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Food imports continue, but potential for port disruptions in Al Hudaydah remain a concern

  • Food Security Outlook Update
  • Yemen
  • April 2017
Food imports continue, but potential for port disruptions in Al Hudaydah remain a concern

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  • Key Messages
  • Current Situation
  • Key Assumptions
  • Projected Outlook through September 2017
  • Key Messages
    • Conflict in Yemen continues to be the primary driver of the largest food security emergency in the world. Currently, large populations face Crisis (IPC Phase 3) or Emergency (IPC Phase 4) acute food insecurity, the latter of which is associated with an increased risk of excess mortality. IDP populations and poor households in conflict zones are likely facing the most severe food security outcomes. 

    • As of January 2017, in-country stocks of wheat flour stood at approximately 1.1 million MT, enough to meet national consumption requirements for approximately four months. Following sharp declines in January and February, wheat and wheat flour imports through Al Hudaydah and Salif ports increased in March 2017. Overall, imports of wheat/wheat flour through these two ports between January and March 2017 were in line with levels seen between October and December 2016. 

    • Recent statements related to the potential for an offensive military operation near the ports of Al Hudaydah and Salif raise concerns that imports through these major ports could be halted in the near term. In a worst-case scenario, significant declines in commercial imports below requirement levels and conflict that cuts populations off from trade and humanitarian assistance for an extended period of time could drive food security outcomes in line with Famine (IPC Phase 5). 


    Current Situation

    Conflict and population displacement

    Widespread conflict events, including both airstrikes and armed clashes, continue throughout Yemen, particularly in western areas. Ongoing conflict continues to disrupt trade, displace households, and limit humanitarian access. Particularly concerning are media reports that an offensive operation could seek to retake Al Hudaydah in the near term, which could significantly disrupt commercial flows of imported food and fuel through the ports of Al Hudaydah and Salif. Together, these ports typically represent approximately 70 percent of monthly food imports and 40-50 percent of monthly fuel imports.

    Airstrikes throughout January 2017 damaged roads and bridges around the port of Al Hudaydah, infrastructure which is vital for the movement of humanitarian and commercial supplies in the country. Overland transport of humanitarian and commercial goods is limited not only by blocked roads and damaged infrastructure but also by checkpoints and bureaucratic impediments. In March, media reports suggested passage of delivery convoys through some areas, such as Dhamar governorate, was being delayed by parties requiring the payment of taxes in order to enter the governorate. Disruptions such as these can contribute to limit the effectiveness of humanitarian assistance delivery.

    The Task Force on Population Movement’s (TFPM) 13th report from March 2017 identified 1,991,340 IDPs and 1,048,896 IDP returnees in Yemen as of 1 February, 2017. Since then, recent displacements have also occurred in Taizz and Al Hudaydah, which, as of March 10th, affected 62,000 people across central and western Yemen including 48,400 people in Taizz. Humanitarian partners are concerned that 200,000 to half a million people could be displaced if the fighting spreads from Taizz to Al Hudaydah where many districts already host considerable numbers of IDPs who could suffer secondary displacement to neighboring governorates (HCT Contingency Plan).

    Markets

    Macroeconomy. The Central Bank of Yemen is still not paying most government salaries or providing lines of credit and favorable exchange rates for private food and fuel importers. Though the official exchange rate remains stable at 250 YER/USD, the parallel exchanged rate ranged between 330 YER/USD and 355 YER/USD in March 2017 according to WFP, compared to a rate of 340 YER/USD in February 2017, and 253 YER/USD in early 2016. Media reports suggest parallel exchange rates could be reaching as low as 370 YER/USD. According to a recent report by the International Crisis Group, the Central Bank in Aden has not been receiving oil and gas revenues from Houthi/Saleh or Hadi government-controlled territories (including Marib governorate, which is the main producer of oil and gas for Yemeni consumption, and the Masila basin in Hadramout). This would further contribute to shrinking state budget revenue and the acute liquidity crisis, particularly since oil and gas exports used to be a main source of hard currency in Yemen.

