ALERT STATUS: NO ALERT Food Security Update WATCH WARNING August 2006 EMERGENCY

CONTENTS Summary and implications Summaries and timeline ...... 1 Markets and prices ...... 2 Three to four months after the harvest, a majority of households still have food from their Special Focus: Interventions-with own production. According to the livelihood baselines, the majority of households in the emphasis on .....4 poor wealth groups start running out of food in September/October in a normal year, and Macro-Economics ...... 5 earlier in a bad year. Although in most of the country, this year can be described as a Appendix 1 ...... 6 normal to above-normal year in terms of crop production, there are some exceptions. In parts of Kasungu, Dowa, Ntchisi, Mzimba, Phalombe, Nsanje, Chikwawa, Mangochi and Nkhatabay districts, where production was affected by prolonged dry spells and floods, households have already started to run out of food. Most of these households will require some assistance to obtain food in order to make it through this season. Elsewhere, farmers continue selling their crops, and, where possible, are cultivating winter crops.

Some local markets, particularly in areas that experienced significant crop failure, are beginning to show an early rise in maize prices, and the rising prices will limit the ability of poorer households without any food reserves to purchase food.

Seasonal timeline

Current hazard summary

• Prices have begun to rise early on some local markets in areas where food production was poor this season.

Food security summary

The household food security situation this season is much better than it was last season, due to the bumper harvest of various crops across the country. However, there are a few exceptions where crops did poorly due to prolonged dry spells and floods. The Malawi Vulnerability Assessment Committee (MVAC) has determined that these areas are in need of assistance. In some of these areas, local market maize prices are already beginning to show upward trends, and this is a matter of concern because higher prices could worsen the food security situation, especially if timely interventions (e.g., food aid distribution, cash for work programs and input provision) are not carried out. The results of the MVAC assessment were only released late July, and as of yet there have been no official interventions in response to the findings. Food security stakeholders would first like to review the ongoing and planned interventions in the areas affected by dry spells and floods as these interventions were not taken into account in the MVAC analysis. It is anticipated that their inclusion could result in a reduction of the required level of intervention. Prior to the MVAC assessments, reports by various stakeholders, including FEWS NET, pointed to anticipated food security problems in the affected areas. FEWS NET for instance, had prepared a special report on the anticipated future food security problems in Kasungu and surrounding areas in February, after the serious dry spells had just occurred in the area. Some stakeholders, including the government, responded immediately with various types of short-term interventions. The government, in particular, has supported some households with water pumps where irrigation was possible in order to allow some of the affected

FEWS NET is a USAID funded activity. Comments or questions regarding this report can be addressed to Sam Chimwaza, FEWS NET representative for Malawi: FEWS NET/Malawi, Off Chilambula Road, Old Town, P.O. Box 30455, Lilongwe 3, MALAWI (Tel) 265 1 754892; (Fax) 265 1 754892; Email:[email protected]

Disclaimer: The authors’ views expressed in this publication do not necessarily reflect the view of the United States Agency for International Development or the United States Government.

MALAWI: FOOD SECURITY UPDATE AUGUST 2006 households to improve food production to last later into the consumption year. There have also been one-off private food donations in some of these areas. Stakeholders feel the need to review these actions and their impacts so that they can respond in an appropriate manner to the MVAC findings. However, with some households’ capacities to access food dwindling already, time is of the essence and the review should be done as soon as possible before the situation gets out of hand.

In most parts of the country, households still have food from own production as a result of the favorable harvest this season. This has resulted in a reduction in market demand for food, especially maize, which in turn has resulted in relatively stable and low maize prices in most of the local markets.

Farmers are busy selling various crops to traders and the Agricultural Development and Marketing Corporation (ADMARC). Following the passage of the national budget, ADMARC’s finances have improved and it has intensified its buying activities. This time, ADMARC is buying mainly maize, and as of the end of the third week of August, had purchased about 40,000 MT. In some areas, the ADMARC fixed price has influenced the buying prices private traders offer, pushing them upward; although, in a majority of cases, prices have not gone beyond the MK20.00/kg ADMARC price. These prices appear to be attractive for households that are selling their crops. It is against this background, that the government is warning households not to oversell their maize and limit what they retain for consumption, because such behavior could potentially compromise their household food security later in the season.

