Widening agriculture trade deficitInadequate and ineffective service delivery is a significant impediment to agricultural development.
The conventional narrative of labelling Nepal as an agricultural country appears to be more rhetoric than reality as the country, once a food exporter, has now become a net food importer. Recent data from the Department of Customs bolsters previous reports that exports have stagnated while imports have skyrocketed. It is disheartening to see the import of cereals, fruits, vegetables and animal products, that can be domestically produced, surging. As per customs data, the import of cereals during the first six months of the current fiscal year 2021-22 (mid-July 2021 to mid-January 2022) has reached Rs42.7 billion, up from Rs41.7 billion during the same period in the last fiscal year 2020-21. Cereal exports, on the other hand, have been miserably low. The export value of cereals in 2020-21 was Rs5.4 million, down from Rs17 million in 2019-20.
Imports at a high level indicate strong domestic demand and a growing economy. However, it is critical to investigate how a country pays for its imports. Because Nepal spends a significant amount of foreign currency received primarily through remittances, its international trade is at risk due to the vulnerability of remittance inflows to geo-political situations and economic downturns. If the current trade deficit continues, Nepal’s food security will be jeopardised, posing a potential threat to national security. It entails an urgent call for action to reverse the trade deficit in agriculture.
Triggers of cereal import
Increasing food imports can be attributed to low agricultural productivity, which occurs when domestic production does not keep pace with population growth. Adoption of improved technologies and production practices are critical drivers of agriculture production acceleration. According to the International Food Policy Research Institute (IFPRI) South Asia report Discussion paper 01781, December 2018), only 33 percent of households in Nepal use improved crop varieties, less than 10 percent use modern farm equipment, and fertiliser use is far below the South Asian average.
There has been a marginal increase in crop yield during the past 10 years. But it is too little and too late. Agriculture is a labour-intensive industry, with per unit labour productivity of $794, one-fourth of that of other sectors. The weak performance of agriculture incentivises youth to seek employment abroad. Reports from research and farmer field level demonstrations indicate a significant productivity gap between current and potential production levels.
One of the factors contributing to the increase in food imports is a shift in food consumption patterns. A growing rice-eating culture that deviates from traditional maize, millet and potato consumption has increased rice demand, which now accounts for 60 percent of total food imports. There is also a preference for imported long-grained aromatic rice. In addition, demand for processed foods such as noodles, burgers and pizza is increasing.
Inadequate and ineffective service delivery is a significant impediment to agricultural development. Because of institutional inconsistencies, political instability and poor governance, the capacity of institutions established to provide services (agriculture extension, inputs, credit, marketing) has been limited. And, as a result of competing authority and jurisdiction, the federal governance structure has added to the complexity of service delivery. Farmers are still fighting for better seeds, fertilisers, credit, a fair price for their produce and technical advice after years of political upheaval. A chronic problem impeding agricultural development is lack of coordination among service providing agencies.
The fragmented value chain of cereal crops contributes to demand and supply disruption. In moving agricultural produce from farm to fork, there is no integration of functions (input supply, production, aggregation, transportation, processing, grading, packaging, marketing, and so on). Value chains are most effective when their actors work together to produce higher quality products and generate more income for all participants along the chain.
Because of the higher cost of production, Nepali products have a lower competitive advantage. Foreign products, primarily Indian, are heavily subsidised and produced at a significantly lower cost, displacing Nepali products in the domestic market. The migration of youth for employment has had a negative impact on local agriculture and food self-sufficiency. The agriculture sector is frequently experiencing labour shortages and land abandonment. As a result, it is estimated that one-third of the cultivated area is barren.
Call for action
In order to achieve food security, the country urgently needs to increase domestic production and productivity of food commodities. A shift in the producers' and agriculture service providers' mindsets from supply-driven to demand-driven programme implementation is required for long-term production growth. One example of this shift is the adoption of value chain-based commodity programmes that integrate and collaborate on a variety of functions ranging from production to end-market consumers.
The cooperatives and producer organisations partnering with public and private sectors as public-private and producer partnership (PPPP) further stimulates collaboration in programme implementation. Increased production is inextricably linked to the capacity of service delivery institutions. It is impossible to successfully implement plans, policies, strategies and interventions without a structurally and functionally efficient service delivery (extension, research, input, marketing and, credit). With the current federal governance structure, a comprehensive capacity assessment of public and private service delivery systems at the municipal, provincial and national levels is needed to identify capacity gaps.
Contextualising the Agriculture Development Strategy, Sustainable Development Goal targets and national policies are critical actions that must be completed at the municipal level resulting in a municipal agriculture development plan of action with clear delineation of responsibility and accountability. Youth involvement in agriculture should be prioritised as a programme package. To continue and expand the youth engagement programme in agriculture and to reintegrate migrant returnees and engage youth as agri-entrepreneurs, it is necessary to reinstitute rural youth programmes under the government structure.
The traditionally grown variety of nutrient-dense millets such as kodo (finger millet), junelo (sorghum), kaguno (foxtail), chino (proso millet) and bajra (pearl millet) used to be a staple food in many parts of Nepal; but has since been replaced by rice. It is necessary to raise awareness about the nutritional value of kuanna (inferior grain) and dispel the traditional kuanna myth, which will help reduce rice imports by increasing dietary diversity. In recognition of the nutritional value of millets, the United Nations General Assembly has declared 2023 as the International Year of Millets. The staggering food import figures indicate that food insecurity is on the horizon. Can the country go about its business as usual? How long must people wait before they realise their right to food is guaranteed in reality, not just on paper?