Food Security Outlook Update

Sustained COVID-19 impacts expected to prolong food insecurity for low-income urban households

August 2020

August - September 2020

October 2020 - January 2021

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
National Parks/Reserves
Would likely be at least one phase worse without current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
National Parks/Reserves
Would likely be at least one phase worse without current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.

IPC v3.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

IPC v3.0 Acute Food Insecurity Phase

Presence countries:
1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
National Parks/Reserves
Remote monitoring
countries:
1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

Key Messages

  • Most rural households continue to consume food from own production and obtain income from crop sales and labor, with Minimal (IPC Phase 1) food security outcomes prevalent across most of the country. In September/October 2020, Stressed (IPC Phase 2) outcomes are expected to emerge in areas that registered localized poor production due to flooding and dry spells. In December 2020/January 2021, Crisis (IPC Phase 3) food security outcomes will start emerging in these areas as the lean season progresses.

  • In urban areas, many low-income households continue to face food and income gaps due to impacts of the economic downturn. According to a report by the Employers Consultative Association of Malawi, 273,000 people have lost jobs in the past six months, mainly due to impacts of COVID-19. Beyond this, additional people have been significantly impacted by reductions in income-earning through loss of business and self-employment opportunities. Due to revised expectations for prolonged impacts of COVID-19 on the economy, Crisis (IPC Phase 3) outcomes are now expected to persist through December 2020 in the four major cities of Blantyre, Zomba, Lilongwe, and Mzuzu.

  • In July, retail prices for the maize staple followed seasonal trends, remaining stable in most markets across the country. This is largely due to favorable supplies across markets following significantly above average maize production in the 2019/2020 production season. In July, maize grain prices fell below levels recorded at the same time last year, reaching levels 5 to 21 percent lower. The gap between observed and five-year average levels also decreased, but prices remained above average by between 5 and 20 percent. In addition to above-average production, a slump in demand from companies that purchase maize for manufacturing is putting downward pressure on prices.

CURRENT SITUATION

As of the end of August 2020, most rural households across Malawi are still consuming food from their own production and obtaining most of their income from crop sales and other economic activities including agricultural and non-agricultural labor, self-employment activities, and small livestock sales. According to the Ministry of Agriculture and Food Security second round estimates, production of the maize staple in the 2019/2020 production season was approximately 11.5 percent above last year and 28 percent above the five-year average. As such, household and market supplies are generally above average across the country, and increased food and cash crop availability is supporting access to food and income.

Due to below-average production and impacts of COVID-19 on marketing activities, income from tobacco and cotton — Malawi’s main cash crops — has been lower than normal at both household and national levels. According to final production estimates by the Tobacco Commission, production of tobacco in the 2019/2020 production season was 26.7 percent lower than the planned production quota of 155,000 MT, and 31.6 percent lower than last year’s volumes. Despite the reduced supply, tobacco prices have remained average without resultant increases, largely due to COVID-19 impacts on marketing activities including suspected collusion by buyers when famers were not allowed to be present on the auction floors. Meanwhile, cotton production was also significantly lower than intended volumes. Beyond this, cotton marketing continues to be impacted by global bottlenecks in supply chains due to COVID-19, with most of Malawi’s cotton not yet sold after buyers withdrew from the market. Remaining buyers sought to buy at prices much lower than the government-set price of MWK 310/kg (at prices closer to MWK 250/kg), further reducing income earned by farmers.

Retail prices for the maize staple remain lower than the government-set minimum farmgate price. At the national level, retail maize prices averaged MWK 169/kg in July 2020. Meanwhile, the minimum farmgate price for maize was set at MWK 200/kg by government on 7 April, 2020. Though ADMARC (Malawi’s grain marketing board) has been buying maize from farmers at this price, ADMARC’s inadequate resources have left most farmers selling maize to private traders at lower prices. In July, retail prices for maize ranged from MWK 135 to 193/kg in most markets, with only Mangochi market selling maize at MWK 200/kg.

Maize prices have generally followed seasonal trends, remaining stable in July at the national level (Figure 1). This is largely due to favorable supplies following significantly above average maize production. In July, maize grain prices fell below prices recorded at the same time last year, reaching levels 5 to 21 percent lower. The gap between observed and five-year average levels also decreased, but prices remained above average by between 5 and 20 percent. Apart from above-average production, downward pressure on prices has resulted from a slump in demand from companies that purchase maize for manufacturing due to impacts of COVID-19 on economic activity. Additionally, bulk maize purchases by ADMARC and National Food Reserve Agency remain low due to funding constraints. As a result, some farmers in northern Malawi — especially in Chitipa district — are selling most of their maize across the border in Tanzania.

In July, informal imports of maize grain into Malawi totaled approximately 6,800 MT, while informal exports increased substantially over June levels, totaling approximately 8,500 MT according to cross-border monitoring data. The main sources of informal maize imports in July were Zambia and Mozambique, while the main destination of informal maize exports was Tanzania. This increase in exports likely reflects a combination of factors including shifting trader strategies in response to limited ADMARC purchases and relatively lower prices in Malawi relative to Tanzania as compared to previous months.

