Monthly FOOD SECURITY Report mid-may - mid-june 2001

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1 MALAWI USAID Famine Early Warning System Network A Chemonics managed project EXECUTIVE SUMMARY Monthly FOOD SECURITY Report mid-may - mid-june 2001 Dry conditions in most parts of the country pave the way for harvesting of the various crops. Winter crop production is expected to increase due to the expansion in area planted that benefit from residual moisture. Based on the final round crop production estimates released by the Ministry of Agriculture and Irrigation on June 21, maize production dropped by 32 percent from 2,501,311 MT in 2000 to 1,713,064 MT in Nonetheless, Malawi will experience a 437,775 MT food surplus this year due to high root crop production (cassava, sweet potatoes, and Irish potatoes). Excluding these root crops leaves the country with a food deficit of 323,391 MT. Local market maize prices are beginning to drop due to lower demand as households start consuming their own food from the current harvest. As of mid-june, official maize stocks amounted to 35,174 MT, much less than the stock level at the same time last year. The Malawi Kwacha continued to appreciate against the currencies of our major trading partners such as the United States, United Kingdom, South Africa, and Zimbabwe. By the end of the second week of June, the U.S. dollar was exchanging for MK76.4, down from MK78.1 at the beginning of May. The inflation rate dropped by 2.6 percentage points, from 27.4 percent in April to 24.8 percent in May 2001, largely due to a harvest-time drop in the food price index. 1. FOOD AVAILABILITY: Agroclimatic Conditions Most parts of the country experienced dry conditions, good for harvesting of crops. A few areas experienced light rains that are good for cultivation of winter crops. Although the rainy season is over, a few areas, particularly in the southern highlands and along the lakeshore, continued experiencing light to moderate rainfall due to moist southeasterly winds from the Indian Ocean coast of Mozambique. These are locally known as Chiperoni winds that normally occur from May to August and are caused by advection of low-level cool moist southeasterly air mass into Malawi. These rains are generally good for the growing of winter FEWS NET Project Off Chilambula Road, Old Town, P.O. Box 30455, Lilongwe 3. Malawi. Telephone and Fax: fewsmw@malawi.net

2 2 crops. The Chiperoni winds are associated with cold temperatures that characterize the country at this time of the year. The dry conditions have generally provided an environment conducive to harvesting of various crops. 2. CROP PRODUCTION Final round crop production estimates were released on June 21. Malawi has produced 1,713,064 MT of maize, 32 percent down from the record harvest of last year. This translates into a 272,975 MT maize deficit. The deficit is offset when other cereal crops and tubers are taken into consideration, resulting in a surplus of 437,775 MT maize equivalents. The government is intensifying its efforts to commercialize cassava as one way of ensuring the sustainable production of the crop. The Ministry of Agriculture and Irrigation released the final crop estimates figures for 2000/01 on June 21, Production of some crops, such as maize and tobacco, has significantly dropped. Maize is the country s main staple food and is grown and consumed almost everywhere. Its availability and access is therefore a major determinant of food security, both at national and household levels. Tobacco, on the other hand, is the country s major export, accounting for more than 75 percent of the country s foreign exchange earnings. There is every reason, therefore, for the country to get concerned over the drop in production of the two crops. Fortunately, other crops have done better than last year. The following section briefly describes the performance of the main crops this year Maize Maize is mainly grown by the smallholder agricultural sector, whereas the estate sector concentrates on the country s major cash crop, tobacco. The final crop estimates show that the country produced 1,713,064 MT of maize in 2000/01. This represents a 32 percent drop from 2,501,311 MT last year. About 93 percent has come from the smallholder sector and the remaining 7 percent from the estate sector. Both the smallholder and the estate sectors experienced drops in maize production. Smallholder maize production is 31 percent down from 2,290,018 MT last year to 1,589,437 MT this year, during which the estate sector experienced a 41 percent drop from 211,293 MT to 123,627 MT. All the Agricultural Development Divisions (ADDs) except Karonga experienced a drop in maize production ranging from 18 percent in Mzuzu to 37 percent in Kasungu. Karanga had a very bad season last year so its recovery this year is a poor basis for comparison. The drop in maize production is mainly attributed to the incessant rains in the past season that caused flooding and serious water logging across many parts of the country, as reported in our previous reports. These conditions occurred even in areas that are not normally affected by floods and/or water logging in the various ADDs, as shown in Map 1. Kasungu, Lilongwe, Blantyre, and Machinga ADDs are the main maize-producing areas, which are the same areas affected by the waterlogging and flooding problem. All these areas experienced a more than 30 percent drop in production compared with Cases of Gray Leaf Spot (GLS) in maize were also widespread, with some of the maize varieties being more susceptible to the attack than others. This also adversely affected maize yields and steps need to be taken to control the disease.

