Despite average production, maize prices are rising earlier than normal

• Generally, the food security situation remains favorable and acute food insecurity is Minimal (IPC Phase 1). Most rural households are accessing a variety of basic foods from the harvest and staple food supplies are reaching markets. However, household stocks are running low in some areas in the extreme southern region that experienced reduced harvests this season.

• Large volumes of maize are currently being purchased by millers and traders. Since the Food Reserve Agency (FRA) is late to start their purchases of maize for the strategic grain reserves, this has resulted in increased participation by the private sector in the maize market.

• Despite adequate maize supplies in the country, prices have started increasing much earlier than normal due to increased transport costs, high demand for maize from neighboring countries, and the delayed commencement of the FRA purchase program. Maize and meal prices are expected to remain high during the outlook period, and this is expected to reduce purchasing power for market-dependent households.  

• Acute food insecurity outcomes are expected to remain Minimal (IPC Phase 1) throughout the outlook period despite Zambia Vulnerability Assessment Committee (VAC) findings that some poor households (<20%) will face livelihood protection deficits this consumption year.   

Current Situation

Following the recent average harvest, the country’s food security situation has remained favorable.  Since the harvest, household food stocks have generally increased in many areas, especially the northern half of the country, however the supply of maize in parts of the southern half of the country has been much lower than normal for this time of the year. These lower supplies are due to lower production levels this season because of the erratic rainfall experienced in the 2012/13 growing season. Despite this, overall acute food insecurity for most poor households is currently Minimal (IPC Phase 1).

As expected, maize and meal prices experienced a typical decline in April and May. In June prices generally stabilized, however price levels continue to remain higher than the previous season and the recent five-year average. In July, early maize price increases have been widely observed and can be attributed to increased transport costs (due to the recent removal of a fuel subsidy), reduced maize supplies, and increased maize demand from neighboring countries. Cross-border monitor reports indicate that traders from Zimbabwe are purchasing maize in Zambia.

Following the Government’s announcement in May that they will no longer supply maize to millers this marketing season, both millers and traders are purchasing large volumes of maize on the market at prices mostly above the FRA buying price of K65 per 50kg. The current market prices are ranging from K65 to K75 per 50kg. Farmers who had been holding their stocks in anticipation of selling to the FRA started selling to the private sector and this is improving supplies in major towns including Lusaka, while also increasing supplies to the areas near the Democratic Republic of the Congo (DRC) border. Since the start of the FRA maize purchase program has been delayed by two months, small scale farmers are generally satisfied with the demand from the private sector, along with their price levels and spot cash purchases.

Assumptions

The Food Security Outlook for July to December 2013 is based on the following national-level assumptions:

Staple food supply: Zambia attained an average production of maize for the 2012/13 growing season. When compared to the previous 2011/12 season, maize production decreased by 11 percent, nonetheless the country has adequate stocks to meet national demand while still maintaining a 454,000MT surplus. Therefore it is assumed that the supply of the staple foods on the market will remain stable throughout the outlook period.

Markets and prices: Given the increased fuel prices, transport costs are expected to remain high and will contribute to increased maize marketing costs. Maize and maize meal prices are expected to remain at levels above the previous season and the recent five-year average. The delayed commencement of maize purchases for strategic reserves by the FRA at a fixed price, coupled with high maize demand from neighboring countries (including Zimbabwe and the DRC), are expected to keep maize and maize meal prices high during the July-December period.

Maize and maize meal trade: Despite restricted formal exports, informal maize exports are expected to substantially increase given delays in the start of FRA purchases and high regional demand for maize. Small scale farmers will sale most of their maize to the traders (local and foreign) who are offering cash and higher prices. Most formal exports will be restricted to government to government arrangements and through World Food Program (WFP) exports for humanitarian assistance. Formal maize exports that were contracted at the government level last marketing season are likely to be fulfilled. This will likely include exports to Tanzania (20,000 MT) and Zimbabwe (150,000 MT), part of which have already been exported. The prevailing high and increasing maize prices are likely to trigger informal maize inflow from neighboring Mozambique and Tanzania.   

Start of season: Based on climatology, FEWS NET expects a normal start of the rain season. In the extreme north-western parts, the season is expected to start in October. The rest of the country is expected to experience an onset of rains in November. This expected start of season is not expected to affect the projected normal labor availability levels that are typical between October and December.

Most Likely Food Security Outcomes

Although the Zambia VAC findings indicate that a small proportion (<20 percent) of households in 18 districts will face some livelihood protection deficits during this consumption year, most poor households across the country will experience Minimal (IPC Phase 1) acute food insecurity outcomes during the outlook period (July to December). Despite national maize production declining by 11 percent when compared to production levels during the 2011/12 season, in country stocks will adequately meet the national requirement.

