Malawi

FEWS Malawi Food Security Report mid-Jun to mid-Jul 2002

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Analysis
Source
Posted
Originally published


EXECUTIVE SUMMARY

Planting of winter crops is still ongoing in areas with residual moisture or irrigation facilities.

By the end of the second week of July, WFP had received about 18,000 MT of food items of a planned 56,500 MT Emergency Operation (EMOP) through September. Of this, about 14,000 MT was maize. The pace of these imports needs to increase so that emergency relief activities can be carried out as planned.

Official maize stocks in the country are very low. The Agricultural Development and Marketing Corporation (ADMARC) has virtually no stocks. WFP had only about 16,000 MT in-country stock by the end of the second week of July.

The government has approved the importation of 250,000 MT of maize through the National Food Reserve Agency (NFRA) to reduce the maize deficit during the 2002/03 (April-March) consumption year.

ADMARC plans to purchase only about 10,000 MT of maize directly from farmers and traders, with possible additional purchases from the NFRA.

The drop in local market maize prices continued to ease in June. However, it is too early to conclude whether this marks the end of the downward trend in maize prices for most of the markets in the remainder of the 2002/03 consumption year.

The national inflation rate dropped by 0.4 percentage points from 17.1 percent in May to 16.7 percent in June, reflecting the slowing rate of maize price increases.

1. FACTORS AFFECTING CROP PRODUCTION

a. Agroclimatic Conditions

Most parts of the country continued to experience dry conditions coupled with cold weather as normal for this time of the year.

A few areas, especially along the lakeshore and in the Southern highlands, experienced some showers, which are beneficial for cultivation of winter crops.

Most parts of the country continue to experience dry conditions and cold temperatures, especially at night. A few parts of the country, particularly in the Southern highlands and along the lakeshore areas, experienced showers, which are normally caused by the inflow of moist southeasterly Chiperoni winds from the Indian Ocean coast of Mozambique. These rains are beneficial for the growing of winter crops. Reportedly, planting of winter crops is still ongoing in areas with residual moisture.

2. FOOD AVAILABILITY

a. Food Stocks

ADMARC has no maize stocks in most of its markets. However, there is no demand pressure for maize in these markets at the moment.

WFP has about 16,000 MT of maize stored in various ADMARC depots and markets across the country.

Although some rural households have began to run out of food from own production, the majority still have food stocks from the recent harvest. However, food availability is generally worse than normal and most households are expected to run out of food earlier than expected. Those that have already run out of food are able to obtain food through purchase, mostly from the local markets and neighbors. Some are already benefiting from the free distributions that have started, while others are involved in income-generating activities, such as casual labor and sale of firewood, to obtain cash for buying food. In addition, others are engaged in food-for-work activities underway, organized principally by the Malawi Social Action Fund (MASAF), a government agency established to implement public works programs and develop rural areas while providing a safety net (incomes and employment) to the rural poor.

WFP had received about 18,000 MT of food items by the end of the second week of July for the four-month Emergency Operation (EMOP), planned at 56,500 MT through September. Of this, about 14,000 MT was maize. With the EMOP nearing the halfway mark, the pace of these imports needs to increase so that emergency relief activities can be implemented.

As ADMARC has no significant food stocks of its own, WFP is storing its food aid, including more than 16,000 MT of maize, in various ADMARC warehouses and markets pending distribution to target areas. Most commodities are for the current EMOP, including general distribution to malnourished groups and food for work for disaster mitigation and rehabilitation projects as well as supplemental and therapeutic distribution.


Table1: Location of WFP Food Aid as of July 12, 2002

Region and Subtotal
COMMODITY (MT)
Maize
Maize meal
Likuni Phala
Beans
Cooking Oil
Salt
Sugar
Milk
Northern
918
64
228
185
27
0.00
Central
8,036
899
461
905
420
0.33
39
30
Southern
7,355
795
773
782
395
0.00
4
GRAND TOTAL
16,309
1,757
1,462
1,873
842
0.33
39
34

Table 1 summarizes the distribution of WFP food stocks in ADMARC warehouses and markets. Most of these food stocks are held in the Central and Southern Regions where storage capacity is bigger. By fortunate coincidence, most of the vulnerable households are in the Southern and Central regions. The location of these stocks, therefore, should facilitate quick distribution to the affected areas.

b. Market Conditions and Food Access

The government, through the NFRA, plans to import 250,000 MT of maize to reduce the deficit during the 2002/03 consumption year.

ADMARC plans to buy 10,000 MT of maize direct from rural areas and may purchase additional amounts from NFRA imported maize.

Local market maize prices continue to drop, albeit at a reduced rate.

The government will import 250,000 MT of commercial maize through the NFRA to ensure that maize is readily available in the markets across the country. Unconfirmed reports indicate that the funds for exercise will be sourced locally through the government’s foreign exchange reserves.

The Agricultural Development and Marketing Corporation (ADMARC) starts buying maize from local farmers when assured that the moisture content is low enough to avoid rotting during storage. ADMARC intends to purchase about 10,000 MT from local sources and will start buying on July 22. However, like other traders, ADMARC will also be able to buy maize that the NFRA will be importing into the country. In addition, ADMARC plans to buy about 10,000 MT of domestic rice and 5,000 MT of groundnuts. The Corporation started buying domestic rice during the second week of July.

