IS A REGIONAL FOOD SECURITY CRISIS LOOMING?
THE REGIONAL PERSPECTIVE
Preliminary maize forecasts released towards the end of April, indicate production shortfalls in a number of SADC countries following a prolonged dry spell in parts of the region during the second half of the season. Most affected are Zimbabwe, Zambia and Malawi. According to current estimates, regional maize production this past season will be sufficient to meet the region's requirements for about ten months.
What is particularly striking this year are the very low maize stocks currently in the region that could be used to offset the production shortfalls. This is largely a result of last year's low production, after which domestic and regional stocks were drawn down in an effort to fill the food gap. This suggests that much of this year's anticipated shortfall of approximately three million metric tonnes will need to be imported from outside the region.
The combination of low production and low stock levels have lead to abnormally high maize prices in many countries, which appear likely to persist. The magnitude and centrality of the Zimbabwe deficit will continue to affect supply solutions in Zambia and Malawi, and prices in adjacent countries, including in South Africa, which will likely aggravate food access in ways not previously seen in the region.
THE NATIONAL PERSPECTIVE
The food security outlook at the national level varies by country. Prospects are largely favorable for South Africa, most of Tanzania and northern Mozambique, where surplus maize and other foods will be available for export to neighboring countries. In contrast, Zimbabwe is facing an extreme production shortfall that will do little to ease food shortages that are already affecting a large number of people. Zambia and Malawi also face serious production shortfalls, but of a different magnitude than Zimbabwe, providing these countries with a small window of time before the situation could become critical. Production in Botswana, Namibia, Lesotho and Swaziland is expected to be well below average this year. These structurally food deficit countries normally have the capacity to fill their food gap through commercial imports from South Africa under preferential trade agreements. However, at the sub-national level, pockets of very poor people in these countries will have difficulties in accessing food, and some may require food assistance. Lesotho declared a state of famine on 22 April.
On 30 April, government declared a state of disaster, estimating that 7.8 million people may require assistance over the next 18 months. Given maize import requirements approaching 1.5 million MT, foreign currency shortages and restrictions on the participation of the private sector, Zimbabwe may have difficulties financing the required imports in a timely manner.
Estimates of maize production in Zambia are expected to drop following the on-going Crop and Food Supply Assessment. Subsidized imports have helped fill the food gap since the beginning of the year. The National Farmers Union is trying to persuade government to limit imports of maize, as private traders and millers are unable to compete with the subsidized prices.
The final harvest in Malawi has been adversely affected by the consumption of premature maize to meet food shortages. Cross-border imports from Tanzania and Mozambique will help ease the food shortages. On 27 February, Malawi declared the food situation a state of disaster, noting that almost three-quarters of the country's population were affected.
HIGH PRICES LIMITS HOUSEHOLD ACCESS TO SCARCE FOOD SUPPLIES
The recent food shortages that have gripped parts of the SADC region, have led to high prices for staple foods. As a result of the low harvest last year, many poor households have suffered from scarce maize supplies, high prices and reduced income. Typically, the harvest season signals renewed supplies and a drop in prices. However this season's disappointing harvest may not provide much relief for the poorest households. For example, the limited maize harvest in Zimbabwe is concentrated in only a few areas, and will provide little relief to poor households already facing food shortages. In most parts of the country, subsidized staple maize is in very short supply, and prices remain high for the small quantities available in local markets. In Zambia, prices dropped somewhat, particularly in the northern areas, but are likely to be short lived due to the limited harvest. Millers in urban Zambia are paying higher prices for local maize than for subsidized imported maize. In Malawi, staple food prices in local markets have been double the prices in government markets (ADMARC) where supplies have been scarce. With the harvest underway, prices are reportedly dropping in most markets, although maize in local markets remains more expensive than ADMARC maize.
THE BOTTOM LINE: With approximately ten month's maize requirements likely to be available within the region, a food security crisis of a regional magnitude can be avoided with appropriate and timely action. At the national level, potential food shortages in three countries, Zimbabwe, Zambia and Malawi, could evolve into serious humanitarian crises. Elsewhere, pockets of vulnerable groups will require assistance.
