Deteriorating macroeconomic conditions to drive high levels of acute food insecurity in 2019

• Food security has seasonally improved with increased cereal availability following the November to February harvest. However, the macroeconomic situation remains very poor and is expected to further deteriorate throughout the projection period, and this will drive continued extremely high food and non-food prices. The negative impacts of high food prices will be somewhat mitigated by the fact that livestock prices and wage labor are also increasing, though overall purchasing power will remain below average. A higher number of households than is typical will face Crisis (IPC Phase 3) or worse outcomes through September.

• Between June and September, the lean season in Sudan, Crisis (IPC Phase 3) outcomes are expected in parts of Red Sea, Kassala, Al Gadarif, Blue Nile, West Kordofan, North Kordofan, South Kordofan, and Greater Darfur. Of highest concern are the IDPs in SPLM-N controlled areas of South Kordofan and SPLA-AW controlled areas of Jebel Marra, who have been inaccessible for both assessments and food assistance deliveries. IDPs in these areas are expected to be in Emergency (IPC Phase 4) during the August-September peak of the lean season.  

• The June to September 2019 rainy season is forecasted to be above average. This is anticipated to lead to flooding in mid-2019 and increase the prevalence of waterborne disease. Similar to 2018, it is anticipated that the above-average rainfall will lead to favorable crop yields, though ongoing macroeconomic issues likely continue to limit households’ capacity to cultivate and harvest at normal levels. Overall, 2019/20 production will likely be average, though more reliable harvest projections will be possible once planting is underway in June/July.

Current Situation

The 2018/19 main harvest in Sudan started in November 2018. Rainfall during the 2018 main rainy season was above average and supported favorable yields in planted areas; however, floods and water logging in Al Gadarif, Kassala, Blue Nile, and Sennar led to some crop losses, as did dry spells in South Kordofan and East Darfur. Additionally, macroeconomic difficulties including cash and fuel shortages, high prices of inputs, and high labor wages negatively impacted the area planted and the capacity of households to harvest at normal levels. The fuel and cash shortages led to a delayed harvest of main staples, sorghum and millet, in semi-mechanized areas and the overall scale of pre-harvest crop losses is expected to be above normal. Despite this, crops developed favorably in several key production areas and overall cereal production is expected to be near average.  

Cash crop production is estimated to be above average, primarily due to the fact that farmers prioritized the cultivation of cash crops given the high sale prices of these crops. Sesame production is estimated to be 26 percent above last year and groundnut production is expected to be around 75 percent higher than last year. However, sunflower production is estimated to be 63 percent lower than last year due to the high cost and low availability of hybrid seeds that led to a significant decrease in area planted.

The area targeted for wheat cultivation for the ongoing winter season is estimated at about 296,000 hectares, which is well above the area planted for last year and the five-year average. Despite efforts by the government to maximize local wheat production to reduce dependency on imported wheat, the persistent fuel and cash shortages and high cost of inputs is negatively affecting the cultivation process, which began at the end of December.

The ongoing hard currency shortage in Sudan started with the cessation of oil-rich South Sudan in July 2011. In an effort to combat this shortage and inflation, Sudan has devalued its currency three times since the end of 2017, removed subsidies for wheat and wheat flour imports, and is controlling the withdrawal of currency from banks. The government continues to set a daily exchange rate to reduce the gap between the official and parallel rates; however, the hard currency shortage persists despite these corrective policies and fiscal interventions. According to the Central Bank of Sudan (CBS), the official exchange rate in February 2019 was set at 47.5 SDG/USD, while the parallel market exchange rate continued to increase and was around 72 SDG/USD in February, a depreciation from 60 SDG/USD in January.

