Oversupply of goats on the market by desperate hungry households has resulted in the sharp drop in prices, the Famine Early Warning Systems Network (Fews Net) has said.
In its Malawi Food Security Outlook for February to September 2020, Fews Net says in southern areas that have been facing the highest levels of acute food insecurity, livestock holdings are currently at seasonally low levels due to households selling livestock to purchase food.
Fews Net says poorer households typically own an average of three to five goats throughout the year but that at the time of its January assessment, most households owned one to two goats, while others had typically sold all their goats to buy food.
“Due to the increase in supply, prices of goats were at seasonal low levels, ranging from K10,000 to K15,000. These prices are approximately 50 percent lower than typical prices after the harvest.
“With maize prices ranging from K15,000 to K20,000 per 50 kilogramme (kg) bag, the goat-to-maize terms of trade are significantly eroded to around a third or less of what is typical for this time of year,” Fews Net says.
The report says some households are typically expanding self-employment activities including firewood and charcoal sales and coping by selling some livestock such as chickens.
“Some households in southern Malawi even reported selling some assets such as bicycles in order to access income for food purchases.
“Households reported reducing the quantity and frequency of meals, with many consuming just one meal per day compared to the typical three,” the report says.
Fews Net says it expects the price of the grain to start falling with the start of green harvests in March, though will likely remain above average through September 2020.
According to first round production estimates from the Ministry of Agriculture, Irrigation and Water Development, Malawi is expected to produce approximately 3.6 million metric tons of maize this year.
But Fews Net says despite the anticipated above-average production this season, continued upward pressure on prices resulting from the government-set Admarc buying price of K 310 per kg is expected to keep prices from fully normalising.
Presenting the mid-year budget statement in Lilongwe last month, Finance Minister, Joseph Mwanamvekha, said funds are available for Admarc to go onto the market to start buying maize on time.
“Resources for maize purchase have been maintained at K10 billion of which K3 billion was spent during the first half. A total of K9.2 billion has been earmarked for maize purchase during the second half comprising K7 billion budget balance and K2.2 billion realised from Admarc maize sales. These funds will be used to start early purchasing of maize from smallholder farmers.
“Going forward, government will promote structured markets through commodity exchanges, warehousing systems and establishment of cooperatives,” Mwanamvekha said.