Zimbabwe

Zimbabwe Food Security Update, August 2004


Summary

Although on-farm stocks are declining, own production is still the major source of staple cereals in most rural districts. These stocks are complemented by local barter and purchase. In areas where production was insufficient, barter or purchase is the primary means of food access. Prices in the informal markets are highest in these areas and unaffordable for poor households. National cereal availability in the coming months remains uncertain.

Although basic commodities like maize meal, cooking oil, flour and sugar are currently available in urban markets, affordability is a problem. Hyperinflation, high rates of unemployment and low wages contribute to food insecurity in urban areas.

As more households rely on the market to obtain their cereal needs, food security will depend more and more on the Grain Marketing Board (GMB), which controls the formal grain supply system. The quantity of grain collected by the GMB as of mid August is insufficient to meet the needs in urban centers and rural areas with deficit production. There are concerns as to how well the parastatal will be able to play its grain redistribution role.

The Meteorological Services Department of Zimbabwe has forecast that rainfall in the coming season will be slightly below normal, but the early part of the season will be wetter than last year and with better distribution of rainfall.

There is sufficient seed available in Zimbabwe to meet most of the anticipated demand for maize, small grains, and other important crops. Still, limited access to seed could constrain production during the 2004/05 agricultural season.

1. Current Food Security Situation

1.1 Rural food supplies declining in most districts

National food security remains uncertain. Although on-farm stocks are declining, own production from the poor 2003/04 season remains the major source of staple cereals in most rural districts. These stocks are complemented by local barter and market exchanges (Figure 1). Food insecure households are still able to rely on neighbors, friends and relatives within their areas and adjacent districts to supplement their grain needs. In deficit producing areas, mainly in the eastern and southern parts of the country, more households purchase or barter for their cereal, but in these areas informal market maize prices are relatively higher. In August, informal maize prices ranged between Z$1,000/kg and Z$1,100/kg in the deficit producing areas, compared to Z$560/kg to Z$860/kg in surplus producing areas.

Income, mainly from casual labor (gardening, brick molding etc.), is contributing significantly to households' ability to purchase basic commodities. Local shops carry stocks of basic commodities such as maize meal, cooking oil and salt, but demands on households' income reserves have increased as farmers purchase agricultural inputs for the 2004/05 agricultural season that begins in October.

As consumption from local production runs out in rural districts, the GMB is urged to quickly establish selling points that are easily accessible to most of the food insecure households. Selling depots that are inaccessible or far apart will incur high transaction costs, and cereal prices may be prohibitively high for those most in need.


Figure 1: Share of districts reporting own production as source of food

Source: FOSENET


1.2 Limited household income continuously threatens urban food security

Although basic commodities like maize meal, cooking oil, flour and sugar are available for purchase, affordability remains a major problem in urban areas due to high unemployment, low incomes, and high inflation. The monthly expenditure basket in July for a low income urban household of six, monitored by the Consumer Council of Zimbabwe (CCZ), stood at Z$1,326,980. At the same time, the minimum wage for industrial workers was about Z$444,000/month, enough to cover only 33 percent of this cost (Figure 2).

Inflation has been declining since January. The annual food inflation reported by the Central Statistics Office stood at 378.4 percent in July, 52.2 percentage points less than the June rate of 430.6 percent (Figure 2). Nevertheless, between June and July, the cost of meat increased by 96 percent, bread by 17 percent, tea by 23 percent and flour by 18 percent. The value of all food items in the CCZ basket increased by about 19 percent and that of non-food items by 13 percent. Over the past twelve months, housing rents have increased 650 percent, and, consequently, a significant number of poor households have been pushed to illegal settlements on the edges of cities and towns.


Figure 2: Cost of monthly expenditure basket for a low income urban household of six in Harare, November 2003-July 2004

Source: CCZ, ZCTU and CSO


2. Food Security Prospects

2.1 Urban and rural deficit areas expected to exert more pressure on the formal grain and maize meal system

Cereal supplies to urban areas are slowing down as farmers from surrounding areas are now holding onto their remaining stocks. Maize prices have increased faster than normal in urban centers surrounded by good grain producing areas. Between April and August, informal market maize prices rose by about 60 percent in Harare, which is relatively near to good production areas, compared to an increase of 23 percent in Bulawayo, which is surrounded by poor production. Due to declining supply, informal maize grain prices in Harare have been gaining on those in Bulawayo since March, matching them at Z$890/kg by August (Figure 3).


