Malawi Food Security Update, March 2006

ALERT STATUS: Malawi NO ALERT Food Security Update WATCH WARNING March 2006 EMERGENCY

CONTENTS Summary and Implications Summaries and timeline...... 1 After the prolonged dry spells that occurred in all the three regions of the country from the Food Security Summary...... 2 end of January to the end of February, rains resumed in late February and early March. Markets and Prices ...... 3 The rains were heavy in some areas, resulting in serious flooding in parts of Mangochi and Salima districts. Floods have washed away crops and damaged property, adding to the Macro-economics...... 4 negative impact of the prolonged dry spells. The rains are continuing in many parts of the Appendix: Prices compared country and, although good for cultivation of winter crops, may cause rotting of the already to MVAC Scenarios...... 5 matured maize that now needs enough sunshine to dry before harvesting.

Household food security in many parts of the country is beginning to improve with the advent of the matured crops. Although the maize is not yet dry enough to be harvested, some households are forced to harvest, dry the maize in their homesteads and mill it into flour for home consumption. They have no available stores of food at the very end of the hungry season, and food in the market is too expensive for most of the poor households.

Maize is readily available in local markets, although still at much higher prices than the ADMARC fixed price of MK17.00/kg. However, prices in some markets are falling due to the onset of the harvest season and the typical seasonal reduction in market demand for food from households that can now begin to rely on the food they have produced. Most of the ADMARC markets in the rural areas are reported to have no maize for sale, leaving the private traders in local markets as the only option. Government imports of maize continue to flow into the country, but perhaps not in adequate quantities to cater to all ADMARC markets.

Seasonal Timeline

Current Hazard Summary

• Although local market maize prices are beginning to decline, some markets continue to experience a rising trend, and prices remain at a relatively high level, forcing some poor households to harvest their crop prematurely for consumption - a fact that may compromise the future household food security of the concerned households. • Flooding in some parts of the country will negatively affect crop production, thereby putting the more greatly affected households at risk of food insecurity. • Continuing rains in some parts of the country pose fears that fully matured maize will rot in the fields, as it now requires sunshine to dry and become ready for harvesting

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 MARCH 2006

Food Security Summary

Crops in the field have now matured in most parts of the country, especially in the southern region and parts of the central region. The maize crop in these areas now needs reduced amounts of rain and more sunshine to allow it to dry and become ready for harvesting. However, some areas have experienced heavy rains during this period, which farmers fear will cause their maize to rot. This has forced some farmers to start harvesting in order to dry the crop in their homesteads in an effort to avoid rotting. The rains have been heavy in some areas, resulting in flooding in Salima and Ntcheu in the central region and Mangochi and Machinga in the southern region. The floods have damaged houses, roads, bridges and crops. Some of the crops were completely washed away, adding to the negative food security impacts of the three to four weeks of dry spells that hit some parts of the country. The dry spells were widely spread, but the degree or intensity varied from one area to another. Some of the worst affected areas Figure 1: include Nsanje District in the southern region, Kasungu District in the central region and part of Mzimba District in the northern region. An analysis of the rainfall data for the month of February tends to confirm that the areas around Kasungu in the central region and around Nsanje District in the southern end of the country were the worst hit (shown in yellow and brown in figure 1). The yellow and brown areas in the map show the areas where rainfall was below normal in the month of February. Generally, there has been a lot of discussion about the dry spells in the central and northern region of the country and less about the situation in the southern region. Last month’s report covered in detail the impact of the dry spells in Kasungu District. However, as the figure shows some parts of the southern region are also severely affected and should be monitored closely. The impact of the dry spells and the floods on crop production will become clear when the Ministry of Agriculture and Food Security releases the second round crop production estimates figures the first week of April.

