Famine Early Warning System NETwork -

MONTHLY REPORT February 20, 2001

SUMMARY

· Excessive rainfall in the northern half of Zambia has resulted in water logging in many areas. These include some high maize-producing areas of Eastern and Central Provinces.

The extreme southern part of Zambia has experienced consistently dry conditions. Crops in part of these areas have wilted.

· Southern Africa regional rainfall imagery shows persistent rainfall deficits in Zambia’s maize trading partners of Zimbabwe and South Africa during January.

· The price of maize remained relatively stable from mid-January to first week of February, implying relative balance in supply and demand.

· The real into-mill price of maize has been consistently much below that of the three previous years since July for and August for Choma District.

· In the year 2001, government hopes to attain a 5% economic growth rate and bring down inflation from its current level of 30% to 17.5% by December.

· The Kwacha appreciated significantly by about 23% against the U.S. dollar from early January to end of January.

1. AGROMETEOROLOGICAL CONDITIONS

Zambia is receiving normal to above-normal rainfall in line with the 2000/01 rainfall forecast. The rainfall in northern parts of the country has been mostly heavy, causing flash floods and water logging in many areas. The southern part has, on the other hand, been receiving mostly normal rainfall with the exception of the extreme southern part where some crops are reported by agrometeorologists to be at the permanent wilting point.

In line with the forecast by Department of Meteorology, the country has so far received normal to above-normal rainfall, except for the extreme south. During the last half of January, Zambia received mostly heavy rains. According to the agrometeorologists, flash floods and water logging occurred in some parts of the country. This rainfall pattern was a result of the Inter Tropical Convergence Zone (ITCZ) oscillating over most parts of the country except the far south. During the third dekad (ten-day period) of January, the northern half of the country

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received substantial rainfall, similar to the rainfall received in the previous two dekads. Meteorologists have attributed this to continued dominance of the ITCZ. The highest rainfall was reported by Mpika (Northern Province) with 178 mm, followed by Kawambwa () with 148 mm and Lusaka with 105 mm. The Department of Meteorology reported that in some areas, cumulative rainfall performance from July 1, 2000 to January 31, 2001 has been well above normal. These areas include Kasama, 44% above normal and Mpika (Northern Province) 41%, Mansa (Luapula Province) 41%, Petauke (Eastern Province) 29% and Kasempa (North-Western Province) 25%.

The extreme southern parts, on the other hand, have been dry. For instance, Livingstone (Southern Province) reported rainfall deficit of 52% during the last dekad of January. Information from the Southern Province Meteorological Office indicated that rainfall in the southern parts of the province has been low in volume and poorly distributed.

Generally, the crop in most parts of the country is at flowering to tasseling stage. In areas receiving excessive rainfall, water logging has been reported by agrometeorologists while in rainfall-deficit areas, some crops have wilted.

2. HAZARD CONDITIONS

Areas experiencing excessive rainfall causing water logging in cropped fields include parts of Western Province (Kalabo, Kaoma, Lukulu and Mongu Districts), Luapula, Northern, Eastern and Central Provinces. Some of these are high grain-producing areas. Excessive rainfall normally leads to yellowing of plants and stunting as a result of leaching and therefore reduced yields.

Loss of crops due to permanent wilting has been reported by agrometeorologists in parts of extreme southern Zambia. The regional rainfall picture shows relative dry conditions in Zambia’s major maize trading partners of Zimbabwe and South Africa during January.

The rainfall pattern in Zambia so far has brought two extreme problems. During January, part of the country, specifically the northern and western parts (much of Northern, Luapula, Eastern and Western Provinces, Copperbelt and parts of Central Province) received heavy rains, resulting in water logging and flash floods in some of these areas. Infrastructure such as bridges and houses in some areas has been damaged. Areas reported by agrometeorologists as being the most affected are parts of Western (Kalabo, Kaoma, Lukulu and Mongu Districts), Luapula, Northern and Central Provinces. Others equally affected are most parts of Eastern Province (Mambwe, Lundazi, Katete, Chipata and Nyimba Districts). Among these affected areas are high maize- producing areas like and the districts of Eastern and Central Province. The extent of damage, if any, is yet to be established.