Traders who won tenders to supply the National Food Reserve Agency (NFRA) with maize continue to make deliveries to NFRA. By the end of the fourth week of August, the NFRA had received about 18,200 MT of the total 22,000 MT awarded contracts. Deliveries for the other tender of 40,000 MT of maize are yet to begin.

Markets and prices

According to the price data sourced from the Figure 1: Average maize price trends for selected local markets Ministry of Agriculture and Food Security 50.00 (MoAFS), average maize prices in the local markets NTCHEU BEMBEKE 45.00 NANJIRI MITUNDU KASUNGU for the first three weeks of August ranged from NSANJE LIWONDE CHINTHECHE MK13.05/kg at Hewe market in the northern region 40.00 MWANZA to MK27.31/kg at Kasungu market in the central 35.00 region (see Figure 1). The high local market maize 30.00 price at Kasungu market is a manifestation of the food security problems in the area emanating from 25.00 MK/kg the poor crop production this season. In the 20.00 northern region, maize prices range from 15.00 MK13.05/kg at Hewe market in to MK23.17/kg at market in Karonga 10.00 District. In the central region, maize prices ranged 5.00 from MK15.17/kg at Kasiya market in Lilongwe 0.00 District to MK27.31/kg at Kasungu market in April May June July August Kasungu District. In the southern region, maize FEWSNet/Malawi Source: MoAFS prices ranged from MK15.29/kg at Namwera market in to MK22.83/kg at Liwonde market in . Although the highest maize price was registered in the central region, the prices are generally highest in the southern region with a median price of MK20.00/kg, followed by the northern region at MK19.01/kg and then the central region at MK18.65/kg.

Some of the markets registered a drop in maize prices in August, while others registered an increase. There are various reasons for this. Supply and demand are affected by a number of factors including whether the households still have food from their own production, which itself is a function of the amount harvested and the time elapsed since the harvest, and these factors vary across the country. Out of the 60 local markets for which data was available, about 42% of them registered maize price decreases ranging from 0.2% at Mchinji market in to 9.6% at Ntonda market in . However, the majority of markets registered price decreases of less than 5%. About 57% of the markets registered price increases ranging from 0.1% at Mpamba market in Nkhatabay District to 59.5% at Kasungu market. The remaining 1% of the markets registered no change in maize prices between July and August. It appears the downward price trend experienced after harvest is beginning to reverse itself, although, it is too early to draw conclusions.

