Liquidity challenges spur bartering and continue to negatively impact terms of trade

• Crisis (IPC Phase 3) food security outcomes are expected to continue in much of the south and parts of the north, despite ongoing humanitarian assistance. This is due to low levels of humanitarian assistance in areas where households are experiencing large consumption gaps. Emergency (IPC Phase 4) outcomes are also expected to persist in the most critical areas. Indications are that the overall level of humanitarian assistance between January and March 2017 will remain more or less the same as December’s levels, despite the approach of the peak lean season.  

• Even with the introduction of bond notes at the end of November, cash shortages still persist. Liquidity challenges continue to have a negative impact on terms of trade for poor food insecure households, demand for on-farm and off-farm labor, and labor wages. This is resulting in a negative impact on rural and urban livelihoods, as well as prices of goods and services.

• As of December 28th, most of the country has received normal to above normal rainfall, with the exception of parts of Masvingo, Midlands, Matebeleland North and South, and northeast Mashonaland Central Province where rainfall has been below the long-term average. There has however been marginal increases in dam levels in most parts of the country. Crop conditions are mainly good in the north, but only fair in the south due to erratic rainfall. 

Macroeconomic Conditions

• Almost a month after the Reserve Bank of Zimbabwe (RBZ) introduced bond notes to help ease the cash shortages in the economy, the situation has not improved. Long bank queues and withdrawal limits still persist. The popular mobile money transfer platforms are increasingly being disabled due to cash shortages. 
• Increasingly, barter trade has become a common mode of payment for goods and services, especially in rural communities. However, liquidity challenges are negatively impacting terms of trade for poor food insecure households, demand for on-farm and off-farm labor, and labor wages. This situation is expected to worsen during the end of year festive season as well as the new school year in January 2017.

Seasonal progress

• The distribution of rainfall improved in December in comparison to November. The Meteorological Services Department reported that all of Manicaland Province and the bulk of the Mashonaland Provinces, eastern Masvingo, western Matebeleland North and South Provinces, and northeastern Midlands Province had received normal to above normal seasonal rainfall (over 75 percent of their long-term average). The rest of the country had received normal to below normal rains.   
• The improved rainfall situation has marginally increased average dam levels following record low levels. The Zimbabwe National Water Authority reports that national average dam levels as of end of December stood at 41.1 percent (from 37.7 percent at the end of the first week of December) compared to an expected average of 60 percent same time of the year.
• There has been significant improvement in water availability for human, livestock and other livelihood uses across most parts of the country. Though pastures condition has revived in the north, the situation is still to show improvement in the most critical areas in the south where cattle conditions remain poor. Planting, weeding and fertilizer application are common seasonal activities in most areas.
• The November 2016 ZIMVAC markets assessment indicated that maize seed was generally not available on the markets. Nationally, only 21 percent of retailers were selling maize seed. Small grain and legume seeds were also generally unavailable. Considering low access by poor households due to constrained livelihoods, challenges in accessing seed may be contributing to relatively low cropped area compared to normal potential. Also, fertilizers are in short supply on the markets as local producers are failing to meet demand due to foreign currency shortages to import raw materials. There is high demand for fertilizers especially in the north due to persistent rains in December which are expected to continue into the second half of the season. The Government is assisting selected farmers with crop inputs under Command Agriculture, the Presidential Input Scheme and the Cotton Input Scheme, though details on coverage were not readily available. Partner support with crop inputs has been constrained by resource challenges. Crop conditions are fair to good in the north. In the south the crop conditions are fair, but water stressed in some areas where the rains have been erratic (Figure 2).
• Compared to last season, the number of farmers who registered to grow tobacco for the 2016-17 season went up 6 percent (to about 73,500) as of the start of December (Tobacco Industry and Marketing Board). Cropped area increased by 12 percent to 32,200 hectares, from about 28,900 hectares. Some farmers who planted early are reportedly harvesting their crop in readiness for curing. The RBZ has urged stakeholders to consider opening auction floors much earlier than they did last season. Tobacco is the highest foreign currency earner for Zimbabwe and is expected to ease the prevailing liquidity crisis when the marketing season starts, which is usually mid-February. Last year marketing started at the end of March.

Maize availability

• About 68,600 MT of maize was formally imported in November, 24 percent less than in October but 28 percent above same time last year (Zimbabwe Revenue Authority updates). Maize imports between April and November this year (584,700 MT) were 40 percent above last year same time (about 418,000 MT). A significant national deficit remains till March 2017.
• With a few exception areas, market supplies of maize grain from local sources have largely dried up. Unlike same time last year, imported maize grain is generally unavailable on open markets.  Maize meal is readily available across most markets, with demand rising as maize grain supplies fall or dry up.

Trade and Market Functioning

• December average maize grain price ($0.40/kg) for FEWS NET sentinel markets was stable compared to the previous month, though 2 percent below same time last year and 7 percent above the five-year average. As in previous months when average maize meal prices were stable, the December price ($0.59/kg) was 3 percent below last month and 1 percent above both same time last year and the five-year average.

Humanitarian assistance

• In December, beneficiary targeting increased for a few notable districts in Manicaland, Masvingo, Midlands and the Matebeleland Provinces, for the October-December period. However, in some cases this increase was not significant enough to improve the area acute food insecurity IPC classifications from Crisis (IPC Phase 3) and Emergency (IPC Phase 4). As of late December, there are no major changes expected in humanitarian assistance coverage in most districts during the peak lean season (January to March 2017).

The assumptions used to develop the most likely scenario for the October 2016 to May 2017 Outlook period are still valid. 

Generally, livelihood options and households incomes will remain constrained given the prevailing economic and liquidity challenges. Persistent cash shortages during the festive season coupled with increased non-food demands in the new school term in early 2017 will put pressure on access to food for poor households.  

In the south, labor opportunities and rates will remain poor for the entire Outlook period. As of end December, below average rainfall has been received across much of the south. Unfortunately, forecasts are also for normal to below normal rains for the second half of the season (January to March 2017). These conditions in combination with poor seed and fertilizer availability and liquidity challenges are adversely impacting farmer demand for labor as well as labor wages. This could potentially affect the availability of green harvest and main harvest prospects this season. Due to low coverage of humanitarian assistance in most areas, a significant proportion of the populations will continue to rely on markets. Maize and maize meal prices have increased slightly and remain above average, which could further constrain food access. Because of significant survival and livelihoods protection deficits in most areas in the south, Crisis (IPC Phase 3) food security outcomes are expected in most areas whilst Emergency (IPC Phase 4) outcomes are expected in and the most critical areas, even in the presence of humanitarian assistance. Some districts receiving humanitarian assistance will have Stressed (IPC Phase 2!) outcomes, but most of them will maintain Crisis (IPC Phase 3) outcomes due to low levels of humanitarian coverage.  

In parts of the north, Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes are expected from December through March. Though significant rains have been received in December in the north and in the east, farmer demand for casual labor opportunities is low due to liquidity constraints and low surplus grain stocks for better-off households to use as in-kind payments. This situation is expected to prevail until March 2017. Green harvests are expected to be normal starting around February to March which will enhance food access and diversity. The start of the main harvests from April to May is expected to improve both labor opportunities for harvests as well as labor rates, mainly in-kind. Still, poor households will continue to face significant livelihoods protection deficits even though they may be able to meet their minimal food requirements. No significant humanitarian assistance is expected in these typically cereal-surplus areas.