Localized poor harvests and high staple prices lead to Crisis (IPC Phase 3) in southern areas

• Between October 2019 and March 2020, populations in southern areas will face Crisis (IPC Phase 3) levels of acute food insecurity due to localized production shortfalls caused by heavy rains and flooding. Populations in most central and northern areas will experience Minimal (IPC Phase 1) food security outcomes through March 2020. In April and May, Minimal (IPC Phase 1) food security outcomes will likely emerge throughout the country with the start of the harvest.

• Despite near-average national production, maize prices remain atypically high throughout the country. This is attributed to market dynamics influenced by localized production shortfalls in areas impacted by flooding, large purchases by traders and institutions immediately after the harvest, and production shortfalls in neighboring countries.

• According to national and international forecasts, average rainfall is expected in the 2019/2020 season. This will likely lead to a normal agricultural production season and normal access to agricultural labor opportunities between October and January.

Current Situation

In March 2019, most areas in southern Malawi received heavy rainfall due to impacts of Cyclone Idai. Resulting flooding affected about 869,000 people in 15 districts, causing crop damage, livestock deaths, infrastructural damage, displacement, and some loss of human life. Harvests were significantly below average in affected areas, negatively impacting food availability and reducing income from sales of both food and cash crops. As a result of crop losses, some households became fully reliant on markets in the post-harvest period of April to July, three to six months earlier than usual. Meanwhile, parts of Karonga district in the north were affected by severe rain shortages due to prolonged dry spells. As a result, the majority of households in the Central Karonga and parts of Nkhata Bay Cassava livelihood zones harvested very little or nothing.

Nationally, maize production is near average levels. According to Ministry of Agriculture third round production estimates, maize production is projected to be around 10 percent higher than average. However, informal cross-border maize imports to date have been below average due to below-average production in neighboring countries such as Mozambique. Meanwhile, the Agricultural Development Marketing Corporation (ADMARC) – which sells maize at government-subsidized prices – had very minimal carryover stocks at the beginning of the current consumption. Despite this, ADMARC’s purchasing target of 16,000 MT for the season was only about a third of what it typically procures. Reports indicate that ADMARC had purchased about 5,000 MT of maize as of late October. Given difficulties in purchasing at government-set prices, ADMARC is unlikely to meet its target for the season; at this time of year, it is typically already selling maize. At the same time, the National Food Reserve Agency (NFRA)/Strategic Grain Reserve (SGR) was still in the process of tendering supply bids as of end October at prices ranging from MWK 180 to 200/kg.  Overall carryover stocks in the SGR were around 25,000 MT at the start of the season, significantly lower than the recommended 200,000 MT. This is attributed to stocks being used to respond to flooding and provide humanitarian assistance to around three million food insecure people in March 2019.

The Malawi Kwacha depreciated from around MWK 746/USD in May 2019 to MWK 789/USD in July 2019. At the end of July, the Malawi Kwacha started appreciating again, likely due to inflows from tobacco sales, and reached MWK 734/USD by end October 2019. Foreign currency reserves are likely below average, however, as sales of tobacco – the main foreign currency earner – were 7 percent below the five-year average and 29 percent lower than sales last year. Despite this, the Reserve Bank of Malawi (RBM) has indicated that the Kwacha is unlikely to depreciate again. Despite relative stability in the Malawi Kwacha compared to other major currencies, the inflation rate has risen in recent months. According to the RBM, the inflation rate rose from 8.9 percent in May to 9.2 percent in September 2019. This was driven by an increasing food inflation rate, which rose from 13.0 percent in May to 13.9 percent in September. Fuel prices have remained constant throughout the consumption season.

Despite near average national production, food prices are significantly above average throughout the country. In Mitundu, the national reference market, September prices were over 80 higher than both September 2018 and five-year average levels. This is a reflection of below-average supply in most markets due to atypically high demand from deficit areas in the south, below-average regional imports, and high demand from companies that use maize grain for manufacturing atypically early in the season. These high prices have led to constrained food access for poorer households, especially in the deficit areas of southern Malawi.

As a result of below-average household food stocks and reduced crop sales, many households are beginning to face food and income gaps. According to key informant interviews conducted in September 2019 in selected southern Malawi districts, very poor and poor households are attempting to expand livelihood activities including accessing agricultural and non-agricultural labor opportunities (such as construction and fishing) and engaging in self-employment activities such as selling firewood and charcoal. However, expansion of these income sources remain limited as increased competition is reducing access and putting downward pressure on wages and prices. As a result, households are coping by reducing quantity and frequency of meals, decreasing investment in health care and children’s schooling, and even selling productive livestock.

As of September, households were already engaging in consumption-based coping strategies including reducing meal sizes, reducing meal diversification, and skipping meals. According to the Malawi Vulnerability Assessment Committee (MVAC) assessment and analysis conducted between June and July 2019, about 1.1 million people will face food insecurity as the country enters the lean period from October 2019 to March 2020.

