ZIMBABWE MONTHLY FOOD SECURITY UPDATE. October 21, 2002

Transcription

1 z ZIMBABWE MONTHLY FOOD SECURITY UPDATE The Famine Early Warning Systems Network October 21, 22 Summary Winter wheat harvest and deliveries to the Grain Marketing Board commenced in September 22. A total of 68, MT of wheat had been delivered to GMB in early October compared with 83, MT at the same time last year. Wheat deliveries to the market began much earlier than normal and expected. The early delivery, coupled with price increases of bread, has eased the bread shortages in the market. The rains that fell throughout most of the country during the first part of October 22 did not signal the start of the season. The Department of Meteorological Services of Zimbabwe expects the rainfall season to start during the last week of October 22. A moderate El Niño continued to develop throughout September 22 and the early part of October 22, and is expected to expand to establish basin-wide mature El Niño conditions during the December 22 to February 23 period. Historical data suggest that under moderate to strong El Niño conditions the southern half of Zimbabwe is likely to experience crop yield reductions of 2 to 4 percent of normal yields. Since the introduction of price controls (October 21), prices of basic commodities in parallel markets have increased at rates well above the rate of inflation. This has resulted in shortages of basic commodities. Between May and September 22, prices of basic foodstuffs increased, some dramatically. The price of sugar increased about 23 percent, that of cooking oil, about 18 percent, and that of maize meal, 13 percent. Bread prices increased by just under 12 percent, while fresh milk and beef increased more modestly, by 8 percent and 3 percent, respectively. A total of 47,814 MT of hybrid maize seed is available in the country, which is adequate to plant an estimated 1.6 million hectares with maize, a 14 percent increase of the 1.4 million ha normally planted. However there is generally a shortage of planting material for sorghum, millets, pulses (such as cowpeas), beans, and groundnuts. Farmers normally retain this planting material, but have not done so due to widespread crop failures in 21 and 22 in some areas. As a result the retained seed is limited. With the start of the rainfall season already underway, just about 2 percent of the estimated Z$16 billion required to finance agricultural activities in the 22-3 production year has been secured. The secured funding includes Z$8.5 billion from the government and Z$24 billion from three private corporations. Maize and maize meal shortages have continued since February 22 as grain imports into the country remain slow; meanwhile, cereal stocks available from last year s harvest have diminished. A total of 647, MT of maize has been imported into the country since April 1, 22. At the current rate of imports of 99,5 MT of maize (grain) per month, an additional 65, MT of maize could be imported before the end of the marketing year in March 23. The imports would only meet 73 percent of the monthly maize requirements. An additional 2, MT of wheat imports are required in addition to the committed 17, MT to meet the requirements after April 23 and before the harvest in October 23. Food aid distribution has not kept pace with food requirements. In areas where food aid is required, only Chiredzi, Chimanimani, Mberengwa, Insiza, Kariba, and Umzingwane Districts have more than 75 percent of the population identified as food insecure receiving assistance.

2 1.1. Winter Crop Condition The Crop Forecasting Committee estimates that a total of 9,5 MT of winter maize is expected from 2,286 ha of winter maize planted in the Southern Eastern lowveld of Zimbabwe. Of this, about 1,5 ha were planted by the government in Triangle and Hippo Valley Sugar Estates in the lowveld on lands loaned to the government. The remainder was planted on Agricultural Rural Development Authority (ARDA) lands in the South Eastern lowveld of Zimbabwe, in areas that are less frost-prone. Most of the maize crop is ready for harvesting, but has been affected by theft and wild animals. Despite this, the harvest is likely to be slightly above the 9,5 MT estimate of the Crop Forecasting Committee. The winter wheat harvest and deliveries to the Grain Marketing Board commenced in September 22. A total of 68, MT of wheat had been delivered to GMB in early October compared with 83, MT the same time last year. Wheat deliveries to the market started on September 16, 22, much earlier than normal and expected. The early delivery coupled with price increases of bread has decreased bread shortages in the market. From the official estimates, a total of 212, MT of wheat is expected. The wheat harvest is 62 percent of the 21 final harvest of 34, MT, which included 6, MT of wheat seed. The harvest is one of the lowest since 1991, only surpassing the 1992 and 1995 drought harvests (Figure 1). Figure 1: Estimated Wheat Production Since , 35, Wheat Area (Ha) Wheat Production (MT) 3, 25, 2, 15, 1, 5, Source: Zimbabwe Cereal Producers Association Seasonal Outlook and Potential Impact of El Niño In the 22-3 seasonal outlook update of October 4, 22, the Department of Meteorological Services revised its forecast for the first half of the season from that issued at the beginning of September 22. The updated forecast indicates the increased probability of receiving normal to above-normal rains during the first half of the season (October to December) for the whole country. The September 22 forecast had divided the country into a southern and northern half. The northern half was forecast to receive normal to above-normal rains during the first half of the season, while the southern half was forecast to have normal to below-normal rains in the 2

