FOOD SITUATION IN MALAWI INCREASINGLY WORRYING

UNCLAS SECTION 01 OF 02 LILONGWE 000047

SIPDIS

USAID FOR DCHA/FFP LANDIS, WELLER, MUTAMBA.SKORIC,
PETERSEN AND BROWN
USAID FOR DCHA/OFDA HALMRAST-SANCHEZ, BORNS, MARX,
KHANDAGLE AND BARTON
USAID FOR AFR/DP SMITH, KNEPP
USAID FOR AFR/SD WHELAN
USAID FOR AFR/SA COOKE
NCS FOR DWORKEN
DEPT FOR AF/S, INR/GGI, PM/ISP
NAIROBI FOR CASHION, ESTES, AND DEPREZ
MAPUTO FOR BLISS AND POLAND
LUSAKA FOR GUNTHER
HARARE FOR REED
PRETORIA FOR DIJKERMAN, DISKIN, HALE AND FAS HELM
GABORONE FOR DORMAN
ROME FOR FODAG

E.O. 12958: N/A
TAGS: EAID EAGR ECON MI
SUBJECT: FOOD SITUATION IN MALAWI INCREASINGLY WORRYING



1. Summary. Poor rainfall, coupled with maize price
volatility, is raising concerns that there may be a
new food security crisis in Malawi this year. The
Government of Malawi (GOM) has stated that it may need
to declare a disaster within the next three months if
harvest prospects do not improve. The international
community is closely monitoring the situation and
developing contingency plans should a crisis emerge.
However, at this time it is too early to predict the
likely outcome of this year's harvest or determine the
possible extent of food insecurity later in 2004. End
summary.

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POOR CLIMATIC CONDITIONS
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2. Rainfall in Malawi has been unevenly distributed and
sporadic in many areas during the 2003-2004 rainy
season. Particular areas of concern include portions
of southern Malawi (Nsanje and Chikwawa Districts,
southwestern parts of Thyolo, Mulanje, and Phalombe
Districts). Parts of Northern Malawi (Rumphi and
Karonga Districts) have also had poor rains to-date.
Should rains not improve within the coming days, FEWS
plans to issue a food security alert for Malawi.

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CROP PRODUCTION PROSPECTS
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3. Informal reporting on planting varies, but in general
most farmers have planted their crops for the 2003-04
planting season. Should the rains not improve,
it is feared that yields will fall sharply. In
Malawi, even slightly below normal maize harvests
have been sufficient to trigger a humanitarian crisis, as
in 2001-3.


4. The responsibility for producing crop estimates was
transferred this year from the Ministry of
Agriculture, Irrigation, and Food Security (MOAIFS) to
the National Statistics Office (NSO). This transfer
has hurt the Government of Malawi's ability to
accurately forecast production. Due to insufficient
personnel and resources, the NSO was not able to
release the first round of crop estimates in early
January as is usually the case. Given the NSO's lack
of experience with the crop forecasting process, it is
expected that the data produced will be of poorer
quality and exhibit greater unreliability than
previous figures.

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DISINCENTIVES FOR PRIVATE SECTOR MAIZE TRADE
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5. As is the norm during the lean season in Malawi
(December-March),consumer maize prices are rising
in local markets. According to FEWS, maize prices
ranged from 9.72 MK/kg to 16.67 MK/kg through mid-
December. The price of maize sold at ADMARC depots
remains 10 MK/kg.


6. The unusually low price of maize (well below the
current world market price) sold through ADMARC is of
increasing concern to the international community.
Anecdotal evidence suggests that private traders are
exporting Malawian maize to neighboring countries
where maize prices are more favorable. There are also
no incentives to import maize into Malawi given
current government price distortions.


7. The GOM currently has 73,706 MT of maize in the
Strategic Grain Reserve. However, the GOM has very
limited capacity to draw down maize from its silos.
Only an estimated 400 MT per day can be released from
silos. Given this constraint, the GOM has been unable
to pre-position maize to be ready should the rains
impede access to certain depots. Isolated cases of
stockouts in ADMARC depots to date have resulted in
immediate maize price increases in local markets.
Should this problem become widespread, many Malawians
will not be able to afford to purchase sufficient food
for their families. (Comment: ADMARC's continued role in the
commercial maize market in Malawi is exacerbating
maize price volatility and food insecurity. End comment.)

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NUTRITIONAL SITUATION
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8. Informal reporting suggests that acute malnutrition is
rising in isolated areas, particularly in southern
Malawi and rural Lilongwe District. Relief
organizations have conducted rapid Middle Upper-Arm
Circumference (MUAC) screening in their areas of
operation. UNICEF and the MOH are compiling the
results in order to identify target areas for
additional nutritional monitoring. In anticipation of
a potential rise in malnutrition during the hunger
season, the USAID-funded C-SAFE program has a
contingency plan for supplementary feeding.

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POTENTIAL FOR DISASTER DECLARATION GROWING
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9. The undesirable mix of chronic vulnerability, poor
harvest prospects, volatile maize prices, and reduced
availability of maize (due to government-created
disincentives affecting importers) could culminate in
a renewed food emergency in Malawi this year.
However, while concern is mounting, it is too early to
accurately predict the situation. More information should
be available by the end of January/early February.
USAID also plants to conduct an assessment of the situation
in Nsanje District in early February. In addition, at the
urging of USAID/Malawi and other donors, WFP and NGOs
are consistently monitoring and reporting on
developments in their areas of operation and plan to
do a fuller assessment in the coming weeks.


10. In the January 16 edition of the daily "Nation,"
Malawi's President Bakili Muluzi is quoted as saying:
" If the situation continues like this for the next
three months, I will declare a state of disaster so that
donor organizations can come in to help us."
(Comment: Press reports that some 3.5 million
Malawians may be at risk of starvation are premature.
There have been no known assessments to back up this
figure, or to differentiate between chronic food
shortages and abnormal levels of acute food
insecurity. However, post anticipates that food
security may well become a hot political topic given
the elections slated for May of this year. End
comment.)

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ONGOING USG FOOD ASSISTANCE
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11. The USG continues to support Malawi with food
assistance through its contributions to WFP's regional
emergency operation in southern Africa as well as the
ongoing C-SAFE program. In addition, the USDA is
providing some $4 million in food assistance for WFP's
school feeding program this year. WFP and C-SAFE
partners continue to collaborate closely and are
prepared to quickly return to emergency operations if
needed.


12. Post is closely monitoring the situation and will
continue to report at it evolves.

BROWNING