2 MALAWI: FOOD SECURITY UPDATE AUGUST 2006

In some markets, the typical seasonal upward Table 1: Local market maize price (MK/kg) comparison between August 2005 and 2006 trend has almost established itself as shown in Region Market Aug-05 Aug-06 % Region Market Aug-05 Aug-06 % Figure 1. The graph shows the markets where Southern MWANZA 32.10 19.44 -39% Central SANTHE 18.00 17.00 -6% Southern NAMWERA 22.84 15.29 -33% Central NSUNDWE 19.84 18.89 -5% prices are already showing a rising trend. At Central NKHOTAKOTA 25.73 18.65 -28% Northern HEWE 13.50 13.05 -3% Kasungu market, maize prices are rising rapidly. Southern THONDWE 26.64 20.00 -25% Central LIMBE 22.00 21.67 -2% Southern MANGOCHI 25.70 19.39 -25% Central DWANGWA 22.19 21.89 -1% This will negatively affect household food Southern LUCHENZA 28.12 21.50 -24% Central DOWA 18.25 18.29 0% security in the area as most households there Central MCHINJI 21.54 16.60 -23% Central NKHOMA 18.45 18.60 1% Southern NTONDA 21.09 16.27 -23% Central THETE 17.20 17.50 2% depend on the market for food due to the poor Southern BANGULA 23.41 18.15 -22% Central LILONGWE 19.97 20.64 3% Southern LIZULU 20.40 15.85 -22% Northern MZUZU 17.55 18.42 5% crop production this season. Southern NGABU 22.77 17.78 -22% Central NTCHISI 20.06 21.16 5% Southern NTAJA 22.31 17.63 -21% Southern ZOMBA 18.00 19.00 6% Southern PHALOMBE 26.45 20.97 -21% Central MITUNDU 18.88 20.00 6% Comparison of the local market maize prices Southern MONKEY BAY 26.84 21.75 -19% Southern LIWONDE 21.32 22.83 7% between this season and last season indicate that Southern NCHALO 24.88 20.37 -18% Southern JALI 18.69 20.15 8% Southern BALAKA 25.00 20.57 -18% Central BEMBEKE 21.43 23.13 8% the prices in August are generally lower than at Central CHIMBIYA 19.70 16.33 -17% Northern CHILUMBA 21.27 23.17 9% the same time last season. This is generally Central NTCHEU 22.72 19.03 -16% Northern CHITIPA 13.96 15.50 11% Southern LUNZU 24.27 20.33 -16% Northern RUMPHI 17.66 19.79 12% because this season’s production is much better Southern MULOZA 23.64 20.00 -15% Northern NKHATABAY 18.42 20.87 13% Southern NSANJE 24.00 20.55 -14% Northern KARONGA 18.79 21.60 15% compared to last season, especially for the Southern CHIKWAWA 25.51 22.22 -13% Northern MZIMBA 16.02 18.71 17% southern region. Table 1 shows a comparison of Southern BVUMBWE 22.94 20.00 -13% Northern CHINTHECHE 17.12 21.50 26% Northern MPAMBA 20.64 18.06 -13% Northern EMBANGWENI 14.00 18.08 29% these prices in August this season and in August Southern MAYAKA 19.50 17.22 -12% Northern JENDA 14.70 20.44 39% last season. The northern region on the other Southern CHIRADZULU 21.12 18.95 -10% Central KASUNGU 18.90 27.31 44% Central MPONELA 20.46 19.02 -7% Northern NTHALIRE 12.46 19.31 55% hand has registered price increases over the Central NANJIRI 20.84 19.38 -7% Northern MISUKU 9.51 16.11 69% same time period last season. In the central Source: MoAFS region the picture is quite mixed, with some markets registering decreases and others increases compared to the same time last season.

Maize prices are a significant determinant of household food security in Malawi and are therefore an integral part of the equation when forecasting food security. The MVAC generally felt that since this year’s potential price increases are localized and not expected to rise as much as last season, one price-based scenario would suffice. Given the much lower production and expectations of steeper price increases last year, the MVAC had employed two price-based scenarios. This year maize prices are assumed to rise by the inflation rate, which generally translates into an approximate 77% increase in prices compared to the 2002/03 baseline year. This will result in overall average prices of about MK30.00/kg over the learn season (December-March) when prices tend to peak. However, the actual situation this year varies across each livelihood zone, as shown in appendix 1. It is important, therefore, to continually monitor maize prices in each local market in relation to the scenario threshold so that any significant rise above this price can be caught early, which will allow for timely and appropriate actions. Appendix 1 shows average local market maize price trends per livelihood zone compared to the expected prices under the current scenario (scenario 1). Due to a lack of data, the MVAC is only able to present information for 13 of the 18 livelihood zones within the country. The zones without adequate information include Phirilongwe, Rift Valley, Nkhatabay Cassava, Misuku and Northern Karonga. The MVAC estimates that the population at risk of food insecurity this season is around 833,000 people, a majority of whom are in Kasungu District, which was the district worst affected by the dry spells this past season. The missing food entitlement for this population is about 57,300 MT of maize or maize equivalent. The MVAC also identified about 147,000 people who are on the borderline, and would become food insecure should maize prices rise above MK30/kg. These people are located in Machinga, Mulanje and Lilongwe districts.

Special Focus: Interventions – with emphasis on Kasungu District

The MVAC last month released the findings of its April/May assessment for the 2006/07 consumption year. According to the findings, the Kasungu Lilongwe Plain livelihood zone, especially Kasungu and surrounding Dowa and Ntchisi districts, are the most food insecure in the current consumption year, with most of the households in the poor wealth group missing over 30% of their food entitlements. Kasungu District appears to be the worst affected in this zone. According to the MVAC findings, Kasungu District accounts for the largest proportion (29%) of the population at risk of food insecurity this season, as shown in Table 2. There has not yet been a coordinated response to the findings in the report. It will be important to take stock of what ad hoc activities are already underway in the affected areas to clearly specify the type, quantity and location of need within the areas identified by the MVAC. This is in recognition of the fact that some interventions are ongoing in some of the affected areas, but the composition and coverage of these interventions remains unclear. However, urgent response is required while many people are still able to cope, rather than wait until the situation gets out of hand.