3 same period. Now, normal rainfall, biased toward below normal, is forecasted for the second half of the season (January to March 23) The rains that fell throughout most of the country during the first part of October 22 did not signal the start of the season (Figure 2). The Department of Meteorological Services of Zimbabwe expects the rainfall season to start the last week of October/early November 22. Despite the low amount of rainfall, some farmers in areas with sandy soils and wet areas have planted their maize crop, and it has germinated. Figure 2: Zimbabwe Total Rainfall in MM Received during the 1 st Dekad of October 22 Moderate El Niño conditions continued to develop throughout September 22 and the early part of October 22. Sea Surface Temperature Anomalies in the Equatorial Pacific Region, an indictor of El Niño conditions, are expected to increase and the area they cover is expected to expand to establish a basin-wide mature El Niño during the December 22-February 23 period. Under moderate to strong El Niño conditions, historical data suggest that the southern half of Zimbabwe is likely to experience a 2 to 4 percent reduction in average potential crop yield. As a result of this seasonal forecast, food security strategic plans for Zimbabwe should factor in a scenario of much reduced crop production in the consumption year Market Conditions Consumer Goods With the government s introduction of price controls on basic commodities in October 21, supermarkets and other commercial shops nationwide were emptied of the commodities listed as controlled. The outcome of this policy has been the emergence of thriving parallel markets for maize meal, sugar, cooking oil, salt, bread, milk, and flour. As the shortages grew in the official markets, parallel market prices of basic commodities have increased at rates well above official inflation rates of 135 percent per annum. Between May and September 22, prices of basic foodstuffs increased, some dramatically. The price of sugar increased about 23 percent, 3

4 that of cooking oil, about 18 percent, and that of maize meal, 13 percent. Bread prices increased by just under 12 percent, while fresh milk and beef increased more modestly, by 8 percent and 3 percent, respectively (Figure 3). The price increases are seriously curtailing poor urban households access to food as well as relegating a significant proportion of this vulnerable group to absolute destitution. Figure 3. Price Trends for Basic Commodities 25 2 % Price Cha Jan 2 M ay 2 Sep 2 Source: FEWS NET 1 kg m aize m e al 1 Loaf bread 2k s ugar 1kg beef 75m l cooking oil 5m l fr e s h m ilk Agricultural Inputs The retail price of seed has been revised upward as of September 25, 22. The price of maize seed went up from Z$1,946 to Z$Z$4,28 per 25 kg. That of groundnuts and sunflower rose by 15 percent, while that of sugar beans increased by 3 percent, and soybeans by 375 percent. The increase in the prices of seed would negatively affect the farmers preparation for the 22-3 production season Preparations for the 22-3 Agricultural Production Season Inputs Availability The quantity of seed available in the country at the end of September is much less than what was available last year. The reduced seed quantities can be attributed to the general low production in 22 due to the drought and the disruption of the traditional seed producers (the large-scale commercial farming areas) by the land reform. A total of 47,814 MT of hybrid maize seed is available in the country, enough to plant close to 1.6 million ha of maize. This area is 14 percent more than the 1.4 million ha normally planted to maize. In normal years, farmers retain their own sorghum, millets, pulses (such as cowpeas), beans, and groundnut seed, but due to widespread crop failures in 21 and 22 in some areas, most farmers have not been able to retain the seed, reducing the quantities available on the market. As a result, there is a seed deficit for crops including cotton, groundnuts, millets, pulses, sorghum, and wheat (Figure 4). 4

