Food Security Outlook

Maize and meal prices remain far above five-year average despite bumper harvest

July 2014 to December 2014
2014-Q3-1-1-ZM-en

IPC 2.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
Would likely be at least one phase worse without current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.

IPC 2.0 Acute Food Insecurity Phase

1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET classification is IPC-compatible. IPC-compatible analysis follows key IPC protocols but does not necessarily reflect the consensus of national food security partners.
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

IPC 2.0 Acute Food Insecurity Phase

Presence countries:
1: Minimal
2: Stressed
3: Crisis
4: Emergency
5: Famine
Remote monitoring
countries:
1: Minimal
2: Stressed
3+: Crisis or higher
Would likely be at least one phase worse without
current or programmed humanitarian assistance
FEWS NET Remote Monitoring countries use a colored outline to represent the highest IPC classification in areas of concern.

Key Messages

  • Acute food insecurity outcomes are expected to remain at Minimal (IPC Phase 1) levels through December 2014. The maize harvest of 3.35 million MT, following five years of consecutive surplus production has enabled majority rural households to have adequate staple food stocks and therefore mostly depend on own production. In addition, rural farming households are accessing a variety of basic foods from the harvest.

  • Although maize prices fell seasonally after the harvest, unexpected price increases have been recorded in July within Lusaka following the announcement of a nine percent increase in the Food Reserve Agency (FRA) maize buying price. Recent price increases are likely due to farmers temporarily holding on to their maize in anticipation of sales to FRA. Consequently, maize meal prices will likely be sustained at high levels up to August to the disadvantage of market-dependent consumers.

  • In view of the likelihood of an El Nino developing by the start of the 2014/15 season and based on past El Nino years, there is a 40 percent chance of southern Zambia experiencing below-normal rainfall in the early part of the season (November to December). Farmers will need to prepare for this to mitigate effects of possible reduced rainfall.

