The ministry of Agriculture and Food Security released the third round crop estimates figures which put overall maize production at 3.44 million MT, 33.7 percent higher than the 2006 harvest. This is an historic record, and is attributed to favorable weather conditions and increased input uptake due to the government input subsidy program. Production of other crops, except tobacco, is estimated to have increased as well. This year’s bumper maize harvest has significantly improved household food security, and most households are now relying on their own production from the current harvest. This in turn has led to a significant drop in market demand for food and a drop in food prices, especially in the rural areas.

However, despite the positive picture at the national level, there are localized problem areas where people will still experience food insecurity due to chronic problems. According to the recent Malawi Vulnerability Assessment Committee (MVAC) findings, there are no significant missing food entitlements arising from hazards experienced during the growing season or based on the projected economic indicators. However, about 519,200 people across the country will need to be watched as any decline in economic conditions could reduce their entitlements below their needs.

Both private traders and ADMARC are busy buying various types of produce, including maize, from farmers. However, due to the huge surplus and the lack of significant export markets, traders are buying at lower prices from farmers, in some cases as low as MK5 to MK10/kg. The government has announced a minimum buying price of MK17/kg in order to ensure that farmers get a good return for their crop. ADMARC is expected to start buying maize in July. ADMARC’s ability to buy maize depends on government funding, and the delayed budget this year will negatively impact their financial position and consequently their ability to buy maize. This year, ADMARC will peg their purchasing price at the government sanctioned minimum price of MK17/kg instead of the MK20/kg they paid last year.

Planting of winter crops continues as more land is put under irrigation. For the Shire Valley, winter crops contribute significantly to the food requirements. Marketing of the various agricultural commodities is under way. Both tobacco and cotton, two major income sources for farmers, are fetching good prices, and this might act as an incentive for farmers to produce more of these crops in the next growing season.

Seasonal timeline

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General food security situation

The household food security situation remains favorable as a result of the new harvest. According to Ministry of Agriculture reports, the percentage of households without own produced food as of the end June was at 1 percent, compared with 6 percent in June 2006. The good household food security situation has in turn reduced market demand for food thereby depressing prices.

The two consecutive bumper harvests have meant that some farmers and traders will store large amounts of maize for a long time, thereby increasing the risk of storage losses due to infestations from pests, such as the Large Grain Bore (LGB), in maize. The government has intensified its campaigns to sensitize farmers on the best post harvest handling practices as it is envisaged that the market will not be able to absorb the surplus, and farmers will have to store the rest.

At the national level, the concern has been how to dispose of the excess maize without putting the country at undue risk of food insecurity later in the season or in case of crop failure in the next season or two. To this end, the government has been constructing maize silos to increase the national maize storage capacity, which the government can tap on in times of emergency. The storage structures are being decentralized as one way of reducing distribution complications in times of food crisis as has sometimes been the case.

Table 1. Comparison of third round 2006/07 and final round 2005/06 crop estimates FULL-SIZE IMAGE FEWSNET/Malawi; Source: MoAFS

The Ministry of Agriculture and Food Security released the third round crop estimates figures on June 13, 2007. Maize production is estimated at 3.44 million MT, an increase of 33.7 percent over the 2006 production. Table 1 summarizes the outcome of the third round crop production estimates and compares the 2007 harvest with the 2006 final figures. All the crops except tobacco have registered increases over last year’s harvest. Despite a reduction in area under cotton, the production increased by 8.7 percent due to the favorable weather. Detailed analysis of the crop estimates can be found in the May Food Security Update, which examined the second round figures. Based on consumption requirement of 2.2 million MT, this year’s harvest leaves a huge surplus of 1.2 million MT. At the same time, cross border trade with Mozambique is increasing, and a total of 8,000 MT were imported in June, bringing total informal imports from April to 21,000 MT.

The MVAC assessment conducted in May to ascertain whether or not there are any households with missing food entitlements released its findings late June. According to the report, despite floods and dry spells experienced in several districts during the growing season, there are no populations facing significant missing food entitlements. However, there are 519,000 people who need to be monitored, as any worsening economic conditions such as a reduction in cash crop prices and an increase in maize prices will push the entitlements below their needs, thereby calling for some kind of support. Chronic food insecurity persists despite the absence of significant transitory food insecurity.

Markets and prices

Anecdotal reports indicate that ADMARC has started buying maize at MK17/kg in very few areas as they do not as yet have adequate resources to purchase all the surplus maize that farmers have to sell. The government budget session is experiencing delays and it is not clear when it will be passed so that government can provide ADMARC with funds to purchase the current produce; otherwise they have to depend on their internal revenues from sales or get loans from any of the financing institutions. Many farmers would like to sell to ADMARC because the ADMARC price is higher than the prices the private traders are offering the farmers. Many traders in remote rural areas are reportedly paying as low as MK5 to MK10/kg. Although maize farm gate prices were not readily available, the low retail prices of maize in the local markets imply that the farm gate prices are very low. Local market retail maize prices ranged from MK9.48/kg at Kasungu market in Kasungu District to MK25.00/kg at Chilumba market in Karonga District as shown in Table 2. At regional level, maize prices ranged from MK11.35/kg at Mpamba market in Nkhatabay District to MK25.00/kg at Chilumba market in Karonga District in

Table 2. Local market maize prices for June 2007 FULL-SIZE IMAGE   FEWSNET/Malawi; Source: MoAFS

the northern region. In the central region, maize prices ranged from MK9.48/kg at Kasungu market in Kasungu District to MK18.38/kg at Dwangwa market in Nkhotakota District. In the southern region, maize prices ranged from MK10.00/kg at Lunzu market in Blantyre District to MK21.08/kg at Chikwawa market in Chikwawa District.

The majority of the markets registered lower prices compared to the same time last year. Out of the 51 markets for which comparative data was available, 72 percent of the markets registered lower prices than at the same time last season. The drop in market prices ranged from 1 percent at Mchinji market in Mchinji district to as high as 60 percent at Nsundwe market in Lilongwe district. The remaining 28 percent of the markets registered maize price increases compared to the same time last season. The increases ranged from just above 0 percent at Dowa market in Dowa District to as high as 36 percent at Chilumba market in Karonga District. Figure 1 compares maize prices between June 2006 and June 2007. The current maize exports have resulted in some increases in maize demand, especially by traders, resulting in maize price increases in some markets.

Exports of maize to Zimbabwe are ongoing. As of June 30, 2007, about 82,250 MT of maize had been exported out of the planned 400,000 MT. Out of the 82,250 MT, about 40,000 MT came from ADMARC. ADMARC had problems selling their maize on the domestic market due to lack of demand as a result of the favorable household maize supplies from domestic production and relatively cheap maize in the local markets in the 2006/07 marketing season. The opening up of the export market has therefore provided some respite.

Apart from the exports to Zimbabwe, government will export some 40,000 MT of maize and 10,000 MT of legumes to Swaziland, which is also facing a food deficit this season. After two successive seasons of bumper harvests, the domestic market demand for food maize is very low, leaving the export market as the major option for the surplus maize. However, the government is treading cautiously over the amount of exports to avoid a situation where the country would face hunger if next season turns out to be bad in terms of agricultural production. The government is promoting food storage at both the household and national level.

Figure 1. Comparison of ADMARC, June 2006 and 2007 local market maize prices by region

Northern region

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Central region

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Southern region

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FEWSNET/Malawi; Source: MoAFS