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Significant food price reductions contribute to stable food security conditions

  • Food Security Outlook Update
  • Southern Africa
  • July 2012
Significant food price reductions contribute to stable food security conditions

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  • Key Messages
  • Updated Food Security outlook through September 2012
  • Key Messages
    • As projected in the June Outlook Update, generally favorable food security conditions are expected to prevail throughout the region from July to September 2012. Main harvests have increased the availability of staple foods at the household level and in local markets. As food prices continue to drop in line with seasonal patterns, food access has improved for most market-dependent households. 

    • Significant price reductions have been observed in the majority of markets as food availability continues to improve. It is expected that staple food prices will continue to decrease until the end of the harvest period in August. Market and on-farm supplies are expected to remain stable across the region due to average and above average cereal production and modest carryover stocks from last year. However, increased costs associated with transportation, agricultural inputs and rising inflation levels in the region may result in anomalous price increases in some countries as the lean season approaches in October/November.

    • Parts of the region that experienced crop production shocks are currently facing food insecurity conditions. Severity ranges from Crisis (IPC Phase 3) in parts of southern Malawi, to Stressed (IPC Phase 2) in other parts of southern Malawi, and central and southern Mozambique.  Other affected areas (where conditions are estimated at IPC Phase 2) include parts of southern Zimbabwe, Lesotho, and Angola. Very poor and poor households in these areas are struggling to meet their food requirements as current food price levels remain well above the five year average for this time of year.  A regional forum for the dissemination of national vulnerability analysis results will take place in mid-July and will provide more detailed information that will assist decision-makers in determining the level of support required over the 2012/13 consumption period.

    Updated Food Security outlook through September 2012

    Regional food security conditions remain stable as the harvest season progresses. New harvests, especially maize, continue to be made available in local markets, ensuring food access for most market-dependent households both in rural and urban areas.   In areas where main season harvests (food and cash crops) are still on‐going, agricultural labor opportunities remain an important income generation activity for poorer households. The sale of cash crops including tobacco and cotton is also a good income source for households who depend on market purchases to access food. Overall, these favorable food security conditions are expected to prevail throughout the outlook period and well into the lean season in areas where the agricultural season performed well.

    However, despite the current stable regional and national food supplies, populations in localized areas of concern are facing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) conditions, and could fall into Emergency phase (IPC Phase 4) over the lean season if humanitarian assistance is not provided.  The recent vulnerability analysis completed by the Malawi Vulnerability Assessment Committee (MVAC) indicates that 1.63 million people in southern and central areas are food insecure and will require support for the next 3 to 8 months.  Other affected areas include parts of  of Lesotho, central and southern Mozambique, parts of northern and north-eastern bimodal/ unimodal transition areas of Tanzania and southern Zimbabwe. Food and cash crop production in these areas has been affected by either one or a combination of unfavorable climatic events. These events include drought, prolonged dry spells, and/or floods during the 2011/12 rainfall season. Some of these areas have suffered similar shocks for successive years and will require humanitarian assistance as early as July/August until the next harvest. Results of the 2012 national food security and vulnerability assessments currently underway in most countries will be shared at the Southern African Development Community (SADC) Dissemination forum that will take place in mid-July in Dar es Salaam, Tanzania. These results will inform the programming decisions required to respond to the needs of the vulnerable and the food insecure in the 2012/13 consumption period. The findings will also guide governments, donors, and the humanitarian community in formulating appropriate medium to long-term interventions to mitigate acute and chronic food insecurity in the region.

    Table 1 summarizes SADC regional cereal production forecasts as estimated by relevant government bodies including the National Statistics offices and the Food Security Early Warning Units (NEWUs) within the region.  The table indicates that regional cereal production has dropped on average by 4 percent.  Maize production has declined in most SADC countries with the exception of South Africa where a 3 percent overall increase is projected. The largest expected drop is in wheat production (to be harvested in October/ November) and this is mainly due to a 16 percent decrease in production by South Africa, the main wheat producer in the region.    

    Surplus maize producing countries (South Africa, Zambia and Malawi) have projected enough surpluses to cover the region’s import requirements. South Africa’s maize harvest is estimated at 45 percent of the total regional harvest, and an exportable surplus of over one million MT is currently projected.  Similarly, Zambia has a projected exportable surplus of over one million MT, while Malawi projects a surplus between 550,000 and 600,000 MT. South Africa’s surplus alone is sufficient to meet the regional import requirements of its grain deficient neighbours - especially Botswana, Lesotho, Namibia and Swaziland (BLNS) and Zimbabwe - as well as for overseas exports.  While Botswana and Namibia should have sufficient resources to commercially import all they need, Lesotho, Swaziland and Zimbabwe may require external assistance.  In particular, Lesotho and Swaziland, which are facing deepening levels of poverty and erosion of livelihoods due to chronic food shortages, and diminishing government revenues from South African Customs Union (SACU), may have more serious challenges meeting commercial import requirements. Zimbabwe could also face difficulties accessing required imports as it is still emerging from a deep economic crisis.  Food shortages are already evident in Zimbabwe’s areas of concern where market-dependent households are reportedly sourcing cereals from distant markets earlier than normal and are also reportedly incurring higher transportation costs; a factor that is contributing to reduced access to food.

    Markets and Prices

    Consecutive years of favorable production in most parts of the region have led to the adequate stocking of most local markets from both current harvests and carryover stocks from the previous year. This has resulted in an adequate and stable supply of staple foods, especially maize, leading to significant price reductions.  Even in Tanzania, where food price increases were observed over the past few months, a declining price trend emerged in June following the start of green harvests in both unimodal and bimodal areas; however prices remain above the five-year average (Figure 2).