Figure 3: Maize price trends

Source: FEWS NET


As sourcing for maize grain from the local market or from neighbors becomes increasingly difficult, more and more households in urban areas and the deficit production areas will be forced to rely on the formal grain supply system for their consumption needs. The GMB's collections to date of about 200,000 MT could cover about 40 percent of the estimated annual requirements for Zimbabwe's urban population of close to 4 million. However, this grain will also be needed in deficit rural areas, and an estimated 177,000 MT is needed for the Government's social protection program. Information on GMB imports have not been made available, which will make conclusions on cereal availability in coming months difficult to assess.

2.2 Slightly below normal rainfall forecast for the 2004/05 season

The Meteorological Services Department (MSD) of Zimbabwe stated that, according to initial indicators, rainfall in the country during the 2004/05 season would be slightly below normal. Furthermore, the MSD is anticipating that the early half of the season is likely to be wetter than last season, with better rainfall distribution. Farmers, the government and the NGOs supporting agricultural recovery need to take note of this and ensure that inputs are available to farmers at the beginning of the rainfall season (early October). Late distribution of inputs, though not a problem last season, limits farmers' ability to take full advantage of a more normal rainfall pattern.

2.3 Seed availability seems adequate, but access to seed for the coming agricultural season could constrain agricultural production in 2004/05 season

The government and Zimbabwean seed companies estimate that the quantity of seed available in the 2004/05 agricultural season is adequate to meet the anticipated demand. About 43,870 MT of maize seed is estimated to be available in the country, of which about 35,530 MT are hybrid and 8,340 MT are open pollinated varieties (Figure 4). Before the land reform, Zimbabwe's annual maize seed demand was around 36,000MT and national seed production could meet local demand, with some surplus available for export into the region. Since the land reform, more land is being planted to maize, increasing the demand for maize seed. The available maize seed has the potential of planting about 1,750,000 hectares, 17 percent more than the area believed to have been planted in 2003/04.


Figure 4: Estimated available seed stocks as percentage of national requirements

Source:MoARD


Seed stocks of small grains seem, on aggregate, sufficient for the coming season. Sorghum seed stocks of about 4,600 MT are more than enough to satisfy the national needs, estimated at 4,000 MT. Millet seed supplies fall short of the anticipated need of about 3,000 MT, but this is expected to be covered by farmers' saved seeds. Timely seed fairs could play a very important role in facilitating the exchange of small grain seeds among farmers before October, when most farmers are known to dry plant their millet and sorghum. Seeds for cotton, the major cash crop for smallholder farmers, are enough to satisfy the project demand of about 12,000 MT.

While seed availability may not be the limiting constraint, the mechanisms to distribute the seed to the farmers must function well. In Zimbabwe, the government, the private sector and NGOs are the distributors of maize seed. The government should guard against holding more seed than it can deliver to farmers in time for planting, and their decision on the amount of seed required for government programs should be communicated to seed companies early. The private sector seed distribution system, before releasing seed into the market, is waiting for both information on the government's seed needs and the resolution of negotiations on seed pricing, currently underway with the government. Early resolution of this matter is needed to ensure a timely and efficient delivery of seeds to farmers and also to protect farmers from being taken advantage of by unscrupulous dealers selling fake seed, as happened last year when seed was in short supply.

2.4 The viability of meeting Zimbabwe's maize requirements with local production

The need to satisfy their own families' food requirements is often the driving motive for subsistence farmers to produce food crops. For these farmers to be motivated to produce surplus for sale and to provide sufficient incentives for commercial farmers to produce, the returns to maize must compete favorably with alternative cash crops. As the new season approaches, the maize pricing policy must send the right signal to producers. In the current pricing scenario, the average commercial maize producer could expect a return of about Z$252,000/ha, assuming the maize producer price remain at Z$750,000/MT (Figure 5). This is just 3 percent of what can be expected from golden leaf tobacco, which could return about Z$9million/ha if the farmer has the necessary infrastructure, skills and operating capital. Even when compared with less capital intensive crops like soybeans and sugar bean, commercial white maize production does not provide competitive returns.


Figure 5: The profitability of maize compared to potential competing crops

Source: FEWSNET


When commercial maize production suffers, the government's ability to ensure adequate supplies of the staple crop to chronically deficit areas and urban areas will be greatly compromised, particularly given the prevailing foreign currency shortages negatively affecting the economy.