In the extreme southern part of the country, on the other hand, rainfall has been scanty. According to the Department of Meteorology, during January these areas received poor rainfall. Affected areas include parts of Western and Southern Provinces (specifically the southern parts of Sesheke, Shang’ombo and Senanga and Sinazongwe Districts in Southern Province).

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FEWS NET Zambia Monthly Report – February 20, 2001

According to Southern Province Meteorological Office, most crops in Livingstone, Kazungula, Gwembe and parts of Sinazongwe Districts have suffered so severely that they have reached the permanent wilting point. If rainfall performance improves, no recovery of the crop is expected, a condition also known as agronomic drought. The crop in the northern parts of the province was reported to be in favorable condition.

In part of , FEWS NET observed the rainfall deficit in the second week of January, as crops were already severely water stressed. With no improvement in the rainfall situation, it is likely that those crops reached permanent wilting point.

Although these rainfall deficit areas are in relatively low producing areas, loss of crops will have serious implications for household food security.

Looking at the regional rainfall pattern (Figures 1a and 1b), it is apparent that Zimbabwe and South Africa, Zambia’s major grain trading partners, experienced persistent relative dryness throughout January.

Figure 1a. Estimated Rainfall (RFE) by Dekad, January 2001

1 – 10 January 2001 11 – 20 January 2001 21 – 31 January 2001

Figure 1b. Difference of Estimated Rainfall from Normal, January 2001

Difference: 1 – 10 January 2001 Difference: 11 – 20 January 2001 Difference: 21 – 31 January 2001

Source: USGS/FEWS NET Southern Africa

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FEWS NET Zambia Monthly Report – February 20, 2001

Compared to average, the extreme southern part of Zambia, most parts of Zimbabwe and the northeastern part of South Africa consistently received below normal rainfall. If the situation continues, it will create a worrying situation for the southern Africa region with regard to maize grain availability.

In view of the rainfall pattern, FEWS NET in collaboration with WFP, FAO and DMMU are making arrangements to visit some of the affected areas of North-Western Province, Eastern and Southern Provinces. The objective of the visit is to verify the situation and establish the extent of impact of excessive deficit rainfall on the crops.

3. FOOD SECURITY SITUATION

The current season has been better than most recent years in terms of food security. The government’s Disaster Management and Mitigation Unit (DMMU) reported that areas likely to have food access problems are parts of Kaputa, Cadiz, Petauke, Nyimba, Lungwa, Kafue, Siavonga, Choma and Sinazongwe Districts. For , high grain prices seem to bear this out.

Generally, the food security situation in the country during the current consumption year (May 2000 – April 2001) has been relatively good compared to most past recent years as a result of relatively good grain output from the April 2000 harvest. As indicated by low prices in the marketplaces, the grain supply has been relatively good.

There have been comparatively fewer areas considered to be food insecure this year. Based on information as of early January from the Disaster Management and Mitigation Unit (DMMU), food insecure areas included parts of Kaputa (Northern Province); Chadiza, the Nyalugwe Area of , Nyimba (Eastern Province); Luangwa, Kafue (Lusaka); Siavonga, Choma, Sinazongwe (Southern Province); and Chavuma and Zambezi (Northwestern Province). For Zambezi and Chavuma, food insecurity has been related to refugee influx from neighboring Angola. The Government sent food to displaced households who fled their homes in fear of village raids and other effects of the war. Food was also sent to the Chiawa area of Kafue and Luangwa Districts, which was adversely affected by the March 2000 floods. In the other areas, verification of the food situation was not done. It is important to note that that the 2000 Vulnerability Assessment was not conducted due to the lack of sufficient data.

