SPECIAL REPORT

FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION

TO MALAWI

9 June 2003

• Mission Highlights
• 1. OVERVIEW
• 2. SOCIO-ECONOMIC CONTEXT
• 3. FOOD CROP PRODUCTION IN 2002/03
• 4. SITUATION BY AGRICULTURAL DEVELOPMENT DIVISIONS
• 5. FOOD SUPPLY SITUATION
• 6. HOUSEHOLD VULNERABILITY ANALYSIS AND IMPLICATIONS OF THE ACCESS ISSUE

Mission Highlights

1. OVERVIEW

Maize is the preferred staple of the vast majority of Malawians, and a lack of maize is generally interpreted as a lack of food. A number of factors, including a reasonably good harvest in 2003, high levels of maize stocks on hand and current low market prices for maize, all point to a better cereal supply position in Malawi during the 2003/04 marketing year than was the case the previous year. Nevertheless, as a precautionary measure following the food crisis of the past two years, the Government of Malawi requested that FAO and WFP carry out an assessment of the food situation in the country. Accordingly, an FAO/WFP Crop and Food Supply Assessment Mission visited Malawi on 6–26 April 2003. The Mission's objectives were to assess the country's 2002/03 crop production, estimate the levels of existing food stocks, review the overall food supply situation and draw up a national food balance sheet. Officials from the Ministry of Agriculture and Irrigation (MAI) accompanied the Mission, while representatives of the Famine Early Warning System (FEWS-NET) participated as observers.

The Mission was briefed in Lilongwe by the staff of various departments in the Ministry of Agriculture and Irrigation (MAI), the National Food Reserve Authority (NFRA), the Agricultural Marketing Development Corporation (ADMARC), the Ministry of Economic Planning and Development, United Nations and other international and bilateral organizations and NGOs. In addition, the Mission received extensive documentation prepared by the Government and non-government agencies on recent weather conditions and current crop assessments and forecasts. Most importantly, the Mission had access to MAI's Second-Round Agricultural Production Estimates prepared at the end of March 2003.

Following initial briefings, the Mission was divided into two teams in order to permit the maximum time for interviews and discussion in each of Malawi’s eight Agricultural Development Divisions (ADDs) during visits over a period of ten days. Work began in the southern region and part of the central region of Malawi. The two Mission teams next visited the northern region of the country. Starting from Lilongwe, both teams completed rural visits by travelling to the remainder of the central region. In addition to travelling to each of the country's eight ADDs, the teams visited most of the districts within them. The local situation was discussed with ADD staff and local District Commission staff, often including the District Commissioner in person. ADMARC representatives also usually attended the meetings, whose purpose was to establish whether the forecasts presented in the Second-Round Agricultural Production Estimates were still valid or not, and to obtain local perceptions of the overall food security situation.

The teams travelled extensively in the field, observing and evaluating standing crops, and discussing with farmers their experiences of the summer cropping season, their plans for the winter cropping season, and the anticipated food security situation in the twelve-month period until the end of March 2004. Crops were sampled and measured for yield estimates. Finally, in this phase of the Mission, local markets were visited in order to observe the level of grain availability and the current market prices of staples, especially of maize grain. Anticipated maize prices for the year to March 2004 were also discussed with traders.

Upon returning to Lilongwe, the Mission briefed the Government and donor agencies on preliminary findings.

Hopes for a better harvest in 2002/03 were generally confirmed by the second-round crop production estimates made at the end of March 2003. The Mission found the estimates acceptably reliable at ADD and national level, although it was agreed that the application of the survey method may have suffered at lower levels due to the reduced number of Extension Field Assistants in some areas.

Unlike in the previous season, the actual harvest for the 2002/03 crop season is not expected to be lower than the second-round estimates. After the second-round forecasts in 2002, maize yields were reduced as a result of the widespread pre-harvest consumption of maize in the field. The Mission found little evidence that maize in the green or immature state was being consumed in 2003.

