| Development
in Nepal: Reports on Food Crisis |
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Nepal Development |
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Nepal Development |
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Market
and price impact assessment |
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KATHMANDU,
August 2008 (ReliefWeb)
HIGHLIGHTS
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Approximately 2.5 million people in rural Nepal are in immediate need of
food assistance. These people are highly vulnerable to food price increases
and already have very low food intake levels.
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An additional 3.9 million people in rural Nepal are at risk of becoming
food insecure due to increasing food prices.
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In urban areas 525,000 vulnerable poor are at risk. The total of 67,000
people may require immediate emergency support. This is best done through
providing targeted subsidized food programmes with limited duration or
through a non-food based response. The remaining 458,000 people need to
be carefully monitored in case further price increases have a broader impact.
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Nepal faces a serious risk of stagflation, a condition of low economic
growth, high unemployment and rising prices. Rising food prices pose a
severe risk to the peace process if not taken seriously by all involved.
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Highest increases in real prices during the past six months were observed
for cooking oil (26 percent), coarse rice (19 percent) and kerosene (13
percent). This during a period when rice prices normally decline by about
11 percent.
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| - Traders in rural areas expect that the price of coarse rice and kerosene
will increase by a further 11 percent and 8 percent respectively in the
coming period. They expect that the price of cooking oil will increase
less sharply at about 5 percent. Price rice expectations for urban areas
are much higher for almost every commodity. |
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Observed
increases in wholesale prices, transportation costs and farm gate prices
confirm the likelihood of further increase in retail prices.
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The Indian ban on food exports have pushed up prices of the restricted
food items to some extent in Nepal; however, supply from India has not
been greatly affected.
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Nepal is facing a serious fuel shortage. This heavily affects transportation
costs which according to traders, is one of the most important factors
in determining food prices. The average cost of transportation has increased
by almost 27 percent and further increases are imminent.
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More than 60 percent of traders indicate that the supply situation for
commodities and their sale volumes have deteriorated. Most of them consider
that the situation will continue to worsen, but they are unable to indicate
for how long. Average supply has decreased by 44 percent for kerosene,
30 percent for coarse rice and more than 20 percent for lentils, cooking
oil and fine rice.
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There has been an upward pressure on daily wage rates for unskilled labour
and wages have increased by 7 to 13 percent during the past six months.
Percentage-wise, wage rates have increased the most in the Terai and Urban
areas. Despite wage increases, the purchasing power for food of households
decreased because of the rise in commodity prices.
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Due to the price rises, people have shifted their consumer behavior to
buying smaller quantities and buying cheaper food items. Sales on credit
have increased substantially.
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An inverse relationship between rising food prices and food intake can
be observed for the extreme poor and poor wealth groups. This may result
in higher malnutrition rates.
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Nepal is unlikely to overcome in the near future the challenges associated
with increasing agricultural production, including, limited irrigation
coverage, limited use of fertilizers and improved seed varieties, and increasing
input costs.
Credit
Reliefweb2008
Copyright
© UN Office for the Coordination of Humanitarian Affairs 2008
[
This report does not necessarily reflect the views of the United Nations] |
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