The continued shortage of hard currency and the rapid depreciation of the SDG have significantly reduced the ability of both the private sector and the government to import essential food and non-food items. By February 2019, wheat flour and fuel shortages significantly increased across the country, based on key informants’ information. The prices of food and non-food items have increased over 60 percent since October 2018. The cost of transportation has almost doubled, and the cost of agricultural labor is around two or three times the cost of last year, as workers are demanding higher wages to keep up with increasing costs. The deteriorating macroeconomic conditions and high food prices have also fueled protests since December 2018 in Khartoum and other states. The protests bring additional economic challenges as the Government is now devoting additional resources to security.

The Sudan Central Bureau of Statistics (SCBS) has reported a substantial decrease in the national inflation rate to 43.4 percent in January 2019, down from 72.9 percent in December 2018. However, this decline is attributed to decreased food and beverage prices and is therefore considered highly debatable.

The retail prices of sorghum and millet increased between January and February across most markets nationwide and remain almost double prices from the same time last year and 260-280 percent above average (Figures 1 and 2). However, in a few markets in western and eastern Sudan with relatively lower demand and increased supplies from the new harvest, prices declined somewhat. Persistent, high sorghum and millet prices are driven by the currency depreciation, high production and transport costs, and relatively high demand. Low supply is also likely a driver, as it has been reported that some large-scale traders are keeping stocks because this is seen as a more reliable form of savings than keeping SDG.

The retail price for locally-produced wheat increased seasonally or remained stable across markets in Sudan, around 150 percent above 2017 prices and 210 percent above five-year averages. The retail price of wheat further increased in January due to seasonally low supply and high prices of imported wheat and wheat flour.

Livestock prices either slightly increased by 10-20 percent or remained stable across most markets between December and January. The stability or slight increases were due to relatively improved livestock body conditions given favorable vegetation (Figure 3) and water availability. Overall, livestock prices are also driven up by ongoing currency depreciation. Livestock prices are currently around 115 percent above the same time last year and 235 percent above the five-year average. Due to the fact that food prices are increasing somewhat faster than livestock prices, household purchasing power is lower than last year and the five-year average (Figure 4). The goat-to-sorghum terms of trade (ToT) are between 25 and 55 percent lower than of same period last year and 20-35 percent below the five-year average.

Agricultural labor wages have significantly increased due to the increased demand for labor and the extended cereal harvesting period, as well as the fuel shortage which has reduced the capacity for mechanized harvesting. Furthermore, laborers are asking for higher wages due to the increased cost of living. Labor wages in February 2019 are 20 to 30 percent higher than the beginning of the harvest in November and are over 50 percent above last year and the recent five-year average. However, given that cereal prices have increased more significantly than wages, the labor wage-to-sorghum ToT across key markets is 20 to 30 percent lower than the five-year average.

The security situation has remained stable in the main conflict-affected areas of South Kordofan, Darfur, and Blue Nile states since the 2017 ceasefire. In February 2019, the government announced the extension of the unilateral ceasefire in South Kordofan and no major incidents of direct fighting between conflicting parties have been reported in South Kordofan since early 2018. Subsequently, no new large-scale displacements have occurred since 2018 and there has been a reported increase in the number of IDPs returning to their places of origin. According to UN OCHA, the relative improvement in security has encouraged thousands of IDPs in Darfur to return to their areas of origin. The findings of an interagency mission carried out in December 2018 indicated that about 10,000 internally displaced persons (about 2,050 families) who fled their homes between 2004 and 2005 have returned to their villages of origin in Kass locality, South Darfur. In addition, the findings of the CFSAM also attributed the substantial increase in area cultivated in Darfur this year to the thousands of IDPs who returned back to their villages to plant previously abandoned fields, including those located in previously restricted areas. It is estimated that the number of IDPs in Sudan has reduced from 2.3 million in 2017 to 1.8 million as of December 2018, most of whom are long-term IDPs in Darfur.

The influx of South Sudanese refugees continues as a result of the ongoing conflict and acute food insecurity in South Sudan.  According to UNHCR, about 1,700 South Sudanese refugees arrived in Sudan in December 2018. The total number of South Sudanese refugees who have arrived in Sudan since the late-2013 start of conflict in South Sudan is estimated to be more than 852,000 individuals, 33,117 of whom arrived in 2018. Additionally, ongoing conflict in Ethiopia has led to new refugees to cross the border into Gedarif and Kasala states.  An estimated 1,500 people have arrived between the second week of January and first week of February.

