Price Hike Pall Hangs Over Dashain

This Dashain is going to be costlier than the last one as the price of staple food is higher than it was at the peak of the international food crisis last August.

In comparison to last August, the price of musuro (lentil) is up by 35 per cent. Black gram is up by 23 per cent and wheat by two per cent. Vegetable prices are also very high -- in some cases more than double what they were last August. This is primarily due to the winter drought, late monsoon and difficulty in transportation caused by various road closures, said a report prepared jointly by the Ministry of Agriculture and Cooperatives (MoAC), Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate, Federation of Nepalese Chambers of Commerce and Industries, World Food Programme-Food Security Monitoring and Analysis Unit and Consumer Interest Protection Forum.

Dashain is expected to be particularly expensive for Nepali households as chicken prices are already very high because the poultry industry is recovering from losses caused by bird flu earlier in the year and that had led to increased consumption of mutton. It is reported that mutton price also will be higher than normal this Dashain due to reduced supply.

The price of sugar is continuing to increase, up by an average of seven per cent this month compared to last month.

This is due to reduced regional and global supply, according to the report.

Maize and potato harvests have begun in various hill and mountain areas in Central and Western Nepal and this has had a positive impact on the availability of these items. However, the harvests have been impaired by drought and in some areas by flood also.

During August, Dairy Development Corporation (DDC) increased the retail price of milk by Rs 2 per litre. Following the hike, milk supply was seriously disrupted after dairy farmers across the country protested asking for a Rs 4 per litre hike.

Traders in the hill and mountain markets of Bajhang, Baitadi, Dadeldhura, Dailekh, Dolpa, Jumla, Humla, Mugu, Myagdi and Sindhupalchok say that there is insufficient supply of important food items to meet the demands of local people.

During August and early September monsoon rains reduced road access and increased transportation costs to many hill and mountain markets, fuelling food prices higher. The delayed and weak monsoon is also expected to reduce crop output by around 15 to 20 per cent, creating more pressure.

Many of the markets have insufficient supply of key commodities and consequently prices have increased. Nepal is also expected to face an estimated 400,000 metric tonnes (MT) domestic food grain deficit this year. This shortfall combined with poor crop cultivation in India is expected to increase food prices in Nepal towards the end of 2009 and during the first quarter of 2010, said the report.

On one hand, the demand for food has risen three-fold and on the other the reduced putput is certain to push the price of commodities sky-high.

According to Nepal Rastra Bank, in 2008-09 the agriculture sector was estimated to grow by half to 2.2 per cent and nonagriculture sector at 4.7 per cent against the growth of 4.7 per cent and 5.6 per cent a year ago.

Due to an unfavourable monsoon, the production of paddy has dropped to 5.2 per cent in comparison to a growth of 16.8 per cent in 2007-08.