    Food Imports. While the financial crisis persists within the Central Bank of Yemen and there are associated difficulties accessing currency and lines of credit through private sources, food imports appear to be continuing. As of January 2017, the Food Security and Agriculture Cluster estimated in-country stocks of wheat stood at approximately 1.1 million MT, enough to meet national consumption requirements for approximately four months. Following sharp declines in January and February, wheat and wheat flour imports through Al Hudaydah and Salif ports increased in March 2017. Overall, imports of wheat/wheat flour through these two ports between January and March 2017 were close to levels seen between October and December 2016, based on data from UNVIM. Although no official data is available on overland imports of food commodities from Oman and Saudi Arabia, overland imports do continue in limited quantity and frequency, according to WFP. On a market-by-market basis, availability of food commodities on the markets generally remained unchanged in March 2017 compared to February 2017. WFP indicates that approximately 40 percent of monitored markets reported that wheat flour was “available”, while the rest reported that wheat flour was “sparsely available.”

    Fuel imports. Imports of fuel commodities in February only covered 28% of the estimated monthly requirements according to the Logistics Cluster, despite a 39% increase from January 2017. Fuel import data from the Logistics Cluster shows a 67% increase in imports in March 2017 compared to February 2017. According to WFP, all monitored markets reported that fuel commodities were sparsely available, similar to February 2017.

    Staple food prices. Wheat flour prices at most markets were either stable or decreased slightly (national average: -1.05 percent) in March compared to the previous month, although they remain 33 percent above February 2015 levels. Prices of fuel commodities showed a minor reduction in March 2017 (with some exceptions) but remained much higher than pre-crisis levels. Governorates with ongoing conflicts experienced the highest prices.

    Seasonal progress

    Cumulative seasonal rainfall since early March over many areas of western Yemen has been near average but somewhat poorly distributed over time, according to satellite-derived rainfall estimates (RFE 2.0). In addition, persistent conflict and associated impacts on fuel prices and availability, as well as access to agricultural inputs, may be constraining ongoing agricultural activities. According to the Normalized Difference Vegetation Index (NDVI), vegetation levels are below average in most areas of western Yemen, suggesting cropping conditions may be poorer than normal.

    Humanitarian Assistance

    According to data provided by WFP, March 2017 programming assistance targeted about 3.6 million beneficiaries in 18 Yemeni governorates, with ration sizes providing roughly one-third of beneficiaries’ monthly kcal requirements during this time. In April 2017, WFP announced the launch of a emergency operation to provide monthly food assistance through general food distributions and commodity vouchers to 6.8 million people, prioritizing areas where food security outcomes are most severe. In addition, the ration sizes would be increased such that beneficiaries in highest priority districts would receive a full ration. Districts identified to be among the highest priorities were located in Taizz, Al Hodeida, Lahj, Abyan, and Saada governorates.

    Food Security and Nutrition Indicator Data

    In November 2016, a joint Emergency Food Security and Nutrition Assessment (EFSNA) collected a variety of statistically representative food security and nutrition outcome indicators (ex. Food Consumption Score, Household Hunger Scale, Reduced Coping Strategies Index, livelihoods coping, Global Acute Malnutrition, and mortality) for 19 of the 22 governorates of Yemen. Although the various indicators may reflect different dimensions of food security, these data generally confirmed that a very high number of people in Yemen are facing Crisis (IPC Phase 3) or worse acute food insecurity, despite a substantial food assistance response. Nevertheless, large-scale humanitarian assistance is likely playing an important role in reducing higher levels of food insecurity.