3 3 Map 1: Areas affected by floods and waterlogging in 2001 KARONGA ADDs AFFECTED BY FLOODS AND WATER LOGGING 2001 MZUZU KASUNGU SALIMA LILONGWE LEGEND Lakes National Parks, Game Reserves, Forests MACHINGA Cities Extension Planning Areas Agricultural Development Divisions National Boundary Floods Waterlogging Both EVENT BLANTYRE SHIRE VALLEY FEWS NET/ Malawi Source: Ministry of Agriculture and Irrigation

4 4 Figure I compares this year s maize production with last year s production by the Agricultural Development Division (ADD). Another important factor that contributed to the drop in maize Figure 1. Comparison of Maize Production in Malawi, by ADD and National Total: 2000 and 2001 Metric Tons Metric Tons (000s) 600, , , , , ,000 3,000 2,500 2,000 1,500 1, KARONGA MZUZU KASUNGU SALIMA LILONGWE MACHINGA BLANTYRE SHIRE VALLEY FEWS NET/Malawi Source: Ministry of Agriculture and Irrigation production is low input usage. The targeted input program, previously known as starter pack, faced some delays in input distribution such that in many areas farmers had already planted when they got the inputs. In addition, the number of beneficiaries was reduced by almost half. The Agricultural Productivity Investment Program (APIP), another program that aims to improve farmers access to inputs, also experienced delays in the input distribution. In addition, the introduction of an interest rate of nearly 50 percent (where there had been none before) dampened farmer desire to take up the input loans. The targeted input program together with the APIP program contributed to the increased input use in the past two years and consequently to increased crop production. Fertilizer prices also went up during the season. Most of the commonly used fertilizers now cost more than MK1,000 per 50- kg bag, which most smallholder farmers can hardly afford Rice Rice is probably the second major staple food after maize. It is grown in all the ADDs except Lilongwe. Weather conditions, which adversely affected the maize crop, were generally favorable for rice production because rice requires a lot of water. The favorable weather conditions have resulted in 15 percent and 13 percent increases in area and yield of rice, respectively, hence the increased production. At the national level, rice production increased by 30 percent from 71,633 MT last year to 93,150 MT this year. All the ADDs have registered increases in rice production.