    This drop in food prices is typical for harvest periods when markets are usually well stocked. Prices are expected to continue falling until the main season harvest is complete around July/August. Thereafter, prices should stabilize until the start of the lean season which in most parts is not expected to be severe given that the harvest from the previous year and the current harvests have been above the five-year average.  Even in South Africa, where domestic prices have been at higher levels over the past two years, the current marketing year started with prices on a consistent downward trend.   However, by April, May, and June spot prices for white maize were still above both last year’s prices and the five-year average, reflecting high international export demand (Figure 3).

    Atypical nominal price increases have been observed during the harvest period in Malawi, largely due to the production shortfalls experienced in the southern region, in addition to the currency devaluation at the beginning of May.  While nominal prices dropped slightly in April and May, by June these prices had definitely turned upward (see Figure 4). Maize prices are currently above last year’s prices and the five-year average at all monitored sites throughout the country.  Increased activity by traders moving  maize from the central surplus areas to the deficit parts of southern Malawi is contributing to the anomalous price increases. As the process to transport maize to deficit areas continues, fuel costs also continue to rise. A weaker local currency, rising inflation and increasing transport costs are all likely to drive food prices up much faster resulting in levels well above the five-year average and last year’s levels throughout this consumption period. In the food insecure livelihood zones of the south, soaring food prices are likely to exacerbate food access causing the most vulnerable households to fall into Emergency (IPC Phase 4) food insecurity conditions.

    Meanwhile informal cross-border food trade continues to play a significant role in ensuring that local markets are supplied with staple foods. Current data show that the total monthly volumes of informally traded maize have been on the increase since the end of the hunger season in March/ April 2012. Overall maize trade in April and May 2012 is almost at similar levels (both volumes and direction of flows) as what was recorded over the same period last year.  The major differences are reduced imports into Mozambique, and an increase in imports by Tanzania (Figure 5).

    Update of Food Security Scenario

    The food security conditions projected in the earlier May – September 2012 Regional Outlook are still expected to prevail, with the exception of those areas of concern in Malawi, Mozambique, and Zimbabwe, as well as in Lesotho and Angola where acutely food insecure populations have been identified.  Conditions are expected to deteriorate for the worst affected households as the outlook period progresses. 

    Apart from production shortfalls in southern Malawi, macro-economic instability led to a 33 percent devaluation of the local currency, and there are significant increases in fuel and other commodity prices—all conditions that are exacerbating food insecurity in this region and forcing households to employ coping strategies significantly earlier than usual. In the southern region of Malawi (Lower Shire livelihood zone, Middle Shire livelihood zone and the Lake Chirwa-Phalombe Plain livelihood zone), some of the most vulnerable households are already facing Crisis (IPC Phase 3) conditions. The most likely scenario in these areas estimates a further deterioration as the lean season approaches to Emergency (IPC Phase 4) conditions for some households unless external assistance is provided and scaled up to cover growing needs.

    In Zimbabwe’s areas of concern (Masvingo, Matabeleland North, Matabeleland South, and Manicaland provinces) households facing acute food insecurity will likely remain below 20 percent of the total population during the outlook period. Therefore these areas will likely remain classified as minimal to no acute food insecurity (IPC Phase 1). In Mozambique, while several areas of concern have been identified, it is in the districts of in Machanga, Govuro, Funhalouro, Panda and Chigubo that Stressed (IPC Phase 2) food insecurity conditions have been assessed for more than 20 percent of the population.  These are expected to continue unless necessary steps are taken to provide assistance.  Currently, the World Food Program (WFP) food aid pipeline remains undersupplied and the agency is unable to extend food assistance to many households that have been rendered food insecure due to this season’s poor food crop production. 

    As previously stated, the results of the annual vulnerability and food security assessments conducted by most SADC countries will be disseminated in mid-July and should provide more detailed information that will assist decision makers in determining the level, type, and timing of support required to assist affected households. 

    Figures Seasonal Calendar and Critical Events Timeline

    Figure 1

    Seasonal Calendar and Critical Events Timeline

    Source: FEWS NET

    Preliminary SADC Regional Cereal Production Estimates: 2011/12 compared to previous year and 5-year average (‘000 MT)

    Figure 2

    Preliminary SADC Regional Cereal Production Estimates: 2011/12 compared to previous year and 5-year average (‘000 MT)

    Source: SADC National Early Warning Units and Central Statistics Office

    Retail prices of maize in selected markets (USD per kg) based on average prices in key markets in each country

    Figure 3

    Retail prices of maize in selected markets (USD per kg) based on average prices in key markets in each country

    Source: FEWS NET Malawi, Mozambique, Tanzania, Zambia, and Zimbabwe

    White and yellow spot prices on SAFEX – South Africa

    Figure 4

    White and yellow spot prices on SAFEX – South Africa

    Source: South Africa Futures Exchange

    Maize Retail Prices in selected markets – Malawi

    Figure 5

    Maize Retail Prices in selected markets – Malawi

    Source: Ministry of Agriculture and FEWS NET, Malawi

    Comparison of cumulative informal cross border maize flows as at 31 May 2012 and 31 May 2011

    Figure 6

    Comparison of cumulative informal cross border maize flows as at 31 May 2012 and 31 May 2011

    Source: FEWS NET Southern Africa

    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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