Private traders in most parts of the country started buying maize as early as May. However, anecdotal reports indicate that they are not as active as last year, most likely because farmers are not willing to sell the little they managed to harvest. Other traders are waiting to gauge the impact of government and donor maize on market flows and prices. Reports from the field indicate that generally private traders are buying maize at MK8 to MK14/kg. ADMARC buying prices will be around the same.

Meanwhile, most of the ADMARC market outlets have no maize. However, there is no demand pressure as most rural households still consume their own food production from the most recent harvest in April-June. In addition, some of the households have already received food aid.

Maize is readily available in local (private) markets where it generally sells for MK10- MK15/kg, less than ADMARC’s fixed price of MK17/kg. Prices have continued to drop due to reduced market demand for maize. However, there are signs that the drop is slowing in a number of markets, with some markets registering an increase in prices between May and June. Figure 1 shows the local market maize price trends in some of the local markets.



The easing in the drop of maize prices in the local markets could mark the end of the influence of the recent harvest and the beginning of an upward turn in the local markets maize prices - though after only one month it is too soon to tell. Prices are generally higher than at the same time last year, in some markets considerably higher. June prices are around the levels attained at September/October last year. If the June prices indeed turn out to be the minimum this year, the country may face even higher prices than last year in the months ahead, especially if imports come in at a slow rate, as was the case last year. This high-price scenario could be averted through an acceleration of maize imports and efficient targeting and distribution to households in need. FEWS NET will continue to monitor these prices closely as they are a good indicator of the food security situation in different parts of the country.

Generally, the prices are highest in the southerneastern part of the country (covering Zomba, Machinga, and Mangochi Districts), where maize prices average about MK16/kg. In contrast, the lowest prices, averaging about MK9/kg, are found in the northernmost part bordering Tanzania, comprising Chitipa and Karonga Districts. This is expected as harvesting of crops usually occurs about a month later in the northern region than the southern region. In addition, large imports from Tanzania helped to maintain relatively low prices during the peak of the just-ended hungry season (January-April).

3. FOOD SECURITY INTERVENTIONS

WFP has developed an Emergency Operation as one way to address the food security problems facing Malawi.

Donors, NGOs, government, and other stakeholders are developing strategies to avert hunger and problems associated with hunger this year.

A number of organizations, including the government, are working to address the food security problem faced by the country. The government has just completed the distribution of free inputs for winter cropping to some 1 million households. This is aimed at increasing winter maize production and alleviating food security problems at the household and national levels alike.

In addition, the government has authorized NFRA to import 250,000 MT to ensure that maize is readily available in the markets across the country. It is vitally important for the government to start importing quickly before shortages get out of hand and prices shoot up again. It is equally important that the NFRA learn the lessons of last year when a late start and slow inflow of the government-imported maize resulted in scarcity of maize in the markets and increase in prices of the commodity beyond the reach of majority of the poor Malawians.

The World Food Program’s short-term Emergency Operation (EMOP) for Malawi will continue to run for four months (June-September). This EMOP will distribute 56,500 MT of food commodities to 2.1 million targeted beneficiaries. Food distribution started on June 17 and by July 19, a total of 3,159 MT had been distributed to beneficiaries in 11 districts. The WFP has been getting a reasonable response from donors and other organizations in response to its appeals. Apparently the WFP managed to obtain about 48,000 MT of food, leaving a balance of about 8,000 MT. However, about 38 percent of these pledges are not yet confirmed. Table 2 shows the sources of food items and status, evidence that Malawi’s food crisis has elicited a growing and generous response.


Table 2. Pledges to the Four Month WFP EMOP, as of mid July, 2002


Donor
Commodity
Confirmed
Unconfirmed
Total
UK Maize
16,947
16,947
Malaysia Maize
270
270
Luxembourg Maize
658
658
USA Maize
10,000
10,000
20,000
EU Maize
1,807
1,807
Subtotal
27,875
11,807
39,682
EU Maize meal
2,286
2,286
ECHO Maize meal
1,037
1,037
Subtotal
3,323
3,323
Canada Beans
1,661
1,661
Subtotal
1,661
1,661
Ireland Likuni Phala
472
472
ECHO Likuni Phala
362
362
EU Likuni Phala
2,773
2,773
Subtotal
472
3,135
3,135
Switzerland Milk
48
48
Subtotal
48
48
GRAND TOTAL
30,056
18,265
48,321


4. PASTURE AND LIVESTOCK CONDITIONS

Livestock prices have normalized as distress sales taper off.

Livestock prices have returned to normal seasonal levels as desperate households are no longer forced to sell their livestock to buy food. However, if the current interventions are inadequate and untimely, the prices may again crash as was the case only a few months ago. It is important, therefore, to ensure timely importation and distribution of all planned imports, be it for commercial or free distribution.

5. MACRO-ECONOMIC INDICATORS

The value of the Malawi Kwacha remains stable at an average of about MK76/US$.

The national inflation rate for June registered a drop of 0.4 percentage points.

The value of the Malawi Kwacha has remained relatively stable at about MK76/US$ for about three months now. The stability of the local currency, coupled with the drop in food prices (food is weighted as 55.5 percent for inflation rate calculations), resulted in a slight drop in the annual inflation rate from 17.1 percent in May to in 16.7 percent in June. The exchange rate and the inflation rate could start climbing again when food prices begin to rise, as widely expected.

FEWS NET Project
Off Chilambula Road, Old Town, P.O. Box 30455, Lilongwe 3. Malawi.
Telephone and Fax: +265 754892 E-mail: fewsmw@malawi.net