Maize prices in local markets remain relatively high, but are beginning to show a declining trend due to the onset of the harvest season. Some households have begun to depend on their own produced food from the matured crop in their fields. This reduces the market demand for food, and, in turn, lowers prices in some local markets. This trend should become more pronounced next month as Source: Meteorological Department more and more people start harvesting their crops for consumption and sale. Most ADMARC markets in the rural areas have no maize despite government maize imports from South Africa and Tanzania that are destined to be sold by ADMARC. Although the market demand for maize is beginning to fall, it remains at an elevated level as majority of the households have not yet started harvesting their crops.

The distribution of food aid has been extended to April in some of the districts: Chitipa, Karonga, Rumphi and Mzimba in the northern region, Kasungu, Lilongwe, Mchinji, Ntchisi, Dowa, Salima and Dedza districts in the central region and Phalombe, Machinga, Balaka, Chikwawa and Nsanje in the southern region. These are some of the districts that were affected by dry spells in January and February. It is estimated that about 1.4 million people will receive food aid during this period. As recommended in last month’s report, the extension of the food aid distribution is essential in order to avoid premature harvesting of the crops. Emerging from a difficult and prolonged hungry season, the majority of poor households have no food reserves. The extension of the food aid distributions will allow time to develop plans and strategies for tackling the lingering food security problems stemming from the dry spells and floods.

Meanwhile, significant quantities of official and informal maize imports continue to flow into the country, responding to the country’s demand for maize that continues to be high, despite the first harvests. According to information obtained from the informal cross-border trade monitoring system, from February 26 – March 25, there were informal imports by individuals and private companies of about 8,500 MT and official maize imports of 48,500 MT. More details about the cross-border trade will be available in the FEWS NET/WFP informal cross-border trade report at the end of March.

2 MALAWI: FOOD SECURITY UPDATE MARCH 2006

Markets and Prices

Local market maize prices in March (first four weeks) ranged from MK29.11/kg at Bangula market in Nsanje District in the southern region to MK68.89/kg at Malomo market in Ntchisi District in the central region. Local markets in many rural areas provide the only source of purchased maize as ADMARC markets are reported to have no maize. The prices are expected to start decreasing as the number of people harvesting their crops increases. However, the fact that Malomo market registered the highest prices and that areas around Malomo, especially those bordering Kasungu District, were also badly affected by the dry spell is a matter of concern. The dry spell could negatively affect the supply and prices of maize in these markets, unless maize flows in from outside the area. At the regional level, local market maize prices vary widely. They range from MK30.67/kg at Santhe market in Lilongwe District to MK68.89/kg at Malomo market in Ntchisi District, while in the northern region the prices range from MK33.33/kg at Misuku market in Chitipa District to MK64.40/kg at Jenda market in Mzimba District. In the southern region, the prices range from MK29.11/kg at Bangula market in Nsanje District to MK58.68 at Mangochi market in Mangochi District. Not surprisingly, the markets that have registered the highest prices in each region are found in districts that have experienced events that are have negatively affected crop production this season. As already mentioned, Mangochi District is one of the worst affected districts by floods that hit the area towards the end of first week of March. Malomo in Ntchisi District and the areas around Jenda in Mzimba District were severely hit by the dry spells from the end of January to the end of February. This may affect maize supplies in these areas. Consequently, prices may not drop as significantly in these markets compared to the other markets. This will put the poor households in these areas at risk of food insecurity.

Local market maize prices are expected to start decreasing with the onset of the harvesting season. Prices have already declined on some markets. Table 1 compares maize prices in the local markets in February and March in each region. The table shows that in the northern region, only one market, Chintheche in Nkhatabay District, out of the thirteen markets registered a local market maize price decrease of about 2%. In the central region, nine out of the 23 markets (representing 39% of the markets in the area) registered price decreases ranging from just above 1% at Dwangwa market in Nkhotakota District to 29% at Ntcheu market in Ntcheu District. In the southern region, twenty two out of the 24 markets (representing 92% of the markets in the area) registered maize price decreases ranging from 6% at Namwera market in Mangochi District to 50% at Nsanje market in Nsanje District. A total of 31 out of the 61 local markets registered maize price decreases this month compared to only one last month. Most of the decreases in terms of both magnitude and number of markets that registered price decreases are in the southern region, followed by the central and finally the northern region. This follows the rainfall pattern, which starts from the southern region and progresses northwards and the season (planting and crop maturity) follows the same pattern. Consequently, the improvements in maize supplies and price levels in the local markets move from south to north.