In December 2018, WFP provided food assistances to about 3.5 million beneficiaries in Sudan, through various modalities including general food distribution (GFD). Among those receiving GFD, it is estimated the average ration is around 50 percent. Beneficiaries reached were primarily long term IDPs in Darfur, South Kordofan, and Blue Nile, as well as South Sudanese refugees and residents in drought and conflict-affected areas in Kassala and Red Sea, Al Gadarif, North Darfur, and North Kordofan. It is anticipated that this assistance will improve food security outcomes among beneficiaries.

The overall national level of global acute malnutrition (GAM) by weight-for-height z-score is likely ‘Serious’ (GAM(WHZ) 10.0-14.9%) but there is likely wide variation in the severity of wasting by administrative areas. At the state level, ‘Critical’ (GAM(WHZ) ≥15%) is likely in areas where recent past surveys identified this level, including North Darfur, Northern, Red Sea, South Darfur, River Nile States, while ‘Alert’ (GAM(WHZ) 5.0-9.9%) to ‘Serious’ (GAM(WHZ) 10.0-14.9%) levels are likely in the remaining states. Critical level of acute malnutrition remains possible, though, in some localities of states with Serious levels of wasting, such as Central and East Darfur, Rive Niler and Khartoum. 

Overall, food security has improved in February compared to the 2018 lean season due to the increased availability of food from the harvest. However, poor macroeconomic conditions are driving worse food security outcomes than are typically observed during the harvest period. Many areas are Stressed (IPC Phase 2), including most parts of western and central Darfur, West and South Kordofan, Kassala, and Blue Nile states, where poor households are typically highly dependent on markets to access food, and this year have below-average purchasing power. Crisis (IPC Phase 3) outcomes exist in conflict-affected areas and areas previously affected by drought, including much of North Darfur and Jebel Marra, parts of North Kordofan and South Kordofan, southern Blue Nile, northern Kassala, and Red Sea states. It is expected that ongoing humanitarian food assistance is preventing worse outcomes among many IDPs in Government-controlled areas of Darfur, South Kordofan, and Blue Nile, among South Sudanese refugees, and among some poor households impacted by past poor seasonal performance in western and eastern Sudan.

Assumptions:

The February to September 2019 most likely scenario is based on the following national-level assumptions:

