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High food prices likely to lead to an increase in the number of food-insecure households

  • Remote Monitoring Report
  • Rwanda
  • June 2022
High food prices likely to lead to an increase in the number of food-insecure households

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  • Key Messages
  • PROJECTED OUTLOOK THROUGH JANUARY 2023
  • Key Messages
    • Despite shortfalls in bean and Irish potato production, the Season B harvest has increased food availability and income for most people in rural areas. In addition, the increased labor demand for Season C and Season A land preparation is likely to sustain Minimal (IPC Phase 1) outcomes in rural areas. However, the number of people in Stressed (IPC Phase 2) conditions is expected to remain atypically high during the primary lean season, from October to December.

    • The forecasted below-average Season A rainfall from September to December and the increased cost of agricultural inputs are likely to reduce crop yields for Season C 2022 and Season A 2023. Increased food sales and price increases for supplemental and non-food items likely lead to early depletion of stocks and limited access to food.

    • Minimal (IPC Phase 1) outcomes are likely to be sustained in Kigali City, driven by increased economic activities and income earning opportunities in 2022 compared to 2020 and 2021. However, high food prices will continue to constrain household purchasing power, especially among the urban poor facing Stressed (IPC Phase 2) conditions.

    • The estimated 127,194 refugees and asylees in Rwanda as of July 31, 2022, are likely to remain Stressed! (IPC Phase 2!), with monthly food assistance likely preventing worse food insecurity outcomes. Informal petty trade and labor are common sources of income for the refugees benefiting from the growing economic activities in early 2022. The rising prices of food are outpacing the purchasing power of the household’s income and cash-based humanitarian assistance. Refugees are expected to be disproportionally affected by the economic challenges of high food and fuel prices, which will likely constrain demand for informal goods and services.  

    ZONE

    CURRENT ANOMALIES

    PROJECTED ANOMALIES

    National

    • Staple food, fertilizer, gasoline, and cooking fuel prices are higher than normal, driven by a mix of domestic, regional, and global factors, including: reduced maize and beans production in Season A and below-normal production prospects for Season B; tight regional cereal supplies; global food and fuel supply shocks related to the Russia-Ukraine war; and political tensions between Rwanda and the DRC that have negatively affected cross-border trade. In addition, expectations that food imports from Uganda would resume following the re-opening of the Rwanda-Uganda border in March have yet to materialize, as Rwandan officials are reviewing policies to protect local food producers and harmonize cross-border trade regulations.
    • Food and non-food prices are expected to remain elevated throughout 2022; however, the Rwandan government is using fuel and fertilizer subsidies and commercial loans to mitigate increases in business operating costs and declines in household purchasing power. Fuel, fertilizer, and global food prices are expected to remain high due to the unresolved Ukraine crisis; domestic and regional crop supplies will likely remain tight; and the timeline for resolving Rwanda-Uganda cross-border trade issues is uncertain.
    • If tensions between Rwanda and the DRC escalate and further restrict cross-border movements, then there is a risk that trade and labor migration will sharply decline.

    Rural areas

    • The Rwandan government’s 2022 Season A Agriculture Survey showed a 7.9 and 8.9 percent decline in maize and beans production, respectively, compared to 2021. While increased production of roots and tubers and bananas partly offset these losses, subsistence farmers have realized a net decline in income and dietary diversity due to lower sales and consumption of beans and increased consumption of lower-quality maize.
    • The rural Consumer Price Index (CPI) for food and non-alcoholic beverages rose for the fifth consecutive month in May, rising by 4.5 percent compared to April and 23.7 percent compared to May of last year.  
    • Although the rural CPI for housing, water, electricity, gas, and other fuels declined by 3.1 percent from April to May, it has risen by 11.5 percent on an annual basis, demonstrating the rising cost of living.
    • Season B bean harvest prospects are below normal, particularly in parts of Eastern Province, due to poor rainfall distribution and lower access to fertilizer.
    • Season B production prospects for minor crops that require fertilizers, especially Irish potatoes, are below normal. Despite fertilizer subsidies and increased use of organic fertilizers, subsidized prices are higher compared to last year, and farmers have reduced spending on fertilizer due to high food and fuel prices.
    • NMME weather forecasts predict below-average Season A rainfall, increasing the chances of reduced crop yields in late 2022.
    • Eastern Province will be most affected by two to three consecutive seasons of reduced bean production. While Eastern Province is prone to structural crop production deficits, other provinces are structurally surplus producing. Lower household bean stocks and elevated bean prices will likely reduce dietary diversity.

    Kigali City

    • The urban unemployment rate fell to 17.8 percent in the first quarter (Q1) of 2022, though it remains slightly above pre-pandemic levels in Q1 2020.
    • The urban CPI for food and non-alcoholic beverages rose for the fifth consecutive month in May, rising by 5.0 percent compared to April and 24.2 percent on an annual basis. The annual inflation rate exceeds that recorded during COVID-19 pandemic restrictions.
    • The urban CPI for all other goods and services reflects annual price increases of 1.4 to 14.3 percent, demonstrating the rising cost of living.
    • According to the Rwanda Ministry of Finance and Economic Planning, economic growth projections have been revised downward to six percent in 2022 to account for the impacts of the Russia-Ukraine war and other factors on food and fuel and the impacts of China’s zero COVID-19 policy on global supply chains. This is expected to limit the pace of recovery in employment and wages, and household purchasing power is expected to decline amid high food and non-food prices.

