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Crisis (IPC Phase 3) outcomes likely to emerge in late 2022 due to low household purchasing power

  • Remote Monitoring Report
  • Lesotho
  • June 2022
Crisis (IPC Phase 3) outcomes likely to emerge in late 2022 due to low household purchasing power

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  • Key Messages
  • PROJECTED OUTLOOK THROUGH JANUARY 2023
  • Key Messages
    • Despite expected below-average production for the current harvest that began in May, rural households are expected to continue consuming own-produced food through August. Overall income is lower than normal due to below-average crop sales and reduced remittances from South Africa; at least 60 percent of households receive monthly remittances. As a result, Stressed (IPC Phase 2) outcomes are most likely through September. Crisis (IPC phase 3) outcomes are likely to emerge in late 2022 as households will be market reliant, yet with reduced household purchasing power because of above average food price increases and below average income.

    • Following flooding in January and February, some households, especially in the lowlands and Senqu River Valley, were not able to plant due to heavy rainfall. The fields lying along the rivers had been washed away by the overflowing rivers, damaging the crops according to the 2022 National Emergency Flood Rapid Assessment Report. The government is to provide subsidies on agricultural inputs for winter production. While official production estimates are currently not available, 2022 crop production is expected to be below average and similar to 2021.

    • Most grain prices remained generally stable owing to decreased demand as most households are consuming own-produced foods. However, the price of wheat in April increased sharply mostly due to high and increasing global food prices. Similarly, prices of non-staple grains including cooking oil, have also increased in recent months, adding to inflationary pressures. Maize meal prices in April were 14.5 percent above the five-year average, while bread prices were 17.4 percent above average. 

    ZONE

    CURRENT ANOMALIES

    PROJECTED ANOMALIES

    National

    • Higher than normal food prices
    • Below average income from labor and remittances
    • Reduced 2022 harvest will likely lead to an earlier than normal reliance on purchases, as early as September
    • Low-income levels and rising food prices will most likely weaken the purchasing power of poor households

    PROJECTED OUTLOOK THROUGH JANUARY 2023

    The 2022 harvest is improving household access to food across most of Lesotho; however, it is expected to be below average largely due to flooding in the country. While good rainfall led to favorable production, continuous heavy January and February rainfall limited planting. Additionally, the heavy rainfall prevented those with early season planted crops from carrying out farming activities especially in the breadbasket areas of lowlands, foothills, and areas around the Senqu River. This has contributed to lower levels of 2022 production compared to normal. Currently, households are accessing food from own production, and it is expected that this will continue at least until August, thereby improving household access to food. In areas where winter production takes place, households are taking advantage of the increased water levels and soil moisture to cultivate more land as poor households also have access government-subsidized inputs to boost winter production.

     

    The annual inflation rate for May is estimated at 7.8 percent, 0.5 percentage points higher than April. Overall, inflation is currently relatively high in the country. As a country that relies mostly on food imports from South Africa, costlier fuels have a direct bearing on the cost of transporting goods. Domestic price increases in food and fuel are driving increases in the household food basket.

    While the price of wheat has increased sharply in Lesotho, as in other regional countries, the prices of other grains (maize and rice) have remained relatively stable as of late April, although remaining above average (Figure 1). To the extent that local and regional production can help keep maize prices steady, the relatively lower share of wheat in local diets could help moderate domestic inflationary pressures. Prices of other food items (cooking oil and sugar beans) have also increased in recent months, adding to inflationary pressures.

    Currently, most rural households are accessing income from crop sales, labor opportunities, and self-employment activities including firewood and craft making and selling, as well as wild food sales. Agricultural and non-agricultural labor opportunities are at slightly lower than normal levels due to reduced purchasing power by better off households from high inflation and reduced income from crop sales.

    Own produced stocks for poor households are expected to last only until August due to expected below average production. Households are therefore expected to start relying on purchases at least one month earlier than normal in September. In addition, most typical income sources are expected to be below normal. Annual inflation is expected to remain high during the outlook period due to continued high global food prices.

    As Lesotho imports most of its food commodities including maize from South Africa, rising fuel prices are expected to lead to increased transportation costs and higher than normal food prices, adding pressure to an already high inflation. Increases in fertilizer prices will compromise local agricultural production for 2022/23 and limit domestic supply as households will try to reduce planted area for crops that consume more fertilizer, such as maize and wheat. Similarly, very poor households who mostly depend on agricultural labor income will see reduced opportunities. With lower income levels and increasing higher than normal food prices, poor households will face limited access to food during the lean season between October and January. Crisis (IPC phase 3) outcomes are therefore expected.

    Figures

    Figure 1

    SEASONAL CALENDAR FOR A TYPICAL YEAR

    Source: FEWS NET

    Figure 2

    Figure 1

    Source: FEWS NET based on BOS data

    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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