Unveiling its micro-economic situation and financial situation report of first quarter, the central bank projected drop in production of staple crops this year indicating that the country will be more food insecure and that the rice imports will increase further.
Deficient monsoon coupled with unofficial blockade and strike in plains that have hindered supply of chemical fertilizers, insecticides and related agricultural equipment, will impact agricultural output, according to the central bank.
Paddy expert Bholaman Singh Basnet said drop in paddy production will lead the country to food insecure situation. He also attributed lack of paddy seeds in quake-hit districts as one of the reasons behind drop in paddy production.
The April earthquake buried seed stocks of many farmers in 14 quake-hit districts. Basnet says actual decline in paddy production will exceed NRB's projection as farmers, particularly in Tarai districts, could not plant paddy in time due to erratic rain. "Also, they couldn't get fertilizers in time because of the strike," he added.
If paddy production declines as projected by NRB, it will be the lowest paddy production in three years.
Paddy contributes about one-fifth of total agricultural productions which accounts for a third of country's GDP. Country's annual paddy production is worth Rs 100 billion. Projected decline will lower paddy production by around 240,000 tons.
Earlier in August, Ministry of Agricultural Development (MoAD) said loss in paddy production will be worth around Rs 25 billion.
Nepal's rice and paddy imports increased by 43 percent to Rs 24.75 billion in the last fiscal year. Experts say imports bill will increase to more than Rs 40 billion if paddy production dropped as projected by the central bank.
Though Nepal has banned export of rice and paddy, informal trade is still possible as Nepal and India shares open border. Paddy production stood at all time high of 5.07 million tons in fiscal year 2011/12. However, paddy and rice import hadn't stopped that year as well.
Labor shortage, shrinking plantation area due to rapid urbanization, land fragmentation, erratic rainfall, and syndication in paddy price by middlemen are the major factors affecting paddy production, according to experts.
"We estimate paddy production to drop by more than five percent this year. But we cannot give exact numbers until the final result of paddy harvest comes," Hem Raj Regmi, senior statistician of MoAD, said.
MoAD recently directed Nepal Food Corporation (NFC) to purchase sufficient paddy from farmers so that the government can distribute 300,000 tons of rice to food-deficit areas.
Nepal has to rely on Indian routes for its international trade. But fuel shortage due to Tarai unrest and blockade has adversely affected both agricultural and industrial sectors, NRB said in its report.
Supply of other farm products to market has also been affected because of fuel shortage. Production of winter crops is also expected to drop as farmers are not getting chemical fertilizers, seeds and fuel.
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