3 MALAWI: FOOD SECURITY UPDATE AUGUST 2006

Normally Kasungu Table 2: Population at risk Figure 2: Sources of household income in the Lilongwe Plain livelihood District with Kasungu Lilongwe Plain livelihood zone populations at Population at 100% zone is highly productive, self empl. and households, especially risk risk % 80% livestock ganyu those in the middle and Balaka 25,900 3% 60% food crops better-off wealth groups, are maize sales Blantyre 106,500 13% 40% highly self-sufficient and tobacco able to rely on their own Chikwawa 59,900 7% 20% crop production for their Dowa 48,800 6% 0% Poor Middle Better-off food needs, as shown in Kasungu 238,200 29% Figure 2. Because MK/year: 8,500- 29,000- 65,000- Lilongwe 12,300 1% 10,000 33,000 75,000 households in the ‘poor’ Source: MVAC Baseline Profiles wealth group meet only half Mangochi 39,500 5% of their food needs through Figure 3: Household expenditure in the Kasungu Lilongwe Plain livelihood zone their own production, they Mwanza/ Neno 22,400 3% 100% supplement their food self empl. Mzimba 51,300 6% sources with casual labor 80% livestock ganyu (ganyu) in exchange for Nkhata Bay 11,700 1% 60% food crops maize sales food, which covers another Nsanje 51,900 6% 40% 30% of their food needs. tobacco Ntchisi 98,500 12% 20% Ganyu labor is mainly in the Phalombe 27,000 3% 0% form of agricultural work in Poor Middle Better-off the fields of better-off Rumphi 25,300 3% MK/year: 8,500- 29,000- 65,000- households. In general, Salima 13,800 2% 10,000 33,000 75,000 therefore, households in this Source: MVAC Baseline Profiles Grand Total 833,000 100% area are highly dependent Source: MVAC on their own crop production for food and, in the case of the households in the ‘poor’ wealth group, both their own crop production and the crop production of households in the ‘better-off’ wealth group. Crop failure, as has occurred this season in Kasungu District, has a two fold negative impact on the poorer households since their options are very limited and completely tied to agriculture. Food purchases appear to be the remaining alternative source of food, but they have limited sources of income. Households in this zone are highly dependent on the sale of tobacco (see Figure 2). Unfortunately, producer prices for tobacco have been low this season. Despite government’s minimum buying price for tobacco of US$1.10/kg, other buyers continue to offer much lower prices, which has resulted in a number of suspensions of tobacco sales at the auction floors because farmers and the buyers have at times Figure 4: Maize gprice trends at Kasungu market been unable to come to agreements on prices. Given 45.00 2004 reduced incomes this year, maize market prices will play a 2005 40.00 crucial role in determining whether households can 2006 purchase enough food to see themselves through the whole 35.00 consumption period. As already pointed out, while prices 30.00 remain stable in most markets, they have started to rise in 25.00

some of the affected areas and, if the trend continues, many MK/kg 20.00 households will become vulnerable to food insecurity. July 15.00 and August maize price data from Kasungu market, for example, shows that prices this year are rising at a faster 10.00 rate compared to the past two seasons and this will worsen 5.00 the food security situation in the area if appropriate 0.00 APR MAY JUNE JULY AUG FEWSNet/Malawi interventions are not carried out in time. Figure 4 shows Source:MoAFS the maize price trends in the first four months of the marketing season from 2004 to 2006.

4 MALAWI: FOOD SECURITY UPDATE AUGUST 2006

Macro-economics

The national inflation rate continued to fall in July for the fifth month in a row. The national inflation rate for July was 14.9 %, representing a drop of 0.4 percentage points from 15.3% in June. The continued drop in the inflation rate is mainly attributed to the continued downward trend in food prices. The inflation rate is heavily influenced by food prices because the weighted contribution of the food basket to the consumer price index is over 50%. A good harvest, such as the one this year, therefore, is very auspicious in that it results in low food prices and consequently low rates of inflation, other things being equal. A rise in the inflation rate erodes purchasing power of consuming households, thereby compromising the food security situation of the households that are dependent on food purchases.

