[Policy Monitoring Report]
Policy measures in response to the soaring food prices
-The Government of Nepal-
Shrawan Adhikary, FAO Nepal
24 September 2009
I. Background
The worldwide phenomenon of soaring food prices has particularly hit Nepal as the country is still recovering from a decade-long conflict that resulted in economic instability, loss of rural infrastructure, widespread lack of security and the worsening of the already precarious food security situation. Nepal, once self-sufficient in food production has increased its dependency on food imports from neighbouring countries, exacerbating the country’s susceptibility to the changing prices of food commodities on international markets. Nepal is highly vulnerable to human-induced and natural disasters.
In 2004, about 17 percent of the total population were undernourished in Nepal. Recent food security and vulnerability analysis reported that approximately 27 percent of rural households are food insecure in Nepal. About 40 percent of the population consume less than 2,124 Kcal per person per day according to the Nepal Living Standard Survey 2003/04.
The food insecure groups in Nepal include those living in rural and remote areas (Hills and Mountains of the Far and Mid-western regions), unskilled and landless, urban poor, low income farmers, female-headed households, and migrant labourers. Within these groups, pregnant and lactating women, young children, the elderly, indigenous people, members of the lower caste groups are most vulnerable. People living in Terai have been found to be food insecure due to the lack of the means to obtain adequate food to meet their nutritional needs.
“Household food security” requires that a household has access to enough quality and culturally acceptable food, for all people in the home (including young children), throughout the year. Household food security often depends on adequate income and assets, including land and other productive resources. The following are components of household food security:
· Availability – An adequate amount and variety of foods are supplied consistently through production, import, or aid.
· Access - Every member of the household has resources to obtain an adequate quantity and variety of food.
· Utilization – Household members are able to properly use the food biologically, which depends on diet, overall health, sanitation, storage, processing, preservation, preparation, and marketing
This report is prepared as contribution for the forthcoming Policy Monitoring Workshop to be held on 28 - 29 September 2009 in Rome.
II. Overall Strategies
1. Agriculture Perspective Plan
The Agriculture Perspective Plan (APP) is a vision document for twenty years (1995-2015) and outlines twin objectives for overall economic growth and poverty reduction. Agriculture has been identified as engine of growth to create demand pull for the non-agricultural sector through multiplier effects.
2. National Agriculture Policy (NAP) 2004
NAP outlines four major policy objectives:
a) To increase agriculture production and productivity
b) Special Facilities for Target Groups
c) To develop competitive and commercial agriculture system.
d) To protect, promote and utilize natural resources, environment and biological diversity.
III. Short-term Measures
a) Community Seed production program
b) Participatory small irrigation support
c) Food or cash for work program
d) Cooperative shops for essential commodities
e) Promoting sustainable soil management practices
f) Implementing pro-poor income enhancement programmes to increase their access to food
g) Develop market and collection centres
h) Price subsidy on fertilizer
i) Import and export restriction
o Ban on rice, maize and wheat export effective from 30 April 2008[1]
j) Improve access to land suitable for production (make available idle fertile land for production)
k) Special program for the targeted population
l) Input fairs/exhibition of agricultural commodity
m) Increased stock: Ministry of Finance has approved NRs. 109 million (equivalent US $ 1.71 million) budget for Nepal Food Corporation for purchase of food stock for future distribution[2]
IV. Medium and Long-term Measures
a) Develop market infrastructure
b) Review and introduce Minimum Support Price Policy measures to encourage the farmers to invest in food production
c) Rural electrification
d) Surface irrigation
e) Review credit policy
f) Land bank
g) Rural youth employment
h) Revision of the domestic food procurement policy of the Nepal Food Corporation to improve national food production
i) Implementation of differential procurement prices that take into account the costs of producing major food crops in different agro ecological zones
j) Encourage traditional consumption habits based on locally produced food items and identifying new items based on locally produced crops, e.g. buckwheat, millet, oats, etc.
k) Discourage the conversion of staple foods into alcohol
V. Strategic Policy Actions
The following strategic policy actions are being considered in order to support the policy measures mentioned above:
1. Related to Fertilizers:
e) Introduce price subsidy to create availability and reduce costs;
f) Transport subsidy for remote areas where road access is not available.
g) Encourage to use the organic manures.
2. Related to Seeds:
h) Investment in community seed house construction of the food deficit remote district;
i) Involvement of seed producer groups/cooperatives/associations in local seed multiplication and improvement;
j) Investment in strengthening the seed marketing network;
k) Strengthen the quality control of seed.
l) Establishment of resource centre
3. Related to Agricultural extension:
m) Investment in improved coverage and quality of the extension network – recruit, re-train and equip extension officers;
n) Integrated Pest Management (IPM)
o) Integrated Plant Nutrients System(IPNS)
p) Promote the development and transfer of technologies to small producers through partnerships with the private sector.
q) Access to extension services in remote areas/communities
r) Devolution of Extension service to the local bodies
4. Reliable Irrigation Scheme:
s) Rehabilitation of irrigation schemes;
t) Capacity building and accountability of users in their management and maintenance.
u) Expand participatory small irrigation scheme.
v) Expand surface irrigation scheme
w) Relevant policy framework -
o Irrigation Policy (2003): It has adopted an approach of community management of irrigation by incorporating the provision of water user association. By waiving the requirement of license for operating irrigation cannel for personal and community use, it has also tried to ensure the right to irrigation as one aspect of the access over the means of production of food. Similarly, it has identified the requirement of necessary water right system to be introduced which a positive step towards is respecting right to food
o National Water Plan (2005): One of the objectives of National Water Plan (NWP) is to increase the agricultural production and productivity to support food security and to conserve biodiversity and protect the environment. The Plan envisions augmenting fish production through aquaculture and natural water bodies like rivers, lakes, reservoirs, and wetlands.
5. Related to Animal draught and mechanisation:
x) Promote machinery use in areas with greater agricultural potential, by establishing public-private partnerships.
6. Related to Credit:
y) Minimise the risk and transaction cost of agricultural credit for reasonable interest rate on agricultural credit
7. Land ownership:
z) Land use policy/Act
aa) Distribution of land to the landless
bb) Relevant policy framework
o Interim Constitution and Three Years Interim Plan (2007-2010)
- To pursue a policy of providing a minimum required piece of land for settlement to the liberated bonded labours having determinded their exact numbers’
- To adopt scientific reform programs by gradually ending feudalistic land ownership
8. Environment:
cc) Climate change adaptation
dd) Agro-biodiversity conservation
ee) Organic certification
9. Forest:
ff) Leasehold forestry
gg) Community forestry
hh) Non-timber forest program
ii) Relevant policy framework - Master Plan for Forestry Sector (1989 – 2014)
o To meet the basic needs on forest products sustainably
o To contribute to economic growth
o To protect land against degradation and other ecological imbalance
o To conserve ecosystems and genetic resources
10. Emergency responses:
jj) Relevant policy framework: the Three Year Interim Plan (2007-2010)
11. Food rights:
kk) Food sovereignty as a basic human right in the Interim Constitution (2007)
(The End)
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[1] FAO CountryBriefs (BolPAD). Initiative on Soaring Food Prices of Nepal. Updated on 10/09/09.
[2] FAO CountryBriefs (BolPAD), 10/09/09. .