Food prices remain stable, but food insecure areas face delayed humanitarian assistance

• Most rural households are consuming food from their 2013/14 production and have an adequate amount of income for food purchases for the remainder of the consumption year.

• Localized food and cash crop production shortfalls due to dryness during the 2013/14 main season has limited food and income access for very poor and poor households in parts of southern and northern Malawi.

• Poor households in three livelihood zones spanning the northern and southern region are in Crisis (IPC Phase 3) and Stressed (IPC Phase 2) from October-December. Humanitarian assistance to food insecure households is planned for areas in the north from January-March, while assistance for areas in the south is planned for December-March. Acute food insecurity outcomes in these areas of concern will be Minimal (IPC Phase 1!) from January to March.

Current Situation

• As the lean period begins many households throughout the country, including those in the traditionally deficit southern region, are still consuming food from last season’s production.
• Typically most households in the southern region deplete their own produced food by October, before beginning to depend on market purchases for consumption. Traders in the south normally source food from surplus producing districts in the central and northern regions.
• Despite most of the country experiencing Minimal (IPC Phase 1) acute food insecurity outcomes, poor households in Central Karonga livelihood zone (north), Middle Shire (south), and Lake Chilwa-Phalombe Plain livelihood zones (south) are reporting constrained food access due to 2013/14 agriculture production shortfalls in food and cash crops.
• Between August and September, average national maize prices decreased by around 5 percent. Key drivers for the decrease is primarily the increased availability of both household and market stocks due to favorable 2013/14 harvests for most households, the delay in institutional purchases by government because of funding, along with annual budget delays.
• Following lower staple food demand and decreasing maize prices in local markets, informal cross border trade maize imports in September decreased by about 50 percent since August. One factor contributing to these lower imports are that maize grain prices in local markets that are about 7 percent lower than prices of imported maize from Mozambique.
• Recorded nformal exports between August and September continued to decline by 70 percent, as compared to a 35 percent decrease that is normally experienced around this time of the year.  This large decrease is atypical for this time of the year. However, Karonga and Chitipa districts (in the north) recorded larger than normal quantities of Malawian maize exports into Tanzania. Analysis of September prices shows that on average, maize in Karonga and Chitipa markets is selling at higher prices (approximately 18 percent higher) than the exported maize, thereby acting as a disincentive for traders to export at their usual levels.
• With the passing of the main 2014/15 national budget, Government has allocated funds for the institutional purchase of approximately 35 percent of the 115,000 MT of maize grain that is required for the strategic grain reserve. Despite the funding allocation and announcement of bids, the institutional buyers, namely ADMARC and the National Food Reserve Agency, have not yet had any impact on maize demand in local markets.
• Due to the general suspension of donor aid, to date donors have not yet committed to supplementing maize purchases  for ADMARC or the NFRA, as they typically do.
• The annual food security assessment by the Malawi Vulnerability Assessment Committee (MVAC) was conducted in July. Official results released in September identified that 640,000 people will be food insecure during the lean period because they were impacted by last season’s production shortfalls. The report recommends that humanitarian assistance in terms of food and cash will start in December in some areas and continue through the end of the consumption year in March.
• Currently, only 55 percent of the funding for the planned humanitarian assistance program has been received and a 45 percent resource gap remains.

Assumptions

The Food Security Outlook for October 2014 to March 2015 is based on the following national-level assumptions:

Agroclimatology

• Malawi is expected to experience a weak El Niño during the 2014/15 production season. Despite the forecast for a weak El Niño, production shortfalls for the current season are expected because of what has historically happened when moving from a neutral to ENSO positive period. Analogue years of this event include 1991/92, 2002/3 and 2004/05. In all these years, the country experienced a drought which led to low production. The three consumption seasons corresponding to these seasons represent some of the worst years in terms of food insecurity for Malawi. For instance, in these analogue years the country recorded staple production shortfalls of 54, 22, and 39 percent below-average, respectively.
• The national forecast is predicting normal to below-normal rainfall in the northern region in the October to December period and normal to below-normal rainfall in southern region during the January to March period. These rainfall levels may reduce agricultural labor and income opportunities, affecting household food access during the Outlook period.