• Shortages of hard currency are expected to persist throughout the projection period. Based on FEWS NET’s integrated price projections, the SDG is expected to further depreciate relative to the USD on the parallel market and remain between 60 and 90 SDG/USD through September (Figure 5). This is due to the fact that no new major sources of USD revenue are likely in the short-term; although oil exports from South Sudan may increase somewhat – from which Sudan receives pipeline and refinery fees - this income is expected to have a negligible impact in the near term.
• The Government of Sudan is likely to continue setting a daily exchange rate for the SDG; however, because of the likelihood of the continued depreciation in the parallel market, it is expected that the gap between the official and parallel rates will widen during the course of this projection period.
• Based on FEWS NET’s integrated price projections, the retail prices of sorghum and millet are anticipated to decline 5-10 percent between February and March, after which they are expected to increase through the peak lean season in September. Overall, prices will likely be 60-100 percent above last year and over 250 percent above the five-year average. The price of locally-produced wheat is likely to be over 200 percent above last year and over 300 percent above the five-year average. The prices of imported foods are also expected to be higher than last year and the five-year average.
• Goat prices, which are currently around 250 percent above the five-year average, are expected to remain 70-80 percent above last year and 150-250 above the five-year average. Goat prices are expected to decline slightly at the August-September peak of the lean season when households sell additional livestock, increasing market supply.
• Goat-to-cereal TOT are expected to remain stable through March and decline from April to September due to the projected 10 to 20 percent increase in sorghum prices and relatively stability of goat prices. Relative to last year and the five-year average, goat-to-cereal TOT are expected to be 10-30 percent lower. 
• WFP plans to reach roughly 4.6 million people monthly with humanitarian food assistance equivalent to 50 percent of kilocalorie needs, from February to September 2019. The majority of beneficiaries are IDPs in accessible areas. Based on past funding trends, it is anticipated the majority of planned assistance will be delivered.  
• Agricultural labor wages are expected to remain 100–150 percent above average. Labor-to-sorghum ToT are expected to remain slightly below average due to the more significant increase in sorghum prices.
• The ongoing social unrest in Sudan since mid-December is likely to continue, and these protests will probably result in additional political and economic challenges, as the government will spend resources to control security, reducing resources available for importing essential items.
• Conflict is South Kordofan and Blue Nile is expected to remain relatively low compared to 2016 and 2017 and at levels similar to those observed in 2018. As a result, relatively low levels of new displacement are anticipated. However, conflict between the Sudan Liberation Movement – Abdel Wahid (SLM-AW) is expected to persist, leading to localized displacement and disruption of livelihoods in Jebel Marra of Darfur. Overall, the number of displaced people in Sudan is expected to remain around 1.8 million.
• New arrivals of refugees from South Sudan are expected throughout the outlook period, though at levels similar to 2018, which were significantly lower than 2016 and 2017. Overall, the number of South Sudanese refugees in Sudan is anticipated to be between 800,000 and 900,000 during projection period.
• Based on field observations that indicated the ongoing winter wheat planting season has been negatively impacted by fuel and cash shortages, the high cost of labor, and a shortage of agricultural inputs, production is expected to be only

average despite efforts made by the government to increase planting and production.

• Based on the above-average rainfall forecast for the June to September season, flooding is likely in many areas of Sudan, which will lead to water logging and increase the prevalence of waterborne disease. Some crop losses are also likely.
• The 2019/20 harvest is expected to be similar to this year: above average rainfall will lead to favorable yields though macroeconomic issues will continue to restrict households from fully cultivating and harvesting. Overall production is anticipated to be average; production prospects will be clearer in mid-2019, though. 

Most Likely Food Security Outcomes:

February to May 2019 covers the post-harvest period and beginning of the lean season. Overall food security outcomes are expected to remain similar to current outcomes. Most poor households will continue to have access to food from their own harvests and wages from agricultural labor and the sale of goats will support food access from markets. However, food insecurityis expected to be more severe than is typical for this time period, driven by continued poor macroeconomic conditions that are leading to lower than normal food access. Given that prices of non-food items are also expected to remain extremely high, poor households will likely face increased difficulty purchasing many non-food needs. As a result, many areas will remain Stressed (IPC Phase 2) between February and May, while much of North Darfur, pats of Jebel Marra and South Kordofan, southern Blue Nile, parts of North Kordofan and West Kordofan, northern Kassala, and much of northern Red Sea states will be in Crisis (IPC Phase 3).

June to September is the typical lean season in Sudan, when access to food and income is at its lowest level: households’ food stock from own production are exhausted, agricultural labor opportunities are relatively low, and cereal prices are at their highest levels. Food security typically deteriorates during this time. In 2019, outcomes are expected to be more severe than usual given that households will face extremely high food prices. More areas within North Darfur, North Kordofan, southern Blue Nile, northern Kassala, Red Sea, and northern South Darfur are expected to face Crisis (IPC Phase 3) outcomes. Emergency (IPC Phase 4) is likely among IDPs in SPLM-N controlled areas of South Kordofan and IDPs and conflict-affected households in Jebel Mara in Darfur during the August-September peak of the leans season. ‘Critical’ levels of acute malnutrition (GAM(WHZ)≥15%) is likely to persist in North Darfur, Northern, Red Sea, South Darfur, River Nile States, as well as in SPLM-N controlled areas of South Kordofan and Jebel Mara of Darfur. 

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