south asia watch on trade, economics and environment

SAWTEE in Media

Grains of truth

By Paras Kharel

For all the hoopla of the creation of a brave new Nepal, here are some sobering facts. At least 3.8 million people are food-insecure, going by World Food Programme data. Thirty-eight of the 75 districts—mostly in the mid- and far-west regions—are food deficit. Over 22 percent of the population is undernourished; over 38 percent of children under the age of five are underweight; and the child mortality rate per 1,000 live births is 61. As per the Global Hunger Index, Nepal’s hunger situation is “alarming”.

Contributing more than one third of GDP and employing some two thirds of the country's labour force, agriculture is not only a source of livelihood but also a way of life for the vast majority of the population. Yet food insecurity remains a chronic problem that has intensified over the last three years.

Low government priority to agriculture is one reason we are in this food insecurity mess. While as much as a third of the national budget used to be spent on agriculture up to the 1980s, the share declined to as low as 5 percent following the post-1990 shift in policy focus. From being the highest in South Asia in the early 1960s, Nepal's agricultural productivity became the lowest in the region by the 1990s. The agrarian country has been a net importer of food grains since the mid-1980s. Increasing population pressure has led to land fragmentation, affecting productivity. Low returns in agriculture are inducing the younger generation to abandon the profession altogether. Rising temperatures and variable rainfall, results of climate change, are already affecting yields, and if appropriate adaptation measures are not taken urgently, the country’s agriculture sector is in for disaster. With the monsoon rainfall this year below 60 percent of preceding years’ average, the national food grain deficit is projected to more than double to 400,000 metric tons.

Buckling under donor pressure, the government discontinued subsidies for irrigation and fertilizers in the mid-1990s. It has also been cutting food supplies through the Nepal Food Corporation (NFC) over the years. The phasing out of agricultural subsidies by the government even as Nepali farmers fought a losing battle with subsidized imports from India contributed to the agriculture sector's decline. Advocates of subsidy removal argued that the subsidies were not reaching poor smallholders and were only benefiting rich farmers. It was an example of throwing the baby along with the bathwater. Calls for making the delivery mechanism effective fell on deaf ears. Of late, the government reintroduced agricultural subsidies, and allocated 3 billion rupees, mainly on fertilizer and small irrigation, in the budget for the current fiscal year. The reintroduction of agricultural subsidies should be complemented by an effective delivery mechanism so that the targeted farmers benefit.

Insufficient production is not the only culprit. After all, from 1999/2000 to 2004/2005, we lived with the incongruity of overall food production being more than enough to meet the national requirement and people in chronically food deficit districts staring at starvation. A difficult terrain and poor connectivity between food-deficit and food-surplus districts contribute to such incongruity. The government-owned NFC, which buys rice and distributes it in food-deficit districts with government subsidy for transportation, says it faces a budget crunch because it has to deliver food by air. Inefficiency in distribution and lack of coordination among government agencies make matters worse. Further, relevant to availability and price is not production per se but the amount of produce that is put on sale in the domestic market. Even if there is surplus production, the bulk of which is in the Tarai, there is no way to tell how much of it enters the domestic market and how much disappears through the 1,800-km open border with India.  

Beginning 2007, the global rise in food prices also affected food security in Nepal. Global rises in food prices translate into high prices in the domestic market as Nepal is a net food importer. Rising food prices erode the already-thin purchasing power of the general people. In the absence of social safety nets, skyrocketing prices are likely to have pushed hundreds of thousands of people back into poverty. Anti-competitive practices by businesses have also contributed to high food prices, and are a major cause of food-price inflation in Nepal not subsiding in line with the slowdown in price rise in India. Additionally, the possible reduction in incomes due to the ongoing global economic crisis, especially through the remittance route, could further jeopardize food security in the country.

Any government that is serious about tackling the problem of food insecurity should realize that major world powers consider food security as a strategic goal, stated or otherwise. The US and the EU heavily subsidize their agricultural sector. China still sticks to a mandated self-sufficiency rate of 95 percent. With food security in mind, Japan has bought 12 million hectares of croplands around the world, from Southeast Asia to South America; its overseas croplands are three times the size as on its mainland. Even in India, which ranks below Sub-Saharan Africa on the Hunger Index, a proposed Food Security Act seeks to provide 25 kgs of food grains per month to every below-poverty-line family at 3 Indian rupees per kg.

Under World Trade Organization rules, Nepal can provide as much as 20 percent of its agricultural GDP in subsidies to its agriculture—10 percent each in product-specific and non-product-specific forms. Surely, resource is a constraint on fully utilizing that option. But it is high time we set our priorities right. A government that cannot ensure as basic a right as the right to safe and healthy food should forfeit the right to rule. Merely enshrining food sovereignty as a fundamental right in the constitution is not enough. Increased investment in agricultural infrastructure and R&D, expanded provision of basic inputs and extension services, productivity-oriented land reforms, price support for farmers, maintenance of adequate buffer stocks and prompt delivery of food to deficit areas by NFC, creation and expansion of well-targeted social safety programmes, cracking down on anti-competitive practices and regulating the open border are crucial for achieving nationwide food security.

(Published in Republica, 21 October 2009)