According to a SMART survey carried out in June 2019, the prevalence of Global Acute Malnutrition (GAM) among children under five was 0.5 percent (95% CI: 0.3-1.0) nationally. GAM prevalence has been decreasing nationally since May 2016 when it was estimated to be 2.5 percent (95% CI: 2.0-3.3). Prior to this, GAM prevalence was estimate to be 1.1 percent in June 2015. Meanwhile, the crude and under-five death rates were both within WHO acceptable levels, with a crude death rate of less than 1 death per 10,000 per day and an under-five death rate of less than 2 deaths per 10,000 per day.

National Level Assumptions

The Food Security Outlook for October 2019 to May 2020 is based on the following national-level assumptions:

• According to national and international forecasts, average rainfall is expected between October 2019 and March 2020, though localized anomalies are possible.
• National maize supply will be close to average owing to average production for the 2018/19 production season. Opening stocks for the 2019/20 marketing year are below average. Given carryover stocks of 25,000 MT and intentions to purchase only 40,000 MT, SGR stocks are expected to remain significantly below the minimum reserve requirement of 200,000 MT maintained in recent years.
• Informal cross-border trade inflows – especially for the maize staple – will likely remain 20 to 30 percent below average for the rest of the outlook period. This is primarily due to production shortfalls in neighboring countries such as Mozambique that were also affected by Cyclone Idai, leading to shortages in markets bordering Malawi.
• Cereal stocks at the household level will generally be average to above-average in most northern and central Malawi districts. Household-level stocks will remain below average in most southern districts, especially those that were affected by flooding around March 2019.
• Maize grain prices are expected to remain about 50-80 percent above five-year average levels between October 2019 and March 2020. Prices for alternative food commodities including cereals, pulses, and cassava will likely be about 20-50 percent above average during this time. Given minimal opening stocks and target purchase levels of only 16,000 MT for the season (representing 32 percent of the typical 50,000 MT), ADMARC is expected to play a minimal role in price stabilization. Between March and May, prices are expected to seasonally decline as the harvest begins to boost market supplies.
• Between October and January, agricultural labor availability will generally increase as the country enters the peak agricultural labor period when middle and better-off households hire labor for land clearing, ridge making, planting, weeding, and fertilizer application. In areas of southern Malawi affected by floods, access to labor and wages will be below average levels due to increased labor supply and reduced paying power of households who hire labor.
• Non-agricultural labor opportunities and wages are expected to be at normal levels due to normal to above normal production season in most northern and central Malawi districts. In southern Malawi, access to non-agricultural labor opportunities will be constrained due to high competition as more households fight for this source of income.
• Self-employment opportunities are expected to be available at normal levels throughout the outlook period. In southern areas, households are likely to expand this income source, putting downward pressure on prices of firewood and charcoal.  
• The Malawi Government will distribute subsidized seeds and fertilizer through the Farm Input Subsidy Program (FISP) around October and November 2019, targeting 900,000 poor farming households as has been the case through the past four to five years. Given the average rainfall season forecasted, this is expected to result in average production of staple foods – especially maize.
• Due to delays in the release of the MVAC assessment and analysis report that guides humanitarian food assistance (HFA) planning, the Malawi government and stakeholders only began to plan for HFA in the second half of October 2019. To date, humanitarian assistance is not fully planned nor funded. Until HFA plans and funding is secured, FEWS NET assumes the absence of HFA.

Most Likely Food Security Outcomes

In southern Malawi districts affected by heavy rains and flooding – including Nsanje, Chikwawa, Blantyre, Neno, Balaka, Phalombe, Machinga and Zomba – and in parts of Karonga district in northern Malawi affected by severe dry spells, most poor households have exhausted household stocks and are expected to remain reliant on markets for food until the green harvest in March 2020. During this time, maize prices are expected to remain significantly above average, restricting household food access. At the same time, access to income is expected to be below average due to increased competition for the same opportunities and reduced paying power of middle and better-off households. As a result, many poor households will be unable to meet their food needs and will begin facing food consumption gaps in October as the country enters the lean period. Meanwhile, middle households are expected to register livelihood protection deficits during this time. These areas will face Crisis (IPC Phase 3) food security outcomes between October 2019 and March 2020, with humanitarian assistance needed to meet food and non-food needs and protect livelihoods. In April 2020, households will access harvests for food and crop sales and Minimal (IPC Phase 1) food security outcomes will emerge.

Households in most central and northern districts are expected to access typical amounts of food from own-production and typical levels of income from crop sales, labor exchange, and self-employment. These areas are expected to remain in Minimal (IPC Phase 1) through at least May 2020, although some households will face Stressed (IPC Phase 2) food security outcomes due to localized production deficits and restricted income-earning opportunities as a result of below-average sales of cash crops – especially tobacco – nationwide.

Events that Might Change the Outlook

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

For more information on the outlook for specific areas of concern, please click the download button at the top of the page for the full report.