Worsening macroeconomic conditions exacerbate the negative impacts of a below-average harvest

• Recent evidence from multiple sources indicates that crop production in Malawi is likely below last year and the five-year average. Southern Malawi is estimated to have the most significant decrease, with maize production estimated to be 30 to 50 percent below the five-year average. As a result, poor households’ food stocks in southern Malawi are expected to last until August compared to October in typical year, leading to an increased reliance on markets and access to income to meet food needs through March 2023.

• The price of maize staples continues to be significantly above the same period last year and the five-year average, driven by below-average harvest, high fuel and transportation costs, and inflationary pressure. According to FEWS NET price data, in nearly all monitored markets, the price of maize staples in May 2022 ranged from 184 MWK to 250 MWK. Compared to the same period last year, prices were higher by 31 to 214 percent and between 47 to 207 percent higher than the five-year average. Prices are expected to remain significantly above five-year averages through January 2023, further limiting household financial access to food.

• Current food security outcomes in Malawi reflect regional dynamics and drivers. In southern Malawi, widespread disruption to livelihoods and household income, a significant reduction in crop production, and high food prices are driving unseasonal food consumption gaps and livelihood coping for poor rural households, resulting in Stressed (IPC Phase 2) acute food insecurity outcomes, despite an ongoing harvest. In the lower shire livelihood zone, very poor households face Crisis (IPC Phase 3) acute food insecurity outcomes, indicated by large consumption gaps and atypical reliance on livelihood coping to generate income to purchase food. However, by January 2023, Stressed (IPC Phase 2) households in southern Malawi will likely transition to Crisis (IPC Phase 3) acute food insecurity outcomes, as high prices and below-average agriculture income exacerbate as lean season dynamics.

• In central and northern Malawi, Minimal (IPC Phase 1) outcomes for most rural households from June to September 2022, given ongoing harvest and minimal reliance on markets. However, a portion of market-reliant very poor households are expected to face Stressed (IPC Phase 2) outcomes from October 2022 to January 2023.

Current Situation

2021/22 Harvest Production: June marks the end harvest period for most Malawi, with recent crop production estimates indicating the 2022/23 harvest to be lower than last year and slightly above the five-year average. An unprecedentedly dry start to the agricultural season in southern Malawi and back-to-back tropical storms significantly impacted crop production. While a better-than-expected finish to the growing period in the northern and central regions likely reduced the impact of a significant delay to the rainfall on crop production.

In April 2022, the second round of national estimates from the Ministry of Agriculture and Food Security (MoAFS) indicated that staples, rice, and tobacco would be 16, 11, and 17 percent below last year's production, respectively. According to MoAFS estimates, crops such as maize and rice for consumption will be near to slightly above the five-year average. In contrast, cash crop production, such as cotton and tobacco, is estimated to be nearly 30 percent below the five-year average. While production of alternative cash crops such as soya beans and groundnuts have increased, their volumes and markets are not significant enough to replace tobacco and cotton. In May 2022, a FEWS NET field assessment in southern Malawi indicated a substantial reduction in localized crop production. Further, according to USDA maize production estimates for June 2022, there is a considerable decrease in maize production compared to last year, 29 percent below and 13 percent below the five-year average (See Figure 1 below). Overall, maize crop production estimates range between 3,200 million MTs and 3,700 million MTs, with regional differences in production reflecting the drivers highlighted throughout the 2021/22 agricultural season.

National Food Stocks: According to the MoAFS, Malawi had significant carry-over food stocks to start the 2022/23 consumption period, including 139,000 MT held by NFRA and ADMARC plus private holdings by traders and farmers. In addition to the current harvest, the surplus food stocks from previous seasons have significantly increased current national food stock holdings to start the 2022/23 consumption period.

Macroeconomic Conditions: In May 2022, the Malawi government devalued the Malawi Kwacha (MWK) by 25 percent, resulting in relatively higher import costs and a general increase in prices across the country. Further, the Malawi Energy Regulatory Authority (MERA) has twice increased fuel prices in the previous three months, with a 31 and 20 percent increase in the price of diesel and petrol in April 2022, followed by a subsequent 31 and 45 percent increase in June 2022. The devaluation of the MWK and increased fuel prices coupled with expectations of below-average crop production have added inflationary pressure throughout 2022. Since May 2021, Malawi's inflation rate has risen from 8.9 percent in May 2021 to 19.2 percent in May 2022, including a 7 percent increase from 12.1 percent in January 2022 (see figure 2 below). Overall, the high inflation rate continues to decrease both urban and rural households' purchase power, limiting household financial access to food.

