Figure 1. Current estimated food security conditions, fourth quarter 2007 (Oct to Dec) FULL-SIZE IMAGE Source: FEWS NET

• The forecast for normal to above-normal rainfall this season and the timely start of the government fertilizer and seed subsidy program indicate a good 2007/08 agricultural season and likelihood of an above-average harvest in 2008.

• Seasonal rains began in some parts of Malawi in early November. In localized areas, farmers began planting with these early rains, and they may lose crops if the main planting rains aren’t established quickly. The rains have generally been light to moderate, but some areas received heavy rains and storms that damaged property in a number of districts, affecting a total of about 1,300 households.

• Maize exports to Zimbabwe continue, totaling about 267,000 MT by the end of November 2007. ADMARC, the government subsidiary charged with buying and selling agricultural produce, has made assurance that they have enough maize stocks to meet the domestic demand throughout the season. Planning should be done for the possibility that the season does not perform as well as expected, so that the government is able to respond to such a scenario.

Seasonal calendar and critical events

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Onset of the 2007/08 agricultural season

Some parts of the country have received rains in the first dekad of November, signaling the start of the 2007/08 rainfall season that generally runs from October to March. The season generally starts with pre-season rains, locally known as Chizimalupysa, during the first two to three weeks. These rains are followed by a dry spell that last one to two weeks before the start of the effective planting rains, which generally start from around mid-November in the south through mid-December in the northern region. However, sometimes it is unclear whether the initial rainfall is the pre-season rains or the main planting rains, which can lead farmers to plant early with the pre-season rains and expose their crop to risk of moisture stress during the dry spell between the pre-season and the effective planting rains. This season, some farmers have already planted with what seem to be the pre-season rains, and the crops currently range from emergence to vegetative stages. If the rains do not start in earnest in another two or three week’s time, this early planted crop is likely to suffer from moisture stress. The percentage of farmers that have already planted is estimated to be less than 20 percent, mostly in the south and parts of the central region.

This season’s rainfall forecast by the Meteorological Department shows that Malawi should expect normal to above-normal rainfall, with a possibility of flooding in flood prone-areas such as the Lower Shire Valley from January to March. If the forecast turns out to be true, the country would be well placed to have another good harvest this season. Although the rains have generally been light to moderate so far, some parts received storms that damaged property, as in parts of Chikwawa (Chief Chapananga’s area), Nsanje, Phalombe, Machinga, Mwanza and Mangochi districts in the southern region and Mzimba District in the northern region. A recent report by the Disaster Department and WFP indicate that a total of 1,309 households were affected to various degrees. The affected households are in need of various forms of assistance, including shelter and food. The department of Poverty and Disaster Management Affairs is already working to address the problem, including through distribution of food stuffs to affected households, and the current response is sufficiently meeting needs. In flood-prone areas such as in the Lower Shire Valley where floods could put people’s livelihoods at risk, the government has issued several warnings to the people to move to higher grounds on a permanent basis to minimize the long-term risk of falling victim to the floods.

Figure 2. Comparison of maize production, average and requirement trends FULL-SIZE IMAGE FEWSNET/Malawi; Source: MoAFS

The government has started distributing coupons that will allow poor smallholder farmers to buy fertilizer and seeds at subsidized prices. These fertilizers are already in the various selling points, which means that farmers will be able to access these inputs and apply them on time this season, which in turn would boost crop production, assuming favorable weather conditions. The program will enable farmers to purchase fertilizers at MK900/bag instead of the market price of about MK4000/bag, representing a subsidy of close to 80 percent, and to access seed for minimal prices ranging from free to MK90 per pack instead of the market price of around MK400/pack, representing a subsidy of almost 100 percent. A total of about 170,000 MT of fertilizer is expected to be sold through the subsidy program, of which 150,000 MT and 20,000 MT are intended for maize and tobacco production respectively.

In the past, high input prices have prevented most poor smallholder farmers from accessing sufficient inputs, resulting in poor crop production. In response, the government and other food security stakeholders have implemented various input programs, such as free input distributions to poor households, inputs-for-work and, more recently, the input subsidy program since the 2005/06 agricultural season. These programs have sometimes been implemented as response strategies after food deficits experienced in specific areas, usually due to floods and droughts. These programs have been strongly associated with increases in crop production. The major input programs have been the Starter Pack in the 1998/99 to 2002/03 agricultural seasons, which targeted all smallholder agricultural households with free inputs (fertilizer and maize and legume seed) sufficient for 0.1 hectare, and the Input Subsidy Programme through which almost all poor smallholder agricultural households are issued coupons to purchase inputs for 0.5 ha at a subsidized price. This program started in the 2005/06 agricultural season and contributed to the bumper harvests in the past two seasons, against a background of favorable weather. The 2006/07 agricultural season, for instance, registered a record maize production of about 3.44 million MT according to the Ministry of Agriculture and Food Security, an increase of 33.7 percent over the 2005/06 agricultural season production of 2.58 million MT, which was also another good season for Malawi (see figure 2 above). The 2006/07production was also about 65 percent higher than the average maize production for the past five years of 2.09 million MT. The increase in the production of main food crops resulted in the country registering a food surplus of more than 1 million MT and official exports of maize for the first time in many years. This year, with good rains, a bumper harvest will again be possible.