Table 1: LOCAL MARKET MAIZE PRICE COMPARISON - February and March 2006 Region Market February March % Change Region Market February March % Change Region Market February March % Change Central NTCHEU 60.59 42.78 -29% Central NAMBUMA 47.75 68.27 43% Southern LIMBE 58.25 37.50 -36% Central LIZULU 50.00 38.89 -22% Central LI LONGWE 35.38 56.25 59% Southern NCHALO 61.50 40.00 -35% Central THETE 52.00 47.50 -9% Centtral BEMBEKE 51.56 47.18 -8% Southern BALAKA 62.68 41.56 -34% Central MITUNDU 53.85 49.44 -8% Northern CHINTHECHE 53.74 52.42 -2% Southern NGABU 54.45 36.11 -34% Central SANTHE 32.98 30.67 -7% Northern EMBANGWENI 50.00 50.00 0% Southern CHIKWAWA 55.01 37.04 -33% Central MTAKATAKA 68.75 65.00 -5% Northern KARONGA 54.88 55.15 0% Southern JALI 56.67 38.89 -31% Central CHIMBIYA 51.25 48.75 -5% Northern CHITIPA 42.79 44.32 4% Southern CHIRADZULU 56.03 39.61 -29% Central DWANGWA 62.13 61.30 -1% Northern NKHATABAY 50.74 58.10 15% Southern MAYAKA 57.50 45.54 -21% Central MWANSAMBO 52.99 52.78 0% Northern JENDA 53.14 64.40 21% Southern LUNZU 62.92 51.20 -19% Central NTONDA 46.00 46.00 0% Northern HEWE 36.86 45.72 24% Southern MWANZA 48.95 39.96 -18% Central NTCHISI 57.00 58.58 3% Northern CHILUMBA 39.83 50.21 26% Southern MIGOWI 64.42 54.02 -16% Central TSANGANO T-OFF 49.01 50.59 3% Northern RUMPHI 48.83 62.25 27% Southern NENO 38.82 32.57 -16% Central SALIMA 49.96 52.69 5% Northern MZIMBA 43.26 55.58 28% Southern ZOMBA 51.25 43.75 -15% Central MCHINJI 43.36 47.59 10% Northern MZUZU 44.84 59.64 33% Southern THONDWE 58.83 50.83 -14% Central NKHOTAKOTA 49.67 55.38 11% Northern NTHALIRE 25.87 35.79 38% Southern LUCHENZA 45.00 40.00 -11% Central KASUNGU 50.92 57.13 12% Northern MISUKU 20.83 33.33 60% Southern BVUMBWE 56.25 51.88 -8% Central NKHOMA 35.00 43.33 24% Southern NSANJE 58.54 29.46 -50% Southern MANGOCHI 62.73 58.68 -6% Central DOWA 38.89 48.84 26% Southern BANGULA 53.50 29.11 -46% Southern LIWONDE 51.52 53.89 5% Central MALOMO 53.65 68.89 28% Southern MULOZA 60.00 33.08 -45% Southern NAMWERA 46.32 55.44 20% Central MPONELA 42.47 58.75 38% Southern MONKEY BAY 67.75 38.82 -43% Central NANJIRI 39.86 56.73 42% Southern PHALOMBE 64.24 40.45 -37%

Although the prices have begun to decline in some markets, especially in the southern region, they remain relatively high compared to the past years. Figure 2 shows a comparison of the maize prices between March this year and at the same 3 MALAWI: FOOD SECURITY UPDATE MARCH 2006 time in the past two years for some of the markets in the southern region. Generally, the prices are more than double the prices that prevailed at the same time in the past two years.

