United Nations
Information Centre | Nepal
Nepal Initiative on Soaring Food Prices
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There are strong indications that the volatility in global food prices will remain for the foreseeable future coupled with an upward shift to higher (real) prices in the medium term. This is attributed to a number of supply and demand side factors, most notably: (i) the “0knock-on” effect of sharp shortfalls in export volumes from major export countries in 2006/2007 due to adverse weather; (ii) low global food stocks, which are likely to reach their lowest levels in almost 3 decades in 2008; (ii) the high cost of oil which is pushing up the cost of production and transport; (iii) the growing demand for bio-fuels, (iv) increasing incomes and the changing nature of food demand (especially for meat and dairy products) and (v) greater speculation in financial markets in agricultural commodities. These underlying factors have been exacerbated by the re-emergence of protectionism in food markets in some countries. The shift in food prices, nevertheless, poses both challenges and opportunities for the international community which now recognizes the importance of significantly increasing investment in agriculture (after decades of decline) as a means of addressing serious concerns related to global food security and poverty.As in the global context, there are a number of challenges to be met in Nepal due to high food prices, particularly ensuring adequate food security in the short term. In the medium to longer term, however, higher producer prices and returns provide significant opportunities for increased public and private investment in agriculture. Nonetheless, in the short term (6 months to 2 years), the historic low levels of public investment in key areas of agriculture coupled with internal conflict over many years, constrains the sector’s ability to respond “quickly” to higher prices. In addition, weak data and information systems and poor market integration further limit farmer response to price and market signals. Over the longer term (3-5 years) however, there are opportunities in revitalizing agriculture and enhancing production providing a number of recognized factors can be addressed including inter alia; (i) increasing investment in key areas of agriculture (ii) enhancing agricultural productivity (iii) improving outreach of research and improved technologies; (iv) reducing high post harvest and storage losses; (v) diversifying farming and improving market integration;(vi) broadening road connectivity in rural areas; (vii) harnessing significant untapped potential for irrigation; (viii) exploiting comparative advantages in commodities with strong export potential; (ix) introducing policy reforms and providing a more enabling environment for private sector involvement which can play a crucial role in rural and general economic growth. In meeting these challenges and opportunities,it is recognized that future growth strategies have to be inclusive of the poorer and economically backward regions and socio-ethnic groups, as such inclusion is vital for underpinning the peace process.
In the short term, the biggest threat to food security lies in the hills and mountains of Far and Mid-western Nepal, several districts in the hills of the central and eastern region and flood some flood and drought affected districts in the Terai. Even though on average percentage price changes for coarse rice in the Terai and Hills have exceeded those in the Western Mountains, rice is about two to three times more expensive in remote mountain areas compared to other locations. The World Food Programme (WFP) estimates that at least 23 districts in Nepal or more than 6 million people are now chronically food insecure, with 2.5 million in need of immediate food assistance and 3.9 million additional people at high risk of becoming food insecure due to increasing food prices.
#FoodMarkets #SoaringFoodPrices #FoodDemand
GoN, FAO, WFP, IFAD, ADB, WB ,   (2008 )
Type / Script:
Annual Report in English
Thematic Group:
 UN : International Peace and Security
10.01.00  -  Food And Nutrition
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