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Nepal: Nepal Agriculture Profile 2012

2012/03/20

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Nepal Agriculture Profile 2012

Reference Date: 25-May-2011

 


FOOD SECURITY SNAPSHOT

  1. Early estimates of 2011 winter wheat harvest show a record production

  2. Currently the food price inflation is much higher than non-food price inflation

  3. Over all food supply security situation is improving but high cost of food is a concern especially for the low income population

Early estimates of 2011 wheat harvest indicate significant improvement

Harvesting of the 2011 winter crops, mainly wheat, is completed in the low lying areas and will continue until the end of June in the hilly areas. The early estimates point to a record wheat harvest at 1.74 million tonnes, some 12 percent increase over the good outcome of 2010. The rainfall during the first half of the season was below normal but good soil moisture from the last year’s extended monsoon season and favourable precipitation in January-February 2011 was beneficial. The Ministry of Agriculture and Cooperatives reported that the area planted to wheat this season increased. Maize crop is currently being planted under normal conditions and planting of the main staple crop, paddy rice, is beginning.

 

The 2010 total cereal production is estimated at 8.4 million tonnes (including paddy), a recovery from the drought affected 2009 output. The generally favourable monsoon season last year was the main reason behind the eight percent increase in production in 2010. The 2009 cereal production itself was some 8 percent below the bumper harvest of 2008.

 

Owing to the improved aggregate harvest in 2010, the estimated cereal imports for 2010/11 marketing year (July/June) are estimated to be lower than the record imports in 2009/10. The Government of India partially lifted its wheat export ban, allowing the sale of 250 000 tonnes of wheat to Nepal at cost price.

Currently the food price inflation is much higher than non-food price inflation

According to the Nepal Rastra Bank (National Bank) the year-on-year consumer price inflation increased to 10.7 percent in mid-March 2011 down from 11.3 percent in mid-January 2011. However, the food and beverage group prices increased by 17.3 percent as opposed to the non-food and services price index increase of 5.3 percent. In particular, prices of rice in Kathmandu market have stabilized since the beginning of this year but wheat flour prices rose in April from a relatively stable level for almost a year.

Food security situation improving

The increased food production in 2010 has improved food supply situation in general. However, rising food prices and high general inflation resulting in reduced purchasing power are a concern especially for the low income sections of the population. Findings of a joint Government/FAO/WFP/Government crop assessment report of February 2011 indicates that in spite of the overall good production at the national level, given the large geographic disparities in production and yields, some areas in Nepal, particularly in the Eastern Terai districts of Saptari and Siraha, and in the Mid- and Far-Western hills and mountains are likely to face food deficits leading to food insecurity, especially for the most vulnerable populations.

08/12/2010  2010 main season crops growing under normal conditions
The main monsoon season cereals, rice, maize and millets are growing under normal rainfall conditions, especially in the major crop producing areas (the southern plains) of the country. Rains have been erratic in the northern hilly areas. Overall prospects for national harvest are considered to be favourable.

Production of winter wheat, harvested by June-July is officially estimated at a record level of 1.55 million tonnes, presenting some 15 percent recovery from the previous year’s drought affected output.

Rice (paddy) production for 2009 was officially estimated at about 4 million tonnes significantly lower than in the previous year due to unfavourable weather. The 2009 winter crop was also affected by poor weather, particularly in districts in Far-and Mid-Western Hills, where wheat is the first or second most important crop. The total cereal harvest for 2009 is estimated at 7.5 million tonnes, some 8 percent below the previous year’s bumper crop.

Higher cereal imports in 2009/10 but expected to come down in 2010/11
Owing to the reduced aggregate harvest, the estimated cereal imports for 2009/10 marketing year (July/June) increased significantly. The Government of India partially lifted wheat export ban, allowing the sale of 250 000 tonnes of wheat to Nepal at cost price. For the new marketing year, with a record winter wheat crop and favourable summer season crops, the import requirements are expected to go down.

Prices of rice and wheat have been rising in recent months
Prices of staple commodity rice in Kathmandu, after having come down from a peak of NPR 40/kg in December 2009 to NPR 29 in May 2010, have now increased by some 20 percent in last three months. The pre-high-food-prices crisis level was around NPR 30, in July 2010 it reached NPR 30. Retail prices of wheat flour in the capital city are steadily rising more in line with wheat prices in India following a fairly stable price since the beginning of 2009 after much volatility during 2008. They have increased by about 10 percent between May and August 2010.

Food security situation improving
Although wheat production accounts for less than 20 percent of total annual cereal production, with the 2010 bumper wheat harvest food security in general has improved. However, given that the main paddy crop of 2009 was reduced by drought, food security situation in many parts of the country remains a concern especially for the vulnerable groups. Rice price increases in last three months are likely to increase burden on the food budgets of the poor. Situation needs to be monitored closely.

A 26-month project funded by the European Commission was approved to mitigate the negative effects of high food prices on local populations in ten most-affected districts in the Eastern, Central, Mid-Western and Far-Western Regions of Nepal.