Agricultural labor opportunities provide insufficient income as food prices rise

• Most of the country is experiencing Minimal (IPC Phase 1) food security outcomes. However, populations in southern Malawi and in northern Karonga district continue to face Crisis (IPC Phase 3) outcomes, with an increasing number of people in need of assistance as the lean season progresses. As of late December, Malawi’s humanitarian food assistance program had just commenced. Due to delays the assistance program, the Malawi government conducted a one-off maize distribution in November as an interim measure.

• Maize grain prices remain significantly above average and continue to increase as a growing number of households become reliant on market purchases during the lean season. Across most markets, maize prices increased by 5 to 20 percent between October and November. Above-average prices are attributed to production deficits in flood-affected areas, atypically low supply from neighboring countries, and atypically high levels of informal maize exports due to higher prices being offered in Tanzania. Prices in November were between 61 and 108 percent higher than the most recent five-year average and between 55 and 105 percent higher than November 2018 levels.

• The October to March rainy season has started erratically, with planting not yet fully completed as of mid-December in most central and northern areas. Ongoing planting is increasing opportunities for agricultural labor and improving access to income for the poor, though an increase in the supply of labor is depressing wages. Meanwhile, stormy weather in some southern and northern areas is damaging infrastructure, especially dwelling houses and other buildings.

Though most of the country is experiencing Minimal (IPC Phase 1) food security outcomes, populations in southern Malawi and in northern Karonga district continue to face Crisis (IPC Phase 3) outcomes, with the Mangochi southern lakeshore region facing Stressed (IPC Phase 2). As the October to March lean season has progressed, food security conditions have generally deteriorated with populations in many districts, especially in southern Malawi, registering food and livelihood gaps. According to earlier analysis by MVAC and FEWS NET, slightly over one million Malawians were expected to start facing Crisis (IPC Phase 3) food security outcomes beginning in October/November 2019. However, lower-than-anticipated maize supply and higher-than-anticipated maize prices now suggest that the number facing Crisis outcomes is likely to be considerably higher. According to current media reports, households in many areas of the country including the surplus-producing central Malawi are experiencing food shortages and consumption gaps.

Maize grain prices continue to increase rapidly as an increasing number of households become reliant on market purchases during the lean season (Figure 1). According to Agricultural Market Information System (AMIS) data collected by the Ministry of Agriculture, Irrigation, and Water Development (MoAIWD), market prices of maize grain ranged between MWK 213-300/kg in November, representing 5-20 percent increases over October prices in most markets. These prices were 80-108 percent higher than the five-year average, and 55-105 percent higher than prices observed in November 2018. In Mitundu, the national reference market, prices rose 22 percent from MWK 222/kg to MWK 270/kg between October and November. According to IFPRI, maize prices reached MWK 190-320/kg in monitored markets (Table 1) – an average of 103 percent higher than prices observed in November 2018. According to the December 5 mVAM report by WFP, maize prices ranged between MWK 180-320/kg in its monitored markets in November, with the highest prices observed in the south and the lowest prices in the north (Figure 2). Given significantly below-average ADMARC stocks, supplies in ADMARC markets are erratic and inadequate. As a result, poor households are relying heavily on local markets for food.

Informal imports of maize grain continue to be below average. In November, an estimated 907 MT of maize grain was informally imported, mainly from Mozambique. This represented a 52 percent decrease compared to October import levels. Import volumes in November were 57 percent lower than the five-year average, attributed to national production deficits in neighboring countries – especially in Zambia and Mozambique – and higher prices being offered elsewhere in the region. Meanwhile, informal exports of maize grain were significantly above average, largely due to higher prices being offered in Tanzania. At 1,018 MT, maize exports in November were about 56 percent above the five-year average. Most of this maize is entering Tanzania, where much is then being re-exported to other east African countries including Kenya and the DRC. Maize export volumes were fairly stable at well above-average levels of around 1,700 MT per month between August and October, before declining by 42 percent in November.