    Refugee and asylee population

    • According to WFP’s April 2022 report, approximately 86 percent of the refugee and asylee population receives a monthly cash transfer intended to meet up to 27 days of their kilocalorie (kcal) needs. In addition, around 7 percent of the population receives a monthly cash transfer intended to cover up to 14 days of their kcal needs. However, WFP monitoring data found that the cash transfer values actually only covered up to 24 days of kcal needs for the first group and 12 days of kcal needs for the second group due to the rising cost of food. The amount of food a household could purchase has likely declined further in May due to rising prices.
    • Available information from WFP suggests humanitarian funding gaps will prevent an increase in food assistance levels. While around 90 percent of the refugee and asylee population is expected to receive a cash ration intended to cover 45-90 percent of their monthly food needs in 2022, the purchasing power of the ration will likely be lower due to food inflation.
    • It is possible that the asylum seeker population may slightly rise due to the UK-Rwanda agreement to relocate spontaneously arriving asylum seekers to Rwanda. However, legal challenges are expected to delay the implementation of the plan.

    PROJECTED OUTLOOK THROUGH JANUARY 2023

    In rural areas, seasonal harvests, income from migratory labor, and income from small ruminant and poultry production are expected to generally maintain Minimal (IPC Phase 1) outcomes between now and January. As of June, the gradual start of the Season B harvest is already replenishing household food stocks and boosting market supply. However, atypically high food prices and slight to moderate production shortfalls – mainly among fertilizer-intensive Irish potatoes and moisture-sensitive beans – are expected to lead to an increase in the number of households that are Stressed (IPC Phase 2), especially in Eastern Province, which is a structurally deficit crop producing area. Irregular rainfall distribution and higher fertilizer prices have led to reductions in area planted and crop yields, even though the government has partially subsidized fertilizer products by around 35 percent of the local market price.

    Reduced harvest prospects will increase the share of food that some subsistence farming households must purchase from the market, especially during the main lean season in October and November. Yet elevated food prices – as shown by the 23.7 percent rate of rural food inflation on an annual basis in May (Figure 1) – will likely limit their ability to fully cover their daily kcal requirements and essential non-food needs (such as purchasing agricultural inputs) without engaging in stressed coping strategies. While government subsidies are mitigating the severity of food inflation – key informants from Northern Province reported that the prices of sugar and cooking oil dropped by 50 percent and 22 percent, respectively, due to such intervention – staple food prices will likely remain elevated due to the anticipated persistence of the Ukraine crisis and regional trade issues. Household coping strategies will likely include selling more poultry and livestock than usual, spending down savings, and reducing the dietary diversity of meals.

    Kigali is also expected to see an atypical increase in the number of households that are Stressed (IPC Phase 2), despite overall expectations for Minimal (IPC Phase 1) outcomes. Although the economy grew by 7.9 percent in Q1 2022, driven by the service, industry, and agriculture sectors, the Government of Rwanda has revised its 2022 economic growth forecast down from 7.2 percent to 6 percent due to the impacts of the Russia-Ukraine war on food and fuel prices. Faltering economic prospects are expected to stall recovery in employment, resulting in below-normal income for un- and under-employed households, particularly if wages struggle to keep up with inflation. As a result, rising staple food prices – captured by the 24.2 percent increase in urban food inflation on an annual basis in May (Figure 1) – and high transport costs will likely continue to constrain purchasing power for some urban households, in turn limiting their access to sufficient food.

    Rwanda currently hosts around 127,340 protracted refugees and asylees, many of whom lack stable livelihoods and heavily depend on humanitarian food assistance. Most of this population is expected to remain Stressed! (IPC Phase 2!), with monthly food assistance likely preventing worse food insecurity outcomes. Although growing economic activity in Q1 2022 likely stimulated demand for the types of informal petty trade and labor that displaced populations typically engage in, many refugees and asylees still have insufficient income. Low income, high food prices, and the anticipated economic slowdown leave many at risk of food consumption gaps. As a result, highly vulnerable (86 percent of the population) and moderately vulnerable (7 percent of the population) households will rely on monthly food assistance in the form of a cash transfer to meet their food needs. They are also still likely to use stressed coping strategies to cope with high food and non-food prices if humanitarian funding is insufficient to calibrate cash transfer values in response to market food price fluctuations.

    The above scenarios assume current tensions between Rwanda and the DRC persist but do not escalate. If an escalation in tensions were to materialize, then the impacts on cross-border trade and population movement would likely be significant. Food and non-food prices would likely increase more sharply, while household income from petty trade and migratory labor in border areas would notably decline. Deterioration in food security outcomes in some areas would be possible.

    Figures Seasonal calendar for a typical year

Mid-December to mid-February is harvest A. 
February to March is land preparation.

    Figure 1

    SEASONAL CALENDAR FOR A TYPICAL YEAR

    Source: FEWS NET

    Chart showing Year-on-year percent change in the Consumer Price Index for food and non-alcoholic beverages in urban and rural

    Figure 2

    Figure 1

    Source: data from National Institute of Statistics Rwanda

    In remote monitoring, a coordinator typically works from a nearby regional office. Relying on partners for data, the coordinator uses scenario development to conduct analysis and produce monthly reports. As less data may be available, remote monitoring reports may have less detail than those from countries with FEWS NET offices. Learn more about our work here.

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