Crop losses and high food prices result in Crisis (IPC Phase 3) in southern and central Malawi

• Although favorable harvests in much of northern and central Malawi resulted in an increase in national crop production this year compared to the five-year average, tropical storms and dry spells resulted in significant crop losses in much of southern Malawi and some central districts. In the worst-affected areas, many households in the very poor and poor wealth groups reported low to negligible cereal and cash crop harvests from the main harvest ending in August. The reduction not only directly affected food and income from crops and crop sales, but also significantly diminished agricultural labor income. At the same time, high inflation linked to weaker export revenues, high global food and fuel prices, and the devaluation of the Malawi Kwacha in May are further constraining household access to food for both rural and urban populations. These shocks are expected to drive Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes throughout the October 2022 to May 2023 outlook period.

• FEWS NET conducted field assessments in several livelihood zones of concern in southern Malawi in September. In the worst-affected areas, such as Machinga district, FEWS NET observed that many poor households are subsisting on limited income from sales of natural resources and migratory labor by other family members that traveled to Mozambique, while consuming only one-to-two meals per day. In some cases, households are resorting to consuming foods such as maize husks. Based on outcome analysis using the Household Economy Approach and other available evidence, typical food and income sources are insufficient to prevent widening food consumption gaps among poor households as the November to March lean season progresses.

• To mitigate the potential for worsening acute food insecurity during the lean season, the government and humanitarian partners plan to deliver humanitarian food assistance beginning in November. Based on currently available plans, deliveries will likely cover household kilocalorie needs for three to five months, ending in April when the next harvest begins. In southern and central districts where planned levels of assistance are significant enough to prevent food consumption gaps, FEWS NET assesses Minimal! (IPC Phase 1!) and Stressed! (IPC Phase 2!) outcomes are most likely. However, in some districts, the level and timing of food assistance is unlikely to be sufficient relative to the scale of need and Crisis (IPC Phase 3) outcomes will likely persist.

• Based on global, regional, and local weather forecasts, Malawi will most likely receive below-normal rainfall in the northern half of the country and above-average rainfall in the southern half of the country. Episodic weather events such as mid-season dry spells and flooding in low-lying areas are possible. Southern Malawi’s Middle Shire, Lower Shire, and Phalombe Lake Chilwa Plain livelihood zones commonly suffer from both dry spells and flooding, while lowland areas along the shores of lake Malawi and across the country typically experience flooding. While the 2022/23 harvest is expected to be average on the national level, these episodic weather events – coupled with reduced financial access to key agricultural inputs such as fertilizer – are expected to result in a third-consecutive below-average harvest in the south.

Current Situation

Agricultural production: The country continues to have adequate overall maize stocks held by farmers, private traders, and government agencies as it enters the typical lean period from October to March. According to the Ministry of Agriculture and Food Security (MOAFS) estimates, total maize stocks will be above the 2022/23 requirements for all national uses. Despite reduced production of maize compared to last year, Malawi’s carryover supply from previous years affords it average supplies of staple stocks. The Ministry of Agriculture and Food Security’s third-round crop estimates, released in June 2022, show national maize production was lower than the previous production season but higher than the five-year average. The two government parastatals, National Food Reserve Agency (NFRA) and Agricultural Development and Marketing Corporation (ADMARC), hold stocks designated for humanitarian assistance and subsidized commercial sales. As of July 2022, ADMARC and NFREA reported having 177,379 MT and 291,191 MT, respectively. The estimated demand for 2022/23 is about 3.5 million MT net stocks, including carryover stocks of 535,723 MT from last year. ADMARC markets that sell subsidized maize remained atypically closed for commodity trading due to an organizational restructuring but were set to open by early December.

About 16 percent of Malawi’s maize production comes from irrigated farms as per the Ministry of Agriculture. The ministry estimates that irrigation production will decline by nearly half in central and northern districts due to high input costs and in southern Malawi due to back-to-back tropical storms. The storms caused siltation and left some farms underwater. Thus, farmers have lost assets and face limited access to seeds and fertilizers.

Start of 2022 rainfall season and planting: The weather forecast shows average to above-average rainfall, with timely start of rain supporting an average 2022/23 crop production. Producers will be affected by limited agricultural inputs and high fertilizer costs that could reduce the planted areas, lowering labor opportunities for poor households.

Macroeconomic conditions: Malawi continues to face economic instability. Below-normal foreign exchange revenues from tobacco sales without significant loans or grants from international partners are contributing to atypically high inflation that is pushing up the cost of living. Central Plateau is the main tobacco producer, but the crop is also harvested by small holder farmers across the country. Annual tobacco production, Malawi investment and trade, in 2022 is 43 percent below the five-year average, and overall income earned were 25 percent below the five-year average. Tobacco contributes over 50 percent of the country's total foreign exchange earnings. The price drop in the international market has resulted in lower revenue, affecting the country’s foreign currency reserve that is used to import necessities from abroad. Low foreign exchange availability pushes inflation further as Malawi depends on imports for most processed foods. The devaluation has caused imported items to be more expensive in local currency (MWK) terms. Low foreign exchange also affects the availability of fuel for transportation, domestic energy, and industrial power. As a result, inflation has risen steeply from 10 percent in October 2021 to 27 percent in October 2022 (Figure 1). Most households in Malawi earn 20-30 percent of their annual income from tobacco labor and sales, which are directly impacted by the ongoing tobacco price reduction. The poor are the most affected by reduced employment and wage rates.