    A SMART survey conducted in Shabwa in January 2017 found a prevalence of global acute malnutrition (GAM) based on weight-for-height Z-scores of 6.2 percent in Shabwa’s Plateau Zone and and 8.5 percent in Shabwa’s Lowland and Coastal Zone, respectively, with no significant difference between the two zones and these findings are in line with those reported in CFSS 2014. However, the January 2017 survey excludes four districts (Usaylan, Ain, Bayhan and Merkhah Al Ulyah) where conflict was ongoing and which might have a higher prevalence of acute malnutrition as a result. Using a recall period of 90 days, the crude death rate found in the Plateau Zone was 0.16/10,000/day (95% CI 0.07 – 0.34) and in the Lowland and Coastal Zone 0.24/10,000/day (95% CI 0.11 – 0.53).

    More recently, WFP’s mVAM data (Food Consumption Score and rCSI) from March 2017 indicates general relative stability in food security outcomes compared to February 2017 levels. However, median rCSA and the percentage of people facing “Poor” food consumption according to Food Consumption Score did suggest a deterioration of outcomes in Aden and Amran in March 2017. As in previous rounds, March data have found that IDP households report worse food security outcomes in comparison to the non-displaced. The overall use of negative food-related coping strategies increased slightly from February to March: approximately three quarters of respondents reported purchasing less expensive food and limiting portion sizes while 60 percent reduced the number of meals and restricted adult consumption, and more than half borrowed food. 


    Key Assumptions

    FEWS NET’s most likely scenario for the period of April to September 2017 is based on the following major assumptions:

    • Conflict
      • FEWS NET assumes that fighting and airstrikes will continue at current levels, which will maintain IDP population at high levels, similar to those currently being observed.
    • Economy
      • Central Bank: The Central Bank’s current split in management will continue. The Central Bank will also not receive any major funding from external donors and will not provide credit to the private sector for food importation during the scenario period.
      • Oil exports: Oil exports will not return to pre-conflict levels during the scenario period.
      • Foreign reserves: Given the assumptions of significantly reduced oil exports and no additional funding from external donors, foreign reserves within the country will continue to decline compared to current levels.
      • Exchange rate: Given the decline in foreign reserves, the Central Bank is not expected to be able to maintain the official exchange rate at its current levels. Consequently, a moderate depreciation of the Yemeni rial against the US dollar on both official and parallel markets is expected.
      • Liquidity constraints: Liquidity constraints at banks within Yemen will continue and will limit general economic activities and complicate import activities.
      • Imports: Cargo will continue arriving into Al Hodeydah, Salif, and Aden ports. While large traders will continue to find alternative methods of accessing foreign currency to continue operations, import levels will likely remain volatile and transaction costs associated with these imports will increase. Informal food flows across land borders will also continue at status quo levels but will be limited by civil insecurity in many border areas.
      • Government salaries and the Social Welfare Fund: Similar to the current situation, many government employees will continue not to receive salaries due to the Central Bank’s lack of adequate financial resources. Similarly, the Social Welfare Fund will not start up again during the scenario period. 
    • Internal trade flows: Active fighting, damaged transportation infrastructure, high fuel prices, and additional security and transaction costs (ex. bribes at checkpoints) will continue to limit food trade flows within the country. In the absence of additional information about the evolution of conflict, FEWS NET assumes that areas where trade flows will be particularly constrained will be the same areas where roads are currently closed, as shown by the Logistics Cluster’s most recent access constraint map.
    • Market demand: Demand from consumers will remain atypically low during the scenario period due to weak household purchasing power caused by below-average incomes.
    • Wheat flour prices: Despite the expected decline in wheat import levels and increasing transaction costs for traders/importers, FEWS NET anticipates only moderate price increases compared to current levels during the scenario period given the impacts of below-average incomes on household purchasing power and market demand. Price increases will be largest in conflict zones (ex. Ta’izz governorate) and at markets that rely on Al Hudaydah as a source market. Prices will remain above pre-conflict levels through the scenario period.
    • Agricultural production: Although the seasonality of agricultural production varies depending on the zone in Yemen, land preparation and planting activities of cereal crops will occur between February and June. Key harvest periods take place between July and September in the Central Highlands and Eastern Plateau zones. Meanwhile, in southern upland and coastal areas, harvests occur after the end of the outlook period in October/November. However, production will likely be below average due to a lack of availability and/or access to inputs and limited access to fields in conflict zones. Related agricultural labor opportunities will also be atypically low. Locusts may be present in coastal Red Sea areas and near Aden (FAO) but will cause minimal damage. Qat production, however, will continue to be generally average.
    • Remittances: Although remittance service offices will remain open in most urban areas, significant difficulties (ex. delays, closed offices, lack of liquidity) will limit households’ access to remittances from abroad, resulting in below-average incomes from this source.
    • Fishing: Based on seasonality information provided by the World Bank/FAO, fishing activities along Red Sea coastal areas will increase seasonally starting in March/April and continue through September but will remain well below average due to high fuel prices and civil insecurity. On the Gulf of Aden coast, peak fishing periods will include March/April for Yellowfin tuna and June to September for other varieties.
    • Livestock sales: Income from livestock sales will likely be below average in April and May as purchasing power will remain low and there are more livestock parasites and diseases. From June to September, income from livestock sales may increase compared to the current situation as the two major Muslim holidays occur during this time. Despite these relatively higher prices, reduced livestock assets caused by several years of food insecurity will limit household income from this source.
    • Incomes from other sources: The deteriorating macroeconomic situation and conflict will disrupt household livelihoods across much of the country, resulting in below-average household incomes. The largest declines in incomes will be amongst IDP populations and households residing in intense conflict zones, such as Ta’izz.
    • Humanitarian assistance: Given uncertainty with regard to assistance funding and humanitarian access after June, no humanitarian assistance is assumed between June and September 2017. 

