Food crisis may follow liquidity crunch
KATHMANDU: After the looming economic crisis, the country is also heading towards a severe food crisis if action is not taken immediately.
Nepal is sixteenth among thirty-one highly food deficit countries in the world and requires emergency assistance.
Approximately 2.5 million Nepalis need immediate food assistance while another 3.9 million are at the risk of becoming food insecure.
“If immediate action is not taken, the food shortage in the country will become so severe that there many other problems will arise,” said Deva Bhakta Shakya, director at the Agro-Entreprises Centre of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
The government is not equipped to handle a crisis in case it occurs, he said. “In case of an earthquake, there is not enough in storage to feed the valley. If a food shortage couples with a natural calamity, the government will not be able to deal with it,” added Shakya.
The rise in prices and the demand supply ratio is not being compensated for by any authority. The fluctuation in prices of sugar, lentils and oil as well as the scarcity of other products are still on the rise.
India has allowed its state trading corporations to export 50,000 metric tonnes (MT) of wheat, 20,000 MT of rice, and 10,000 MT of lentils while relaxing the ban imposed in export.
“From this year, China too has shown some interest in extending its food grain supply to some 10 food deficit border districts of Nepal,” added Shakya.
According to Shakya, the government needs to give more flexibility to the private sector.
He also said that all small countries dealing with a crisis of this nature have applied a few techniques that can be used in Nepal as well.
“There has to be reduction in taxes on food grains, with an increase in supply using food grain stocks. There have to be export restrictions as well as price control and consumer subsidies,” said Shakya.
The food price hike as well as its security is becoming a major concern for authorities, as this trends seems to be growing with the passage of time.