The MVAC analysis in May developed two scenarios in the food projections for this marketing Figure 2: MAIZE PRICE COMPARISONS FOR MARCH 2004 - 2006 year (April 1, 2005 to March 31, 2006). These were 60.00 2004 based on maize prices, one of the key determinants 2005 2006 of food access in Malawi. Under scenario 1, maize 50.00 prices are assumed to rise in line with the average 40.00 rate of inflation at that time, i.e. at 35% above the baseline (2002/03). This translates into maize prices 30.00 MK/kg ranging from MK19/kg to MK23/kg. In scenario 2 20.00 maize prices were assumed to reflect the import parity price of maize from South Africa plus a 5% 10.00 mark up, resulting in a 110% increase in the maize 0.00 I A A O prices above the baseline price, which translates into DE Z R E AL ON H GABU ANJE LUNZU GOCH C N S BALAKA N MW N N about MK32/kg to MK40/kg in most cases. BANGULA LIW CHIKWAWA LUCHEN MA NA FEWSNet/Malawi Source: MoAFS At the time of the scenario building exercise, scenario 2 appeared to be unlikely, but as experience has shown, this scenario actually unfolded this past season. Under scenario 1, the vulnerable population was estimated at about 4.2 million, requiring about 270,000 MT of food aid. Under scenario 2, the vulnerable population was estimated at about 4.6 million, requiring about 414,000 MT of food aid. In the initial period, food aid interventions were based on scenario 1. This was the situation up until sometime in December, when the price trends in most of the livelihood zones had reached scenario 2 levels, with prices in some zones going even higher. This prompted the MVAC to update the analysis, which resulted in the revision of vulnerable population to about 5.51 million and a requirement of about 335,400 MT of food aid. These figures represented an increase in number of vulnerable populations within the already identified vulnerable areas as well as the introduction of new vulnerable areas that were previously identified in the initial analysis. Appendix 1 compares the local market maize price trends of scenarios 1 and 2 of the MVAC analysis. This shows that this month, local market maize prices remained above both scenarios 1 and 2. However, trends indicate that prices are beginning to decline in most of the livelihood zones, but not in the northern region and part of the central in region (see appendix 1). The central region comprises the Kasungu- Lilongwe Plain, the High Productive Border and part of the Southern Lakeshore livelihood zones. All the livelihood zones in the central region except the Kasungu-Lilongwe Plain experienced a drop in the average local market maize prices. It is likely that the serious dry spells that affected Kasungu, one of the high maize producing areas in the district, have contributed to the continued high prices. This means that a lot of people are still dependent on the market for food, as some of the households have harvested almost nothing in the district as a result of the dry spells.

Macro-economics

The national rate of inflation in Malawi is mainly influenced by the price of food commodities, especially maize, the Figure 3: NATIONAL INFLATION RATE TREND country’s staple. A rise in the inflation rate negatively affects 17.5 household food security through the erosion of household 17.0 purchasing power. Since the maize prices are now beginning to drop, the inflation rate may also begin to drop in the next 16.5 one to two months, assuming all other things are equal. Since 16.0

September last year, the country has experienced a rising trend % in the rate of inflation. Figure 2 shows the national inflation 15.5 rate trend since January last year. The inflation rate expressed 15.0 a short dip during the harvesting period between June and August last year and started rising again after that. The 14.5 decrease in the inflation rate is mainly attributed to a drop in 14.0 food prices that normally happens during the harvesting Apr'05 May'05 June'05 July'05 Aug'05 Sep'05 Oct'05 Nov'05 Dec'05 Jan'06 Feb'06 FEWSNet/Malawi period. With the early harvesting that is taking place in some Source: National Statistics Office parts of the country this year and the subsequent drop in the maize prices, the inflation rate may start decreasing earlier than last year i.e. before July. 4 MALAWI: FOOD SECURITY UPDATE MARCH 2006

Appendix 1: Monthly Comparison of 2005/06 Prices to MVAC Scenarios

Note: Market representation is not adequate in most of the livelihood zones to effectively monitor price movements over the zone as a whole