Nutrition: The March 2022 Malawi Nutrition Bulletin reported a worsening of malnutrition indicators, especially in districts impacted by tropical storms and flooding. In the absence of a comprehensive nutrition SMART survey, the bulletin indicates that at the national level, there was a 30 percent increase in admissions of children with severe wasting in February 2022 (4,472) compared to February 2021 (3,442). More children were admitted for severe acute malnutrition (SAM) treatment in the districts of Chikwawa, Nsanje, Balaka, Chiradzulu, and Phalombe in March 2022 compared to the same period in 2021 which is in line with the districts severely impacted by Tropical Storms Ana and Gombe. SAM admissions increased most significantly, by 64 percent, in the Chikwawa district (from 526 in February 2021 to 867 in February 2022).

Humanitarian food assistance: Given the recent conclusion of the main harvest and ongoing winter harvest, humanitarian food assistance distributions are not currently ongoing.

Current Food Security Outcomes

Although the 2022 staple food harvest was near average on the national level and staple food prices are starting to stabilize, the impact of cyclones and flooding earlier this year reduced the production of food and cash crops in southern Malawi. Based on FEWS NET’s outcome analysis using the Household Economy Approach (HEA), very poor and poor households in the south experienced a 10-25 percent reduction in income from crop sales, with an additional reduction in petty trade and other self-employment income of up to 25 percent. High inflation and the devaluation of the MWK early this year has affected petty trade and self-employment opportunities, especially in the south. October represents the start of the traditional lean season in which most poor households, especially in deficit areas, deplete their own produced food and depend on market purchases for food. In rural areas, the poor production year caused many families to rely on market purchases for food earlier than in a typical year, without sufficient income to cover spiking food costs. Poor households face constrained financial access to food due to increased food and non-food prices and reduced household incomes, impacting household purchasing power. As a result, poor households in southern Malawi and some districts in central Malawi are facing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes.

Reductions in household purchasing power are also driving an increase in acute food insecurity among the urban poor. Households in the urban centers of Blantyre, Zomba, Lilongwe, Mzuzu are likely Stressed (IPC Phase 2). However, the average national harvest has supported normal food availability, leading to Minimal (IPC Phase 1) outcomes in most of rural central and northern Malawi.

The most likely scenario from October 2022 to May 2023 is based on the following national-level assumptions:

