Parts of the country have received planting rains much earlier than normal. However, the rainbelt over Zambia is not yet established, explaining the irregular rainfall in many areas this time of the year. Normally by the last week of November, rains are fully established over Zambia.
In some of the areas that have already been planted after receiving early rains, there is a possibility that subsequent lack of rainfall will cause water stress. These areas require monitoring.
Local supply of maize to the market remained comfortable seven months into the 2003/04 marketing/consumption season. A slight increase in maize demand in November was observed.
Government has requested the Zambia National Service and the Zambia Army to help collect and move purchasable small scale maize into storage. Part of the commodity which has been collected is yet to be paid for because the Food Reserve Agency (FRA) had run out of funds. By November, 6th, K4.7 billion (~US $980,000) of collected maize had not been paid for. Additional funds were only disbursed after mid November but these should be able to cover all maize collected to date.
The FRA stock position as of November 20th stood at 81,816MT, of which 40,000MT is Government imported maize from last season, while the rest is from local purchases.
The FRA is among the companies awarded the Regional WFP tender to supply relief maize to Zimbabwe. The Agency will export 6,500MT, and this is a welcome development as it implies additional market opportunities for Zambian maize.
Reports from the Ministry of Agriculture indicated that as of November 17th, the Government had issued export permits for 14,235 MT of maize and 23,993 MT of maize meal to traders and millers. It should be noted that exports so far have been very slow and have not had a significant impact on increasing local prices.
HIGHLIGHTS
Although the Inter Tropical Convergence Zone (rain belt) has not yet established over Zambia, the country has started receiving rains in different parts of the country. According to the Zambia Meteorological Department, the rainfall is mostly due to the influence of moist air from the Congo. This could help explain why there had been more rainfall activity over the western parts of the country than other areas. In the second dekad of October (October 10th - 20th), light to good rains were received in many parts of the country. The highest rainfall was recorded in northern parts of the country (Northern, Luapula, Copperbelt and North western Provinces) and the southernmost part of Southern Province. During the third dekad of October (October 20th - 30th), most rainfall was confined to the extreme western parts of northern Zambia and northern parts of Northwestern Province which recorded mostly light rainfall. In addition, western parts of Western Province recorded significant rainfall.
In the first dekad of November, rainfall was much more wide spread, covering most of the country. Areas in the North, Northwest, and South received the highest rainfall. The Copperbelt, parts of northern Zambia south of Northwestern Province, east of Western Province and west of Southern Province all received more rainfall than normal (Figure 1).
Figure 1: Rainfall Estimate Deviation from Normal, November 1-10
Source: NOAA/RRSU
Based on the rainfall so far received and analysis by the Regional Remote Sensing Unit of SADC with FEWSNET, parts of Zambia (Copperbelt and parts of northern and northwestern Zambia), have started the season earlier than normal. The start of the season is when more than 20mm of rainfall is received in one day or within two consecutive days, on condition that no dry spell of ten or more days is experienced within the thirty days that follow the start date. Figure 2 shows the start of the season anomaly for Zambia and neighboring countries. According to the mid November Agromet Update, issued by the Regional Food Security Program under SADC, although parts of the region (which include areas in DRC, Angola, Tanzania, South Africa, Zambia and Zimbabwe) had an early start, the season has not started in most areas.
MAP - Figure 2: Start of Season Anomaly
The bottom line is that the rainy season is establishing itself very slowly with what could be described as a poor start. The Meteorologists observed that generally, there has been more rainfall in the western part of the country while the eastern parts have received little rainfall. The country has been under the influence of the dry south easterly air flow characterized by a high pressure system responsible for the dry weather. Increased rainfall activity is expected starting end of the third dekad of November.
Implications for Planting
With the onset of the rains, planting (of grain, mostly) has started in different parts of the country. In some cases, germination has been reported. The extent of the planting will only be known when the information from the VAC field assessments currently in progress is analyzed.
Figure 3: Crop Water Satisfaction Index
Source: USGS/FEWSNET
FEWSNET is closely monitoring the rainfall development. The concern is that rains in many areas are not yet fully established (i.e. it has not been raining on a regular basis), and despite having received early rains, crops may experience water stress following germination. Using the soil water satisfaction index, it can be noted that as of the first dekad of November, some areas where the season had started may also have experienced some water stress due to irregular rains coupled with very high temperatures (32 - 36 degrees centigrade). This needs to be verified on the ground. Germinated crops experiencing water stress are found in northern and north western Zambia, as depicted in Figure 3. It should be noted that the Department of Meteorology's regular reports are not yet being disseminated.
Market Situation
Grain Supply
Local supply of maize to the market has remained comfortable seven months into the 2003/04 marketing/consumption season. Commercial farmers still have relatively large stocks of maize, and most of the market supply in the past six months has come from small scale farmers. The demand for maize is expected to increase alongside the increased demand for maize meal and increased imports. In mid November, the Agricultural Commodity Exchange (ACE) observed that demand for maize had started picking up with the onset of the rains, and this trend is likely to continue.
