Bumper harvest in India may affect Nepali farmers

  • Price fall unlikely to benefit consumers, as only middlemen and traders stand to gain much

May 27, 2018-

India is expected to record a bumper crop harvest this year as a result of good weather but its potential impact is likely to be felt by Nepali farmers who are already struggling with low prices amid a glut of produce such as lentils, sugarcane and cereals.

Agro experts in Nepal said that record harvest in India is likely to bring down the food prices and its direct impact would be felt in Nepal. The cheaper food prices will directly affect Nepali farmers. But it is unlikely that consumers will benefit because only middlemen and traders stand to gain the benefit.

The India agricultural ministry estimates that 277.5 million tonnes of food mainly paddy, maize, pulses and sugarcane has been produced this year, up 0.9 percent. But it is unlikely that farmers of both countries will benefit. Experts said that due to the record harvest, food import bill is likely to increase in Nepal.

Nepal’s raw and processed agricultural import bill is close to hitting the psychological level of Rs200 billion, way higher than what the country spends on oil imports on which it is totally dependent.

According to the Department of Customs, Nepal imported farm products worth Rs196 billion in the last fiscal year, up 11.36 percent year-on-year, setting off concern that the country’s dependency on imported food was ballooning out of control. As per the figures, the cereal import bill amounted to Rs40.14 billion in the last fiscal year.

The share of agro products in the total import bill has swelled to 20 percent.

The department’s statistics show that agro imports have surged more than fourfold during the last eight years. The growth is unlikely to stop due to increased migration of farm labour to foreign job destinations as the agriculture sector has started to lose its shine due to a low rate of return. Besides, cheaper agro products from India have been increasing the imports. The department statistics show that in the first six months of this fiscal year, Nepal’s food imports bill has already touched Rs105 billion mark. In the review period, rice and maize imports bill has increased to Rs11 billion and Rs6 billion respectively. “The potential impact of bumper food harvest in India is likely to felt by Nepali farmers as commodities price will drop sharply,” said agro expert Hari Dahal. “Whenever there is a bumper food harvest in India, the southern neighbour’s export policy becomes flexible,” he said. There will be two impact of this policy: food prices in Nepal will drop sharply and imports bill would balloon. “As Nepal’s products have not been able to compete with heavily subsidised India products, farmers will be at the receiving end,” he said, adding that the government needs to be proactive to address such issues.

Yubak Dhoj GC, secretary at the Agricultural Ministry, said that his ministry has recommended determining the minimum support price (MSP) of agricultural products to protect farmers. “We have recommended the MSP for this season, but the Supplies Ministry should implement.” The government had last year announced the MSP for paddy and other products recommending the lowest legal price that can be paid for their harvest. But it was not implemented.

A minimum support price is an intervention by the government to protect farmers against sudden slumps in the market price. It is the rate at which the government buys farm produce when there are no other buyers in the market.

Published: 27-05-2018 08:18

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