following export bans.<sup>5</sup> The NBR depends on the contribution of maize to household income (production ratio, PR) and its share in total household expenditure (consumption ratio, CR) as well as the magnitude of change in maize price. Based on IHS4, Table 6 summarizes PR, CR, and NBR as well as the share of households that are net-buyers, net-sellers, and self-sufficient. Maize consumption represents 23 percent of total consumption, while maize production accounts for about 10 percent of the income. About 65 percent of the households are net buyers of maize, that is, their maize consumption is higher than production (in value terms), while about 12 percent are net-sellers. About 24 percent of the households are self-sufficient, that is, they produce maize only for their own consumption without any maize sales or purchases in the market.<sup>6</sup> There is some heterogeneity by residence (urban/rural), region, poverty status, and consumption quintile. For example, rural residents and the poor have high PR and CR, and a larger share of them are self-sufficient, compared to urban residents and the non-poor households.

Lower maize prices typically lead to welfare losses for farm households that have a surplus harvest and rely heavily on maize sales for their incomes. Whereas, those farmers who do not have enough maize harvest (and non-farm urban residents) and purchase maize for consumption would benefit from lower maize prices. As shown in Table 6, the majority of households, both in urban and rural areas, are net-buyers. Therefore, in the short run, a lower maize price due to export bans is likely to benefit these households. The ban is likely to hurt farmers that are net-sellers, but these farmers make up only 12 percent of Malawi’s households. The magnitude of the short-term gains, however, is very low. The gains make up a relatively higher share of rural households’ consumption (0.86 percent) than urban residents’ consumption (0.59 percent).<sup>7</sup> The gains are also larger in the South (0.97 percent) and North (0.72 percent) regions than the Central region (0.66 percent).

Poor households have a much larger maize consumption share relative to non-poor households, and they tend to be mostly net-buyers of maize. Therefore, a reduction in maize prices results in an average welfare gain of 0.94 percent for the non-poor and 1.14 percent for the poor households. The welfare implications of a decrease in maize prices also vary across the consumption distribution with those in the lowest two quintiles exhibiting a more substantial increase in welfare gains relative to households at the higher end of the distribution. This holds in both urban and rural areas. Within urban areas, households that are in the lowest quintiles gain about 0.7–0.9 percent of their consumption expenditure for a 6 percent decrease in maize prices. In comparison, the effect on the wealthiest households is around 0.3 percent of their consumption. We observe a similar pattern across different consumption quintiles within rural households.

Households that are net-sellers of maize would see a reduction in farm profits due to a decline in maize prices, while households that are net-buyers would gain from consuming cheaper maize. For a 6 percent decrease in maize price, net-sellers would see a welfare loss of 0.88 percent of their consumption, while households that are net-buyers gain nearly 1.1 percent of their consumption (Table 6, Panel B). These changes in their consumption are, however, a small fraction of their total consumption. As a result, these

> 5 Household expenditure is used as a proxy for income.

> 6 The results are similar in 2010/11 (IHS3) and included in Appendix Tables A.3 – A.5.

> 7 This does not necessarily mean that the amount of gain is higher for rural residents but that the gain is a larger share of their initially low consumption.

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