5 Figure 4: Seed Availability in 22 Compared with 21 and National Requirements 65, 6, 55, 5, 45, 4, Seed Amount Required (MT) 21 Amunt Available (MT) 22 Seed Available (MT) 35, 3, 25, 2, 15, 1, 5, Maize Sorghum Soyabeans Groundnuts Millets cotton Wheat Source: Ministry of Agriculture Maize seed sales have been normal as of the end of June 22, with a total of 3,6 MT of maize seed purchased compared with 3,3 MT in 2 and 4,8 MT last year. Seed purchases typically increase gradually, normally reaching a peak in November when a total of 28, MT would have been bought (Figure 5). Figure 5: Maize Seed Stocks and Sales from 2 32, 3, 28, 26, 24, 22, 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec MT Source: Ministry of Agriculture and SADC 2 Cummulative Maize Seed Sales 21 Cummulative Maize Seed Sales 22 Cummulative Maize Seed Sales 5

6 Total flue-cured tobacco seed sales for 22-3 dropped by 19 percent to 295 kg from last year s sale of 352 kg. The Zimbabwe Tobacco Association estimates that a total of 41,3 ha, about 5 percent of the recent five-year average, will be planted in the 22-3 production season. Yields are expected to fall 23 percent from a recent five-year average of 2,49kg/ha. Both the reduction in area planted and the average yield resulted in the projected flue-cured tobacco harvest for the 22-3 production year declining to 7,MT, or 34 percent of the recent national five-year average and 41 percent of last year s estimated harvest of 17, MT. The projected fall in flue-cured tobacco harvest for next year is mainly the result of a forecast drop of 78 percent from the recent-five-year-average in area planted by the large-scale tobacco sector to area planted of 72,7 ha (Figure 6). Flue-cured tobacco contributes about 29 percent of total export earnings and 9 percent to gross domestic product of Zimbabwe. Reduced tobacco production will exacerbate the foreign currency crisis currently stifling the Zimbabwean economy, forcing it to shrink further and compromising its capacity to respond to food imports in the 23-4 consumption year. Generally there is a shortage of both basal and top dressing fertilizers this year unless concerted effort to import the ingredients is made. A total of 6, MT of NPK fertilizer and 42, MT of ammonium fertilizer is required for the 22-3 crop production but only about 262, MT of NPK and 14, MT of AN could be produced between now and March 22 giving a deficit of 338, MT of NPK and 28, of AN. The shortage of fertilizers in 22-3 is attributed to the following circumstances: Phosphate is manufactured in Dorowa and transported to the major fertilizers companies in Harare by rail, and recently, transport capacity has been stretched due by food imports, making the fertilizer companies resort to the more expensive road transport and not meeting the demand. Calcium is imported from outside Africa and, due to foreign currency shortages, the amount imported has been insufficient. The Government has, however, made some concerted effort by allocating foreign currency to the fertilizer companies. The ammonium nitrate being manufactured by Sable Chemicals has not been adequate and the company has been able to produce about two thirds of the Nitrogen and was going to import the remaining third, but due to foreign currency shortages this has not been possible. Lat year there was a similar shortage which was slightly alleviated by the importation of 35, Mt of urea. The pending shortages, if not addressed by the provision of foreign currency by Government, the donor and NGOs to import the fertilizer or ingredients used in fertilizer manufacturing, will result in poor crop growth and reduced yields and harvests in 22-3 season. 6

