The price of rice, Nepal’s staple food, is escalating in the domestic market right after India announced a global ban on the export of all varieties of rice, save the Basmati. The move from New Delhi came after Russia announced its withdrawal from the Black Sea Grain Deal in the midst of the Ukraine war, straining a war-hit supply system and aggravating the global food crisis.
Despite hints that the ban may not apply to Nepal and the government’s assurance that there’s enough stock to last three months after which a new harvest season will begin, panic buying has been going unabated and the traders have been making hay.
In a very short span of time, traders have raised the prices of different varieties of rice by more than 16 percent in the domestic market.
“When I inquired about the price of a 25 kg rice sack some days ago, the shopkeeper said Rs 2,300. But when I visited the shop the next day, the price had already increased by Rs 200. The shopkeeper said the price would rise further as he was running out of stock. That’s why I bought two sacks of rice,” said Parbati Dahal, a resident of Naya Thimi.
Many more customers like Dahal are opting for panic buying, fearing the unavailability of rice in the market in the coming days. But the government officials say there is no reason to panic.
“We have food grains for three months at least. The new paddy will be ready in October-November,” says Gajendra Kumar Thakur, director-general at the Department of Commerce, Supplies and Consumer Protection.
In response to increasing complaints from consumers about the price hike, government authorities have a readymade answer: “We have been monitoring the market daily.”
Thakur says it is difficult to immediately find out whether there is black marketeering going on, as people get their foodstuffs from wholesalers, distributors and retailers.
“We have been collecting data from the market and analyzing them. The reported price hike is under investigation,” adds Thakur.
The department has requested consumers to lodge complaints against price gouging by calling at its two numbers: 5343939 and 5347992.
India has imposed a ban on the export of non-Basmati rice across the globe despite objections from the international community. The export policy of non-Basmati white rice, semi milled or wholly milled rice, whether or not polished or glazed, is amended from “free to prohibited,” according to a notification from the Directorate General of Foreign Trade.
According to one official, discussions are underway with the Indian government to exempt Nepal from the ban list.
The Indian rice ban has also affected the prices of Nepali rice. Dev Kumar Shrestha, who runs a rice mill at Lagankhel, Lalitpur, says as this is an off-season for rice production, it is usually normal for the prices to go up during this time. But he does admit that the hike rates have been unreasonable after the Indian ban of rice export.
“Big traders who are in power and are making huge profits by causing an artificial crisis,” says Shrestha. “When they raise the price, we too have to buy at an increased rate, which has caused the price increase.”
Shrestha says since India has not banned the export of Basmati rice, high quality rice including long grain, Basmati rice should be easily available. “There is an ample supply of low quality rice, only the middle quality rice varieties are hard to get. Still, there is a panic among consumers.”
Some shopkeepers have stopped ordering rice because they are finding it difficult to sell them due to the price hike. Fanindra Shrestha, a grocer from Buddhanagar, Kathmandu, is one of them. He says the customers who visit his shop return empty handed after hearing the new price list of the rice varieties.
“I cannot convince them, so I thought it is best not to order more rice because my customers are not going to buy them,” says Fanindra.
When there is a price hike of any goods in the market, it affects the consumers and eventually the supply chain. Those with purchasing power can buy and hoard any amount of goods that are in short supply, whereas the poor consumers cannot afford them.
Market experts warn this could create an imbalance in the demand and supply, upsetting the market.
Several traders and experts that ApEx spoke with suggest that the government needs to come up with a long-term solution to address the issue, as this is not the first time the country has experienced such a scenario. They say that the government should take the initiative to make Nepal self-reliant when it comes to essential food items including rice.
“We must increase our domestic rice production,” says Shrestha, the rice mill owner from Lagankhel. “By doing so we will no longer be dependent on foreign countries for rice.”