According to the Ministry of Agriculture, the typical number of farmers (around 900,000 of the total 3 million) were again targeted with subsidized seeds and fertilizer under the Farm Input Subsidy Program (FISP). Current reports indicate that most targeted households had received their coupons and accessed inputs by the end of November. This has ensured timely planting and fertilizer application, which is especially important for maize. In most areas of Malawi, planting is now either ongoing or has been completed. In the south, most areas received sufficient rainfall for planting by the end of November, with the majority of farmers now weeding according to the December 13 Malawi Weather and Agrometeorological Bulletin from the Department of Climate Change and Meteorological Services (DCCMS). In central and northern areas, the distribution of rainfall has been erratic but has improved in early December, with most farmers now planting.

With the agricultural season now underway, demand for agricultural labor – the main source of income for poor households – is increasing. As a result, access to income has improved for many households in recent months. However, increased competition for the same opportunities is limiting access to income, as the number of people seeking labor opportunities is above average and increasing as the lean season progresses. Furthermore, wages are now below average as a result of the increased competition. This comes at a time when high maize prices are substantially reducing household purchasing power. As a result, income earned from agricultural labor is proving insufficient for most households to meet their food and basic non-food needs.

Due to delays in planning, implementation of the main humanitarian food assistance program that was intended to start in November only recently started in late December 2019. To ease the food insecurity, the government of Malawi undertook an interim one-off food distribution in the month of November 2019. This food assistance is expected to have provided each of approximately 220,000 poor households with a 50kg bag of maize. As the target population was distributed across all districts, the distribution is not expected to have changed area-level outcomes. Food insecure households will require continued assistance through the end of the consumption season in March 2020.

The assumptions used to develop FEWS NET’s most likely scenario discussed in the October 2019 to May 2020 Food Security Outlook Report remain unchanged, except for the following:

• National net maize supply is expected to be below average through to the harvest in April 2020. This is due to below-average opening stocks, localized production deficits in 2018/19 production season, below-average informal maize imports, and above-average informal maize exports in the current consumption season.
• Maize gain prices in Mitundu – the national reference market – are now expected to reach levels as high as MWK 290/kg with a calculated ceiling of MWK 300/kg. Maize prices in other markets have already surpassed MWK 300/kg. Maize grain prices are expected to remain about 50-80 percent above five-year average levels through March 2020.
• According to national and international forecasts, average to above-average rainfall is expected in the northern half of Malawi from January to March 2020, while southern areas are expected to receive average to below-average rainfall.

Most of the country will continue experiencing Minimal (IPC Phase 1) food security outcomes through May 2020. In late December 2019, the government and partners – primarily WFP – commenced the implementation of the humanitarian food assistance program in six districts, targeting households in Machinga, Mangochi, and Zomba districts with a full monthly ration of maize, and targeting households in Balaka, Nsanje, and Neno districts with cash transfer benefits equivalent to the in-kind ration – around 30 USD per month. With the start of this programming, food security outcomes are expected to improve to Stressed! (IPC Phase 2!) by the end of December, with the Mangochi southern lakeshore region improving to Minimal! (IPC Phase 1!). According the MVAC estimations and recommendations, food insecure households in Chikwawa district will receive HFA from January to March while households in Karonga, Blantyre, Mwanza and Phalombe districts will be targeted with HFA in the months of February and March 2020. For Balaka, Nsanje and Zomba districts, the first distribution includes a double ration, retroactively providing support intended for both November and December. The provision of HFA is expected to be maintained through March. Around the end of February, households are expected to begin accessing the green harvest, with further improvements to food security conditions anticipated for households whose production is favorable. Areas that receive insufficient rainfall during the critical time of maize flowering will likely experience reduced production, with southern areas most at risk given current forecasts. In April and May, access to food will improve more significantly with increased household stocks expected from the main harvest. At this time, outcomes are expected to improve to Minimal (IPC Phase 1) in most areas. However, areas that are anticipated to face Stressed! outcomes until this time will maintain Stressed outcomes in the absence of assistance beginning in April. These populations will remain unable to meet all essential non-food needs until they access income from crop sales, expected in May and June. At this time, Minimal (IPC Phase 1) are expected to prevail throughout the country. Throughout the outlook period, Global Acute Malnutrition (GAM) prevalence is expected to remain low and within the WHO “acceptable” range (less than five percent) in all parts of the country.