The Malawi Kwacha – which has mostly held steady in value over the past few years – began to depreciate slightly against the US Dollar and South African Rand around the end of July 2020 (Figure 2). Notably, this depreciation is occurring during the tobacco marketing season, a time when Malawi earns most of its foreign currency (which should support the value of the Kwacha). This depreciation is likely driven by significantly below-average tobacco income and COVID-19 impacts on crop marketing and trade, in addition to generally higher demand for foreign currency as more companies are now seeking to import goods that they were previously not able to import due to recent trade disruptions.

As of August 30, there were 5,489 confirmed cases of COVID-19 Malawi, with 173 associated deaths. Despite a decline in incidence, testing capacity remains limited and concern over the rising COVID-19 caseload has been generally increasing, leading to renewed interest among local governments to enforce preventive measures. As such, in urban areas, low-income households continue to face food and income gaps due to impacts of the economic downturn. According to a report by the Employers Consultative Association of Malawi quoted in the media, 273,000 people have lost jobs in the past six months, mainly due to impacts of COVID-19. Beyond this, additional people have been significantly impacted by reductions in income-earning through loss of business and self-employment opportunities. Meanwhile, regional trade has improved somewhat in August, though this has not yet impacted the economy and local businesses activity.

According to a food security assessment conducted in Malawi’s four major cities — Blantyre, Zomba, Lilongwe, and Mzuzu — in July 2020, over 60 percent of surveyed households reported that their income had declined in the March-June period. When asked about their most important income source, most households reported relying primarily on salary/wages (35 percent), small businesses/self-employment activities (17 percent), own businesses (10 percent), and skilled trades (8 percent). Of the 44 percent of households who reported relying on a second source of income, most relied additionally on small business/self-employment activities (14 percent), petty trade (19 percent), salary/wages (8 percent), and own businesses (8 percent). However, households in lower wealth quintiles were generally less dependent on salary/wages and more dependent on small/business/self-employment and petty trade. Furthermore, those dependent on small businesses/self-employment were disproportionately impacted by reductions in income-earning, with 73 percent of those dependent on these activities (as a first or second source of income) reporting reduced income in the March-June period.

Most rural households across the country are currently accessing sufficient food from own production and income from crop sales and other activities, with Minimal (IPC Phase 1) food security outcomes widespread. Due to impacts of COVID-19 on international and local businesses and the economy as a whole — including significant job losses — many urban households have experienced significant reductions in income-earning. As a result, many low-income urban households who have few alternative food and income sources are likely facing consumption gaps or engaging in unsustainable coping, with Crisis (IPC Phase 3) food security outcomes expected in Malawi’s four major cities of Blantyre, Zomba, Lilongwe, and Mzuzu. As such, humanitarian assistance is needed to fill consumption gaps and protect livelihoods, though an assistance program for the urban poor — planned by government and partners to start in May 2020 — has to date not been implemented. 

UPDATED ASSUMPTIONS

The assumptions used to develop FEWS NET’s most likely scenario for the June 2020 to January 2021 Food Security Outlook Report remain unchanged, except the following:

  • Due to ongoing global concern about COVID-19, impacts on Malawi’s economy are likely to persist throughout the remainder of 2020. However, some gradual recovery is expected beginning in September, due to the impacts of increased trade and re-opened airports and schools (expected in September as per a government announcement).
  • In urban areas, income from labor opportunities, self-employment, small businesses, and petty trade — as well as salaries — are expected to remain below average through at least December 2020 due to the expectations for gradual economic recovery.
  • Income from the sale of cash crops — including tobacco and cotton — is expected to be below average due to below-average production as well as lower prices due to impacts of COVID-19 on global markets.
  • Due to reduced income from cash crop sales, income from agricultural labor activities will likely be below average in the central and northern regions due to reduced purchasing power among those who hire labor.

PROJECTED OUTLOOK THROUGH JANUARY 2021

In most rural areas, Minimal (IPC Phase 1) outcomes are expected to persist throughout the scenario period. However, an increased number of rural households in areas that experienced localized dry spells and flooding – especially in southern Malawi – are expected to exhaust food stocks early, with Stressed (IPC Phase 2) outcomes expected from September to December 2020. As the lean season progresses and food prices rise, Crisis (IPC Phase 3) food security outcomes will start emerging in these areas in December 2020/January 2021.

In the urban centers of Blantyre, Zomba, Lilongwe, and Mzuzu, low-income households will likely continue facing food and income gaps due to impacts of COVID-19 on the economy and significant reductions in income-earning. As a result, Crisis (IPC Phase 3) outcomes are expected to persist through at least December 2020 in the absence of assistance.

About this Update

This monthly report covers current conditions as well as changes to the projected outlook for food insecurity in this country. It updates FEWS NET’s quarterly Food Security Outlook. Learn more about our work here.

About FEWS NET

The Famine Early Warning Systems Network is a leading provider of early warning and analysis on food insecurity. Created by USAID in 1985 to help decision-makers plan for humanitarian crises, FEWS NET provides evidence-based analysis on approximately 30 countries. Implementing team members include NASA, NOAA, USDA, USGS, and CHC-UCSB, along with Chemonics International Inc. and Kimetrica.
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