• National food stocks are expected to be sufficient through the 2022/23 consumption year. Malawi realized a gross production of 3.716 million MT and a net production (factoring in post-harvest losses) of about 3.300 million MT of maize. With total maize requirements at around 3.67 million MT, national food stocks are expected to be sufficient to cover demand. Net informal maize trading volumes estimated at around 50,000 MT outflows will not be significant enough to affect the national volumes However, cereal stocks at the household level in sub-national areas experiencing reduced crop production are lower than usual, especially in southern Malawi.
• Irrigated crop production has been constrained by high input prices in northern and central Malawi and earlier flooding in Southern Malawi. The irrigated winter crop harvest will be below average, according to the Ministry of Agriculture
• According to both local and global forecasts (FEWS NET science partners, SARCOF, and the Malawi Department of Climate Change and Meteorological Services (DCCMS)), the main rainfall season from October to March will most likely vary from average to above average. OND (October-November-December) period rainfall will likely be below average to average in northern Malawi; however, rainfall is expected to be normal in central and southern regions. During the JMF (January-February-March) period, rainfall is expected to increase to above-average levels for most of Malawi. The DCCMS also predicts localized episodic weather events such as dry spells and flooding. For instance, the above-average rainfall through JMF poses a risk of flooding, particularly in parts of southern Malawi.
• Average to above-average rainfall is expected to support an average national 2022/23 crop production season. However, reduced access to inputs will likely compromise production for very poor and poor households as the prices of fertilizers have tripled compared to last year. Limited availability of the input in the local market and doubled prices of subsidized fertilizer compared to last year are causing low application of inputs and lowering the crop production.
• Income from agricultural labor will likely be below average overall. From October to January, agricultural labor will center on land clearing, cultivation, planting, and weeding. An average crop production season is predicted, and labor demand is likely to be normal, though wages may be lower as more households are expected to seek out labor opportunities given the previous poor production season and elevated prices of food and agricultural inputs. As a result, wages are expected to decline in response to the increased supply of labor. Due to high input costs, the amount of cultivated land is likely to drop, reducing the labor required for farm activities. Agricultural labor, which provides over 30 percent of overall incomes, is especially significant as it is done mainly in the lean season and serves as one of the main income sources during that period of the consumption year.
• Livestock production: Income from livestock sales is expected to be above average for middle and better-off households, driven by above-average herd sizes and prices. However, such income for very poor and poor households will likely be below average as these households are likely to engage in distressed livestock sales to compensate for the reduction in crop sales income given the below-normal crop production year.
• Incomes 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 very poor and poor households. Additionally, self-employment activities may have a dwindling customer base in the face of increases in households that use this activity for coping. Self-employment incomes are significant between peak agricultural labor periods, especially from July to October.
• Labor migration will likely increase as households, especially in southern Malawi, run out of produced food during harvest. This is a severe way of coping mainly used at the peak of the lean period. More households reported labor migration as early as June/July in the current consumption season.
• Macroeconomic challenges are expected to persist due to reduced foreign exchange revenues from below-normal tobacco production, high global food and fuel prices linked to the Russia-Ukraine war, and the recent 25 percent devaluation of the Malawi Kwacha. According to the Reserve Bank of Malawi’s Statement of the 2022 Fourth Monetary Policy Committee meeting released in October, Malawi’s actual domestic economic activity was estimated to grow by 1.7 percent in 2022, down from 4.2 percent in 2021. It will pick up slightly to 2.6 percent in 2023. The report attributes the slowdown to decreased agricultural production in 2022, intermittent electricity, high commodity prices, fuel shortages, and overall high inflation constraining consumer demand. The statement further projects that the 2022 annual average inflation will rise to 21.5 percent from 9.3 percent registered in 2021 and increase to 22 percent in 2023.
• Despite the recent stabilization of staple crop prices, maize grain and other staple food prices are projected to trend above 2021/22 prices and the five-year average. Elevated food prices will continue to be driven by higher demand for food from southern Malawi districts, which registered production reductions and informal cross-border markets from Tanzania, due to higher prices and exchange gains by exporting to Tanzania and Mozambique. In addition, government’s setting of higher minimum crop farmgate prices and higher retail prices of subsidized maize sold by ADMARC has led to maize prices remaining atypically high even after harvests.
• In rural and urban areas, household purchasing power will be below average compared to last year and the five-year. An average weekly wage in the urban center is 50,000 MWK, which would buy four to five 50kg bags of maize last season. Now, however, it will buy only two bags of maize.  In rural areas, sale of a goat would buy about three 50kg bags of maize. Currently, the same amount would buy only one bag.
• The Department of Disaster Management Affairs (DODMA) reported that funding for the lean season humanitarian food assistance response program has been secured by the government and its development partners. The Malawi Vulnerability Assessment Committee (MVAC) 2022/23 food security assessment and IPC analysis informed food assistance plans. Food assistance in cash or in-kind food transfers will target households that the MVAM and IPC assessed to be facing Crisis (IPC Phase 3) levels of acute food insecurity; these households will receive a full food ration from November 2022 for a period ranging from three to five months. FEWS NET expects that the level of assistance is sufficient to prevent worse food insecurity outcomes in several targeted districts where over 25 percent of the base population will likely receive their full caloric requirements throughout the outlook period. However, households in some districts or parts of some districts – including Salima and Ntcheu districts in central Malawi and Mangochi, Machinga, Phalombe, Mulanje, Thyolo, Neno, Mwanza, and Chiradzulu districts in Southern Malawi – will not start to receive humanitarian assistance distributions until the January to March period.

Most poor and very poor households will depend increasingly on the market for basic food supplies as their food stocks dwindle between October and January. Increased market reliance will continue through March, just prior to the start of the 2022/2023 harvest in April. Because of the high price of food and non-food commodities, as well as dependence on the market and a lower-than-average agricultural income, household financial access to food is expected to remain below normal. Households in the middle wealth group and, to a lesser extent, the poor wealth group will be able to compensate for the reduced income from crop sales through the typical income that they earn from raising livestock. However, poor households will take a larger reduction in their income from labor, as the labor supply is expected to rise given the shortfalls in crop-related food and income sources and drive a consequent reduction in wages and/or days of labor available. In addition, high inflation will decrease household purchasing power, to the detriment of poor and very poor households that will rely on food purchases for at least six months of the year.

As a result, Crisis (IPC Phase 3) and Stressed (IPC Phase 2) outcomes are expected across much of southern Malawi and some parts of central and northern Malawi. In some districts, the start of humanitarian food assistance deliveries from November onward will play a significant role in prevent more severe acute food insecurity outcomes, particularly in the far south and parts of Lilongwe district, where Minimal! (IPC Phase 1!) and Stressed! (IPC Phase 2!) outcomes are likely. However, in areas where food assistance deliveries will either begin late or will not be sustained for the full five months, the outstanding factors such as poor purchasing power, depletion of food stocks, and reduced crop yields are still expected to result in Crisis (IPC Phase 3) outcomes.

Finally, the rising cost of living is expected to place additional pressure on access to food among urban households. While the income of urban households will be near-normal, deriving mainly from employment, trading, and services, they will face increasing difficulty affording both their essential food and non-food needs. An atypical increase in the number of Stressed (IPC Phase 2) households is expected in cities such as Lilongwe and Blantyre, with households shift to consuming less nutritious substitutes and reduce the number of meals eaten per day.

Events that Might Change the Outlook

Table 1. Possible events over the next eight months that could change the most-likely scenario.

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