Malawi

Malawi Food Security Report, May 2004


EXECUTIVE SUMMARY
With the main rainfall season now over, dry conditions extended throughout most of the country, facilitating harvest activities.

Results from the second round of the national crop assessment indicate a drop in production for most of crops compared to last season.

The short-term household food security situation has improved with the current harvest, but this will be short-lived in many parts of the southern region where a number of households are expected to start experiencing food shortages as early as July/August due to the poor harvest.

In general, it is expected that many households in the southern region will require food aid this year to compensate for food shortages caused by a combination of their own crop losses and higher prices.

Staple prices finally began to drop in local markets, ranging from about MK10/kg to MK23/kg depending on locale.

The Malawi Kwacha exchange rate remained stable at around MK109/US$ (April 2004), putting in place at least one of the necessary conditions to achieve affordable farm input prices.

1. FACTORS AFFECTING CROP PRODUCTION

a. Agro-climatic Condition

The main rainfall season is now over. Conditions were dry in most of the country, facilitating drying and harvesting of crops such as maize.

With the main rainfall season now over, most parts of the country did not receive any rain in April, facilitating harvest-related activities. In the last dekad of April, moderate to heavy rains fell in a few areas of Mulanje and Thyolo Districts in the southern region, and in Mzuzu and Nkhata Bay in the northern region.

By the end of the main rainfall season, most parts of the northern and central regions had received normal to above normal rainfall, whereas most parts of the southern region had received below 75% of the expected rainfall, as shown in Map 1. Although the cumulative rainfall picture shows that the season was generally good, with none of the country receiving less than 50% of average rainfall, the distribution of seasonal rains was poor, characterized by prolonged dry spells that adversely affected crop production, especially in the southern region. In some areas, such as the Lower Shire Valley, farmers were unable to plant in the first half of the season (October to December), and, after planting in January, were left with too short of a rainy season to support the full production cycle.



2. AGRICULTURAL ACTIVITIES AND CROP PRODUCTION PROSPECTS

After the second round of assessments, maize production is now estimated at 1,731,925 MT, representing a 13% drop from last year's production of 1,983,440 MT.

On April 28, the National Statistics Office released crop estimates from the second round of crop assessments. The crop estimate exercise is conducted three times each year; the first one takes place around January/ February, the second one around March/April and the final one around June/July. The first and second rounds are, therefore, preliminary and the third round is final. The second round improves on the previous estimate by taking into consideration developments related to crop production that occurred since the first round. In 2004, the second round of the assessments confirmed and factored into the analysis the late onset of rains and a prolonged dry spell that occurred at a critical development stage, especially in the southern region. These developments adversely affected production, lowering initial estimates. The following paragraphs summarize the current production prospects for key crops.

Maize

Maize production is now estimated at 1,731,925 MT, 13% lower than last season's production, estimated at 1,983,440 MT. Maize, which is grown and consumed everywhere in Malawi, is the country's major staple food and an important source of income for most farmers. Maize production is, therefore, a major determinant of food security in the country. As already mentioned, the southern and parts of the central region normally start receiving rains in late October to early November; however this season, most parts of the country received planting rains around mid-December, with some areas, especially in the lower Shire and parts of Blantyre, forced to wait until mid-January to plant. The delay in planting meant that the season would have had to extend into April for crops to reach maturity. Instead, a prolonged dry spell spread over the south and some parts of the center and north, resulting in crops wilting and drying. Maize was particularly hard hit because the dry spell occurred when it was at the critical flowering and cobbing stages, lowering likely yields, and putting at risk the food security of many households, particularly in the south.

Rice

Rice, another crop that requires a lot of water, was severely affected by the dry spells. In some areas farmers failed to plant any of the crop at all. According to the second round forecast, rice production is expected to drop by 25%, from 88,184 MT last season to 66,336 MT this season.

Cassava

Recognizing that approaches for estimating cassava production are still being debated, the second round crop production estimates indicate a 44% increase in cassava production, from 1,735,065 MT last season to 2,501,298 MT this season. This increase is due primarily to an almost 40% increase in area planted with cassava, from 112,071 hectares last season to 156,645 hectares this season. The yield increased slightly by 3%, up from 15,482 kg per hectare to 15,968 kg per hectare. The government and other stakeholders are continuing to promote the relatively drought-tolerant cassava as a means of supporting national food security.

