- The Malawian government has decided to export 100,000 tons of maize, thus emptying parts of its emergency storage of the country's primary staple food. Maize prices on local markets lately have been even lower than the government's subsidised emergency supply, thus signalling a gradual normalisation after years of drought and food crisis.
Maize continues to be readily available throughout local markets in Malawi at relatively low prices. The Malawian government thus has announced its decision to export 100,000 tons of maize through the National Food Reserve Agency (NFRA) as one means of addressing this stock glut.
The government however was to retain 100,000 tons of maize in its Strategic Grain Reserve to hedge against unforeseen domestic food shortages, today reported the US agency Famine Early Warning Systems (FEWS). "Keeping this food in reserve is important because low maize prices may result in low informal maize imports and reduced maize supplies in the local markets later in the season," FEWS noted.
- It is also possible that maize might end up flowing out of the country through informal channels to capitalise on higher maize prices elsewhere, and this could result in maize shortages and price hikes in the domestic market, FEWS warned. "The government will therefore need to manage the Strategic Grain Reserves prudently."
During the first week of July, maize prices in Malawian local markets ranged between Malawi kwacha 5.91/kg at Nkhotakota market in the central region, and MK 13.48/kg at Namwera market in the southern region. These prices were much lower than both last season's comparable prices and the original prices of the Agricultural Development and Marketing Corporation (ADMARC) of MK 17.00/kg.
The Malawian government only last month had advised ADMARC to reduce its maize prices from MK 17.00/kg to MK 10.00/kg as one way of attracting buyers and competing with the prices in the local markets. It was however too early to assess the impact of this change, FEWS said.
The US agency warned against the consequences of lowering the ADMARC price. This may act as a bargaining tool for private traders, who may argue that since they will not be able to sell their maize for more than MK 10.00/kg, they will be forced to offer something even lower to farmers in order to make profit. Unlike in the past, it was still not clear whether ADMARC would buy maize from farmers this year and if so, at what price.
Further, low producer prices would make it difficult for most farmers to afford fertilizers, FEWS warned. Anecdotal field evidence from the baseline vulnerability assessment supported this argument, the agency said.
The improved food security and dropping maize prices also had influenced the macro-economic situation in Malawi at large, the new FEWS report indicated. The national inflation rate dropped from 9 percent in May to 8.5 percent in June 2003. The country is experiencing its lowest inflation rates in the past five years.
This drop in inflation was mainly attributed to the improved food security situation this year and the subsequent decline in the food index which accounted for over 50 percent of the inflation rate. The declining inflation rate had been further supported by the stable exchange rate.
Meanwhile, the food emergency in Malawi has almost come to an end. The World Food Programme (WFP) yesterday reported on its few and downgraded operations in Malawi, where it had "distributed 864 tons of food to vulnerable beneficiaries."
WFP was also holding discussions regarding other social food programmes, contrary to the emergency programmes implemented until now. A large number of Malawians were impoverished by the long-lasting food crisis.
Also FEWS regards the food security situation in Malawi as significantly improved. Recently harvested crops are being marketed and winter crops are being planted at the moment, the agency reports from Malawi.
As typical of the winter season in Malawi, the country now continues to experience dry conditions coupled with intermittent showers. The cold temperatures and rainfall showers provide an environment which supports the cultivation of winter crops. The dry conditions on the other hand facilitate the main season (summer) harvest, which is now almost complete.
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