7 Figure 6: Flue-Cured Tobacco Production Trends Compared to Projected 23 Production 35, 3, 25, 2, 15, 1, 5, Flue Cured Tobacco Production Trends Large Scale (MT) Large Scale Ha Source: Zimbabwe Tobacco Association Small Scale (MT) Small Scale Ha Agricultural Input Support Schemes With the start of the rainfall season underway, only about 2 percent of the estimated Z$16 billion required to finance agricultural activities in the production year has been secured. The secured funding includes Z$8.5 billion from government and Z$24 billion from Delta, FSI Holding, Ivines Day Old Chicks, Ingweu Breweries, Seed Co, and Cotton Company of Zimbabwe. If the pending Z$ 6 billion agriculture bond issue is successful, the agriculture funding gap will be reduced to 42 percent of total requirements. Given the nature of Reserve Bank of Zimbabwe bonds, for which the interest rates are higher for short-term bonds than longterm bonds, economic analysts are predicting that yield curve response to the issuance of the agriculture bond is expected to be lukewarm. Given that commercial banks have been slow in responding to the funding needs of the new farmers because they consider them too risky, the current agriculture funding gap is not likely to be closed before the start of the rainfall season. Delivery of inputs under the government input scheme started in mid-september 22, with some farmers already having received some maize seed. Progress on delivery of the inputs is being constrained by the following factors: a) GMB is unable to transport inputs to distribution points because transporters are asking for Z$4/km/MT while GMB is offering a maximum of Z$18/km/MT b) Production of fertilizer and hence its supply to the input scheme is being slowed by erratic supply of phosphate by the National Railways of Zimbabwe, resulting from much reduced NRZ cargo handling capacity c) Ammonium Nitrate (AN) fertilizer production rate has been reduced by 35 percent to 13,5 MT per month, due to foreign currency shortages being experienced by the only local AN fertilizer producing company, Sable Chemical Industries. The effectiveness of the input schemes could be seriously compromised if inputs are delivered late to farmers. 7

8 2. Food Security Prospects for the 22-3 Consumption Year 2.1. Current Food Availability at the National Level Maize and maize meal shortages have continued since February 22 as grain imports are entering the country at a slow pace, while the stocks available from last year s harvest have diminished. A total of 647, MT of maize have been imported into the country since April 1, 22. At the current rate of imports of 99,5 MT of maize per month, an additional 65, MT of maize could be imported before the end of the current marketing year in March 23. The imports would only meet 73 percent of the maize requirements. The gap of 27 percent is to be filled either through increased commercial imports by the Grain Marketing Board, the private sector, or through accelerated food aid imports by WFP (provided it receives adequate funding). The wheat harvest which has started coming into the market will not be adequate to cover requirements until April 23, due to increased demand of bread as consumers substitute wheat and bread for maize. An additional 2, MT of wheat imports are required in addition to the already committed 17, MT to meet the requirements after April 23 and before the harvest in October 23. The size of the deficit would be determined by the final 22 harvest currently underway (Table1). 8

9 Table 1: Cereal Balance Sheet for 22-3 (April 1, 22 to March 31, 23) Marketing Year as of October 21, 22 Maize (MT) Millets (MT) Wheat (MT) Rice (MT) All Grain (MT) A. Potential Domestic Availability 55,581 38,3 38,182 7, ,629 Formal Opening Stocks (April 22) 5,41-167,232 7, ,839 Gross Harvest Production (estimate) 498,54 37,3 212,95-748,79 Unmonitored Stocks : Farmers & other (estimate) 2, 1, - - 3, B. Annual Requirements 1,993, ,63 398,312 13,697 2,583,727 Gross Consumption Requirement 1,643, ,63 398,312 13,697 2,233,727 Livestock, other uses and losses 35, , C. Domestic Balance (DB) (A minus B) (1,488,74) (139,763) (18,13) (6,131) (1,652,98) D. Cross Substitution 139, , ,525 E. Cereal Exports to date (estimate) F. Cereal Commercial Imports to date (estimated) 449,357 17, ,51 G. Private Sector maize imports for livestock feed 3, 3, H. Cereal Food Aid Imports to date (estimated) 167,374-17, ,68 Total Imports to date (as at beginning of May 22) 646,731 35, ,119 I. Forecasted Closing Stocks Before Additional Imports (March 23) (71,58) - 17,258 (6,131) (69,453) J. Strategic Reserve Requirement (SGR) -to cover 3 months 45, 4, 445, K. Total Imports Required to Cover SGR and DB (1April 22 to March 23) (1,753,311) - (58,13) (6,131) (1,817,572) L. Planned Food Aid Imports outstanding 13,819 13,819 M. Planned Commercial Imports outstanding 536,316 32,36 5,6 574,222 N. Winter maize and early summer maize harvest (Estimate) 1, 1, Total Imports and winter maize outstanding 767,135-32,36 5,6 85,41 O. Forecasted Deficit (Closing Stocks) after Imports & SGR (March 23) (339,445) - 9,564 (531) (33,412) Assumptions Est. mid-year population 13,697,122 13,697,122 13,697,122 13,697,122 13,697,122 Est. Human Annual Consumption Requirement. (Kgs/Person) Total Supply (excluding livestock) 1,889,447 38,3 447,876 13,166 2,418,789 Total Demand (Human Consumption excluding Livestock) 2,48, ,63 438,312 13,697 3,28,727 Balance (excluding Livestock and considering 3 months SGR) -159,28-139,763 9, , Status of Imports and Genetically Modified Maize Total maize imports of 1.3 million MT are planned for the 22-3 season, of which about 52 percent (647, MT) has arrived into the country mid-way through the 22-3 marketing year. If the current average rate of imports is maintained, all the planned imports would be moved into the country before the end of March 23. The government will account for 69 percent (449, MT) of the total maize imports, while the rest will come from NGOs and WFP. After totaling all the committed imports, there is still a food gap of about 256, MT to meet the total 22-3 human consumption requirement of 1.6 million MT (Figure 7). 9