Market Prices: Despite the ongoing harvest, prices for maize staples continue to be significantly above the same period last year and the five-year average. According to key informants, atypically high food and non-food prices are driven by macroeconomic stressors, below-average harvest, high fuel and transportation costs, and inflationary pressure. Further, increasing demand from other countries such as Zimbabwe and East Africa, especially Kenya, is also influencing higher prices. For example, in the Karonga market, on the border with Tanzania, maize prices have already surpassed the projected ceiling of 325 MWK per kilogram.

According to FEWS NET price data, in nearly all monitored markets, the price of maize staples in May ranged between 184 MWK to 250 MWK. Compared to the same period last year, prices were higher by 31 to 214 percent and between 47 to 207 percent higher than the five-year average. The increasing price trends are atypical as prices typically decrease between March and June before they start rising seasonally.  

Further, the June 2022 survival minimum expenditure basket (SMEB) cost continued to increase from May to June 2022, reflecting the overall increases in the cost of living for rural and urban households (see figure 3 below). According to WFP SMEB data, urban areas reported the highest SMEB price increase, approximately 10 percent in June 2022 compared to May 2022, followed by the rural south region (3.5 percent increase) and rural center region (2.9 percent increase). While the SMEB price in the rural north is higher than 2021, prices are relatively stable compared to the south and central regions, likely driven by relatively higher crop production.

Access to Seasonal Income: Throughout the year, poor and very poor rural households typically rely on income-generating activities to access food, including agriculture and nonagricultural labor income, crop sales, and petty trade activities. For middle and better-off households, crop sales during the harvest period are a significant income source, accounting for 35 to 75 percent of total income. Further, middle and better-off households typically employ poorer wealth groups during the agricultural season, with peak labor demand and supply between November and April. The poorer wealth groups rely on income-generating activities more than middle and better-off households, particularly in the southern region, where crop production and sales are relatively lower than in central and northern regions. However, recent reports indicate that current access to seasonal agricultural labor opportunities across most Malawi is below average, particularly in the southern region. Further, household income from crop sales in southern Malawi is significantly below average, driven by poor harvest production.

In Malawi, cash crops, such as cotton and tobacco, are also a critical income source for rural households and a source of foreign currency for the government. While cotton and tobacco production is significantly below the five-year average, cotton and tobacco prices are above average. According to the June 2022 Tobacco Commission report, the observed average price of tobacco was 26 percent above prices from the same period last year. Further, the Cotton Council of Malawi (CCM) reported that cotton prices had risen from around 400 MWK in April 2022 to 500 MWK per kilogram at the beginning of May 2022; both months were higher than the same period in the previous two seasons. However, for most rural households, the below-average production and loss of income from agricultural labor outweigh gains from high cash crop prices.

Overall, for poor and very poor households in southern Malawi, an earlier than usual reliance on markets due to low food stocks coupled with a substantial increase in staple food prices and reduced household income has negatively impacted household financial access to food. In May 2022, a FEWS NET field assessment indicated that rural households in southern Malawi were atypically dependent on petty trade, including firewood and construction material sales, and migration to Mozambique to seek labor opportunities to mitigate below-average income and high food prices. However, in central and northern areas, access to income is reported as near to slightly below average, driven by relatively higher income from crop sales.

For poor urban households, current evidence indicates that urban households have relatively stable access to income. However, evidence also demonstrates that current wages are insufficient to match the increased cost of living, driven by rising inflation and the devaluation of the local currency. As a result, deteriorating macroeconomic conditions, particularly sharp increases in food and non-food items, have negatively impacted the purchasing power of low-income urban households, limiting financial access to food.

Nutrition Admissions and Health: World Health Organization and UNICEF data in May indicated that the ongoing cholera outbreak in southern Malawi continues to worsen. Since cases were first detected in May 2022, confirmed cases increased from less than 100 to over 800 by late June. Further, compared to last year, nutrition admissions have increased substantially. While a comprehensive nutritional SMART survey has not been completed in over two years, nutrition admission data indicates a deterioration in nutritional status for children in southern Malawi. According to UNICEF Malawi, there was a 30 percent in the admission of children under-five with severe acute malnutrition (SAM) compared to the same period in 2021 - increasing from 3,442 in February 2021 to 4,472 in February 2022. In May 2022, UNICEF admission data indicates that the number of SAM admissions decreased in April 2022 (1,508). However, SAM admissions are still significantly higher than in April 2021 (700). Most notable increases were reported in Chikwawa, Nsjane, Balaka, Chiradzulu, and Phalombe districts in southern Malawi, including a 64 percent increase in children SAM admissions in Chikwawa district (from 526 in February 2021 to 867 in February 2022). According to UNICEF, the increase in admissions is driven by the negative impacts of Tropical Storm Ana and Gombe on shelter and WASH conditions, high disease prevalence, including the ongoing cholera outbreak, displacement, and poor food consumption patterns.