5 Groundnuts Groundnut production experienced a 27 percent increase from 122,281 MT last year to 155,183 MT this year. This is due to 7 percent and 18 percent increases in area and yield of the crop, respectively. The area put to groundnuts increased from 176,100 hectares last year to 189, 262 hectares this year. This increase is mainly attributed to increased seed availability, especially of CG 7 variety, due to seed multiplication programs and seed distribution by NGOs. All ADDs except Shire Valley experienced an increase in groundnut production over last year ranging from 17 percent in Machinga to 48 percent in Blantyre. Shire Valley ADD experienced a 22 percent drop in the production of the crop compared with last year due to a decrease in planted area, but as the lowest producer, it has little effect on the overall groundnut production in the country Cassava Cassava production rose 20 percent from 2,794,617 MT last year to 3,362,401 MT this year. All ADDs except Karonga have registered increases in cassava production, ranging from 10 percent in Machinga to 78 percent in Lilongwe ADD. The increase in production is a result of a 10 percent and 9 percent increase in the area put to and yield of the crop, respectively. In general, the increase in cassava production is attributed to favorable weather conditions, ready availability of improved planting materials through multiplication programs, extension campaigns by government and NGOs, etc. Cassava has increasingly become popular both as a food crop as well as cash crop. The box story below briefly discusses progress in cassava production Tobacco Tobacco production figures from the Ministry of Agriculture and Irrigation do not include the tobacco grown by the estate sector, which produces the bulk of the crop. The Tobacco Control Commission (TCC) prepares estimates for the estate sector. Smallholder tobacco production is estimated to have declined by 16 percent from 98,675 MT last year to 82,544 MT this year. The TCC, on the other hand, estimates that tobacco production from estates is down 11 percent from 159,689 MT last year to 142,679 MT this year. Reasons for the drop in tobacco production included the incessant rains that caused leaching of the soil and made curing of crop difficult, and low fertilizer use as explained above.

6 6 COMMERCIALIZATION OF CASSAVA Maize is the Malawi s main staple food grown and consumed almost everywhere in the country, explaining why for a long time food security in Malawi has been looked at in terms of maize. Ministry of Agriculture policies emphasized maize when it came to food security. Agricultural research concentrated on maize. However, maize still remains susceptible to drought. The droughts experienced in the early 1990s made the authorities and other stakeholders, including farmers, realize that putting all eggs in one basket was not the best policy. During this period maize did not do well, especially during the 1991/92 and 1994/95 droughts. The government had to resort to importing maize, and some farmers had to depend on government handouts for food. These circumstances caused the government to reorient its policies to crop diversification, culminating in the production of the Agricultural and Livestock Development Strategy and Action Plan in 1995 by the then-called Ministry of Agriculture and Livestock Development. The main objective of the Strategy and Action Plan was to diversify both the food security and agricultural export base. Extension campaigns urged farmers to grow different crops other than maize. One crop that has grown in popularity is cassava. There have been tremendous increases in cassava production in the past 5 years, as shown in Figure 2. Figure 2. Cassava Production in Fresh Weight: Figure 2. Cassava Production in Fresh Weight : ,500,000 3,000,000 Fresh Weight (MT) 2,500,000 2,000,000 MT 1,500,000 1,000, , / / / / / / / / / / / / / / / / / / /01 FEWS NET/Malawi Source: Ministry of Agriculture and Irrigation Cassava production has increased about eight fold, from 344,341 MT in 1992/93 to 3,362,401 MT in 2000/01. This is attributed to increases in yield and area planted to the crop that have almost doubled in this period. The distribution of disease-tolerant, high-yielding varieties has also greatly contributed to this increase in production. Area planted to cassava has gone up from 75,050 hectares in 1992/93 to 202,338 hectares in 2000/01, while yields have nearly doubled, from 7,693 kg/ha to 15,253 kg/ha, in the same period. This growth is due to the tremendous efforts of the Ministry of Agriculture and Irrigation, SARRNET, and some NGOs in promoting the crop. In areas such as Lilongwe East, cassava is becoming an important cash crop and in some cases is replacing tobacco. At the same time, the government and other stakeholders realize that the success story may be short lived and the production trend may reverse if the market for the cassava is not well developed. For this reason, the Ministry of Agriculture and Irrigation, the Agricultural Policy Research Unit, and the Southern Africa Rootcrop Research Network (SARRNET) organized a symposium last month to discuss commercialization of cassava. The symposium pulled together a wide spectrum of stakeholders including farmers, policy makers, researchers, and manufacturers. At the symposium, it became apparent that there are a number of companies who use cassava and cassava products. The advantages of cassava include utility of the plant i.e., the leaves are used for relish, the stems are the planting material, and the root can be processed in various products such as cassava flour, 2.6. confectioneries, Implications starch, glue, of the etc Some Harvest of these, Outcome like starch, on are presently National imported. Food Security It also became clear that there is a weak link between manufacturers and cassava farmers, and that the market needs to be developed. Development of a strong market information system is one way to achieve this and ensure the continuation of the successful cassava story.

