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Maize prices start to fall as farmers increase sales to the private sector

  • Food Security Outlook Update
  • Zambia
  • September 2014
Maize prices start to fall as farmers increase sales to the private sector

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  • Key Messages
  • Current situation
  • Updated Assumptions
  • Projected Outlook through December 2014
  • Key Messages
    • Minimal (IPC Phase 1) acute food insecurity is expected countrywide through December 2014, with poor households providing labor in exchange for basic staple food.  

    • Recent maize price decreases in September, despite higher-than-usual FRA purchase prices, may reflect panic selling by some farmers who still hold large grain stocks. These lower prices should improve poor market-dependent consumers’ access to maize. 

    • The FRA continues to buy maize despite meeting their 500,000 MT target in early September, which may interfere with private sector participation in the market and lead to high grain losses as the rainy season starts due to limited FRA storage capacity.


    Current situation

    Minimal (IPC Phase 1) acute food insecurity outcomes remain as the marketing season reaches its peak.

    • Rural households in many parts of the country continue to rely on own harvests, following record-high 2014 maize production.
    • The maize market is at its peak as surplus-producing farmers are still trying to secure a market, with many selling to the FRA, who are paying eight percent above the previous years’ price.
    • The FRA continues to buy maize, despite meeting their 500,000 MT target in early September, and despite having inadequate safe storage and not having paid many farmers for maize already purchased. This may affect farmers’ preparations for the coming season and result in large grain losses when the rainy season starts.
    • The FRA’s above-market buying price for maize caused prices to rise 8-18 percent in most markets in August, following price declines in June and July. However, as of September, farmers in high-production areas of Central, Southern, and Eastern Provinces have increased sales of maize to private traders at between 50-65 ZMW/50 kg. These sales at below-FRA prices are likely due to delayed payment by the FRA, the need for immediate cash to purchase inputs, and the need to destock maize before the rainy season ruins stocks in poor/inadequate storage facilities. Field reports indicate large stocks of maize in the high-producing areas of Eastern, Southern, and Central Provinces are yet to be sold.
    • Retail maize prices remained, on average, 14 percent higher than in August 2013, and 39 percent higher than the previous five-year average. Maize meal prices mostly remained stable, but above the five-year average. Prices decreased in some markets as households continue to access staple foods from own stocks, keeping market demand low.
    • Food assistance coordinated by the Disaster Management and Mitigation Unit, scheduled to target 351,000 people in 14 districts (mostly in Western Province) has not yet begun. The VAC has recommended that most assistance be in the form of cash/vouchers, since supply of staple foods on the market remains good. Despite the delay, there have been no official requests for assistance from the districts, an indication that the situation is currently stable.
    • Despite the open export market policy, maize exports remain insignificant given low regional demand and high Zambia maize prices making it uncompetitive on the regional market. The World Food Program has procured 15,000 MT locally that is committed to regional humanitarian assistance. Informal exports to the DRC remain stable, and exports to Tanzania destined for Kenya increased by at least 10 percent in August. Continued FRA purchasing has maintained high informal imports from Malawi and increased those from Mozambique by 35 percent, potentially contributing to the high maize supply in Eastern Province.

    Updated Assumptions

    The Department of Meteorology’s September seasonal forecasts indicates a high likelihood of normal to above normal rainfall for Zambia, suggesting an on-time start to the season. The assumptions used to develop FEWS NET’s most-likely scenario for the July to December 2014 period remain unchanged. The full scenario is available in the Zambia July Food Security Outlook


    Projected Outlook through December 2014
    • Maize prices will fall in October-November as farmers get desperate to sell to the private sector due to poor household storage facilities and the need to raise cash for inputs to the 2014/15 production season, which begins in November for most areas. However, maize and meal prices will remain above the five-year average through December given the increases in cost of fuel, electricity tariffs, and FRA purchase price.
    • Planting is likely to start on time, given seasonal forecasts of normal to above normal rains and the early delivery of government-subsidized inputs.
    • In areas of concern, poor households will continue selling their labor in exchange for food (primarily) and cash in order to meet their basic food needs. Labor demand is expected to be good as the better-off have enough food to pay workers as land preparation starts in September, followed by planting in November/December. The small harvest from off-season maize planted in August will be available in December for consumption. Additionally, in Western Province, households will be accessing maize through the sale of fish through November and rice exchange through December. Food assistance will likely begin in October. The combination of good harvests and employment of normal livelihood strategies will sustain the poorer households and ensure that acute food insecurity remains Minimal (IPC Phase 1) through December. 
    Figures Seasonal calendar in a typical year

    Figure 1

    Seasonal calendar in a typical year

    Source: FEWS NET

    Figure 2

    Source:

    This Food Security Outlook Update provides an analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography over the next six months. Learn more here.

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