Food security Challenges facing Nepal’s agriculture

Bishwambher Pyakuryal:

The average yield in Nepal has fallen from 157 per cent to 61 per cent of the South Asian average. Food availability over time has increased in other countries in South Asia but decreased in Nepal during the period 1991-2001. About 60 per cent of the incomes are spent on rice, maize and wheat; therefore incidence of poverty is highly sensitive to the changes in economic availability of these crops. Unfortunately, as the investment in land is less than 3 per cent of household income, it is unlikely to increase the farm productivity.

Shortfall in domestic production/productivity was the major cause of food insufficiency. The current growth rate in agricultural productivity is estimated to be a meagre 0.4 per cent. Nepal was a food surplus country till the early 1970s but there has been an overall deficit of 1.5 per cent since then. The average amount of food deficit is 47 kg per capita in mountain regions and 32 kg in the hills though the per capita food surplus was 45 kg at the national level. This necessitated reforms in Nepal’s ailing agricultural sector by minimising the social cost of liberalisation on food security, especially to the underprivileged section of the society.

The overall progress in the LDCs, after the implementation of globalisation and liberalisation policies, has not been satisfactory. It has not helped in increasing real incomes and reducing poverty. It necessitates rethinking in the existing policy to correct uneven distribution of the costs and benefits of globalisation. The global average per capita income has been increased throughout the 20th century, but the income gap between rich and poor countries has been widening.

Globalisation is deepening food insecurity. Fewer farmers have found a place in agriculture, and even privileged consumers have no food security in the sense of access to safe and nutritious food. In countries that made progress, benefits accrued mainly in urban areas. Farmers could not get international market where products could be sold at higher prices and inputs and technology could be purchased at cheaper rates. The focus in the LDCs has been to increase yields of traditional food products. Emphasis has not been given to high value crops. Against this background, the objective of a responsible government should be to review the impact of agriculture sector liberalisation and its impact on food security and poverty.

In the mid-1980s, the government experienced severe balance of payments and budget deficits due to high government expenditure on offsetting the sluggish economic growth during 1975-80. The liberalisation policy was initiated in 1985 and intensified after 1990. Reforms included deregulation of interest rates, liberalisation in international trade, removal of a number of restrictions on foreign investments, opening of the financial sector to foreign and private sector investment and privatisation of public enterprises. Its scope was extended to the agricultural sector. These were: removing input and output subsidies in agriculture, privatising Agriculture Inputs Corporation, restructuring Nepal Food Corporation (NFC), increasing private sector participation in the production, distribution, and marketing of agricultural products, reducing the tariff rates on the imports of food products, and opening the agricultural sector to FDI. In 1995, the government endorsed ADB supported 20-year Agricultural Perspective Plan to raise the growth rate of agricultural sector.The subsistence nature of agriculture is slowly eroding. It is no longer possible to feed the entire household for more than six months in a year especially in the hills and mountains. Small land holding and fragmentation have contributed to the food insecurity. The import of food grains from India has increased since the Indian price of rice is lower due to subsidies on fertilisers and electricity for irrigation. Indian prices on an average are 12 per cent lower than in Nepal but hurting about 40 per cent of households in the Tarai who are the net producers of rice.

It is believed that household income and the job opportunities have improved not so much by liberalisation and improvement in agriculture but by labour migration that has contributed through the remittances. Currently, the proportion of households that receive remittances is 32 per cent in Nepal. According to Nepal Living Standard Survey II (2004), the total amount of remittances is NRs. 46 billion.

Food production is declining in comparison to food requirement. The productivity in the hills and mountains is declining despite increases in the use of fertilisers and pesticides. Because of the rugged topography and inaccessibility, the food prices are much higher, the marketing channels are almost non-existent and insurgency has further disrupted the food supply system. In food distribution, the efficiency of private sector is seen to be higher than the public sector, necessitating an arrangement to use NFC’s facilities on a cost-sharing basis. Since air shipments have benefited the airlines companies, labour-intensive land transportation can be a better option. It is cost-effective and can generate a lot of employment. The food deficit areas have very high comparative advantages for development of natural resources like energy, water, biodiversity and tourism. Tapping these resources would lead to food security through economic prosperity.

Prof Pyakuryal is president, Nepal Economic Association