United Nations
Information Centre | Nepal
Food and Agricultural Markets in Nepal
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WFP and FAO Country Offices in Nepal jointly commissioned this study on food and agricultural markets (FAMS) to develop an agricultural market profile based on study of market dynamics within the context of a long-standing conflict in order to contribute to the decision making in case of emergency. The study was prepared, relying heavily on secondary data sources complimented by primary information collected through different market sizes in different regions and key informants such as traders, millers and government district officers. The final report focuses on food grain markets, as food grains constitute a major component of food consumption and thus food security in Nepal. However, the field survey covered also other food items such as livestock and vegetables and fruits. Specific findings on these non-food grain agricultural markets are annexed to the report. The rest of the executive summary highlights key issues related to food markets and food security and recommended actions.Growth performance in Nepal remains low over the recent years, resulting in persisting low purchasing power among the population. Nepal ranks 136 out of 177 on the UNDP Human Development Index of 2005. Of its population of some 25 million, an estimated 31 percent live below the poverty line.Nepalese economy is dominated by a slow performing agriculture sector with the majority of the population relying on subsistence farming and increasingly on external remittances. Food grains in Nepal account for nearly three fourth of the calorie intake. Over the recent years (2002-2005), the agriculture sector recorded a rather low growth rate of 3 percent a year on average. Foreign supply plays a major role in complimenting the limited domestic food production in Nepal. Nationally, Nepal is food insufficient due to limited cultivable soil, low productivity growth and frequent dry winters affecting crop production. The country depends therefore substantially on foreign food supply, mainly from India. The implementation of Nepal food sector strategies are challenged by trade liberalization. With a trade-to-GDP ratio of more than 50 percent, an average tariff rate of about 14 percent, and virtually no quantitative restrictions, Nepal is one of South Asia’s most open and trade dependent economy. Private sector involvement in food commodity trade in the hilly and mountain remote areas is limited by weak physical access to markets. Difficult terrain and consequently, weak road connectivity from the main roads and from the district headquarters to rural areas, especially in mountain and hilly areas, are cause of high in-country transportation costs and reduced reach of private traders. Despite the relatively competitive food grain market structure, the lack of backward and forward linkage markets bears the risk of undermining the food trade flows, given the relatively small number of large millers-traders controlling the trade of cereals. The food grain market channel is one of a tertiary market. It operates with a large number of stakeholders including farmers, kantawalas, rice millers, importers, wholesalers and retailers and consumers. Individual farmers are price takers in the marketing system because of their small marketable surpluses and the lack of cooperatives in food grain markets. The long-standing conflict has led to significant market system disruptions in conflict affected areas. Overall, market functioning has weakened in conflict-affected areas due to market shutdowns, induced shortage of goods and services, physical damage of goods and food stuff incurred during transport on unsafe roadways, obstruction of production, processing, transportation and trading of agricultural commodities, damage of physical infrastructure, and price instability due to taxation, donation and transport strikes, blockades and bandhs.

#AgriculturalDevelopment #FoodSecurity #PeaceBuilding #NaturalResources
FAO, WFP ,   (2007 )
Type / Script:
Progress Report in English
Thematic Group:
 FAO : Food and Agriculture Organization
04.01.01  -  Agricultural Economics And Policy; Rural Sociology
Reference Link:
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