National food stocks

• Currently, most households in Malawi have adequate food stocks for consumption due to a good production season. Households in areas that suffered localized dry-spells and early cessation of rains reported running out of food by August. Nationally, Malawi has about 20,000 MT of maize in the Strategic Grain Reserve but needs about 115,000 MT in total for humanitarian assistance, subsidized commercial sales, and for the strategic reserve. Government had pledged funds that will purchase an additional 40,000 MT but the institutional buyers are coming on to the market much later than normal. According to the MVAC, the country will need about 16,000 MT maize equivalent for humanitarian assistance.

Irrigated crop production

• Most districts across the country have reported drier than normal conditions since March, with the exception of the northern region and highlands. According to an April report by the Department of Climate Change and Meteorological Services, most of the country experienced average rainfall amounts during the previous season, however there were a few pockets of below-average rainfall in Balaka and Neno districts in the southern region. These dry conditions coupled with a reported scale down in the availability of inputs for irrigated farming is expected to result in significant winter production shortfalls between September and December. For most households irrigated crops can provide an additional 10 to 20 percent to their annual food sources, offering some respite in the October to December period.

Markets and trade

• Maize prices across most of the country are likely going to be slightly lower this year in comparison to last year due to the availability of inputs. FEWS NET estimates that average national maize prices are likely going to increase by about 20 percent between October and March. However, prices in CKA and MSH are likely to increase given seasonal price patterns, continued unstable macroeconomic conditions in the country, and low food supply at household level, which will increase demand on the market. Prices in these areas of concern will increase between 20 and 70 percent, respectively, from October 2014 to March 2015.
• Informal cross border trade maize imports mainly from neighboring Mozambique and Zambia are expected to be significantly lower at only about 20 percent of the five-year average between October and March. This is as a result of a slump in maize trade within Malawi due to higher than normal supplies which has led to lower prices in the traditionally deficit south. Informal maize exports into Tanzania are expected to continue, but the continuation of the maize export ban put in place by the Government and higher maize prices in the exporting northern districts of Karonga and Chitipa are expected to curb any significant outward flows of maize. It is estimated that maize exports into Tanzania will only be about 10 percent of the five-year average.
• The Malawi Kwacha which had appreciated to a high of about MWK 380/1 USD during the tobacco marketing season has started depreciating and is currently at a low of about MWK 425/1 USD, as predicted by financial experts earlier in the year. This exchange rate is the same level as it was during the October-December 2013 period, which also saw very high maize prices nationwide. Lack of more foreign exchange earning options in the face of the current suspension of donor aid may cause further depreciation in the local currency, which could trigger high food prices during the Outlook period.

Labor

• Labor opportunities will be limited in areas currently facing localized food insecurity.  However, between October and December households in the north may face reduced labor opportunities due to forecasts of below-normal rainfall according to the Malawi Department of Climate Change and Meteorological Services, while areas in central and southern regions may experience reduced agricultural labor opportunities between January and March due to the below normal rainfall expected as a result of the El Niño.

Social safety-net programs

• From October to December, the Malawi Government will distribute subsidized inputs through the Farm Input Subsidy Program (FISP), targeting about 1.5 million poor farmers.
• The Malawi Farm Input Loan Program (FILP) will not be available this year. Since middle and better-off households tend to use the FILP, this could further reduce labor opportunities for poor households.

Most Likely Food Security Outcomes

During the Outlook period (October 2014-March 2015) the majority of poor rural households across the country are projected to face Minimal acute food insecurity outcomes (IPC Phase 1) due to above-average 2013/14 production. The exceptions are very poor and poor households in CKA, MSH, and PHA that experienced production shortfalls. A reduction in production of both food and cash crops among middle and better-off households that offer labor will limit the availability of surplus food and cash that is used to pay for labor wages and this will in turn further limit food and income generating opportunities for poor households. Poor households in CKA will face Stressed (IPC Phase 2) outcomes from October to December and once they start to receive humanitarian assistance their outcomes will improve to Minimal (IPC Phase 1!) outcomes in the presence of assistance between January and March. Very poor and poor households in MSH and PHA will be in Crisis (IPC Phase 3) from October to December and these outcomes are projected to improve to Minimal (IPC Phase 1!) acute food insecurity in the presence of humanitarian assistance from January to March 2015.

FOR MORE INFORMATION ON THE ANALYSES FOR THE AREAS OF CONCERN PLEASE DOWNLOAD THE FULL REPORT