Maize production drop to trigger inflation

Malawi’s Civil Society Agriculture Network (Cisanet) has said the drop in maize production will have a knock-on effect on inflation as price of maize continues to soar.

Cisanet was reacting to the third round crop estimates (which are usually viewed as final) released by the Ministry of Agriculture which shows a seven percent drop in maize production.

Malawi will, however, have surplus maize, especially from the Central and Northern regions.

This year, Malawi harvested 3.624 million tonnes of maize which is slightly above the five-year average of 3.46 metric tonnes.

The national cereal requirement stands at 2.8 metric tonnes, according to the ministry.

The ministry cites poor rainfall and prolonged dry spells in Southern Region as factors that have contributed to a drop in maize yield.

But Cisanet national director Tamani Nkhono-Mvula said the reduced production of maize will trigger inflation. Food, dominated by maize, controls 58 percent of the Consumer Price Index, a weighted basket used to compute inflation.

“The decrease in production compared to last year will have a knock-on effect on inflation. We should expect a rise in inflation as the price of maize as major food crop will increase. There will be need for relief food. The Shire Valley, for example, will need some injection of food from other areas,” said Tamani Nkhono-Mvula.

Since the devaluation of the kwacha in May 2012, the exchange rate has shifted from K167 per dollar to K278 per dollar in July, significantly lowering consumer purchasing power as prices of basic commodities and staple food continue to rise.

“These estimates, however, should be a wakeup call because if there is such a reduction in production, we should be asking ourselves how this came about when government pumped in a lot of money through the subsidy programme.

“Obviously, the low production is attributed to dry spells, but how much have we, as a country, invested in irrigation development? Investments in irrigation have been low, we need to invest more so that we minimise this problem,” he said.

According to a report from Famine Early Warning Systems Network (Fewsnet), a comparison of three-year maize prize averages from source markets or surplus producing areas of Mzuzu in the Northern and Mitundu in the Central show that recent nominal maize prices are already about 30 percent higher. A 50-kg bag of maize currently fetches.