This FEWS NET Enhanced Market Analysis (EMA) report presents findings to inform regular market monitoring and analysis in southern Malawi. The information can be used to support the design of food security programs, including but not limited to informing a United States Agency for International Development (USAID) Bellmon determination in advance of an FY 2019 USAID Community Development Fund-supported (CDF) Development Food Security Activity (DFSA).
The Malawi EMA involved a mixed-method approach, combining the collection, review, and analysis of primary and secondary data from various stakeholders. Primary data were collected through a field assessment between May 18 and June 8, 2018 by a team of FEWS NET staff and international and local consultants, supported by local guides. The team met with stakeholders in Lilongwe and in eight focus districts (Balaka, Blantyre, Chikwawa, Machinga, Mangochi, Neno, Nsanje, and Phalombe, (Figure 2).
The findings indicate that several modalities are likely feasible at scale as part of a future DFSA program in Malawi. These include: local or regional procurement (LRP) of maize grain, Corn Soya Blend (CSB), and pulses; cash in easily accessible areas (if no specific nutrition objective); and vouchers in easily accessible areas.
The EMA areas of interest (AOI) are located in southern Malawi. White maize is overwhelmingly the main staple food produced and consumed among poor households. Variation in physical geography within many districts results in multiple agricultural production systems and livelihood zones (LZ) in close proximity. Most agricultural production is rainfed and takes place during the October to March rainy season. Winter crop production also takes place along the Shire River in the Lower Shire Valley. The AOI experience a relatively high degree of interannual rainfall variation, resulting in frequent drought and/or flooding.
Crop sales and casual labor income (ganyu) are among the most prominent income sources among poor and very poor households in the AOI. Following recent years of recurrent drought, the relative proportion of annual cash income from crop sales declined, while income derived from ganyu and construction labor became more prominent. Household expenditures follow distinct seasonal patterns: during the July–September postharvest period, purchases are mostly diverse, for both food and nonfood items; during the October–December agricultural season, expenditures peak for agricultural inputs and end-of-year festivities; During the January–March lean season, staple food purchases peak as do health expenditures due to outbreaks of waterborne diseases and malaria. Market purchases range from 20–60 percent of food requirements among poor and very poor households within the AOI.
White maize is by far the most widely consumed cereal within the AOI; pigeon peas are the most widely consumed pulse; informally imported edible oil from Mozambique is less expensive than locally produced edible oil and therefore favored; Bonya fish is the most common animal protein source, followed by chicken and goat meat.
Southern Malawi is structurally food deficit. Lunzu market (Blantyre) is an important reference market for bulking/aggregation and distribution for the AOI, especially Neno, Chikwawa, and Nsaje. Reference markets located in district administrative centers (bomas) and along major roads are well integrated, while markets in physically isolated rural areas are less integrated, especially during the rainy season. The number of traders, volumes traded, and frequency of market days are relatively low on isolated rural markets. Important constraints to expanding trader capacity are access to finance and commodity availability in source markets. Such challenges are more pronounced for emerging female traders.
The Structure, Conduct, and Performance (SCP) of markets varies across commodities. Maize and pulses are supplied through local production across the AOI, supplemented by seasonal inflows from surplus-producing areas of central Malawi and imports from Mozambique. The Malawi Agricultural Development and Marketing Corporation (ADMARC) buys and sells maize at controlled prices, but its influence on supply and prices varies considerably depending on how it is funded each year. Pulse prices are determined by source market prices and local supply/demand dynamics. Refined edible oil is locally produced in Blantyre and distributed through a network of vendors; edible oil imported informally from Mozambique is less expensive. Sorghum production is marginal and could be considered a nontradable commodity in Malawi as very little arrives onto markets. Likuni Phala (a local CSB product) is sold in shops in major urban areas and along main roads.
Several species of fish are found in southern Malawi, but dried Bonya is less expensive and most often purchased by poor households. Balaka, Nsanje, and Chikwawa produce a surplus of livestock (especially goats and cattle), supplying other districts of southern Malawi and beyond. Livestock in southern Malawi are mostly held by a small number of larger owners, and sales typically take place in the village markets outside of weekly urban markets. Goat ownership is most prevalent among the poor. Household meat purchases are limited due to low effective demand, and peak during the end-of-year holiday season due. Crop (maize and pulses) prices exhibit the greatest degree of intra-annual price variation. Seasonal differences in units of measure practiced for goods like dried fish reduce household purchasing power.
The availability of infrastructure and other supporting services necessary to implement the range modalities under consideration is very uneven. District bomas and other urban areas located along major roads generally benefit from storage and ICT infrastructure, and the availability of transportation and financial services. However, these amenities decline rapidly in more rural areas. During the rainy season, many areas are partially or entirely isolated, creating challenges for commodity distribution (through markets or in-kind assistance activities).
The AOI face several common hazards, including erratic rainfall, resulting in flooding and drought. Price shocks are common (particularly for maize and pulses) and driven by the national and regional market context. Several zones within the AOI were classified as IPC Phase 2 (Stressed) or higher for over 60 percent of FEWS NET analysis cycles in the past five years.
The Government of Malawi (GoM) introduced several important policy initiatives over the last decade to establish and standardize a national social protection program and to streamline humanitarian response programming. Its policy efforts focus on strengthening and linking social protection and humanitarian systems to enhance resilience and break the cycle of hunger and humanitarian crises. Its programs emphasize: (1) decentralized program design/implementation/harmonization through district-level committees; (2) centralized management and monitoring of beneficiaries across programs and projects through a Unified Beneficiary Registry (UBR); (3) the use of cash “when it makes sense”; and (4) research programs alongside program implementation to improve policy making and program design.
The range of modality experiences in the AOI is wide, suggesting many opportunities and constraints for consideration in future program design (Table 1). Regardless of modality, there is a perceived need to: (1) better define the role of local authorities and leaders in beneficiary selection and program implementation; (2) consider the very wide range of related activities ongoing in the AOI, their program components/objectives, and transfer values (rations or otherwise); (3) account for household size and sharing practices (intra- and interhousehold) when setting ration sizes and transfer values; (4) consider the strong maize emphasis in household food consumption and purchases; and (5) understand that shifts in modalities used to meet program objectives may require a transition period. Testing new transfer modalities at scale is not well suited to years of severe shock or crisis.