During the July to September period, most rural households in the northern parts of the country and parts of the southern region will depend on own produced food. Farmers with large harvests this season will earn more income for their grain due to strong demand and rising prices. In areas where production was significantly reduced due to erratic rainfall this season, households will likely finish their food stocks much earlier than usual (by the end of July). The poor will engage in non-agriculture labor sale in order to earn income needed to make food purchases. Throughout the outlook period, small traders will be supplying maize to deficit areas from surplus areas in order to ensure that staple food is available on the market. If staple food prices rise to abnormally high levels, the Government (through the FRA) will likely embark on maize community sales in order to make food more accessible to poor households and in order to stabilize prices. In addition to this, the Disaster Management and Mitigation Unit (DMMU) will commence relief distributions to the 18 districts identified by the VAC as being in need of assistance. No external staple food assistance will be required since country stocks are adequate.  

High staple food prices are expected for the duration of the outlook period (July-December). Given the delayed start of FRA purchases at fixed prices most maize supplies are being purchased at high prices by the private sector and these high prices are expected to be passed on to consumers. Maize and meal prices are expected to rise earlier than usual (July instead of September) due to increased transport and marketing costs, and strong regional demand. The prices are likely to remain higher than the previous season and above the five-year average throughout the outlook period. As demand increases, maize and maize meal prices are likely to continue rising steadily from July to October and then more steeply from November to December, with the onset of the lean season. These high food prices are expected to reduce poor household purchasing power.

Restricted maize exports are expected to continue. The supply of maize locally will continue to be sustained to some extent by stringent export permit regulations which will limit formal exports. However, in the case of informal exports the relaxed border patrols will ensure significantly increased maize flow into the DRC between July and December. With already increasing supplies to the DRC, the prices at the DRC border have dropped by approximately 30 percent. As in previous years, informal maize imports from Tanzania and Mozambique are expected to increase during the outlook period as traders take advantage of the high selling prices in Zambia.

Gwembe Valley livelihood zone (Sinazongwe, Gwembe, Siavonga, southern Kalomo and southern Kazungula districts)

Current Situation

Households in this area are meeting their basic food needs from their small harvests this season and supplementing this with wild foods and market purchases made through income earned from the sale of wild foods and non-agricultural casual labor. Household members are engaging more in non-agricultural labor opportunities including brick-making and thatch grass collection. Because of the reduced harvest this season, household food stocks and variety has also significantly decreased. Households in this livelihood zone are generally employing their usual livelihood strategies in order to earn income. Some of these activities include working for food, gathering wild foods, and to a less extent brewing.

Assumptions

• By August, there will be inflow of maize from high producing districts of the Southern province to areas in the Gwembe Valley livelihood zone and this will satisfy demand and increase market supplies.
• Due to reduced harvests this season, household food stocks are expected to be reduced by as much as 50 percent. Therefore, households will finish their own food stocks much earlier than normal and they will need to depend on the market purchases.
• Between July and September labor availability is likely to be reduced because production from the better-off households was negatively impacted this season. However, from October to December demand for agricultural labor will increase as land preparation begins for the 2012/13 season.
• Little or no vegetable production is expected by poorer households since streams are dry due to poor rainfall performance this season.
• Recent changes to the input subsidy program and the new mode of accessing subsidized inputs (maize/fertilizer barter system) is likely to reduce small scale farmer access to fertilizers.   

Most Likely Food Security Outcomes

The poor households in affected areas will likely finish their food stocks much earlier than usual (in July). Households will likely start to increase consumption of wild foods and other less preferred foods when they finish their own food stocks and they will also make market purchases in order to meet their food needs. Due to reduced harvests this year, income from both agricultural and non-agriculture labor between July and September will be low because better-off households will have less income to hire labor for construction. In order to raise some income, poor households will increase their collection and sale of wild foods, while also selling some chickens. Because millet and sorghum harvests were also reduced, the reliance on brewing as an income source will likely be lower than normal. Additionally, off-season vegetable production and sales will be lower than normal during this outlook period because of erratic rainfall. Household members in this area will probably have to look outside of their districts for labor opportunities. In search of casual work to supplement their income, some family members will likely migrate to neighboring districts, including Choma, Monze, and Mazabuka.

By October, labor availability will start to improve as land preparation begins. Labor opportunities are expected to increase and remain high during the November-December period. As identified through the VAC assessment, there will be some poor households (<20%) during this period that will face small livelihood protection deficits during this period. Despite this, the acute food insecurity outcomes for most households will remain Minimal (IPC Phase 1) throughout the outlook period.

Kazungula Mwandi Plains livelihood zone (South Kazungula, Sesheke and Mwandi districts)

Due to erratic rainfall this season, poor household production in this area was reduced by approximately 50 percent. Household food stocks will likely be finished by July instead of September. Households are meeting their basic food needs by consuming their own production and through labor exchange for food. Due to reduced harvests this year, income from non-agriculture labor between July and September will be low because better-off households will have less income to hire labor for construction. However, other income sources for poor households include selling wild foods and fish. In order to meet their basic food needs during the August to September period, the households will increase their collection and sale of wild foods and fish, will also increasing their consumption of wild foods to help reduce their food gap. In August, the DMMU will start food relief distributions to assist the poor households (<20%) identified by the VAC that will face small livelihood protection deficits during this period. By October, labor availability will start to improve as land preparation begins. Labor opportunities are expected to increase and remain high during the November-December period. Generally, the poor households in these areas will face Minimal (IPC) acute food insecurity throughout the July to December outlook period.