With substantial carryover stocks brought forward, a forecast cereal harvest of 2.056 million tonnes and informal cross-border imports of maize and rice, the Mission estimates the total national cereal availability to be about 2.319 million tonnes, adequate for meeting utilization requirements without additional imports, apart from the usual commercial wheat imports. Utilization requirements include 1.925 million tonnes of cereals consumed as food and 385 000 tonnes for other purposes, leaving 103 000 tonnes as closing stock at the end of March 2004. It is assumed that there will be no cereal exports in the period covered.

Malawi's production of roots and tubers is also estimated to rise substantially above the level achieved in the previous year. This Mission confirms the finding of last year’s Mission that these commodities are being increasingly accepted, especially in certain regions of Malawi, as important contributors to overall household food security. As such these crops will contribute to reducing any localized cereal deficits.

The Mission noted that informal maize and rice imports were taking place. These occur across the border with Mozambique, particularly into the southern region of Malawi, and to a lesser extent in the north and west across Malawi’s borders with the United Republic of Tanzania and Zambia. These unrecorded imports were observed entering unhindered across regular border crossings. Importers are attracted to Malawi because of the relatively higher cereal prices that generally prevail there.

In Malawi, the main cereal harvest starts in the southern region, followed by the central and northern regions approximately four to six weeks later. At the time of the Mission’s visit, informal imports, together with the increasing arrival on the market of Malawi’s own harvest and the absence of ADMARC as a buyer on the market, were keeping the market price of maize below the ADMARC selling price of 17 Malawi Kwacha (MK) per kilo. Depending on area, this situation is expected to prevail until the end of July, August or September 2003. It was the general view of government officials, ADMARC staff and grain traders that, between late July and late September, maize prices were likely to rise again, closer to but probably not above the present ADMARC selling price and to remain at that level until the end of the marketing year (end of March 2004). The current market prices make it difficult for the National Food Reserve Agency (NFRA) to dispose of the 151 000 tonnes of maize stocks it wishes to sell, but the position could improve when maize prices rise in a few months’ time. The final outcome will, however, depend on the relation between the price of the maize imported from neighbouring countries and the price at which the Government is willing to offer the NFRA maize.

Regarding informal grain imports, the Mission believes that one should be able to measure the volume of imports where they enter Malawi at official border crossings. As long as these imports are permitted to enter Malawi unhindered, such crossings provide convenient points of entry and are therefore likely to account for a major part of these imports. An actual count, or even sample data, would help gauge the magnitude of the inflow.

2. SOCIO-ECONOMIC CONTEXT

2.1 Macro-economic situation

For more than twenty years Malawi has faced two central economic challenges: reducing the level of absolute poverty and cutting the budget deficit. The strategies for poverty alleviation have included liberalization of domestic markets, relaxation of agricultural marketing arrangements and privatization of parastatal companies, including through specific rural development programmes. Overall, there has been little noticeable diversification of the production base, agriculture being by far the dominant sector.

According to the 2002 report of Malawi’s National Economic Council, total GDP declined by 1.5 percent in 2001 compared to an average annual growth rate of 2.6 percent in the three previous years. With the population recognized to be increasing at an average annual rate of 1.9 percent, the rise from poverty has been very modest in recent years and was reversed in 2001. During 2002, GDP grew at a marginal positive rate of 0.1 percent. However, mainly because of more favourable weather conditions for agriculture in 2002/03, it is anticipated that GDP growth will be higher in 2003.

In his 2002/03 budget statement to Parliament, the Malawi Minister for Finance said that poverty in Malawi had reached unacceptable levels. He pointed out that the 1998 Integrated Household Survey revealed that 65.3 percent of Malawians – 6.3 million people – were poor, and that 28.7 percent of these were extremely poor. He regarded the key causes of poverty to include limited access to land, low education, poor health status, limited off-farm employment and a lack of access to credit.

In December 2000, the International Monetary Fund approved a three-year poverty reduction and growth facility that formalized the objective of poverty reduction and emphasized fiscal policy reform and promotion of private-sector development and investment.