3. FOOD SECURITY SITUATION AND PROSPECTS

Household food security has temporarily improved due to the current crop harvest, which peaked during this period. Households in the southern region are likely to face serious food shortages this season.

For the moment, household food security has significantly improved with increased supplies from recently harvested crops. However, in most parts of the southern region the poor harvest will translate into potential food shortages, with harvested stocks running out as early as July/August instead of the normal November/December. It is already clear that these areas will require food aid, but just how much food and for how many people will be determined in the coming month, with the final analysis of the Vulnerability Assessment Committee. The worst affected areas include parts of Nsanje, Chikwawa, Blantyre, Mwanza, Chiradzulu, Phalombe, Balaka, Machinga, Mangochi and Karonga Districts.

4. MAIZE AVAILABILITY AND ACCESS

a. Maize Availability

The government issues a tender for the purchase of 28,000 MT of maize to replenish the Strategic Grain Reserve (SGR).

In last month's report, the need to replenish the SGR was highlighted after pointing out that maize stocks were running very low, at about 22,000 MT. These stocks will decrease further to about 7,000 MT after WFP starts drawing the 15,000 MT recently allocated for their ongoing programs. In a bid to replenish the SGR, the government, through the National Food Reserve Agency, has issued a tender for the purchase of 28,000 MT of maize. Although the stated preference is to purchase this grain locally, supplies from neighboring countries (Mozambique, Tanzania and Zambia) will be considered. Replenishing the SGR stocks will help the government ensure that maize is readily available in the market at prices households can afford. The SGR requirement varies between 60,000 MT and 100,000 MT.

In a related development, the GoM, through the ministry of Agriculture, has announced plans to engage farmers in contract farming for winter maize production between now and October/November. The GoM expects that 250,000 MT will be produced under this initiative and will help offset the production shortfall. Bidders have been asked to provide their quotations before June 4.

b. Markets and Prices

Local market maize prices begin to drop as households depend on maize and other foods from their own production. April prices ranged from MK10.00/kg to MK22.33/kg.

Maize is readily available in local markets and prices have begun to drop as households increasingly depend instead on they maize they have just harvested. Prices normally decline in Malawi after the harvest, from around April to July, and begin to rise thereafter, reaching a peak in January or February, as most households run out of food from their own production. Figure 2 illustrates the trend in local market maize prices for three reference markets: Chitipa in the north; Mchinji in the centre; and Liwonde in the south. Out of the 32 markets for which data was available, close to 70 percent recorded decreases in maize prices between March and April between 1 to 45 percent. In nearly all the markets prices were above MK20.00/kg. The prices ranged from MK10.00/kg at Thete market in Dedza District to MK22.33/kg at Dowa market in Dowa District. In the southern region, where stocks are expected to run out by July, prices are expected to start rising steadily from August onwards. It is very unlikely this year that the local market maize prices will drop beyond the ADMARC fixed price of MK10.00/kg as they did last season.



5. MACRO-ECONOMIC ISSUES

The Malawi Kwacha exchange rate remains stable at about MK109/US$.

Fertilizer prices have remained stable in large part because of the stable exchange rate.

The value of the Malawi Kwacha has remained relatively stable at around MK109/US$ over the past eight months, as shown in Figure 3. The exchange rate is significant because it determines farm input prices such as fertilizer and other imported items, including maize. It is widely acknowledged that the majority of poor households cannot afford to buy fertilizer and during the recent political campaigns, almost all political parties indicated that if elected, they would lower the price of fertilizer. Implicit in this campaign promise is the recognition that the large-scale free farm input distribution programs implemented in the country during the past few years are not sustainable. Lowering fertilizer prices is a component of establishing a more sustainable system, but how this will be implemented in a country where the farm inputs market has been liberalized remains to be seen. A stable exchange rate is one of the prerequisites for stable fertilizer prices, as shown in Figure 3.


The exchange rate will also determine, in part, the cost of the maize the government will purchase to replenish the SGR (as mentioned above), and this will have knock-on effects for local market prices.