KATHMANDU, NOVEMBER 24

Flour traders have expressed concerns over their stocks running out before the end of the year as India continues to halt wheat exports to Nepal.

Despite being an agricultural country, domestic production caters to just about 40 per cent of market demand while the rest is fulfilled through imports from the southern neighbour. The ban on wheat export has crippled stocks and caused flour prices to soar in the local market, affecting industries and consumers, insiders say.

In light of supply chain disruptions due to the Russia-Ukraine war, India had restricted the export of four variants of durum wheat to ensure its food security.

After restricting wheat exports in May, the Indian government had also banned wheat flour exports in August to control inflation.

According to the data provided by the Department of Customs, the country has imported over Rs 60 million worth of wheat in the first four months of the current fiscal year compared to the wheat imports worth Rs 2.06 billion in the same period of last fiscal year. Although India has banned the export of wheat and flour, some of it may have entered the country during plantation season, traders say.

Sunil Bohora, manager of Daunne Flour Mills Pvt Ltd, said that the lack of wheat in the market has increased the flour price, affecting consumers. 'The price of flour has increased drastically over the months in the domestic market due to the supply issues, increased costs, and decrease in production. Our appeals to the concerned authorities over the past five months have basically fallen on deaf ears. Because of the surging prices, the risk of such commodities being smuggled into the country has also increased,' he said.

Similarly, Dinesh Kumar Agrawal, senior vice-president of Nepal Flour Mills Association, also reiterated that the domestic production of wheat is insufficient to cover the local demand. Stating that the country had been dependent on India for supply of wheat for a long time, the sudden export ban on wheat by the Indian government has affected flour prices in the domestic market and has dented our wheat stock. 'The flour industries will run out of wheat to continue production after mid-December. The issue has left stakeholders and traders in distress. We are on the verge of losing our investments. While domestic production covers at least 40 per cent of the demand, the rest are covered through imports,' Agrawal told The Himalayan Times.

He complained that the lack of progress in terms of irrigation projects, issues in the market, and imposed VAT on wheat imports are the reasons behind failure to ramp up domestic production.

'With the increased cost of production, consumers will have to pay more for other wheat-related products like noodles, breads, biscuits, and even momos. Most of our wheat used to come from Uttar Pradesh and Bihar in India.

With halt in exports, mill owners are anxious about securing the raw materials after mid-December,' he added.

Furthermore, Agrawal shared that the Nepali government has confiscated truckloads of illegally smuggled wheat and flour in bordering regions of the country.

'The illegal import of wheat has become visible in recent days as a result of increased prices in the domestic market. After the vote counting is completed, we hope the new government will hear our issues and take effective actions to hold talks with Indian counterparts and lift the ban on the import of essential items,' he added.

Along with wheat, the Indian government has also halted the export of sugar and limited rice exports for a few months.

Meanwhile, Mahesh Bhattarai, director general at the Department of Commerce, Supplies, and Consumer Protection, informed that the department is holding discussions to resolve the issue but nothing concrete has materialised yet. 'We have yet to come to a conclusion on the matter and plan to move ahead as per the finalised decision,' he said.

A version of this article appears in the print on November 25, 2022, of The Himalayan Times.