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Crisis (IPC Phase 3) outcomes expected to emerge around October in southern areas

  • Food Security Outlook Update
  • Malawi
  • August 2019
Crisis (IPC Phase 3) outcomes expected to emerge around October in southern areas

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  • Key Messages
  • CURRENT SITUATION
  • UPDATED ASSUMPTIONS
  • PROJECTED OUTLOOK THROUGH JANUARY 2020
  • Key Messages
    • Minimal (IPC Phase 1) outcomes prevail across most of the country. However, some southern areas are in Stressed (IPC Phase 2) as a result of flooding associated with tropical cyclone Idai. In affected areas, some poor households experienced significant production losses. Additionally, labor availability and wages are below average, limiting household incomes and access to non-food needs such as agricultural inputs, health services, and school fees.  

    • Crisis (IPC Phase 3) outcomes are anticipated to emerge in some southern districts around October, persisting through at least January 2020. Households in these areas are expected to exhaust food stocks atypically early due to poor harvests. In addition, household income will most likely be below average due to below-average payment power of middle and better-off households and earnings from self-employment activities. This is likely to result in below-average purchasing power as food prices are expected to be abnormally high.

    • In July, staple food prices continued to be significantly above average across all monitored markets. This is largely due to the unusually high demand from large-scale traders who are buying maize grain to supply institutions and processors. Maize grain shortages are anticipated as a result of below-average imports from Zambia and Mozambique. As such, large-scale traders are purchasing larger than normal quantities, abnormally early, contributing to the price increases. Increased demand from southern areas is also helping keep prices above average.


    CURRENT SITUATION

    According to the Ministry of Agriculture’s (MoA) second round production estimates, national maize production is expected to be 10 percent above the five-year average, with production of alternative cereals such as rice, sorghum, and millet, also expected to be above average. Despite above-average national production, below-average maize grain supply is being reported in most southern districts where flooding led to production deficits. This is most likely a result of reduced national supply, due to negligible opening stocks and below-average imports from Zambia and Mozambique, combined with increased demand from large companies using maize grain for manufacturing. In May, key informant interviews, indicated some farmers and traders are hoarding maize grain in anticipation of selling it at very high prices during the lean season.

    Current estimates indicate the August to November irrigated harvests, which only provide about five to ten percent of food needs in areas with irrigation potential, is expected to be above average. Many households in flooded areas and along water bodies resorted to irrigated crop production in order to compensate for losses in the main cropping season. However, low availability of irrigable land area per household limits the expandability of this food source. As such, production from this harvest will not be adequate to cover gaps in household food needs.

    In April 2019, MoA set the official maize-buying/farmgate price at MWK 150 per kg; however, prices started increasing steeply immediately after the harvest. This is due to the reduced national supply and anticipated shortages. In July, retail maize grain prices in Mitundu, the national reference market, were 68 percent above the five-year average and 62 percent higher than the same time last year. After failing to buy at the farmgate price, ADMARC announced in August that it will buy maize grain at MWK 200 per kg, about 30 percent above last year and about 40 percent above the five-year average, in order to fulfill its 16,000 MT quota. This quota is roughly a third of the maize grain ADMARC usually purchases. Meanwhile, the National Food Reserve Agency (NFRA), which typically buys about 200,000 MT of maize grain around August to replenish the Strategic Grain Reserve (SGR), has yet to enter the market. The NFRA is anticipated to purchase maize grain from September to October, most likely putting increased pressure on market supply. Currently, the NFRA has an atypically low carryover stock of only 20,000 MT.

    Additionally, the Malawi Kwacha depreciated by 6 percentage points against the US dollar and other major trading currencies between May and July 2019. This contributed to price increases for most food and non-food commodities. The Kwacha has since recovered due to foreign currency inflows from tobacco sales. However, according to the Tobacco Commission, sales remain lower than last season. As of late August, total tobacco sales volume was 16 percent below the same time last year.

    Currently, most households across the country are experiencing Minimal (IPC Phase 1) food security outcomes. Some southern districts are most likely in Stressed (IPC Phase 2), as they are reliant on markets.


    UPDATED ASSUMPTIONS

    The assumptions used to develop FEWS NET’s most likely scenario for the  Malawi June 2019 to January 2020 Outlook  remain unchanged, except for the following:

    • According to international forecasts, rainfall is expected to be above average for the 2019/20 rainy season as a result of the expected ENSO neutral conditions and positive Indian Ocean Dipole.
    • Maize prices are expected to continue increasing through the end of August, then stabilize and remain significantly above the five-year average and last year’s prices until at least January 2020. This is a result of reduced national supply, increased demand from processors, ADMARC’s atypically low quota and increased buying price of 200 per kg, and the impending entry of NFRA into the market.

    PROJECTED OUTLOOK THROUGH JANUARY 2020

    Households in some southern districts are expected to be in Stressed (IPC Phase 2) through September. This is due to the impacts of heavy rains and flooding, which negatively affected food and cash crop production, increasing market dependence and reducing labor availability. Above-average maize grain prices will likely worsen food access in these areas.

    Starting in October, southern areas are most likely to transition to Crisis (IPC Phase 3) as more households start experiencing food consumption and income deficits. Poor households are anticipated to increase engagement in self-employment activities such as the gathering and selling of firewood in order to supplement incomes for food purchases. However, these income-earning strategies will be insufficient for these households to meet their minimum food and non-food needs. Additionally, unusually low purchasing targets make it unlikely ADMARC will be able to sell sufficient quantities of maize to satisfy demand during the lean season from October 2019 through at least January 2020.

    Figures Malawi seasonal calendar

Rainy season is from mid-October until April. Planting is from November until January. Winter pla

    Figure 1

    SEASONAL CALENDAR FOR A TYPICAL YEAR

    Source:

    This graph shows FEWS NET's integrated price projections for maize grain in Mitundu market. The y axis depicts maize prices a

    Figure 2

    Integrated price projection for Mitundu Market for Maize grain, April 2019 to March 2020

    Source: FEWS NET estimates based on Ministry of Agriculture data

    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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