KATHMANDU, MARCH 15
Severe shortage of wheat following export restrictions by India since May 13 last year has contributed to spiking inflation and left domestic mill operators unable to meet the market demand.
At present, common flour costs Rs 90 per kg, while standard flour is priced at Rs 100 per kg in retail stores, a considerable increase compared to the retail price of Rs 50 per kg and Rs 60 per kg, respectively, a year ago.Although the export curbs are scheduled to be reviewed in April, India is likely to extend the ban on wheat exports as the world's second-biggest producer seeks to replenish state reserves and bring down domestic prices.
Earlier, the Indian government had pledged to export 50,000 tonnes of wheat to Nepal. Citing shortage in the domestic market, mill operators had urged the government to import the pledged wheat, of which about 33,000 tonnes were received by mill operators with the rest reserved for traders, according to Ananda Ojha, secretary of Nepal Flour Mills Association.
"It was a very temporary solution. The supplies we received were enough for just a month of production. We are facing a supply crunch again. We are facing problems maintaining production. While large flour mills require about 1.2 million tonnes of wheat a year to meet the market demand, about 40 per cent of the supply was covered through imports from India before the ban," he said.
Along with affecting mill operators, increasing prices of wheat and related products in the domestic market is denting the government's revenue collection and intensifying grey market activities.
He emphasised that consumers were hit the hardest. According to the macroeconomic and financial situation report of the seventh month of the current fiscal year, the year-on-year consumer price inflation had shot up to 7.88 per cent in mid-February compared to 6.24 per cent a year ago. Meanwhile, food and beverage inflation stood at 6.19 per cent, under which the rise in year-onyear price index of cereal grains and their products stood at 12.39 per cent. Mill operators are also wary of government data.
"Flour mills are the largest consumers of wheat and domestic production has decreased considerably. But the government uses the old data. It simply adds 1.5 percentage point growth every year," Ojha said, referring to a report published by the Ministry of Agriculture, which stated that the annual wheat production in the country stood at more than 2.1 million tonnes in fiscal 2020-21.
"The data also gives the false impression that the country is self-reliant in wheat when it is not. The government should also look at facilitating the entire wheat ecosystem market to increase production and achieving further export potential," he opined.
A version of this article appears in the print on March 16, 2023, of The Himalayan Times.