Macro-economic instability has been a major problem in recent years. In spite of the Government’s expressed desire to control public spending, expenditure has continued to increase significantly. In 2002 it rose by 13 681.02 million Kwacha over the previous year, a rise of nearly 49 percent. Recurrent expenditure rose by 23.3 percent while development expenditure increased by 283.2 percent. Even after taking into account grants received, the budget/deficit ratio stood at –3.3 in 2002 compared with –1.5 the previous year.

Money supply has grown rapidly in Malawi. It grew by 15.9 percent in 2002, compared to 12.1 percent one year earlier. However, the growth rates in both years were more modest than in the three previous years.

The figures in Table 1 reveal that after four successive years of high inflation rates, the level declined significantly in 2002. It remains to be seen if this downward trend will continue in 2003.

Table 1. Annualized rate of inflation in Malawi during the last six years

The Malawi Kwacha has continued to depreciate against a number of important currencies as illustrated in Table 2.

Table 2. Value of the Malawi Kwacha compared to several major foreign currencies

The depreciating value of the national currency has naturally acted to raise the cost of imports, including agricultural inputs and grains.

Malawi’s total foreign exchange reserves at the end of 2002 stood at US$211.3 million and declined further to US$188.08 million during January 2003. This latter figure is equivalent to three months of imports. According to the Reserve Bank of Malawi’s Monthly Economic Review dated January 2003, “the outlook for reserves in the coming few months continues to be bleak with the ongoing lean period and also as donor inflows keep being scaled down”.

2.2 Performance of the agricultural sector

Malawi is highly dependent on agriculture. Although the sector produces only about one-third of the GDP it contributes more than 90 percent of the country’s foreign exchange earnings. Tobacco, tea and sugar – three of the country’s major agricultural products – contributed an average of about 82 percent to Malawi’s total annual export earnings in the eight years prior to 2001.

The agricultural sector is composed of two sub-sectors: small-scale farmers and larger estates. The two sub-sectors have been historically distinguished on the basis of legal and institutional rules regulating land tenure, type of crops and marketing arrangements. The smallholder sub-sector is based on a customary land-tenure system and is primarily subsistence, providing the bulk of food production. The main food crop is maize, supplemented by rice, sorghum, pulses, cassava and sweet potatoes. Since the mid-1990s, smallholders have been allowed to produce/export industrial crops, and this has generated great response in production, particularly of tobacco. The great challenge arising from this development is to maintain the quality of tobacco produced. Other cash crops include cotton, groundnuts and pulses. The estate sub-sector comprises about 14 700 estates occupying some 850 000 ha of leased land. The main crops are tobacco, tea and sugarcane. Approximately 80 percent of the workforce is employed in the smallholder sub-sector and 11 percent on estates.

Agricultural production grew at an annual rate of 2.1 percent from 1980 to 1993, down from a high of 4.4 percent per annum between 1970 and 1980. This was mainly because ADMARC’s purchases were drastically reduced in 1986/87, with maize purchases decreasing from 271 000 tonnes in 1985 to 59 500 tonnes in 1987, as result of excessive stocks and Government budgetary constraints. Furthermore, guaranteed producer prices were held down to reduce Government expenditure, with the price of maize constant for three years up to 1997. This led to a steep fall in marketed maize and a resurgence of food shortages after many years of surpluses.

Throughout the 1990s, agricultural production was characterized by marked swings due mainly to droughts. Following a drop in maize production in 1996/97, there was a significant recovery in 1998/99 and 1999/00, which was attributed to increased use of modern agricultural inputs (improved seed and fertilizer) especially under the Starter Pack scheme. An increase in cropped area also contributed to the rise in the level of production. During the poor 2000/01 season, the distribution of inputs was drastically reduced because of very limited donor involvement in financing the scheme, and reduced credit availability following extensive defaults by farmers in 1999/00 partly caused by very low maize prices. The 2001/02 cropping season was also poor, principally because of unfavourable weather conditions.

