After India, Nepal bans food item exports

May 1st, 2008 - 12:52 pm ICT by admin  

By Sudeshna Sarkar
Kathmandu, May 1 (IANS) Fearing a severe food crisis after its giant southern neighbour India slashed the export of rice to battle soaring prices, Nepal too has banned the sale of foodgrain abroad. The ministry of commerce, industry and supplies Wednesday decided to stop the export of foodgrain following reports that rice and wheat shipments were being sent out through the border towns of Nepal at an alarmingly high rate, causing their prices to shoot up in the domestic market.

Following the decision, the central Nepal Rastra Bank instructed all financial institutions to halt issuing letters of credit to exporters from Thursday. It asked exporters to submit documents regarding the price, quantity and shipment dates of commodities within three days for scrutiny.

Landlocked Nepal, while being heavily dependent on India for food supplies, exports wheat flour to Tibet in China and basmati rice to Bangladesh.

After India stopped rice exports to Nepal, the price of rice, wheat and flour have shot up in the Himalayan nation by 25-30 percent, triggering fears of an acute food crunch.

Last year, Nepal had legally imported rice worth Nepali Rs.2 billion from India and wheat worth Rs.50 million. However, that is thought to be just the tip of the iceberg with the worth of smuggled food grain amounting substantially more.

Till the 1960s, Nepal was self-sufficient in food production, having the highest yield in South Asia.

However, according to the South Asia Watch on Trade, Economic and Environment, food production decreased dramatically in the 1990s due to the spurt in population and the abandoning of farming by the new generations for other means of livelihood.

Currently, over 50 percent of public expenditure is estimated to be spent on food.

The price of rice in Nepal has more than doubled since 2000. In the coming days, it is expected to go up by around 40 percent.

UN agency World Food Programme said the food stock in 38 districts, mostly in the remote west, fell by more than 50 percent last year due to rising prices.

It predicts that the price of food would go up by 10 percent every month if the Indian ban on the export of rice and wheat to Nepal continues.

Last year, rice dispatches to Nepal had amounted to two percent of the subcontinent’s exports while wheat to Nepal accounted for about 0.6 percent.

After India banned the export of food grain, Nepal’s border towns like Kakarbhitta and Biratnagar in the east and Nepalgunj in the south have seen an alarming flight of foodgrain to Bangladesh via India.

Till last week, over 90,000 tonnes of wheat was sent to Bangladesh via Kakarbhitta.

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