Current reports of flooding of lowland areas in Luangwa District need to be followed up and the situation needs close monitoring. Maize is mostly planted in the lowland (valley area) since the upland often receives insufficient rainfall. However, any effect of crop loss due to this situation is unlikely to be felt until after the harvest period. Press reports (February 16) indicated that the second Kariba spillway gate was opened in mid-February due to the water levels having slightly exceeded the 484.15m water level limit recommended by the Zambezi River Authority. This means that people living downstream in Luangwa, Chiawa () and Siavonga (Southern Province) areas might need to brace for possible further floods.

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FEWS NET Zambia Monthly Report – February 20, 2001

4. MARKET SITUATION

Prices of maize and maize meal have remained relatively stable since mid-January to the beginning of February. In some cases, millers are paying a little less for grain, partly because of the Food Reserve Agency (FRA) selling maize on the market but more importantly because the maize supply on the market remains adequate. The real price trend for Lusaka and Choma show much lower prices in the current marketing year compared to the last three marketing years, even as the country approaches the seasonal peak price period.

Among the districts selected for analysis, Luangwa (Lusaka Province) is the only one exhibiting an above-average price at the end of December. This suggests that there may be a grain supply problem in the area.

Following notable increases in maize and meal prices from the end of December to mid-January, prices remained unchanged up to the end of January. Into-mill grain prices ranged from K16,000 (US$4) per 50 kg to K20,000 (US$5) per 50 kg for Lusaka and Copperbelt towns. Based on FRA data, average prices stood at K17,897 (US$4.47) per 50 kg and K18,500 (US$4.62) per 50 kg for Lusaka and Copperbelt, respectively. Choma prices were a little less at K14,000 (US$3.50) per 50 kg. The relatively low prices in Choma area normal since this is a high maize producing area. As of the last week of January, the price of maize in Zambia ranged between US$80 and US$114/MT.By comparison, Zimbabwe maize prices were in the range of US$113/MT – US$127/MT as of January 26 (source: Lusaka Agricultural Commodity Exchange), implying that Zambia’s highest price was closely comparable to the lowest price in Zimbabwe.

In the first week of February, price movements were mixed. FRA observed that some millers in Lusaka and the Copperbelt lowered their purchase prices, causing average into-mill prices there to drop by 3%. Normally prices at this time should be rising, not falling. The behavior of the price trend could be mostly attributed to continued good supply of grain on the market. It should be noted that FRA sold some maize on the market in various parts of the country, which may have contributed to the relative stability in price. Consequently, the price of maize meal remained fairly stable, with FRA observing only marginal reductions in some markets.

Going by the trend of grain prices this current marketing season, the peak price will be much lower than in previous years. Based on the maize seasonal price pattern, prices peak in February/March. Current prices are generally lower than average and below those of last year.

Figure 2 depicts the real maize price trend for four marketing years in two centers, Lusaka and Choma. Figure 2a and 2b clearly show that the current marketing year’s prices have been much below those of the three previous marketing years. Based on the current trend, it is unlikely that maize prices will increase significantly by the end of the marketing season in April. Those still holding significant stocks will soon start releasing their stocks on the market before the next harvest when prices take a downward trend. However, if excessive rains continue in the major maize producing areas of Eastern and Central Provinces and negatively impact the yield of the current crop, price patterns will change.

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FEWS NET Zambia Monthly Report – February 20, 2001

Figure 2a. Real Retail Price for Into-Mill Maize in Lusaka

7,500

1997/98 1998/99 6,500 1999/00 2000/01

5,500

4,500

3,500 Zambian Kwacha per 50 kg

2,500

1,500 May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr

FEWS NET Zambia Source of Data: Food Reserve Agency

Figure 2b. Real Retail Prices for Into-Mill Maize in Choma

7,500

1997/98 1998/99 6,500 1999/00 2000/01

5,500

4,500

3,500 Zambian Kwacha per 50 Kg

2,500

1,500 May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr

FEWS NET Zambia Source of Data: Food Reserve Agency

Low income consumers usually buy maize at public markets and have it ground at hammer mills. Looking at the public market prices for selected districts (Figures 3a and 3b), Luangwa District has consistently had the highest price between July and December (January prices from Central Statistical Office are not yet available) with Kabwe Urban (Kabwe U) recording the lowest price at the end of December (Figure 3a). The selection of districts was based on the areas with the highest prices and those with the lowest price out of the thirty-eight districts (of a possible seventy-three) that reported prices in December.

