US embassy cable - 04LILONGWE741

UNCLAS SECTION 01 OF 04 LILONGWE 000741 
 
SIPDIS 
 
AIDAC 
 
USAID FOR DCHA/FFP LANDIS, WELLER, MUTAMBA, SKORIC, 
PETERSEN AND BERGMAN 
 
USAID FOR DCHA/OFDA HALMRAST-SANCHEZ, BORNS, MARX, 
PRATT,AUSTRENG, KHANDAGLE AND BARTON 
 
USAID FOR AFR/DP WARREN, KNEPP 
 
USAID FOR AFR/SD WHELAN 
 
USAID FOR AFR/SA COOKE, HAGELMAN, LOKEN 
 
DEPT FOR AF/S, INR/GGI, PM/ISP 
 
NCS FOR DWORKEN 
 
NAIROBI FOR PUTNAM, ESTES, AND DEPREZ 
 
MAPUTO FOR BLISS AND POLAND 
 
LUANDA FOR LYVERS 
 
HARARE FOR ATWOOD AND REED 
 
PRETORIA FOR DISKIN, KHANDAGLE, PRATT, HALE, SINK, AND 
FAS HELM 
 
GABORONE FOR KHUPE 
 
ROME FOR FODAG 
 
 
E.O. 12958: N/A 
TAGS: EAID, EAGR, MI, Development, Agriculture/Food Security, Economic 
SUBJECT: SITREP 29: DISASTER ALERT FOR EMERGING HUMANITARIAN ASSISTANCE NEEDS IN MALAWI 
 
1. Summary: Many of the same conditions that sparked the 
2001-2003 food crisis are emerging again this year in 
Malawi. The recently concluded harvest was slightly below 
the ten year average and below the 2001 harvest volume 
that presaged the 2001-2003 food crisis. Government maize 
stocks, which last year were at record highs, are 
depleted. Humanitarian stocks are also low with few 
donors having made formal food aid pledges to World Food 
Program (WFP) emergency operations in Malawi. 
Furthermore, uncertainty about Government maize imports 
may create disincentives for private sector imports. A 
lack of leadership in the Ministry of Agriculture has 
resulted in Government inaction and conflicting messages 
regarding the likely Government response. Lastly, a 
devaluation of the Malawian kwacha seems possible. Such 
devaluation would raise the Malawian kwacha price of 
imported maize for those households dependent on market 
purchases. Post request is contained in paragraph 14. 
 
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FINAL RESULTS FROM FOOD PRODUCTION SURVEYS 
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2. Several districts in Malawi received below average 
rainfall and experienced periodic dry spells during the 
2003/04 cropping season, resulting in a decline in 
agricultural production. According to recent assessments, 
districts in the Southern Region of the country were the 
most affected. Severely affected districts (40-50 percent 
decline in production relative to last year) are Machinga 
(eastern part), Phalombe, Chikwawa and Nsanje. Other 
affected districts (30-35 percent decline) include 
Chikwawa, Blantyre, Chiradzulu, parts of Thyolo, Mwanza, 
Balaka, parts of Zomba, Mangochi, Salima and Karonga. 
 
3. Final crop estimates by the Ministry of Agriculture, 
Irrigation and Food Security (MOAIFS) have put national 
maize production at 1.69 million (metric) tons, 15 
percent below the 1.98 million tons reported last year 
and slightly below the ten year national maize production 
average of 1.73 million tons. Results of a Food and 
Agricultural Organization (FAO) also put the maize 
harvest at 1.7 million tons. Annual consumption 
requirements for maize are thought to be in the 
neighborhood of 2 million tons. Rice production declined 
25 percent from 88,000 tons last year to 66,000 tons this 
year. Cassava production has increased from 1.74 million 
tons to 2.5 million tons due to area expansion. 
 
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MALAWI VULNERABILITY ASSESSMENT COMMITTEE (VAC) RESULTS 
-------------------------------- 
4. The independent, multi-agency Vulnerability Assessment 
Committee (VAC) report was completed late last month. The 
VAC report estimates that between 1.34 million and 1.68 
million people will require humanitarian food assistance 
in Malawi between June 2004 and March 2005. 
 