Current Outcomes

In Malawi, April through June marks the harvest season, generally a period of abundance and minimal food insecurity outcomes due to increased food availability and income from agricultural labor and crop sales. However, in southern Malawi, the erratic rainfall season, including an unprecedented dry start followed by back-to-back tropical storms in January and March, led to widespread displacement and livelihood disruption, resulting in significantly below-average crop production.

For most households in southern Malawi, the below-average harvest significantly reduced income from crop sales and agricultural labor, a critical income source for very poor and poor households. As a result, poor rural households with limited food stocks and income are likely experiencing Stressed (IPC Phase 2) acute food insecurity outcomes, despite an ongoing harvest. Further, very poor households in southern Malawi are likely to face considerable consumption gaps or engage in coping strategies usually reserved for the lean season, such as reducing the number of meals consumed daily, intensifying petty trade sales, and migrating to Mozambique in search of labor. As a result, very poor households in southern Malawi with minimal household food stocks, limited income, and reliant on markets to access food are likely to experience Crisis (IPC Phase 3) acute food insecurity outcomes.

Despite a poor start to the agricultural season in central and northern Malawi, crop production is expected to be near or slightly below average. While household income from crop sales is slightly below average, food availability in the area is reportedly adequate, and reliance on markets is minimal. As a result, despite poor macroeconomic conditions, including high food and non-food prices, most households in rural central-northern districts are likely to face Minimal (IPC Phase 1) acute food insecurity outcomes.

Overall, current food security outcomes reflect regional dynamics and drivers. In southern Malawi, widespread disruption to livelihoods, significant reduction in crop production, and high food prices are driving unseasonal food consumption gaps and livelihood coping for very poor and poor rural households. While, in central and northern Malawi, a relatively better harvest seasonally reduced household reliance on markets, limiting the impact of poor macroeconomic conditions on household food insecurity.

The Food Security Outlook for June 2022 to January 2023 is based on the following national-level assumptions:

• From June to August, seasonal income from crop sales is expected to be below average for all wealth groups. The reduced crop production is expected to limit the benefit of higher-than-average crop prices. While the price of cash crops, such as tobacco and cotton, are higher compared to last year, reductions in production volumes and lack of crops for sale in areas where households harvested little to no crops will lead to reduced incomes across wealth groups. In southern Malawi, agriculture-related income during the harvest period, May to August, is expected to be moderately below average for all wealth groups, driven by below-average labor opportunities and below-average income from crop sales. In the Central and Northern regions, income from crop sales and agricultural labor is expected to be slightly below to near average through the outlook period.
• From November 2022 to January 2023, income for poor rural households is expected to increase as agriculture labor opportunities seasonally increase. However, overall incomes from this source are expected to be slightly below average, given the reduced income for middle and better-off households who typically hire poorer households during the agriculture season.
• In southern and parts of central Malawi, very poor and poor households are expected to have a higher-than-average reliance on income from petty trade activities to meet food and non-food needs through October 2022. In October, the start of the 2022/23 agricultural season, labor opportunities are expected to increase for very poor and poor households. However, seasonal income from agricultural labor for very poor and poor households is expected to be below average, particularly in southern Malawi, due to limited hiring by middle and better-off households. 
• From July to October, income from non-agricultural labor, construction-related labor, and self-employment will likely be below average owing to reduced incomes from the middle and better-off households who offer labor to the very poor and poor households. Further, income generated from petty trade, such as the sale of firewood and charcoal, is expected to be slightly below average as increased higher than average engagement by poorer households as a coping strategy is expected to reduce prices.
• Income from self-employment activities is expected to be below average, as the increased proportion of households engaging in petty trade reduces prices, particularly firewood and charcoal prices.
• Household cereal stocks through the outlook period are expected to be below average for all regions. According to a recent FEW NET assessment, households in southern Malawi are expected to experience the largest reduction, with food stocks from the recent harvest expected to last two to three months, until August or September, compared to four to six months in a typical year. While households in the central and northern regions are also expected to experience lower than average food stocks, households are expected to have adequate food stocks through the outlook period, January 2023.
• FEWS NET expects carry-over food stocks from 2021/22 to be estimated between 300,000 and 400,000 MT, and 2022/23 production will range between 3.1 and 3.7 MMT. Further, national food stock requirements for the 2022/23 consumption period are expected to be approximately 3.8 million MT. As a result, FEWS NET assumes that national food stocks will be slightly below to near food stock requirements during the 2022/23 consumption season.
• FEWS NET expects that most poor and very poor households in southern Malawi will atypically increase reliance on markets from August to March 2023, compared to seasonally from November to March. 
• From June 2022 to March 2023, Maize grain prices are projected to be significantly above 2022 and the five-year average, with the highest prices expected in southern Malawi. Higher prices through the outlook period are expected to be driven by a significant reduction in local crop production and high transportation costs. Maize prices in central and northern Malawi are also likely to be substantially higher than average, driven by worsening macroeconomic conditions. From June 2022 to March 2023, FEWS NET technical price projections show that retail maize prices will range from 169 to 273 MWK per kilogram in northern Malawi markets, 178 to 278 MWK per kilogram in central region markets, and 184 to 350 MWK per kilogram in Southern Malawi.
• Variations in livestock income are expected to vary by region, from below average to above average. In central and northern Malawi, FEWS NET expects income generated from livestock to be above average through the outlook period, especially for middle and better-off households. However, in southern Malawi, below-average income from livestock is expected through the outlook period, given substantial livestock losses reported after Tropical storm Ana and Gombe.
• Irrigated crop production will be near average with regional differences. In southern Malawi, irrigated crop production is expected to be above average. However, irrigated crop production in the central and northern regions is expected to be approximately 50 percent below average. Further, in October, irrigated crops are expected to provide farming households with an additional one-month supply of food stocks.
• In southern and central Malawi through September, FEWS NET expects higher than average labor migration, including internal and cross-border movement, driven by increased reliance on income and markets to access food. Labor migration incomes will be higher than normal but unlikely to cover gaps from below-average income from agricultural labor, crop sales, and petty trade.
• Macroeconomic conditions are expected to worsen throughout the outlook period, June 2022 to January 2023, as the impact of global supply chain disruptions and domestic economic policy continue to exacerbate inflationary pressure. FEWS NET assumes that the national inflation rate will remain elevated through the outlook period. Further, atypically high global fuel and fertilizer prices will continue to deplete foreign currency reserves, and the MWK is expected to further depreciation. As a result, FEWS NET expects household purchasing power to continue to worsen through January 2023, further limiting financial access to food.
• FEWS NET expects income from wage labor for poor urban households to decrease through the outlook period, January 2023, as businesses and traders limit labor opportunities in response to high inflation, power shortages, and worsening economic outlook. Further, FEWS NET expects the urban cost of living to increase through the outlook period, with food and non-food prices higher than in recent years. As a result, in large urban areas, worsening macroeconomic conditions will likely negatively impact urban households' access to food.

