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Food crisis looms large in Nepal

Food crisis looms large in Nepal

Nepal, a nation already grappling with food security concerns, now faces a growing fear of impending food scarcity. A confluence of issues on both domestic and global fronts threatens to disrupt the supply of grains and exacerbate the situation.

The outbreak of lumpy skin disease on livestock has dealt a severe blow to Nepal’s agricultural sector. This epidemic, coupled with a low monsoon rainfall and reduced rice plantation, has raised alarm bells regarding the prospects of a diminished paddy harvest.

According to the Ministry of Agriculture and Livestock Development, paddy transplantation has been affected this year due to the late onset of monsoon in Madhes, Koshi, and Bagmati provinces.

As of July 28, paddy had been transplanted on 77 percent of the 1.35m hectares of available rice paddies. Transplantation had been completed on 90 percent of the total cultivable land last year.

Shrinking agricultural land and rising food prices 

In addition to these domestic challenges, a decade-long trend of decreasing agricultural land has cast a shadow on food security. The recently released Agriculture Census for the fiscal year 2021/22 reveals a disconcerting decline of 0.3m hectares in agricultural land over the past decade.

According to the census conducted by the National Statistics Office (NSO), Nepal’s total area of agricultural land holdings in FY 2021/22 stood at 2.22 million hectares, down from 2.52m hectares in FY 2011/12. While the number of farming families has increased, arable land is dwindling, with fragmentation becoming a growing concern. Over the past 10 years, both the total number of land parcels and the average number of land parcels per holding have decreased, a clear indication of a more fragmented landscape.

The majority of agricultural land, approximately 1.73m hectares, is allocated for temporary crops like paddy, maize, wheat, and vegetables, but this area has seen a significant reduction in the last decade. Notably, paddy cultivation has suffered a 16 percent decrease over the same period, a trend echoed in maize and wheat production.

Nepal's food security concerns are further exacerbated by rising food prices. The price of rice, a staple food, is surging in the domestic market, primarily due to India's announcement of a global ban on the export of all rice varieties except Basmati. This decision came in response to Russia’s withdrawal from the Black Sea Grain Deal amidst the Ukraine war, straining an already vulnerable global food supply chain.

Despite government reassurances of a three-month stockpile and the upcoming harvest season, panic buying persists, leaving traders capitalizing on the crisis. India's imposition of a global ban on non-Basmati rice exports has only exacerbated the problem.

“The shortage has been created because of the rice export ban by India. But we are hopeful that the new paddy will be produced after two months,” says Sitaram Chaudhary, a rice supplier in Koteshwor, Kathmandu. 

Meanwhile India has also imposed a 20 percent duty on exports of parboiled rice with immediate effect on Aug 25. India had exported 7.4m tons of parboiled rice in 2022.

India’s Ministry of Finance of India issued a notice saying that the government decided to impose export tax on all types of parboiled rice till Oct 16. 

In response to the crisis, Nepal has requested 155,000 tons of grains and sugar from India, highlighting the interconnectedness of the region's food security.

The International Monetary Fund (IMF) has also requested India to remove export restrictions on non-Basmati rice, noting that such restrictions are likely to exacerbate volatility in food prices in the rest of the world. 

Homnath Bhattarai, information officer at the Department of Commerce, Supplies and Consumer Protection, says there is a sufficient amount of paddy and rice for the time being. 

“Even though the festival season is near, the supply chain is faring well. We will not have rice scarcity,” he claims.

Global factors amplify woes

Nepal’s plight is part of a larger global crisis, triggered by the ongoing Russia-Ukraine war. Fertilizer price spikes, coupled with concerns about availability, are casting a long shadow over future harvests, potentially leading to sustained price increases.

The war's impact on Ukraine’s agricultural system has been catastrophic, with machinery damage, grain loss, and disrupted logistics. Many farmers have left agriculture to join Ukraine’s armed forces, and the disruption of agricultural logistics, including increased transport costs and plummeting domestic prices, adds to the crisis.

According to official estimates from Ukraine’s Ministry of Agrarian Policy and Food (MAPF) and the Kyiv School of Economics (KSE) since Russia invaded Ukraine, 84,200 pieces of agricultural machinery have been totally or partially damaged, four million tons of grains and oilseeds have been destroyed or stolen, and storage for 9.4m tons of agricultural products has been damaged or destroyed.

The Black Sea Grain Initiative, designed to boost grain exports from Ukraine, has partially offset lost maritime routes with more expensive land-based export options. Rising average shipping costs for agricultural products, coupled with limited access to export routes for Ukrainian farmers, further contribute to food security concerns.

The World Food Program (WFP) reports that a record 349m people across 79 countries now face acute food insecurity due to the global crisis. Low- and middle-income, food-importing countries, particularly in Africa, the Middle East, and Asia, dependent on Black Sea imports, have borne the brunt of this crisis, according to the Center for Strategic and International Studies.

The Food and Agriculture Organization (FAO) warns that a prolonged disruption of exports from Ukraine and Russia could lead to an increase of 8m to 13m undernourished people in 2022.

Pakistan floods and fertilizer shortage

Adding to the global challenges, Pakistan's recent floods have impacted rice prices, witnessing a 20-30 percent surge since September 2022, according to the International Food Policy Research Institute. Global stocks have fallen by about five percent year over year, reaching their lowest levels since 2017/18.

Floods have ravaged 1.7 million hectares of agrarian land in Pakistan, damaging major agricultural products, including rice, tomatoes, onions, wheat, and vegetables. The country now faces the risk of food scarcity as a result of these environmental challenges.

Environmental factors, such as the rapid emergence of El Niño and a forecasted positive Indian Ocean Dipole or the Indian Niño, also raise concerns about potential impacts on rice production in South and Southeast Asia.

Moreover, disruptions in global fertilizer markets in 2022 are affecting rice production. China, a major exporter of nitrogen-based and phosphate-based fertilizers to Asia, implemented trade restrictions that significantly reduced exports, causing a spike in fertilizer prices.

Rice is a fertilizer-intensive crop, and 2022 saw large disruptions in global fertilizer markets. 

China, a major exporter of nitrogen-based (N) and phosphate-based (P) fertilizers to many Asian markets, implemented trade restrictions in October 2021 that sharply reduced exports of fertilizer products such as diammonium phosphate (DAP) and urea. Chinese DAP exports, which typically account for 30 percent of global DAP trade, fell by 43 percent in 2022 compared with 2021, while Chinese urea exports declined by 47 percent in the same time frame.

Countries in South Asia and Southeast Asia, responsible for nearly 60 percent of global rice production and over 80 percent of global rice exports, depend heavily on fertilizer imports. The ongoing Russia-Ukraine war has further exacerbated the global fertilizer price crisis, raising concerns about its impact on future yields.

The global food security crisis underscores the need for coordinated international efforts to address these multifaceted issues. As nations grapple with interconnected challenges, ensuring food security has become a critical imperative.

For Nepal, the ability to mitigate the impending food crisis largely hinges on the formulation and execution of a comprehensive action plan to boost food grain production.

Rice imports from India in MT

Year 2020/21 2021/22 2022/23

Non-Basmati 1,284,631 1,387,355 765,455

Basmati 9,090 19,336 46,593