Sale of maize to the Food Reserve Agency by small scale farmers is still ongoing. Even after the FRA had exhausted their available funds for the purchase exercise, farmers continued delivering to FRA sheds as the new planting season was fast approaching. In addition, during November, the Government mobilized the Zambia National Service and the Zambia Army to help collect and move available maize from small scale farmers into storage. However, some farmers were not receiving immediate payment for the maize collected. According to the FRA market report, 41,191MT had been purchased by November 6th, of which 7,923MT valued at K4.7 billion (~US $980,000) had not been paid for. As of November 20th, FRA had procured (but only partially paid for) a total of 44,389MT of maize. In the third week of November, the Government announced that they had released an additional K11 billion (US $ 2.3 million) towards the purchase of grain, bringing the total so far released for this exercise to K38 billion (~US $7.9 million). Reports from the FRA confirmed that part of this money will go towards paying farmers for already collected maize as well as meeting some administrative costs. It's highly unlikely that they will manage to purchase more than 9,000MT of maize using the additional funds.
With these additional purchases, the FRA stock position as of November 20th stood at 81,816MT, of which 40,000 MT is Government imported maize from last season.
Grain Prices
Using Central Statistics Office price data confirmed by field reports, FEWSNET observed that generally, most rural centers recorded either stable or slightly reduced prices at the end of October. Figure 4 shows the maize price trend for three predominantly maize consuming rural districts. Two of the districts are normally highly productive (Petauke and Kalomo) while Luangwa is less so. All three districts are showing relative price stability in the past three months. Based on the maize seasonal price pattern, prices at this time of the year should have started rising.
At the ACE, maize prices rose 5% from a low of US$115/MT in mid October to US$121/MT in mid November, a reflection of the increased demand.
Whereas maize prices have remained relatively low since April 2003, wheat and soybeans prices have been very attractive since the beginning of the year. Compared to the same period last year, wheat and soybean prices are currently 12% (at US$280/MT) and 40% (at US$320-370/MT) higher, respectively. FEWS NET will investigate the impact this will have on planting decisions.
Maize and Meal Export Update
The pace of maize and maize meal exports by traders and millers has so far been quite slow. Applications for export of maize and maize grain cover an estimated 89,930 MT, while that for maize meal was at 46,926 MT. The commodities are mostly destined for Zimbabwe and, to a lesser extent, Democratic Republic of Congo. Reports from the Ministry of Agriculture indicated that as of November 17th, 14,235 MT of maize and 23,993 MT of maize meal had been approved for export. This represents 15% and 51% of intended maize grain and meal export respectively five months since the first export permit was issued. It is difficult to estimate amounts so far exported as no efficient system to monitor actual amounts exported has been put in place. However, even without this statistics, it is obvious that most of the exports of both maize grain and meal so far have been to Zimbabwe.
The FRA has won a tender for export of 6,500MT of maize to Zimbabwe. This was part of the Regional World Food Program (WFP) advertisement for about 33,000MT of maize to go towards relief operations in the Region. This is a positive development for the market in two aspects: firstly Zambian maize is finding much needed additional markets outside the country; secondly, proceeds from this sale will go towards more local maize purchases. The maize is yet to be dispatched to Zimbabwe. If more export opportunities like this one are found, there may be subsequent increases in price.
Why Prices did not Increase as Expected
During the current season, the high maize supply has been depressing the prices six months into the marketing season. Significant price increases would have been observed by October if the following had been addressed.
1. Government not announcing the 'floor price/indicative price': The announcement of a maize 'floor price/indicative price' by Government at the start of the marketing season immediately triggered a sharp drop in the price of the commodity. Instead of making that announcement, which was understood by buying agents as indicative of the price at which they would purchase all maize, the Government should have just released money to the FRA to go and purchase the commodity in outlying areas at that price as was done in the previous season. Making that announcement did not help matters.
2. The Government's timely release of funds to enable FRA to meet even half of their intended target by purchasing excess maize from small scale farmers by August: Additional efforts of trying to mop up grain from outlying areas though welcome is only being implemented when the rains have started. Some of the maize may already have been partially soaked and therefore of poor quality. Timely release of funds could have helped reduce the excess stock, while also ensuring that the market was adequately supplied with the commodity without triggering sharp price increases. The FRA would have entered the market at an appropriate time using market signals of an upcoming grain shortage.
3. Procurement of locally produced grain by humanitarian organizations in the food relief/ recovery programs: This would have gone a long way towards increasing demand for grain on the local market. In a good grain supply year such as the current one, even the use of the "non competitive grain" (non maize) for relief /recovery purposes impacts negatively on the market by reducing demand for the local product and therefore contributing towards depressed prices. Awarding part of the relief maize tender to FRA by the Regional WFP is a welcome development. It is hoped that more maize will be bought from Zambia for regional relief programs.
4. Earlier lifting of the export ban and timely awarding of export permits by the Government: It is possible that if the above had been addressed earlier, there would have been more maize exported by now, and therefore less grain going to waste.