A below-average harvest and worsening macro-economic conditions severely limit post-harvest improvements

According to the Ministry of Agriculture and Food Security (MoAFS) second-round production results, Malawi is expected to realize a below-average harvest for essential food and cash crops due to poor rainfall performance, multiple tropical storms, and limited supply access to agricultural inputs. According to the report, food crop production is expected to be below the five-year average for maize (13 percent below), rice (7 percent below), sweet potatoes (14 percent below), and beans (35 percent). In Southern Malawi, crop production was severely impacted and is expected to experience widespread crop production deficits similar to 2015/16 drought, given multiple shocks that significantly reduced cropland available and damaged existing crops. Further, cash crop production, such as tobacco and cotton, is reported to be 38 percent and 36 percent below average. Overall, the below-average harvest will likely reduce rural household income generation from crop sales and result in an earlier than normal increase in market reliance.

Malawi's macroeconomic conditions continue to worsen, characterized by seasonally low foreign reserves and increasing inflationary pressure. Malawi continues to register price increases in most key commodities such as fuel and fertilizers, resulting in a widespread rise in transportation prices. The significantly below-average tobacco production, the top foreign currency earner for Malawi, is expected to restrict foreign currency access. The Reserve Bank of Malawi's (RBM) May 2022 Monetary Policy Report indicated that foreign exchange reserves decreased from 1.72 months of import cover in quarter 4 of 2021 to 1.5 months of import cover in quarter 1 of 2022, triggering a deprecation of the local currency. Further, on 26th May 2022, the Malawi Kwacha was devalued by 25 percent, triggering additional price increases.  The RBM also reported an upward revision to the forecasted annual average inflation estimates from 10.4 percent initially indicated to 12.3 percent. Overall, reducing foreign reserves and increasing inflationary pressure, coupled with the ongoing increase in global wheat, oil, and fertilizer prices, is adding significant pressure on the Malawi economy.

Despite entering the post-harvest period, food prices continue to be atypically high due to several factors, including below-average harvest, the government's announcement of a higher farmgate price, and a general increase in goods and food commodities prices. Between March and April 2022, prices of maize grain increased substantially in most FEWS NET monitored markets, ranging from 5 to 27 percent. While Lilongwe, Phalombe, and Nsanje markets were stable but remained atypically high for the post-harvest period. Compared to last year, maize prices in April 2022 were trending 22 to 73 percent above prices recorded in April 2021. Further, compared to the five-year average, maize prices were between 18 and 55 percent higher in all markets, with the highest increases in southern markets. Overall, the higher than average food prices and reduced income coupled with the expected earlier than normal increase in market reliance is likely to severely limit rural households' financial access to food, especially in the southern region.

Overall, poor and very poor households in southern Malawi and parts of Central are expected experience only a minor seasonal improvement and are likely to continue face Stressed (IPC Phase 2) acute food security outcomes through the outlook period, September 2022. In the Lower Shire livelihood zone, Crisis (IPC Phase 3) acute food security outcomes are expected through the outlook period, September 2022, as underlying vulnerabilities have been exacerbated by multiple shocks impacting crop production, access to livelihoods, and financial access to food. In northern and parts of central Malawi, minimal (IPC Phase 1) acute food security outcomes are expected to continue through the harvest and post-harvest period, however, monitoring the impacts of shifting market dynamics on financial access to food is critical through the outlook period and into 2022/23 lean season.