Until 1980s Nepal was a rice-exporting country and agro products accounted for three-fourths of exports
The issues of food availability, accessibility and use became main pillars of food security after second World Food Summit in Rome in 1996. Many developing countries, including Nepal, took part in the summit and made commitments for agriculture growth. The summit’s main objective was to free the world from hunger and promote economic growth through agriculture development.
Today, China, which battled hunger up until the 1970s, feeds 22 percent of world population. Brazil, a net importer of agricultural goods until the 1970s, is among world’s five largest exporters. They served as models for developing countries like Nepal.
To realize its commitment expressed in Rome Summit, Nepal formulated a 20-year Agricultural Perspective Plan. Significant steps were taken for policy and institutional reforms to increase and sustain food availability but they were not enough.
Until the 1980s, Nepal was a rice-exporting country. Agricultural production then accounted for three-fourths of total export and our export markets reached India, Bangladesh, Thailand, Myanmar and Japan. But this changed in the next 20 years. Other countries like Brazil, Turkey and India multiplied their exports even as we imported more and more.
Nepal could not retain investors in agriculture and it failed to create market connectivity through a robust supply chain. As a result, agricultural lands were unutilized and as population grew, these lands were used for building rather than for agriculture. The country was forced to import even its staple food.
According to Trade and Export Promotion Center (TEPEC), imports of agro-products have ballooned. They increased three-fold in the past five years, reaching Rs 138 billion in 2015. Import of staple foods like rice jumped to Rs 23 billion in the first eight months of 2015 and maize and crude palm oil import prices reached Rs 5 billion and Rs 3.3 billion respectively.
We opted for the easy option of importing, ignoring ways to boost domestic production.
Today we import apples from as far as Canada but have failed to promote our own apples from high mountains. So what led to this situation?
One, the government failed to safeguard domestic production. Low incentives for our farmers led to massive import of agricultural products, making our farmers even poorer.
According to 2015 Global Food Security Index, 50 percent of Nepali farmers who depend on agriculture for their livelihood have fallen under the poverty line.
To make matters worse, market intermediaries have squeezed profits from farmers. The intermediaries make far more profit than hardworking farmers. These intermediaries also artificially jack up prices by limiting supply. In 2011, farmers of Janakpur protested against this arrangement but no action was taken against the middlemen.
When agriculture is a commercial failure, farmers are less motivated to work and invest money and labor in it. According to the Ministry of Agricultural Development, agriculture contributes to 33 percent to our GDP. This is low compared to the large segment of population involved in it. To achieve financial security, farmers have now started selling their lands. This does not bode well for poor and vulnerable economies like Nepal.
Climate change, inflation, low government expenditure, non-availability of seeds and fertilizers on time, and use of primitive technology have discouraged Nepali farmers. Given this, farmers struggle to maintain a decent lifestyle through agriculture.
As imports have far surpassed our sluggish exports, it has taken a toll on the Balance of Payment. According to the Asian Development Bank, Nepal’s trade deficit, at the end of the first five months of the current fiscal, was a whopping Rs 352 billion. As a result, banks are now facing liquidity crunch and are offering as much as 12 percent interest on fixed deposits.
Remittance cannot be a long-term solution to our economic woes. We need long-term agriculture strategies to reduce our dependency on remittance.
The first such step would be to motivate farmers through price ceilings on all agricultural products. This will protect the farmers against price volatility. Another step is to reduce the influence of market intermediaries and to connect the farmlands with roads.
Likewise, arable lands should not be used for commercial purpose. With this, the budget for agriculture should also go up. Despite Nepal’s immense potential in agriculture, we have failed to ensure food security for average Nepalis.
The author is alumni of Henan University of Technology (HAUT), China