The high interest rates currently prevailing in Malawi, with bank rates at 40 percent or more, have adversely affected agricultural producers in two important ways. Firstly, they have increased pressure for the rate of inflation generally to rise thereby driving up the cost of agricultural inputs. Secondly, high interest rates have increased the cost of borrowing to finance agricultural production. Malawi has thus been prevented from realizing full potential for agricultural production.

2.3 Population

The size of Malawi's population remains a contentious issue, with significant implications for the assessment of national food security. In 2002, the MAI and the FAO/WFP Mission used the official Central Statistic Office (CSO) figure of 11.44 million. This was based on an annual growth rate of 2.7 percent since the 1998 census. This is higher than the inter-censual annual growth rate of 1.9 percent for 1989-1998. Even that growth rate is regarded as too high by international agencies, which attempts to take into account the effects of high mortality attributable to AIDS. The Reserve Bank of Malawi uses the lower population growth rate of 1.9 percent when preparing its annual macro-economic projections. Therefore, the Mission decided to take the 2002 population figure of 11.44 million as previously used and project it forward at the inter-censual growth rate of 1.9 percent per annum. This method of calculation resulted in a population of 11 657 360 for 2003. This is the figure used by the Mission to calculate the national cereal requirement.

3. FOOD CROP PRODUCTION IN 2002/03

3.1 Main factors affecting production in 2002/03

Rainfall

The long term average rainfall for Malawi of around 1100 mm per year should be enough to grow sufficient food to feed the country if well distributed. In the 2002/03 season, the rainfall recorded at the various ADD sections averaged 903 mm between October and March 2002/03, which was 118 mm more than last year (785 mm), but still some 200 mm less than the average.

The rainy season for 2002/03 started late October/November in most areas but was delayed by over a month in others, mainly in the south and central regions. However, planting got well underway with good rains in second and third dekads of December 2002, but heavy rains in early January 2003 caused flooding and crop destruction, particularly in the south and central regions, necessitating some replanting of both maize and cassava. This was apparently a result of the tropical cyclone “Delfina”.

Some parts of the country then experienced dry spells in February, affecting the early planted maize crop at cob filling stage and later plantings at tasselling. Stunted maize was the result in the worst affected areas of the lower Shire valley and the lakeshore areas.

The rainy season then continued longer than normal with substantial rains in March 2003. This benefited the later crops which had been replanted after the December floods, but also caused lodging and germination of mature maize, forcing farmers to harvest early at high moisture contents and sun dry the grain before storage. There was still some flood damage in the Northern Region at the time of the Mission. Mzuzu in particular stands out with nearly 2 200 mm recorded in 2002/03, compared with 1 400 mm last year (800mm more), which explains the flood damage reported from that area this season. The ten year average (88-98) for the Northern Region is 1 367 mm/annum. The graphs in Figure 1 show how the rainfall recorded by Regions compared with 2002/03 and the long-term average.

Figure 1. Malawi Estimated Rainfall by Region

Area planted

The steady increase in population has resulted in farm sizes becoming smaller, particularly in the south of the country. According to the MAI, some 75 percent of farming households have less 1.0 hectares and 55 percent have less than 0.5 ha. In the Southern region, where 50 percent of Malawi’s population lives the average farm size is only 0.17 hectares and in the Central and Northern Regions it is 0.26 hectares on average. These small areas in the south particularly limit the area of crops that each farmer can grow and there appears to be little movement from south to north, for mainly cultural reasons. Spare labour available in the south is therefore not generally inclined to move to the north, where there is more room for expansion.

However, the area of crops grown in 2002/03 has increased compared with 2001/02 for the main staple food crops of maize, cassava and sweet potatoes. Maize area and production increased by 4 percent and 22 percent respectively, while the respective increases for cassava are estimated at 8 and 15 percent. Sweet potatoes area and production increased by an estimated 27 percent and 36 percent, respectively.