5. The Malawi VAC report presents two scenarios for 
humanitarian food needs in Malawi, ranging from 56,030 
tons (scenario 1) to 83,550 tons (scenario 2) in the 12 
most affected zones. Scenario 1 assumes that food prices 
will remain relatively constant, while scenario 2 assumes 
that food prices rise 30 percent by end of the year. Post 
believes that the more pessimistic scenario 2 is more 
probable. WFP is gearing up to expand food distribution 
through a well-managed NGO consortium, but the WFP food 
pipeline remains severely constrained. WFP is making a 
strong appeal for donor pledges for Malawi. 
 
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LACK OF PURCHASING POWER AND LIMITED MAIZE STOCKS 
INCREASE FOOD NEEDS 
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6. Malawi faces a set of structural problems that mean a 
significant portion of the population are vulnerable to 
increasingly smaller shocks. This is especially true 
during the "hungry season" when most households have run 
out of maize and are dependent on the market. Reliable 
maize trade links with Mozambique and Tanzania have 
enhanced food security in Malawi, but only for those with 
significant purchasing power. 
 
7. Households in Malawi's Southern Region will need the 
most food aid this year, with needs already emerging in 
some districts (particularly Machinga, Phalombe, Nsanje 
and Chikwawa districts). The majority of relief 
assistance will be required during the hungry season 
beginning in October 2004 until the next harvest in April 
2005. 
 
8. Given the improved methods used by the VAC assessment 
this year, improved geographical targeting of food 
assistance will be possible. For example, with current 
VAC data, it will be possible to target assistance down 
to the Extension Planning Area (EPA) level rather than 
just the district level. Use of sorghum instead of maize 
in food aid programs will also reduce the likelihood of 
disrupting the important cross-border trade between 
Southern Malawi and Northern Mozambique. 
 
9. In the aftermath of the pre-election maize sell-off, 
the Strategic Grain Reserve (SGR) silos are nearly empty. 
Only some 7,000 MT of maize remains and most of this 
maize is of poor quality and not fit for human 
consumption. The European Union has committed to help 
restock the SGR and is tendering for 28,000 tons. The 
Government of Malawi has promised to replace the 30,000 
tons that were sold from the SGR in breach of agreed-upon 
procedures, but whether the Government will be able to do 
so remains to be seen. 
 
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GOVERNMENT ACTIONS MAY CREATE DISINCENTIVES FOR 
COMMERCIAL IMPORTS 
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10. In past years, the bulk of Malawi's maize deficit has 
been met through formal and informal private sector 
imports. The year's maize deficit is estimated by the FAO 
to be 408,000 tons. Evidence from past years suggests 
that the informal cross-border trade could bring as much 
as 350,000 MT from Mozambique, Zambia and Tanzania this 
season. 
 
11. However, the volume of private sector trade is 
dependent on the right price signals. That is, private 
traders need profit opportunities and information about 
likely Government of Malawi interventions in the maize 
market. In past years, Government importation and sales 
of maize at subsidized prices has discouraged the private 
sector maize trade while doing little to assist the most 
vulnerable populations. 
 
12. Thus, recent reports that the Government of Malawi is 
planning to import 160,000 tons of maize could damage 
private sector incentives, actually reducing the total 
maize available in Malawi. Government officials have been 
tight-lipped about maize import plans. Furthermore, the 
Government of Malawi has not made it clear whether the 
maize sales will be continue at subsidized prices in 
light of the conversion of ADMARC into a limited 
liability company. 
 
13. There is no indication that the Government of Malawi 
is planning to make a disaster declaration in the coming 
days. Yet, Post believes that such silence reflects the 
current lack of leadership within the Ministry of 
Agriculture rather than any firm belief that no 
assistance is needed. 
 
14. Post request:  USAID's Food for Peace (FFP) office 
has been working closely with Post to plan for the 
upcoming hungry season. Current FFP plans include 
diverting up to 5000 tons of food to Malawi. FFP 
recognizes that this will be insufficient, but faces 
tight FY 2004 budgets and high demand. As a result, Post 
strongly urges AID/W to consider a total food allocation 
to WFP/Malawi of 30,000 tons during the July 2004 to 
April 2005 period. Sorghum would be more appropriate than 
maize this year in Malawi. While the situation in Malawi 
is not yet at crisis stage, relatively small price shocks 
coupled with unmet humanitarian needs could quickly 
trigger a crisis later this year. 
 
RASPOLIC