FEWS NET Monthly Report for Zambia covering the period Oct 2006 to Nov 2006.

ZAMBIA Food Security Update November 2006

ALERT STATUS: NO ALERT WATCH WARNING EMERGENCY

 

Summary and implications

The rainy season in Zambia has generally not yet started outside the western parts of the country, where the rains began early.  In the north, the start of season has been delayed.  Land preparation is ongoing in anticipation of another good rainy season.  The Food Reserve Agency has re-entered the market for another two weeks, after having closed the purchase program at the end of September.  The response from the small scale farmers is mixed as FRA still owes a large outstanding debt to farmers.  Due in part to the continued ban on private sector exports, maize prices have remained relatively low and stable, which is unusual for this time of the year. 

Seasonal calendar

FULL-SIZE IMAGE

Start of the 2006/07 growing season

In most of Zambia, the rainy season has yet to effectively start.  Based on satellite imagery as of October 30, rains have not started in most parts of the country, in contrast to what is normally expected at this time of the year.  By the end of October, the season had started in the western parts of the country, while the northern parts where rains normally establish early were still awaiting the effective start of the rains (see Figure 1a).  The start of the season occurs with at least 25mm of rains in one dekad followed by two consecutive dekads with 20mm of rainfall.  As of the end of October, the onset of rains was at least one dekad late in western parts of northern Zambia (Luapula Province) (see Figure 1b).  In Western Province, the season has started two dekads earlier than is normal.  In Northwestern Province, the start is timely.  Land preparation is still ongoing as the season is yet to start in most parts of the country. 

Figure 1a: Onset of rains as of October 30, 2006 FULL-SIZE IMAGE	Figure 1b: Start of season anomaly, October 30, 2006 FULL-SIZE IMAGE
Source : FEWS NET/USGS

Market position

The Food Reserve Agency (FRA) concluded its maize purchase program at the end of September, having exceeded its initial target of 200,000 MT by purchasing a total of 350,000 MT.  The favorable response from farmers was due to the surplus production last season and the attractive price being offered.  Because small scale farmers still had significant amounts of maize to sell, the FRA has resumed maize purchases at the end of October for another two weeks. 

The FRA intends to purchase an additional 50,000 MT during this extended period.  The farmers' response has so far been mixed.  The FRA has not been able to pay farmers for its purchases earlier in the marketing season, and payments for additional maize purchases would only be made once the payments had been made for purchases between July and September.  Because farmers need money immediately to purchase inputs for the current planting season, farmers are discouraged from selling maize to the FRA, even though they are still offering the highest prices. 

Payments to farmers are still taking place, and it's unlikely that FRA will meet all the payments before the season effectively starts in the third week of November.  This will make it difficult for the affected farmers to purchase inputs on time.  During the month of October, the government released K30 billion (~US$7.5 million) to the FRA to help meet part of this payment; however, the amounts owed are still substantial, and this amount only covers half the debt. 

Zambia has arranged to export 85,000 MT of maize to Zimbabwe.  As of the end of October, the buyer had paid only US $5 million, or 25 percent of the total cost of the consignment, and only about 3,000 MT have actually been moved.  Based on the contract, transportation of the commodity will be the responsibility of the buyer, and the release of the maize to the buyer will be subject to payment being made.  Part of the proceeds from this sale will be used to clear outstanding debt owed to farmers.  There are possible but unconfirmed plans by FRA to export an additional 100,000 MT of maize in the coming months to Zimbabwe. 

In October, the FRA opened up a maize selling point at Kasumbalesa border post (DRC border) to officially sell 5,000 MT of maize to DRC.  About 10,000 MT of maize is to be exported by farmers through the Zambia National Farmers Union, using the FRA export allocation, but the destination is yet to be confirmed. 

The delayed onset of rains in northern parts of Northern Province was a blessing in disguise for FRA as it gave them time to move purchased maize into safe storage.  Information from FRA indicated that most of the purchased maize has been put into safe storage.  The FRA is also likely to release some maize onto the market before the end of the current marketing season; however it is not yet known when this will be done.  The government uses this release as a mechanism to stabilize prices; their intention is never to store more than 150,000 MT of maize to carry into the next marketing season, which starts in May.

Currently, maize prices are still relatively low for this time of the year and have been stable in most areas (Figure 2a), even as the end of the year approaches. The current trend is similar to the situation which prevailed in 2004, when prices were low and stable up until the end of the year, and only began to rise in January.  Wholesale maize prices for commercial farmers are in the range of US$ 173/MT to US$195/MT (CHC Commodities Ltd).  This is about 28 percent lower than the prices which prevailed at the same time last season. 

Figure 2a: Nominal maize trend for selected districts

Source : FEWS NET/CSO

Prices at which major millers have been purchasing maize in Lusaka has seen only marginal increases of mostly less than 10 percent in the recent months (Figure 2b).  This is an indication of stable supply of the commodity on the market. 

Figure 2b: Maize end of month purchase prices by millers

Source: Millers Association

Maize prices are expected to remain relatively stable during November to December.  Notable increases are more likely in January 2007 to March period, when the market will largely be supplied by maize from the commercial farmers as supplies from small scale farmers dwindle.  However, with the FRA's likelihood of releasing maize on the market around that time, price increases will not be significant, and the peak price in February and March will be unusually low.

Famine Early Warning System Network (FEWS NET)

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