5 MALAWI: FOOD SECURITY UPDATE AUGUST 2006

Appendix 1: Comparison of actual local market maize prices and projected prices under scenario 1

Comparison of 2006/07 P rices to VAC Projection Comparison of 2006/07 Prices to VAC Projection

60 45 VAC Projection VAC Projection 40 2006/07 50 2006/07 35 40 30 gk gk/ 25 30 / 20 Mk Mk 20 15 10 10 5 0 0 april may jun jul aug sep oct nov dec jan feb mar april may jun jul aug sep oct nov dec jan feb mar

Southern Lakeshore Livelihood Zone: Lake Chilwa/Phalombe Plain Livelihood Zone: Mangochi and S alima Districts Phalombe and parts of Machinga and Zomba

Comparison of 2006/07 Prices to VAC Projection Comparison of 2006/07 Prices to VAC Projection

70 60 VAC Projection VAC Projection 60 50 2006/07 2006/07 50 40 gk/

g 40 30 k/ 30 Mk Mk 20

20 10 10 0 april may jun jul aug sep oct nov dec jan feb mar 0 april may jun jul aug sep oct nov dec jan feb mar Central Karonga Livelihood Zone: Shire Highlands Livelihood Zone: Parts of Mangochi, Zomba, Chiradzulu and Blantyre ditricts

Comparison of 2006/07 Prices to VAC Projection Comparison of 2006/07 Prices to VAC Projection 35 35 VAC Projection VAC Projection 30 2006/07 2006/07 30 25 25 gk

20 g 20 / k/Mk 15 Mk 15

10 10

5 5 0 0 april may jun jul aug sep oct nov dec jan feb mar april may jun jul aug sep oct nov dec jan feb mar Western Rumphi Livelihood Zone: High Productive Border Livelihood Zone: Rumphi District Parts of Neno, Ntcheu and Dedza Districts

Comparison of 2006/07 Prices to VAC Projection Comparison of 2006/07 Prices to VAC Projection

45 45 VAC Projection 40 2006/07 40 VAC Projection 2006/07 35 35 30 30 gk 25 gk

/ 25 20 /

Mk 20 15 Mk 15 10 10 5 5 0 april may jun jul aug se p oct nov dec jan feb mar 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Northern Lakeshore Livelihood Zone: Parts Middle Shire Livelihood Zone: Machinga, of Nkhotakota and Nkhatabay Districts Mwanza and Balaka Districts

6 MALAWI: FOOD SECURITY UPDATE AUGUST 2006

Comparison of 2006/07 Prices to VAC Projection Comparison of 2006/07 Prices to VAC Projection

45 35 VAC Projection VAC Projection 40 2006/07 30 2006/07 35 30 25

gk 25 / g 20 20 k/Mk Mk 15 15

10 10 5 5 0 april may jun jul aug sep oct nov dec jan feb mar 0 april may jun jul aug sep oct nov dec jan feb mar Chitipa Maize & Millet Livelihood Zone: Thyolo/Mulanje Tea Livelihood Zone: Thyolo and Mulanje Districts

Comparison of 2006/07 Prices to VAC Projection Comparison of 2006/07 Prices to VAC Projection

45 45 VAC Projection 40 VAC Projection 40 2006/07 2006/07 35 35 30 30 gk 25 gk 25 / / 20 20 Mk Mk 15 15 10 10 5 5 0 0 april may jun jul aug sep oct nov dec jan feb mar april may jun jul aug sep oct nov dec jan feb mar Kasungu-Lilongwe Plain Livelihood Mzimba Self Sufficient Livelihood Zone: Zone: Kasungu, Dowa, Ntchisi, and Mchinji Districts

Comparison of 2006/07 Prices to VAC Projection

40 VAC Projection 35 2006/07 30

25 gk/ 20

Mk 15

10

5 0 april may jun jul aug sep oct nov dec jan feb mar Lower Shire Liv elihood Zone: Nsanje and Chik wawa District

7