    Projected Outlook through September 2017

    Under the most likely scenario, given that the current drivers of food insecurity will likely not be alleviated during the February to September 2017 period, FEWS NET expects the population facing Crisis (IPC Phase 3) outcomes or worse will continue to increase, though likely at a rate slower than was seen between 2014 and 2016. While cereal harvests between June and September 2017 will provide some rural households with small food stocks, these stocks are not expected to have any major impacts on food security outcomes given the small-scale nature of cereal production in Yemen and the fact that these harvests will be below average. Meanwhile, in Al Mahrah governorate where on-the-ground fighting and airstrikes have been less intense than in western areas and household livelihoods and food consumption have been less impacted by fighting, food security outcomes are likely to remain in line with Stressed (IPC Phase 2) acute food insecurity.

    In a worst-case scenario, significant declines in commercial imports below requirement levels and conflict that cuts populations off from trade and humanitarian assistance for an extended period of time could drive food security outcomes in line with Famine (IPC Phase 5). The rate with which the size of the population in Crisis (IPC Phase 3) or worse increases in 2017 would also intensify. If there is a significant decline in commercial staple food imports below requirement levels, due to the effects of the macroeconomic crisis on traders’ financial abilities to import or increased conflict around port facilities, and if the overland transportation of goods across front lines is also limited, a significant drop in imports at one key port could drive severe outcomes in nearby areas, even if imports continue into other ports within the country. This would drive major shortages on local markets and steep price increases, limiting household food access. This appears to be more likely at markets sourced by Al Hudaydah port, which is the entry point of about 70% of all food imports into Yemen. Given that imports by humanitarian actors currently make up only 5 – 15 percent of total formal food imports into Yemen, it is very unlikely that the humanitarian community would have the capacity to fill the very large import gaps which would exist in this scenario. On the other hand, if a major increase in conflict levels or change in conflict location cuts off populations from trade and humanitarian assistance for an extended period of time, limitations on population movements could drive a drastic decline in local food availability, severely limit economic activities, and also drive a rapid deterioration in food security outcomes. 

    This Food Security Outlook Update provides an analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography over the next six months. Learn more here.

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