One of the factors responsible for an increase in crop area is better availability of seeds to a large number of farmers through the Targeted Input Programme (TIP), more availability of cassava cuttings and sweet potato vines through NGOs programmes and the emergency food aid distributions which allowed people to concentrate on land preparation instead of hunting for food. It could also be the case in some areas that the earlier rains in 2002 allowed more time for cultivation, thereby adding to the overall areas cultivated. ADD staff have also attributed some increase in cassava areas to MAI campaign to promote more planting of drought tolerant crops.

Other reasons for the increased area compared with 2001/02 include the promotion of more winter cropping on wetlands, with residual moisture and irrigated cropping. It is planned to issue farmers with packs of seed and fertilizer as well as a large number of treadle pumps for irrigation in the 2003 dry season. Each pump is said to be capable of irrigating 0.33 ha. Table 4 shows the amount of maize planned for winter cropping in 2003 – 118 110 hectares and other winter crops including rice, groundnuts, beans and Irish potatoes. Apart from increasing the crop area, winter cropping is aimed at reducing dependence on rainfed production and to prolong the period when food will be available. Planting of winter crops will start in May and continue until July.

Crop yields

The early start to the rains, which some areas experienced, is likely to have contributed to higher yields of maize this season, since timely planting is closely correlated to yield. The better overall rainfall and distribution than last season also, undoubtedly, helped to improve yields of all crops. However, the weather also had adverse effects on yields where flooding or extended dry spells were experienced and in such areas local opinion is that yields will not be as good as last year. Localized flooding (in low lying land) and washouts (on upland slopes) caused complete crop destruction of both maize and cassava and 4-6 week long dry spells in mid season led to stunting or poor cob filling of maize, depending on the stage of growth. Replanting was also necessary where the damage occurred earlier in the season, with lower yields as a consequence.

Another main reason, given by farmers and ADD staff for higher yields this year was the better availability of improved seed of both hybrid and OPV maize varieties, as well as fertilizer, which were distributed by MAI under the TIP programme. Although only a very small amount of seed, sufficient only for 0.1 hectares per farm was given out, a large number of farmers benefited (see “Inputs” below). ADD staff also emphasized the success of their campaign to promote the use of farm yard manure as another factor contributing to better yields.

Although there has been an increase in the estimates of crop yields for 2002/03, with maize at 1.2 tonne/hectare compared with 1.0 tonne/hectare in 2001/02, the maize yield in particular is still well below potential. Maize production in the 1999/00 season was 2.5 million tonnes from 1.5 million ha, giving an average yield of 1.7 tonne/ha. That was when the ASIP credit programme was operating and, as a result, farmers were able to buy more fertilizer.

Cassava yields have always given rise to controversy, being notoriously difficult to estimate with confidence. Although most cassava in Malawi is grown in pure stands and not intercropped as a rule, the problems of yield forecasting still arise from a variety of factors, e.g. cassava is planted at all times of the year and a single plot will contain plants of all different ages, new plants replacing old as they are consumed. Furthermore, cassava can take as long as 9-24 months to mature, according to the variety and growing conditions, but may be harvested at any time from 6 months or so, with a correspondingly reduced yield.

Up to the year 1998/99 the average yield of cassava was around 5.5 t/ha annually (MAI records), but in 1999/00 it jumped to 13.4 t/ha and the current estimate for cassava harvested in 2002/03 is 16.0 t/ha. The “sweet” type of short term cassava, such as that which is being multiplied under an FAO programme this year, is capable of yields of 25-30 t/ha at nine months old under good management, and the longer term, bitter varieties, which predominate in those areas where cassava is the preferred staple, could also achieve similar yields at full maturity. It is quite possible that the 2002/03 estimate of 16 t/ha may be optimistic but in the absence of verifiable evidence to the contrary, the Mission has decided to include the official MAI Second Round estimate of 16 t/ha in this report, without adjustment. However yields and production figures should be treated with caution when considering cassava as part of the overall food availability.

