Maize prices are expected to ease between April and June 2013 largely attributed to the availability of the staple grain, according to a forecast by the Famine Early Warning Systems Network (Fewsnet).
The drop in the price of maize could also trigger a further drop in inflation rate, currently at 34.6 percent as of March, according to the National Statistical Office (NSO), a 1.5 percentage points decline from 37.9 percent in February.
The NSO has indicated that the drop in the March inflation rate is largely because food inflation has started to decline, thanks to the availability of cereals in some parts of the country.
Malawi’s inflation is driven by food which accounts for 50.2 percent of the Consumer Price Index (CPI)—a measure that examines the weighted average of prices of a basket of consumer goods and services.
But the Malawi Economic Justice Network (Mejn) executive director, Dalitso Kubalasa, said it is a normal trend for maize prices to go down during and soon after the harvest season.
“It is all to do with the impact of demand and supply. Largely, the foodstuffs are the ones that push the inflationary figures up, and with the harvests, we expect the inflationary pressures to be lower,” he said.
The Fewsnet report has indicated that in March 2013, the average national retail price for maize was 253 percent higher than the average retail price in March 2012.
Among other things, Fewsnet has attributed the high maize price to the continued tight supplies and high demand, aggravated by the loss of 32 222 metric tonnes of national maize stocks, the continued depreciation of the kwacha, the longer distances travelled to source markets and high fuel costs.
Similarly, a comparison of 2013 and 2012 March maize prices in the Northern Region shows a 285 percent increase, while prices in the Southern Region are 287 percent higher than they were during this same period last year.
This could also be the reason a March 2013 assessment by Fewsnet and Ministry of Agriculture and Food Security found that farmers in parts of central and northern Malawi started harvesting their maize much earlier than normal because it was too expensive for households to buy maize in local markets.
The second-round crop estimates released by ministry projected a gross domestic maize production of about 3.68 million metric tonnes, which is 1.5 percent higher than 2011/12 production levels and would result in a domestic maize surplus of approximately 740 000 metric tonnes.
The increase in the crop’s output could also be a result of the Farm Input Subsidy Programme (Fisp) which was allocated K57 billion (about $135m) in the 2012/13 budget to buy fertiliser to benefit more than 1.5 million farm families at a price of K500 (about $1.10) per 50 kilogramme bag.