SITREP 30: GOVERNMENT TAKES STEPS

UNCLAS SECTION 01 OF 03 LILONGWE 000939

SIPDIS

AIDAC

USAID FOR DCHA/FFP LANDIS, WELLER, MUTAMBA,
SKORIC, PETERSEN AND BERGMAN
USAID FOR DCHA/OFDA BORNS, MARX, PRATT
AND KHANDAGLE
USAID FOR AFR/DP WARREN, AND KNEPP
USAID FOR AFR/SD WHELAN
USAID FOR AFR/SA COOKE, HAGELMAN, LOKEN
DEPT FOR AF/S, INR/GGI, PM/ISP
NCS FOR MELINE
NAIROBI FOR PUTMAN, ESTES, AND DEPREZ
MAPUTO FOR BLISS AND POLAND
LUANDA FOR LYVERS
HARARE FOR ATWOOD AND REED
PRETORIA FOR DISKIN, HALE, SINK, AND
REYNOLDS
GABORONE FOR KHUPE
ROME FOR FODAG

E.O. 12958: N/A
TAGS: EAID EAGR MI
SUBJECT: SITREP 30: GOVERNMENT TAKES STEPS
TO ADDRESS HUMANITARIAN FOOD NEEDS IN MALAWI


1.SUMMARY: A key GOM-donor meeting, chaired by the
President of Malawi, was held on Saturday September
18th. Although the GOM will likely not declare a disaster
this year, an urgent appeal was made for humanitarian
assistance for the WFP program. The GOM re-established
the government-led "Joint Task Force" coordination
mechanism that was employed so successfully during the
2002 food crisis. The GOM also reiterated its commitment
to purchase and import 70,000 tons of maize from
neighboring countries despite indications that the
private sector has the capacity to handle commercial
imports. The GOM is planning to provide free and/or
subsidized fertilizer and seeds to most farmers, but the
details have yet to be worked out. Private sector input
dealers are concerned that delays in defining the scope
and operation of the government scheme could impair the
country's ability to be ready for the upcoming planting
season. Despite this new leadership, the World Food
Program emergency operations for the January-April 2005
period remain under-resourced.

BACKGROUND

2.The President of Malawi Bingu wa Mutharika called an
emergency meeting to discuss growing humanitarian food
needs in Malawi and to map out the way forward in
the months to come. This meeting follows rising donor
concerns about lack of GOM leadership on the growing
humanitarian food needs this year. The meeting was
well attended by Government Ministers, Donors and senior
government staff.

3.The president explained the meeting was part of a
consultative effort between GOM and its development
partners. The president said the country is facing a
food shortfall and made an urgent appeal to donors for
humanitarian food assistance for the coming lean months
(October, 2004 to April, 2005). A state of emergency was
not declared. The GOM stated that it believes the
country's humanitarian food needs can be met without such
a declaration.

4.At the meeting, the President of Malawi announced the
revival of the Food Security Joint Task Force to
coordinate humanitarian food needs this coming season.
The Joint Task Force ensured enhanced coordination
between GOM, donors, civic society and NGOs during the
last food crisis in 2001/02 and is credited with improved
humanitarian response that averted hunger during the food
crisis.

5.The President of Malawi will personally chair the Joint
Task Force meetings in order to issue the attention it
deserves. In addition, the humanitarian food needs
subcommittee of the Joint Task Force has been revived.

6.Donor welcomes the leadership, efforts but observed
that, without declaration of state of emergency, some
donors may not be able to mobilize humanitarian food
resources.

MALAWI HUMANITARIAN FOOD NEEDS

7.According to calculations by FAO/WFP Crop and Food
Suppply Assessment Mission (CFSAM),there is a possible
deficit of 600,000 MT. If the contributions from
cassava and sweetpotatoes are factored in, the food
deficit decreases to 408,000 MT. This will be met through
a combination of commercial imports (formal and informal)
from neighbouring countries principally Zambia and
Mozambique and humanitarian food assistance.