Agricultural inputs

The Targeted Input Programme (TIP), financed by the EU and DFID, provided a large number of the poorest farmers with small packs of inputs, free of charge, in the 2002/03 season. These were made up of 5kg basal fertilizer, 5kg of Nitrogen fertilizer for top dressing and 2kg of maize seed (Open Pollinated Varieties (OPV) or hybrid), sufficient for 0.1 hectares of rainfed maize, plus small packets of seed of beans/ soybeans/ pigeon peas or groundnuts (depending on the location). Table 3 gives the amounts of improved maize seed and fertilizers used, by the end of March 2003 in each ADD, for the 2002/03 summer crop.

Table 3. Malawi: Uptake of improved maize seed (Hybrid & OPV) and fertlizer in 2002/03 and 2001/02

Table 3 shows that the use of improved maize seed in 2002/03 increased by 200 percent over that in the 2001/02 cropping season, and fertilizer usage increased by 100 percent. The increase in the estimated maize yields of 16 percent, given in the Second Round Crop Estimates for 2002/03, is attributed as much to this better uptake of crop inputs as to the generally better rainfall experienced in most of Malawi. The TIP pack was usually only enough for a small part of the maize area on each farm and as a result it was very common to see good stands of maize on the 0.1 hectares fertilized area, alongside very poor stands on unfertilized land in the same field, clearly illustrating the benefit of applying adequate fertilizer.

Until 19 March 2003, 183 000 tonnes of fertilizer had been officially imported for the 2002/03 cropping season, according to Malawi Agricultural Input Markets Development Project. Approximately half appears to have been used in the smallholder sector as reported by the ADDs (90 919 tonnes) and the remainder presumably used by the large commercial tobacco, sugar, tea and coffee estates.

Weeds, pests and diseases

Several ADDs reported attacks by Army Worm caterpillars early in the season, which necessitated some replanting of maize and therefore loss of improved seed, but it was not serious in most areas. There were also some losses from White Grub and Grasshoppers, but not of major significance.

Agricultural credit

The Agricultural Sector Investment Programme (ASIP), which had provided seeds and fertilizers to farmers on credit in previous years, was discontinued after the 2001/02 season due to poor debt recovery, and only some very limited schemes funded by NGOs were operating in 2002/03. The effect has been a major reduction in fertilizer use with a corresponding reduction in production potential. The NGO schemes, which are based on the village group credit principle, have been reported as having good rates of debt recovery.

Food aid

The emergency food aid programme which operated during the 2002/03 season is reported to have had a significant effect on crop productivity. Apart from the obvious benefits to health and strength, the time saved by farmers not having to look for food was used to cultivate more land and to spend more time on crop management like weeding. Some families which grew no crops at all last season had land under cultivation this year. Another important effect of food aid was to minimize the premature consumption of green maize and cassava, thereby improving final yield and production.

3.2 Food crop production estimate

The MAI's Second Round Agricultural Production Estimates, which were prepared in March 2003, provided the figures for the crops grown in 2002/03. The major dry spells and floods, which reduced crop yield in some areas, had occurred before the 2^nd round estimates and were therefore taken into account.

Estimates for maize for the eighth Agricultural Development Divisions (ADDs) are given in the Table 4. Tables 5 and 6 show, respectively, estimates for all cereals and roots and tubers. Table 7 gives the areas and production of all the major food crop groups (cereals, roots/tubers and legumes), comparing the 2001/02 and 2002/03 seasons. The estimated total production of all major crop types in the 2002/03 season is as follows:

• Cereals: 2.057 million tonnes of which maize 92 percent, rice 4 percent, sorghum 2 percent, millet 1 percent and wheat 1 percent;

• Root & tuber crops: 3.6 million tonnes of which cassava 50 percent, sweet potatoes 40 percent and Irish potatoes 10 percent;

• Legumes: 500 000 tonnes of which pulses 65 percent and groundnuts 35 percent.

Table 4. Malawi: Maize estimates for 2002/03 - Summer and Winter Crops

Table 5. Malawi: Cereal production in 2002/03