7 7 A preliminary food balance sheet analysis by FEWS NET shows that the country has not produced enough maize this year. Maize contributes about 67 percent to total food consumption in terms of calories; with an estimated population of 10,791,000, this translates into a national demand for 1,682,801 MT of maize. This, plus estimated seed and Strategic Grain Reserve (SGR) requirement of 40,000 MT and 60,000 MT, respectively, brings the total maize requirement to 1,780,478 MT. Net maize production (after allowing for 15 percent post-harvest losses) is estimated at 1,456,104 MT. Adding the official opening of maize stocks at 51,399 MT brings the total maize availability to 1,507,503 MT. Compared with the maize requirement, this amount leaves a maize deficit of 272,975 MT. If it is assumed that all cereals (maize, rice, sorghum, and wheat) provide 75 percent of the total food consumption, the deficit rises to 323,391 MT maize equivalents. However, when cassava, sweet potatoes, and European potatoes are included, the situation is reversed and the country remains with a food surplus of 437,775 MT. On-farm carryover stocks have not been considered at this stage, but anecdotal information shows that farmers in some areas in the Central and North have considerable quantities of carryover stocks from the previous year, which was an above average one in terms of production. FEWS NET will collaborate with government agencies and other groups to produce the final food balance sheet. 3. LIVESTOCK CONDITIONS AND ANIMAL PROTEIN CONSUMPTION Water and food for animals are readily available. Livestock figures and meat and egg production estimates indicate that from domestic sources alone there is a very low national average animal protein consumption Pasture and Livestock Conditions Pasture for animals continues to be readily available. Crop residues left over after the farmers harvest their crops are providing an extra source of feed for the animals. Drinking water for the animals is still readily available. No significant animal disease outbreak has been reported Consumption of Animal Proteins The Ministry of Agriculture and Irrigation released estimates of the livestock population and its products. It is estimated that the country has 763,724 cattle, 1,689,485 goats, 111,539 sheep, 468,140 pigs, and 7,065,482 chickens, as of June The Ministry also estimated annual meat and egg production at 22,081 MT of beef, 9,669 MT of goat meat, 10,065 MT of pork, 498 MT of mutton, 8,951 MT of chicken meat, 9,848,000 liters of milk, and about 53,697,663 eggs. Based on domestic production alone and with a population of nearly 11 million people, the figures imply a very low per capita animal protein intake in the country an average of about 4.75 kg of meat (all kinds), 4.98 eggs, and 0.91 liters of milk per person per year, assuming no exports. Although the livestock product figures do not include the estate sector, they may not significantly change the findings.

8 8 4. FOOD ACCESSIBILITY 4.1. Market Conditions Maize prices begin to drop, due to lower demand, as households start consuming food from their own production. However, prices remain higher than the ADMARC price of MK5.00/kg. Maize prices in most local markets are beginning to fall as the harvest gathers momentum. Figure 3 shows that most markets registered a drop in maize prices in May. Prices in the capital, Lilongwe, fell from about MK10.00 to about MK9.00/kg. The price of maize in local markets ranged from MK5.40/kg at Ntaja market to MK9.16/kg at Nkhotakota market. The prices are generally higher than the ADMARC maize selling price of MK5.00/kg. Some private traders have already started buying maize for sale later in the season. Most are buying from farmers at prices ranging from MK3.00 to MK5.00/kg. Most traders expect maize to be in short supply, in view of the sizable production decline this year, which will enable them to sell it at higher prices later in the season. Figure 3. Local Market Maize Prices for Selected Markets in Malawi: LILONGWE LIZULU KARONGA RUMPHI LUNZU NCHALO ADMARC 12 Malawi Kwacha per Kg Jan'00 Feb'00 Mar'00 Apr'00 May'00 Jun'00 Jul'00 Aug'00 Sep'00 Oct'00 Nov'00 Dec'00 Jan'01 Feb'01 Mar'01 Apr'01 May'01 FEWS NET/Malawi Source: Ministry of Agriculture and Irrigation a. OFFICIAL FOOD STOCKS Official maize stocks stood at 36,621 MT, much less than 184,450 MT at the same time last year, largely because ADMARC did not buy maize last year. This year ADMARC intends to buy 120,000 MT whereas the government will buy about 60,000 MT locally to replenish Strategic Grain Reserve stocks.

