Country may not have enough forex to import food

Malawi might not have sufficient reserves of foreign currency to import food to cover current shortages, according to a new UN report. The International Monetary Fund has noted that Malawi needs US $80 million worth of foreign exchange per month, but is holding a reserve of about $90 million - just enough to cover a month's imports, according to the Crop and Food Supply Assessment Mission report by UN's Food and Agricultural Organisation (FAO) and the World Food Programme (WFP). "This is a serious cause for concern," said the agencies. Total maize import requirements are estimated at 767,000 mt, of which 434,000 mt will not be covered by either formal or informal imports, or food aid. The Malawi Vulnerability Assessment Committee (VAC) has calculated that just over than four million people will require food assistance during the 2005/06 marketing year. However, if the price of maize rises sharply, the number in need of assistance could rise to 4.61 million. About two-thirds of the population lives below the poverty line. Maize prices have remained low because of informal cross-border imports and the state grain marketer, ADMARC, but given the scale of maize deficit, "prices may shoot up if significant amounts are not imported," the UN agencies commented. Should the recently announced G-8 decision to cancel Malawi's debt be implemented, the country could have more foreign exchange at its disposal. Malawi is in the throes of yet another prolonged dry spell, recording the lowest production of maize - estimated at 1.25 million mt - in a decade, according to the FAO/WFP report. Maize production this year is some 26 percent below last year's "relatively poor harvest." "Early and above average rains had led to optimism for a good crop, but hopes were dashed when rains failed at a critical time, when the maize crop was at the stage of cob formation and pollination." Heavy rains in late December and early January caused significant damage to crops through flooding and nutrient leaching. The FAO/WFP assessment mission found that mineral fertilisers were "delivered too late to be of use to the main summer crops, while commercially very little fertiliser was available in the markets, which also significantly contributed to the reduced harvest". Adverse climatic conditions have affected Malawi's food and cash crop production in four of the last five growing seasons. "Emergency food assistance has been required for 15 to 30 percent of the population in 2001/02, 2002/03 and in the recently concluded 2004/05 season," noted the UN report. Food security has deteriorated in the southern and central regions, where access to food is traditionally more acute. The WFP is currently providing food assistance to more than 200,000 mothers and children, and intends revising its requirements to cover those affected by the 2004/05 crop failure.