Nepal not likely to reduce its reliance on imports: WFP

Nepal is unlikely to overcome - in the near future - the key challenge of increasing agricultural production and reducing reliance on imports, which have made the country particularly susceptible to rising global prices during 2008, said a report of World Food Programme (WFP).

Households in Nepal have reduced intake of food and/or shifted to cheaper food items, according to the report on Nepal Market Review 2008.

Ninety-eight percent of households reported that their expenses had increased during the year.

For almost all households, high food prices were an issue, and in 58 percent of households it was the major cause of increased expenditure.

During the same period, only 31 percent of households saw an increase in their income while for 17 percent income decreased.

When food prices were at their highest point during the middle of the year, households reported spending on average 67 percent of their income on food. The extremely poor and urban poor had the highest share of food expenditure, 78 and 70 percent respectively.

“For nearly a year, Nepalis have been struggling with food prices that have yet to reduce significantly. We are very concerned about the effects that this sustained high food price is having on Nepal’s poor,” WFP country director Richard Ragan said. He also further remarked that addressing this key issue needs to be made a priority in 2009 if food security is to be achieved.

In many areas, people are said to be skipping meals because they can’t afford to buy enough food. The longer this goes on, the more vulnerable the people — especially children — become to malnutrition.

Many of the factors that contributed to Nepal’s inflation rate in 2008, like high transport costs, are still an issue, it is said.

Inflation in Nepal is said to be imported from India. "Nepal’s inflation rate, instead of following the Indian rate, is going up and is more than double than the target of 7 percent set by the budget. It stands at 14.4 percent by the end of the first six months of the current fiscal year," the report stated.

Nevertheless, the report said that relatively strong harvests in 2008 in both India and Nepal should keep prices controlled through at least the first half of 2009.

Nepal can also expect further price reprieve if the full reduction of global fuel prices is passed on through the Nepal Oil Corporation (NOC).

“Nepal did not experience as sharp a decline in food prices as other countries in the region during the final months of 2008 - and this was ‘partially’ due to transportation costs remaining relatively high," the report further pointed out. nepalnews.com Feb 27 09