9 9 ADMARC has not yet started buying maize from farmers but they will start soon when they are satisfied with the moisture content. It is not yet known at what price ADMARC will be buying maize but it is anticipated that the price will be higher than the Mk2.50/kg offered in the 1998/99 season when they last bought maize from farmers. ADMARC maize sales since April 1 amounted to 4,665 MT by mid-june, only about 66 percent of the sales level at the same time last year. The low sales level is due to the bumper harvest last year that boosted household food stocks, lowered market prices and dampened demand for ADMARC maize. Official maize stocks amounted to 35,174 MT in mid-june, much less than the 181,300 MT attained by the same time last year. The low stock level is as a result of ADMARC not buying any maize in the 2000/01 marketing year that ended on March 31. Out of the 35,174 MT, most of it (34,117 MT) belongs to the government while the rest (757 MT) belongs to ADMARC. Most of the maize ADMARC is selling, therefore, is government maize. This year, ADMARC and the government have indicated that they intend to buy 60,000 MT and 120,000 MT, respectively. 5. VULNERABILITY UPDATE FEWS NET will conduct a Current Vulnerability Analysis to identify which Extension Planning Areas are food insecure. The drop in production of some crops, especially maize, may result in food deficits and poor food access in some areas, despite the net contribution of cassava, sweet potatoes, and Irish potatoes to the positive food balance. Even in times of food surplus, there may still be some pockets that suffer from food insecurity due to varying reasons. Soon after the final crop estimate figures are released, FEWS NET plans to conduct a Current Vulnerability Analysis (CVA) to identify Extension Planning Areas (EPAs) that are likely to face food insecurity in the marketing year 2001/ MACROECONOMIC INDICATORS The Malawi Kwacha continued to appreciate against currencies of the country s major trading partners such as the United States, United Kingdom, South Africa, and Zimbabwe. The Malawi Kwacha appreciated against the U.S. dollar between the beginning of May and end of the second week of June. The Malawi Kwacha continued to appreciate against currencies of the country s major trading partners such as the United States, United Kingdom, South Africa, and Zimbabwe. The Malawi Kwacha appreciated against the U.S. dollar between the beginning of May and end of the second week of June. The Malawi Kwacha exchanged at MK76.4/US$ at the end of second week of June, down from MK78.1/US$ at the beginning of May. The appreciation of the Kwacha is attributed to donor inflow of foreign exchange that has boosted the country s foreign exchange reserves. In addition, tobacco marketing, which is underway, is expected to contribute to the country s foreign exchange reserves. Tobacco accounts for about 75 percent of the country s foreign exchange earnings and has a significant impact on the country s exchange rate. The exchange rate determines the cost of imported goods and services in terms of Kwacha. Changes in the exchange rate affect people s ability to buy imported food, locally grown food with an imported cost component such as fuel for transport, and imported inputs for food production. Consequently, the exchange rate has a direct bearing on household food security.

10 10 The annual inflation rate dropped by 2.6 percentage points from 27.4 percent in April to 24.8 percent in May. This is attributed to a drop in the price index for food items, a result of the harvesting currently underway, which in turn has reduced the market demand for food. Both the rural and urban areas experienced drops in the food price index, by 7.5 percent and 4.8 percent, respectively. This year s inflation rate trend is similar to last year as shown in Figure 4. Figure 4. National Inflation Rates: % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FEWS NET/Malawi Source: National Statistical Office