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FEWS NET Zambia Monthly Report – February 20, 2001

Figure 3a. Nominal Maize Price Trends in 2000 for Selected Districts 13,000 Luangwa Samfya Serenje Kabwe Urban 11,000 Mumbwa Lusaka Urban

9,000

7,000

5,000 Zambian Kwacha per 15 kg

3,000

1,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

FEWS NET Zambia Source of Data: Central Statistical Office

Compared to average, all selected districts recorded below-average prices except for Luangwa District (Figure 3b). This again suggests that Luangwa District may be facing a maize supply problem.

Figure 3b. Comparison of Real Maize Grain Prices for Selected Districts

2,500

Dec 2000

2,000 Dec Average

1,500

1,000

Zambian Kwacha per 15 Kg 500

0 Luangwa Samfya Lusaka U Kabwe U Mumbwa Serenje Dec 2000 1,697 1,581 1,356 591 649 697 Dec Average 1,378 1,919 2,192 1,715 1,209 1,445

FEWS NET Zambia Source of Data: Central Statistical Office Note: Average for all districts is 1993-1999 except for Luangwa (1996-1999).

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FEWS NET Zambia Monthly Report – February 20, 2001

5. MACRO-ECONOMIC INDICATORS

In its 2001 budget statement, the government hopes to attain a real economic growth rate of 5% and an end of year inflation rate of 17.5%.

The annual inflation rate in January remained relatively stable at 30% compared to the previous month. The Kwacha appreciated sharply against the US dollar by about 23% between the first week of January to the end of January, following the government’s announcement of its intention to curb the alarming rate of depreciation. By mid-February, the Kwacha appreciated by another 4%. Many companies view this sudden gain in value as a temporary situation.

Government has announced the budget for the Year 2001 in which it proposed an expenditure of K5 trillion (equivalent to 38.4% of GDP). The macro-economic objectives in the current budget are: · Attain a 5% real GDP growth rate; · Reduce inflation to 17.5% by the end of the year; · Lower the domestic fiscal deficit to 0.75% of GDP; · Increase foreign exchange reserves to US$150; · Increase core social sector spending to over 37% within discretionary expenditure; and · Raise domestically financed capital by 50%.

Government hopes to adhere to these objectives through increased investment and implementation of appropriate macro-economic policies. These include use of a tight monetary policy to bring down the inflation rate and stabilize value of the local currency, the Kwacha.

Poverty, which government admits is high, will be addressed through increased social expenditures. In the year 2000, the economy attained a growth rate of 3.5% (slightly below the targeted rate of 4%) and an end of year inflation rate of 30% (instead of 19%). The failure in achieving these objectives was partly attributed to the adverse effect of high international oil prices on the economy.

5.1. Inflation Rate

The annual rate of inflation remained relatively stable at 30% in January compared to the month of December. The monthly rate however rose slightly (0.9%), partly due to continued food price increases.

5.2. Exchange Rate

Following government announcements of putting measures in place to curb the local currency’s alarming depreciation, the Kwacha appreciated sharply in January with respect to December. The Kwacha gained about 23%, going from K4,550:US$1 in the first week of January to about K3,500:US$1 at the end of January. This was, however, viewed as a temporary situation, as the strength of the Kwacha was not sustainable by current export levels. By the first week of

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FEWS NET Zambia Monthly Report – February 20, 2001

February, the Kwacha depreciated slightly and then remained stable at K3,650:US$1 in the second week of February. This stability was attributed to the selling of US$10 million on the market by the Central Bank. Barclays Bank expects the exchange rate to remain stable for now.

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