8.Maize imports are primarily by either private sector
importers responding to market opportunities and GOM
interventions in the commercial maize sector. Informal
private sector maize traders play a significant role
in maize imports as recent monitoring by USAID-supported
FEWSNET has revealed.

9.In the month of August alone, close to 13,000 MT of
maize moved into Malawi by informal traders, largely on
bicycles and small trucks. Imports will likely increase
as demand increases in the coming months (Note: These
import numbers sharply contrast the earlier 2,000 MT per
month estimate, GOM officials that are often too quick to
dismiss the significant role private traders play in
maize imports.)

10.Using the most likely scenario for Malawi by the
Malawi Vulnerability Assessment Committee (MVAC),
humanitarian food assistance news are pegged at 86,000 MT
for some 1.6 million people especially in the southern
part of the country.

11.Humanitarian food assistance is likely to be met
through food aid programs managed by WFP and heavily
supported by the USG. The WFP/Malawi emergency food
program for the upcoming hungry season remains severely
under resourced. WFP does not have enough food to
maintain food aid deliveries during the critical January-
March 2005 period. WFP indicates it needs 41,000 MT
between January and March 2005. WFP has made an urgent
appeal to donors (including USAID) for immediate
assistance.

12.While the situation in Malawi is not yet a crisis,
there is a clear food aid need this season. Post has
requested USAID/Washington commit further resources to
the WFP/Malawi program from FY 2005 budget resources.
Post strongly urges FFP to consider a total food
allocation to WFP/Malawi of 30,000 tons during the
October 2004 to March 2005 period given the food
situation on the ground. Sorghum would be more
appropriate than maize this year in Malawi.

STRATEGIC GRAIN RESERVE TO BE FILLED BY OCTOBER

13.The Strategic Grain Reserve (SGR) is set to be
replenished to the agreed level of 60,000 MT by October.
Of this 28,000 MT is a contribution from the EU while GOM
will replenish 32,000 MT it "borrowed" from the SGR last
season. Tenders went out and deliveries have started. So
far, 10,000 MT has been received by National Food Reserve
Agency, NFRA. GOM says 60,000 MT of maize will be in by
end October, 2004.

14.In light of the anticipated WFP/Malawi pipeline break
in October, GOM and the donors have agreed that WFP can
access the SGR maize now, with replenishment later in the
season. According to established SGR rules, the SGR
cannot release SGR maize without donor or GOM pledges of
replenishment later. So far, DFID and EU have pledged
resources to replenish the SGR should WFP use SGR maize.
The technical details of this arrangement are yet to be
worked out.

GOM TO IMPORT 70,000 MT COMMERCIAL MAIZE

15.GOM is going ahead with the importation of 70,000 MT
commercial maize for sale during the lean period despite
donors concerns about the importation. GOM has budgeted
MK 1.5 billion (13.8 million USD) for the exercise and
the maize will be sourced locally and from neighbouring
countries of Zambia and Mozambique.

16.Donor concerns are three fold:(1) this decision will
put pressure on GOM budget; (2) depending on price, it
may disrupt the private sector maize trade, concentrate
in meeting humanitarian needs and (3) subsidized maize
may be diverted by local elites, especially if ADMARC,
the government parastatal, is used to distribute
subsidized maize to the population.

17.GOM maintains that the 70,000 MT commercial maize is a
contigency in case of private sector failure to supply
maize at a critical time. At the September 18 meeting GOM
commited to only intervening in the maize market in case
of commercial maize shortage during the lean months and
GOM has given the donors commitment that it will sell the
maize to recover costs (e.g. no subsidy).

18.Much mistrust exists between GOM and private sector
maize trade. The private sector is uncertain as to
government intentions while the GOM is unsure of the
capacity of the private sector to meet maize shortfalls.

19.Recently,USAID/Malawi,with valuable assistance from
the REDSO-funded "RATES" activity, convened a meeting
between GOM officials and private sector maize players to
foster dialogue and communication between the GOM and
private sector. The meeting went well and the two sides
have agreed to meet again. Mission hopes this marks the
beginning of a real dialogue between the GOM and private
sector.

RASPOLIC