National overview

Current situation
  • Minimal (IPC Phase 1) acute food security outcomes are prevailing across Zambia, due to the record 3.35 million MT maize harvest that has followed several consecutive years of surplus production, as well as the seasonally good variety of foods available following the harvest beginning in April.
  • Although the Vulnerability Assessment Committee (VAC) findings established that 351,000 people will require food assistance from August 2014 to March 2015, mostly in Western Province, it is also clear that this is mainly due to chronic food deficits attributable to high poverty levels.
  • Following sustained high prices during the previous season, maize prices were on the decline up to June due to increased market supply and reduced demand by rural households. Among the provincial centers, price reductions in June ranged from three to 33 percent, with Choma (high producing) district of Southern Province recording the largest decrease. However, these prices still remained significantly (on average ~30 percent) above the five-year average due to high transport costs and high levels sustained in the previous season. Meanwhile, maize meal prices showed no decline and remained above the five-year average. Retail maize meal price reductions were recorded in some areas only for the less refined roller meal whose demand is at its lowest as low income households currently prefer purchasing grain and milling it.
  • After the announcement of increased FRA maize buying price (70 ZMW/50 kg in 2014 from 65 ZMW/50 kg in 2013), significantly less maize is reaching public markets in Lusaka as farmers wait to sell their stocks to the FRA at the above-market price. This has resulted in unexpected price increases as these markets increase prices, which is a major source of maize for low-income urban consumers who are buying maize to process at hammer mills.
  • Informal trade activity has increased at the DRC border, as July/August is the peak informal maize export period. Due to the large maize stocks available, prices at the border have dropped, as is normal. July field reports suggest that more maize meal is being informally exported than maize grain at this time at the Kasumbalesa border. In July, an increased number of Tanzanian traders were reported to be purchasing maize in Nakonde for eventual sale in Kenya, which is sustaining high maize prices in that area. Consequently, it is offering farmers a good market as the FRA has not yet started purchasing maize in the area and local private sector purchases have not yet picked up. 
National Level Assumptions
  • Staple food availability: Given the bumper maize harvest of 3.35 million MT, and consequently the large surplus of 1.15 million MT, it is expected that there will be adequate staple food supply on the market during the July to December outlook period. Additionally, most farming households will depend on own maize stocks and a variety of seasonal foods to meet basic food needs from July up to September. Dependency on the market will slowly increase from October to December as own stocks reduce and eventually run out for some households.
  • Maize market and prices: The Food Reserve Agency (FRA), which started buying maize in July, is expected to purchase no more than 500,000 MT for strategic reserves. The 70 ZMW/50 kg FRA price is 27 percent above market price and will likely sustain high maize and meal prices close to the previous year’s elevated levels during the July to August period. The participation of the private sector in the maize market will largely depend on the level of FRA maize market intervention.
  • Given the large surplus, the slow pace at which FRA is purchasing maize, and the limited storage potential at household level, farmers will increase their sales to the market by September. Farmers will need to quickly sell off excess maize before the rains start and in order to purchase inputs for the 2014/15 production season. This is likely to bring maize and meal prices to lower levels than the previous season, but will still remain above the five-year average.
  • Maize flows and trade: Although Government lifted the maize export restrictions in April, to allow for more robust exports given the large surplus, the limited immediate regional market will likely constrain the volumes of both formal and informal maize exports during this outlook period. Good harvests in neighboring countries, coupled with import license suspensions imposed by Zimbabwe, are likely to reduce the amount of maize Zambia can export regionally. On the other hand, if demand from the Horn of Africa increases substantially, informal exports could substantially increase through Tanzania in order to supply maize-deficit countries in East Africa. Informal exports to the DRC will follow typical trends, peaking in the July to September period and then falling thereafter. Given the large surplus and removal of restriction on maize exports, the maize prices at the DRC border will be significantly below the previous year.
  • Local purchases for regional humanitarian assistance: In view of the large maize surplus, there will be increased opportunities for the World Food Programme (WFP) to purchase Zambian maize and to supply countries with strict GMO maize policies in southern and East Africa.
  • Labour opportunities: As farmers carry out processing and marketing activities, it is expected that both agricultural and non-agricultural labour opportunities will be typical for the July to December period given the good harvest. Poor households will mostly depend on working for the better-off to meet their basic food needs through in-kind and cash receipts.
  • Agro climatology: There is a high (80%) likelihood of an El Nino developing by the start of the 2014/15 production season. Although the El Nino phenomenon is generally associated with below-average rainfall (40 percent chance) in Southern Africa, affected areas can vary with each occurrence. In view of this forecast and based on past experience, southern Zambia is likely to receive below-normal rainfall during the November to December period.
Most Likely Food Security Outcomes

During the July to December outlook period, Minimal (IPC Phase 1) acute food insecurity outcomes are likely to prevail. The variety of seasonal foods and large maize production will increase access to basic foods from own harvest for most farming households through at least September. Coupled with a limited regional market, this will likely translate into a milder lean season (November-December) for farming households. Additionally, labor opportunities in rural areas are likely to remain at normal levels as better off households have more food from their harvest to pay for labor. This will increase access to basic foods for the poorer households.

The 18 percent increase in maize prices at Lusaka public markets from June to July is likely to be temporary (July-August), but will negatively impact mostly poor urban consumers who are heavily dependent on maize and maize meal from the market. Maize and maize meal prices are likely to slightly fall/stabilize in September and October, when supply will significantly increase as farmers hurry to sell off excess maize before the rainy season starts. In November and December, prices will increase as the lean season starts and more rural households depend on the market. Throughout the outlook period, maize and meal prices will remain above the five-year average.

The regional market for maize will likely remain limited given the good harvest in most of the Southern African countries sustaining good local supplies. However, increasing demand from Kenya could offer a good market for farmers in the northern parts of the country through increased informal trade to Tanzania. Additionally increased demand from East Africa could increase WFP local purchases providing producers an increased market and assured earnings.