10 Figure 7: Maize Imports Progress from April 23 2,, 1,8, 1,6, 1,4, M aize (MT) 1,2, 1,, 8, 6, 4, 2, Feb/March April May June July August September Cummulative Commercial Imports Cummulative Food Aid Imports Planned Commercial Imports Outstanding Planned Food Aid Imports Outstanding Expected Winter & Early Summer Maize Import Gap Outstanding for 22/3 Source: GMB and WFP The government has signed an agreement with WFP for a swap arrangement for 17,5 MT of genetically modified (GM) maize under which the government will handle the milling and distribution of the maize meal while WFP would receive an equal consignment of non-gm maize from the government for its food aid program Population Movements A recent report by the National NGO Food Security Monitoring Network (FOSNET) indicates high levels of population movement in search for work, land, and food in and out of districts in Matebeleland and Mashonaland Central Provinces in August and September. Job hunting and job losses were reported as the major causes of inward migration. Also, separate from the general population movement, is the prevalence of displaced people. From the report, districts in Matebeleland South and Mashonaland Central had the highest reports of people who are internally displaced (Figure 8). 1

11 Figure 8. Indications of Displaced Populations by District in August/September 22 Source: FOSENET 2.4 Food Security Prospects at the Subnational Level Food Security in Rural Areas At the national level, imports are meeting at least 73 percent of the food requirements and at least 2 percent of the 6.7 million people identified in the August assessment are getting food aid from WFP and NGOs. However, at the subnational level, the food distribution is not even, with some households and districts not getting enough of the food. FOSNET has reported deaths due to food shortages in some districts. Some households are reported to be surviving on wild fruits and vegetables as food availability becomes a problem. Prices of grain in retail markets have continued to increase and range from Z$11 to Z$19 per kg at GMB depots and from Z$27 to Z$12 per kg in parallel markets for August and September. The highest grain prices are reported in Matebeleland South and Masvingo Provinces, while the lowest prices were reported in Mashonaland Central, which also reported the highest number of people (13 percent of the population) holding stocks that will last more than a month (Table 2). The prices of grain illustrate the serious magnitude of the food security problems in these provinces. 11