General food security situation

Most households in Malawi are currently generally food secure (see figure 1 above). There have been no reports yet of serious food shortages in any part of the country. Although maize prices in some markets have increased seasonably (although from a below-normal base price), the increase seems due to competition between ADMARC and private traders, most of whom have been buying maize for export to Zimbabwe, and not due to excess local market demand for maize. There are no reports of demand pressure in any local markets and no queuing to buy maize in ADMARC markets, which often occurs when there are food security problems. Not many people are moving in search of casual labor, in both rural and urban areas, and some of the farmers who employ casual labor to help them with their farming activities are already reporting a scarcity and high cost of labor. Some even suggest that they will be forced to just use herbicides to clear their fields of weeds, as this will be probably cheaper than employing casual laborers this season. In some areas, wage rates are currently MK1.500/acre, between two to three times the rates at this time last season (MK600/acre). During periods of food crisis, households with livestock also depend on livestock sales to obtain cash to buy food. At this time, there have been no reports of distress livestock sales. This season, livestock prices have remained stable and relatively high, with chickens ranging from MK350 to MK550, goats MK3,000 to MK4,000 and cattle from MK25,000 to MK60,000 each. When households are faced with serious food insecurity and have to sell assets to access food, these prices are generally less than half of what they are now. These positive indicators reflect the general level of food security currently across the country.

Figure 3. Maize price trends in selected local markets, November 2007 FULL-SIZE IMAGE Source: MoAFS

Markets and prices

Of the 8 markets that had submitted price data at the time this report was published, all registered prices above MK20.00/kg during the second week in November. This is consistent with last month, when the majority of markets registered maize prices above MK25.00/kg. Maize prices have generally continued to increase across local markets (figure 3), as is normally the case as the hunger period approaches. Prices normally rise at this time of year as more and more households deplete their own harvested food stocks and start depending on the market for food, thereby increasing the market demand for food, especially the main staple maize, and consequently pushing up the prices.

However, the increase in prices this year in September and October was exacerbated by the entrance of ADMARC in the maize market. The prices were very low at the beginning of the season, with some markets registering prices as low as MK8.00/kg. Many farmers were selling their maize at prices between MK8.00/kg and MK12.00/kg to traders and/or vendors between April and July. As a result most traders sold their maize in the local markets for between MK15.00/kg and MK20.00/kg. However, when ADMARC started buying maize from mid-August to early September at MK17.00/kg, the traders also adjusted their prices to compete with ADMARC by offering a slightly higher price. This in turn resulted in a push in maize prices in the local markets to above MK20.00/kg. Eventually ADMARC was forced to increase their maize purchase price from MK17.00/kg to MK20.00/kg in mid-September which resulted in an increase in ADMARC purchases. However, this did not last long as the traders and/or vendors also responded by offering slightly higher than MK20.00/kg. This increase in the buying price resulted in the maize selling price in some local markets to go to as high as MK25.00/kg to MK30.00/kg. This resulted in a steep increase in the prices between August and October as shown in figure 2. The increases in prices in the local markets therefore have not necessarily been driven by excess demand from consumers nor dwindling supply, but rather the stiff competition among buyers, some of whom are supplying the maize to NFRA for export to Zimbabwe. If the increases were specifically due to unavailability of maize at household level, people would have been increasing demand for maize in the local markets or queuing for maize at ADMARC markets, but as mentioned above, these food security indicators point to a normal to better-than-normal situation.

Figure 4. Maize price comparisons in selected local markets, November 2005 to 2007 FULL-SIZE IMAGE Source: MoAFS

The local market maize prices at this time of the year are generally higher than at the same time last season, despite that 2007 maize production was greater than in 2006. The production in 2006 was also good, leading to significant carry-over stocks (although the exact amount is difficult to quantify). The carry-over stocks plus the bumper 2006/07 harvest resulted in abundant maize supply on the market, which would suggest that prices would be at levels slightly lower than at the same period last season. Although last season ADMARC was buying at MK20/kg, they did not have enough money to buy all the maize farmers were bringing to their markets, and as a result many farmers were selling to vendors and private traders who were paying less than ADMARC, taking advantage of the lack of a market for maize. However, this season ADMARC entered the market late at a time when prices were less than their buying price of MK20/kg, thereby triggering the general increase in maize prices in local markets mentioned above. In addition, last season there was an export ban, resulting in a saturation of maize supplies in the local markets and consequently maintaining the prices at relatively low levels. The export ban was lifted this season, which enabled traders to sell their maize abroad (mainly to Zimbabwe through the National Food Reserve Agency (NFRA)) and pushed up the domestic demand for maize thereby contributing to upward pressure on the local market prices. However, although the prices are generally higher than at the same time last season, they are much lower than in 2005 (figure 4). At the same time in 2005, the country was already experiencing serious food security problems, in which local market maize prices rose to unprecedented levels. The majority of poor households could not afford to purchase enough food, resulting in many of them relying on food aid. This year, food prices are much more favorable for net consumer households.

Official maize exports to Zimbabwe continue, and by end of November about 267,000 MT of maize had been exported to Zimbabwe through the NFRA out of the planned 400,000 MT total. In addition, WFP has been exporting maize purchased in Malawi to Zimbabwe, amounting to 32,363 MT by the end of the first week of November, resulting in overall official maize exports to Zimbabwe of about 300,000 MT. As much as the exports have provided a market opportunity for traders to sell their maize, there are concerns that the country may end up not having enough reserve stocks for potential emergencies. The government has on several occasions assured the general public that there is no reason to panic, as they will buy enough stocks to ensure that they adequately cover any food shortages that may occur in any part of the country. ADMARC, the government subsidiary charged with buying and selling produce, recently made a press briefing assuring that they have enough maize stocks to see the country through the next harvest. Information about the exact amount that the NFRA and ADMARC have in stock was not available at the time this report was published. However, planning by relevant authorities needs to consider beyond the next harvest in case the country has to address problems that may arise if this agricultural season is not as good as anticipated. Despite the currently favorable seasonal forecast, it is important to prepare for other potential outcomes.