Agro import bill close to hitting Rs200b mark

August 13, 2017

Sangam Prasain, The Kathmandu Post, 13 Aug 2017 

Nepal’s raw and processed agricultural import bill is close to hitting the psychological level of Rs200 billion, way higher than what the country spends on oil imports on which it is totally dependent.

According to the Department of Customs, Nepal imported farm products worth Rs196 billion in the last fiscal year, up 11.36 percent year-on-year, setting off concern that the country’s dependency on imported food was ballooning out of control. 

The share of agro products in the total import bill has swelled to 20 percent. The country’s total import bill amounted to Rs984.06 billion in the last fiscal year. 

The department’s statistics show that agro imports have surged more than fourfold during the last eight years. The food import bill in 2009-10 amounted to Rs44.43 billion. The import bill jumped to Rs76.05 billion in 2011-12 and to Rs99.35 billion in 2012-13. It further ballooned to Rs127.51 billion in 2013-14. 

In 2014-15, Nepal imported agro products worth Rs137.12 billion, pushing agro commodities to the top of the list of imports and knocking petroleum products from the number one spot.

Experts said that a swelling middle class, expanding population and stagnant local agricultural production were driving up Nepal’s food imports. 

The growth is unlikely to stop due to increased migration of farm labour to foreign job destinations as the agriculture sector has started to lose its shine due to a low rate of return. 

Former vice-chairman of the National Planning Commission Min Bahadur Shrestha pointed to three factors behind the ballooning imports: rising food consumption, growing food processing industry and expanding livestock industry. 

“In the past, people used to consume a small amount of food whether they were from a lower or middle-class background. Consumption patterns have now changed,” he said. “Currently, people are eating larger amounts and they are eating higher quality food due to a rise in income levels. On the optimistic side, we can describe it as good; but the main concern is that consumption has outstripped supply,” said Shrestha. “We are unable to produce enough food.”

He said the scenario was ‘alarming’. The primary cause behind low output is labour shortage and traditional farming practices. Farm mechanization and modernization is the only answer, he added. 

“When mechanization and modernization increases productivity, it automatically increases the wage rate of farmers which encourages them to continue farming.”  

Second, a growth in the food processing industry has also increased the import bill. Shrestha said that expansion in the livestock industry was another reason for the increase in the agro product import bill. 

The department’s statistics show that imports of materials needed by food industries, animal fodder and oil seeds totalled more than Rs26 billion. Cereal tops the list of agro imports followed by edible oil, vegetables and nuts and fruits.

As per the figures, the cereal import bill amounted to Rs40.14 billion in the last fiscal year, up from Rs39 billion in the previous year. Agro experts say that Nepal started importing cereals seven to eight years ago, and now imports have risen to alarming levels. Agro expert and scientist Bhola Man Singh Basnet said it was not surprising that last year’s record paddy output did not result in a reduced import bill. 

This is mainly because the expanding population of middle-income Nepalis prefer to eat basmati rice, and Nepal doesn’t grow such fine rice in sufficient quantities. “So the shortfall in production is met by imports,” says Basnet. 

He added that there seemed to be a direct link between remittance and food habits in Nepal. “Nepalis have been earning more from the last couple of years, and demand for basmati rice has grown accordingly.”