Perverse situationThe country's cereal import bill hits a record high despite bumper harvests
Nepal saw the largest paddy and wheat harvest in history in the third quarter of this fiscal year. Despite this, its cereal import bill also hit a new record high. Analysts maintain that the steep rise in cereal imports is largely due to soaring demand for fine rice and maize used as animal feed. This is a perverse situation, especially for a country where agriculture still largely dominates economic activities, as Nepal is rapidly becoming dependent on imported food. As a corollary, people are facing accelerating prices of basic food imports, too. Annually, billions are being poured into the agricultural sector, mainly on subsidising fertiliser; but it looks like the investments have not been able to yield the desired results.
According to the Department of Customs, Nepal imported rice, paddy, maize and wheat worth Rs40.21 billion in the first nine months of 2018-19, up 23.10 percent year-on-year. The top contributors are rice and maize. Rice imports hit 384,956 tonnes valued at Rs19.32 billion. Nepal imported 201,620 tonnes of paddy worth Rs5.60 billion and 302,382 tonnes of maize worth Rs8.72 billion.
Nepal’s reliance on foreign markets for agricultural goods has increased nearly fivefold in the last nine years. The food import bill in 2009-10 amounted to Rs44.43 billion. It jumped to Rs76.05 billion in 2011-12 and to Rs99.35 billion in 2012-13. It further ballooned to Rs127.51 billion in 2013-14. In 2014-15, Nepal imported agro products worth Rs157.78 billion, pushing agro commodities to the top of the list of imports and knocking petroleum products from the number one spot.
Agricultural issues related to imports and ballooning trade deficits are not new. The government has for years been saying that it will make the country self-sufficient in food, but it is constantly fallen short of delivering on its promise. One of the key reasons behind stagnant agricultural production is labour shortage. This problem has been further exacerbated by the country’s mechanisation policy failing to address the problem of labour shortage.
The agriculture sector continues to decline and is no longer the main economic driver of the country. According to Ram Krishna Regmi, the chief statistician at the Agriculture Ministry, commercial vegetable farming has boomed in the country, but the government cannot ascertain the sharp rise in imports. This cannot be an excuse. The government needs to get into the root cause of the problem and try to find a solution. This has been said over and over again, but it bears repetition: To enhance exports, the country first must identify and diversify its exportable items and find markets for them along with adopting measures of farm mechanisation and modernisation.