Rural Households: From June to September 2022, very poor and poor households in southern Malawi are expected to deplete food stocks, resulting in earlier-than-normal reliance on markets to access food. Further, income during the post-harvest period will be below average, while food prices are expected to be significantly higher than last year and the five-year average. As a result, rural households in southern Malawi are expected to experience a reduction in financial access to food, forcing households to mitigate food consumption gaps through increased engagement in consumption and livelihood-based coping. As a result, by September, most very poor and some poor households in southern Malawi will experience Stressed (IPC Phase 2) acute food insecurity outcomes.

Typically, between October to January, agricultural labor opportunities provide a critical increase in income for poor and very poor households. However, the expected below-average income for middle and better-off is expected to restrict agricultural hiring, limiting seasonal labor opportunities. Simultaneously, food prices will remain above five-year averages through March 2023. As a result, by January 2023, Stressed (IPC Phase 2) households in southern Malawi will likely transition to Crisis (IPC Phase 3) acute food insecurity outcomes, as high prices and below-average agriculture income exacerbate as lean season dynamics.

In central and northern Malawi, food stocks and income will likely be sufficient to cover consumption gaps through October 2022, despite a slightly below-average harvest household. As a result, most households will experience Minimal (IPC Phase 1) acute food security outcomes. By December 2022, very poor households in central and northern Malawi are expected to deplete food stocks and increase their reliance on markets. While labor opportunities are likely to be near average, above-average food and non-food prices are expected to reduce household purchasing power, negatively impacting financial access to food. As a result, by January 2023, a proportion of very poor households will likely experience Stressed (IPC Phase 2) outcomes due to limited financial access to food. Households in Stressed (IPC Phase 2) are characterized by limited crop production and income from crop sales and rely on petty trade income to purchase food in markets.

Urban Households: almost entirely depend on markets to access food, resulting in high exposure to macroeconomic shocks. Though not usually included in most vulnerability assessments, low-income households in the four cities of Malawi will likely face food and income gaps throughout the consumption period. FEWS NET projects that between 285,000 and 325,000 people from low-income urban households may register food and income gaps that may lead to Stressed (IPC Phase 2) outcomes in the June to September period. Most households with Stressed (IPC Phase 2) outcomes will likely transition to Crisis (IPC Phase 3) from October to March. The worsening food security conditions are driven by deteriorating economic conditions, such as high inflation, devaluation of the local currency, and steep increases in essential goods and services prices, severely limiting poor urban households' financial access to food.

Events that Might Change the Outlook

Possible events over the next eight months that could change the most-likely scenario.

Malawi Food Security Outlook June 2022 to January 2023: Worsening macroeconomic conditions exacerbate the negative impacts of a below-average harvest, 2022