12 Table 2: Price Ranges of Maize in Rural Markets Province Percent of households with food for more than one month Informal markets Z$/kg GMB Z$/kg Manicaland 3 65 to 9 11 to 13.5 Mashonaland East 4 35 to 9 11 to 13.6 Mashonaland Central to 5 11 Mashonaland West No Data 7 n.a Masvingo 1 5 to 1 11 to 16 Midlands 5 to to 11.9 Matabeleland North 24 to to 16 Matabeleland South 5 to to 19 Source: FOSENET Current Food Access in Urban Areas The cost of living for poor urban households continued to deteriorate, despite the government s imposition of price controls on most basic commodities (to protect the poor from price hikes that become rampant toward the end of 21). The majority of poor urban households are unable to obtain basic commodities at controlled prices primarily because the commodities are rarely found in the formal market (at those prices) but on the parallel market (at higher prices). There are higher prices in the parallel market since high demand for the few available goods has helped prices increase to more than twice the levels of controlled prices. This increase in the price of basic commodities is driving up the cost of the expenditure baskets of poor urban households. The period between January and May 22 saw the expenditure basket of the very poor households increase by between 25 and 51 percent. Even higher increases were observed in the values of the expenditure baskets for the poor households from May to September 22. In this period the middle poor experienced the highest increase (113 percent) in the value of their expenditure basket (Figure 9). The major source of the increase in the expenditure basket was higher food and clothing prices. Replacing price controls by policies and programs that improve availability of basic commodities in the formal market will go a long way toward reducing the economic hardships of poor urban households, and improving their food access. 12

13 Figure 9: Trends in Harare Urban Poor Households Expenditure Baskets 35 maize other food 66% 3 daily non-food education&health Basket Value Z$ accomodation clothes 51% transport other 98% 25% 113% 44% 5 Jan-2 May-2 Sep-2 Jan-2 May-2 Sep-2 Jan-2 May-2 Sep-2 VERY POOR HOUSEHOLDS POOR HOUSEHOLDS SLIGHTLY BETTER - OFF HOUSEHOLDS Vulnerable Populations The August Zimbabwe Emergency Food Security Assessment identified a number of districts as requiring food aid. WFP which provides most of the food aid in the country indicates that most of the population identified as food insecure have not yet been targeted for food aid; hence, WFP needs to register more partners and increase the coverage of its food aid programs, and NGOs should expand to the affected districts to avoid a deterioration in the food security situation. Where food aid is being distributed, only Chiredzi, Chimanimani, Mberengwa, Insiza, Kariba, and Umzingwane Districts have met the needs of more than 75 percent of the population identified as food insecure (Figure 1). 13

14 otswana t swana Figure 1. Food Aid Distribution by WFP and Number of People in Need of Food Aid Districts Targeted for Food Aid by WFP, Maximum Number of Total Population* February 2 to October 5, 22 in Need of Food Aid - Sept/2 thru Mar/3 Number of Population in Need Sept/2 - Mar/3 Source: WFP < 5, 5, - 1, 1, - 15, > 15, Km Source: ZIM VAC August 22 Assessment Report 3. Macroeconomic Environment The Zimbabwe economy continues to be under pressure from the inflation rate, which stands at a high, since 1999, of 139 percent in September 22. Coupled with the high inflation rate is a high parallel exchange rate, which stood at around Z$95 per USD in October, much higher than the official rate still pegged at Z$55 per USD. The high inflation rate combined with the low interest rate on cash deposits of 16 to 7 percent per annum has also seriously hurt savings. The level of savings fell to 5 percent of GDP from 15 percent 2 years ago (Figure 11). These factors have also negatively affected poor consumers and have encouraged spending and investment in assets rather than the money market. 14

15 Figure 11: Zimbabwe Inflation Rate and Exchange Rates Since 1999 Inflation Rate (%) Food Non Food All Items Exchange Rate Z$/US$ Parallel Rate Z$/US$ Jan-99 Mar-99 May-99 Jul-99 Sep-99 Nov-99 Jan- Mar- May- Jul- Sep- Nov- Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Exchange Rate Z$/US$ Jul-2 Sep Source: CSO and USAID. 4. Food Security Recommendations to Consider Immediately FEWS NET recommends the following actions for immediate consideration: The government and NGOs need to step up efforts to provide food aid to about 6.7 million people whose food security are under threat in the areas identified in the August SADC/NVAC Emergency Food Security Assessment. Actions are immediately required to maintain the already precarious food security situation in many parts of the country. The maize marketing system needs to be reviewed to allow more private sector participation in the marketing and distribution of maize to increase supplies, lower prices, and make maize easily accessible to starving people. Wheat imports of 2, MT are required to alleviate shortages from April 23 to the next harvest in October 23. Funding for inputs and tillage has to be provided to support food production in the coming season. Options to consider funding production include issuance of agricultural bonds, government giving guarantees to individual banks, and establishing a guarantee. bank. 15