Areas of concern

Zambezi Plain, Rice, Livestock and Fishing Livelihood Zone (Kalabo, Sikongo, Mongu, Limulunga, Senanga districts)

These are districts with localized high poverty levels and generally experience chronic food insecurity.

  • Current Situation. Most households are accessing the little own harvest, which is expected to last for about four months, and food from agricultural labor exchange. In addition, some households are accessing food from the market with income from agricultural labor, beer brewing, and fishing. Households in the game management area of Liuwa Park are already depending on the market as crop production is hampered due to damage by wildlife. Overall current acute food insecurity is classified as Minimal (IPC Phase 1).
  • Staple food is available at local markets, and June maize prices at Mongu (reference market) are 1.67 ZMW /kg which was a 19 percent reduction from the May 2014 price, but above previous season and the five-year average by 11 percent and 32 percent, respectively.
  • Cattle and small livestock are generally in good condition during this period as pasture conditions are good and the disease burden is lower. On the other hand surveillance and vaccinations for the endemic Contagious Bovine Plural Pneumonia (CBPP) are ongoing by the Ministry of Agriculture and Livestock (MAL).

Assumptions

  • In addition to the national assumptions described above, the following assumptions have been made for this area of concern:
  • Staple foods from own production are likely to run out by September and households will mainly depend on the market with incomes from sale of fish, rice, charcoal, and brewing, while also exchanging fish and labor for food.
  • Households with access to land in the plains (wetlands) will engage in off-season maize cultivation and will harvest in November/December.
  • Agricultural and non-agricultural labor (thatching and construction) opportunities are likely to be normal as better-off households have adequate stocks of maize and rice.
  • Based on the June VAC assessment findings, 18 percent of the population will be eligible for relief food (for livelihood protection), during the outlook period starting in September. The food will be provided by the government through the DMMU and implemented by local CBOs for either food-for-work or general food distribution for households with disabled or ill members.
Most–Likely Food Security Outcomes

Poor households will meet their minimum food requirements from July to September, mainly through own production and market purchases of food. For the October to December period, poor households will mainly depend on the market and exchange of labor and fish for food, own off-season production for November and December period and those eligible relief food. Households will engage in normal coping strategies such as increasing sale of labor, more wetland cultivation and reducing non-essential expenditure in order to meet minimum adequate food consumption. Overall the most likely food security outcome for the whole outlook period is minimal acute food Insecurity (IPC Phase 1).

Events that Might Change the Outlook

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

Area

Event

Impact on food security outcomes

National

Increased FRA purchases far above the targeted 500,000 MT for strategic reserve would likely disrupt effective private sector participation.

 

This would distort the market prices, maintaining them at relatively stable and higher levels. Additionally, FRA would by December become the major source of maize for millers as has happened in past years. When the rural households run out of own stocks in the November to December period and look to the markets, they will be facing higher staple food prices, reducing their purchasing power.

National

Significant increase in maize demand from Tanzania to serve Kenyan market.

A good regional market would open up, providing producers with a ready market and assured earnings. On the other hand, if the market is large enough, it could result in prices in Nakonde and surrounding areas increasing to levels observed during the previous season. This would reduce the purchasing power of consumers, especially in the November-to-December period when they effectively depend on the market for staple food.

 

About Scenario Development

To project food security outcomes, FEWS NET develops a set of assumptions about likely events, their effects, and the probable responses of various actors. FEWS NET analyzes these assumptions in the context of current conditions and local livelihoods to arrive at a most likely scenario for the coming eight months. Learn more here.

About FEWS NET

The Famine Early Warning Systems Network is a leading provider of early warning and analysis on food insecurity. Created by USAID in 1985 to help decision-makers plan for humanitarian crises, FEWS NET provides evidence-based analysis on approximately 30 countries. Implementing team members include NASA, NOAA, USDA, USGS, and CHC-UCSB, along with Chemonics International Inc. and Kimetrica.
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