While Zimbabwe is most at risk, the magnitude and centrality of the Zimbabwe deficit is already having adverse effects on neighboring countries that must be mitigated in the months ahead. This will require close cooperation and collaboration between governments and all stakeholders. While market solutions will play a major role in averting food crises, humanitarian relief will be crucial for the most seriously affected.
HOW WILL THE MAIZE GAP BE FILLED?
While maize production in South Africa is expected to increase by some 17% from last year, opening maize stocks this year are less than one-third of last year's level. Estimates of export potential this season vary, but are likely to be in the vicinity of one million MT for maize. Approximately half of this amount is normally earmarked for Botswana, Namibia, Lesotho and Swaziland, leaving perhaps half a million MT for other countries in the region. Securing price and availability for South Africa maize is possible using options on the South African Futures Exchange.
South Africa however, is not the only supplier of maize to SADC countries. East Africa is reporting availability of 180-220,000MT of white maize, which can be delivered to the SADC region competitively. Zimbabwe reports recent purchases of 30,000MT of white maize from Kenya, with a landed cost in Harare slightly below the landed cost of maize imports from South Africa. Uganda has recently provided Zambia with some 30,000MT of maize, although delivery rates have been slow.
Outside of Africa, the United States could have as much as one million metric tonnes of white maize to export this year. As the US planting season begins, prices are expected to remain low. At current parities, white maize from the US is competitively priced for the SADC region. South African traders have already begun importing some 80,000MT of US white maize, while there are reports that Swaziland and Botswana may also be importing maize directly from the US.
Elsewhere, maize prices in Argentina, where harvesting is underway, are also low despite a recent increase in export taxes to 20%, which could lead to higher prices over the short-term as farmers hold back supplies. South Africa is expected to import 280,000MT of yellow maize from Brazil and Argentina this season, while Zimbabwe has reportedly placed an order for an additional 20,000MT from Brazil. Zimbabwe has also reported purchasing 25,000MT of yellow maize from China, where prices are even lower than in the US.
TRANSPORT CORRODIRS SHOULD BE ABLE TO HANDLE IMPORT REQUIREMENTS
Commercial routes moving critical food supplies to inland countries currently rely primarily, but not exclusively, on the southern corridor from South Africa. This corridor on its own will not be able to handle the large volumes of food imports required this year. Although other important corridors from coastal ports to inland countries have not seen much commercial activity, WFP and private sector analysts agree that these corridors should be capable of handling the anticipated import volumes. One important change that has occurred over the past decade is that port and railway facilities are no longer fully-state owned and managed. These institutional changes have created a sense of instability raising questions concerning the capacity of the private sector to move the large volumes of commodities that will be required in the months ahead. However, the routes are viable and with concerted effort can be geared up and commercially activated to meet the challenge. If this is achieved with assistance from international agencies and donors, both the immediate and long-term benefits to the region could be substantial.
2002/2003 EL NIÑO THREAT WEAKENS
Climate experts forecast an enhanced probability of a weak El Niño event occurring in 2002, which could lead to drier than normal conditions in Southern Africa. However, by mid-May atmospheric indicators were still not displaying the necessary conditions to confirm the development of a major El Niño event. The probability of an El Niño event that could affect the next cropping season in Southern Africa decreased from 70% in mid-April to 55% in mid-May, and its expected intensity has also weakened. Even if an El Niño does occur, this is not in itself enough to cause a drought in Southern Africa. Experts must also consider the affects of local regional climatological factors that could influence the global factors, as happened in 1997/98 when the El Niño did not result in the anticipated major drought in the Southern Africa region.
The International Research Institute for Climate Pre-diction (IRI) is leading the global discussion on the El Niño threat. They have recently hosted a global workshop on El Niño information and preparedness.
Regular El Niño updates are available from IRI by visiting: http://iri.columbia.edu/climate/ENSO/