Commodities prices continue to rise

Food prices have seen a significant rise in the recent years.Poor summer harvests domestically and across much of India are a significant factor keeping prices in Nepal high
However, losses in India are not as bad as initially expected and it is likely that the country produced a surplus summer crop, said a report jointly produced by World Food Programme (WFP) – Food Security Monitoring and Analysis Unit, MoAC – Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate (ABPMDD) FNCCI/ AEC – Federation of Nepalese Chamber of Commerce and Industries/ Agricultural Enterprise Centre CIPF – Consumer Interest Protection Forum.
The price of rice continued to be at the same or higher level even after the recent crop harvest; the prices in most Terai markets are higher by 10 per cent to 40 per cent compared with the same period last year. The most recent year-on-year food price inflation figure provided by the Nepal Rastra Bank in November was over 16 per cent. The report said national food price inflation remains of significant concern. Compared to the same period last year, the price of black-gram is up by 37 per cent, wheat flour by 19 per cent, musuro (broken lentil) by 17 per cent and coarse rice by 11 per cent.
However, cooking oils are the only commodity which has not significantly increased during the past 12 months. “Similarly, a seasonal increase in the supply of fruit and vegetables has significantly reduced prices across much of the country,” the January report said. “For instance, the Kalamati wholesale fruit and vegetable market has experienced a decrease in the price of tomatoes, onion, carrot and cauliflower of around 25 per cent during the past one month period. During December the government lifted the pulse export ban which had been in place since the end of July 2009. Traders are now allowed to export a maximum of 15,000 tonnes of pulses. The price of lentils appeared to be stable during the period of the export ban
However it is not known whether this was a direct result of the ban. “The price of diesel and kerosene has been increased by three rupees per litre. It now costs fifty-eight rupees per litre, pushing the commodity prices high. The report said that 90 per cent of markets surveyed across Nepal reported that the supply situation had remained stable or improved during December. This was a result of both improved road access following the reopening of monsoon damaged transportation routes (particularly in the mid and far-western hills and mountains) and also the ongoing summer crop harvest which re-stocked markets with paddy (and to some extent maize and millet
However, a number of hill and mountain markets reported ongoing supply constraints, including Bajura, Dailekh, Dolpa, Mugu and Humla. The Kolti region of Bajura is facing a particularly severe shortage of food supply and NFC supply is virtually the only grain stock available in local markets. “This is mostly due to the monsoon which caused a severe damage to transportation routes and blocked food transportation for much of the period, and an outbreak of diseases which has affected a large proportion of the mules and donkeys used for food transportation in the region,” the joint report said. “The Karnali highway was still not fully operational in the reporting period.” The report also attributes the price rise to bandhs that have caused disruption to almost every market surveyed by WFP during December
“Almost 70 per cent of markets were forced to close at least once during December. Markets in Kailali and Kanchanpur were closed for five days during the month, the main market in Udayapur was closed for four days, and markets in Saptari, Siraha, Dailekh, Mugu and Doti were each closed for three days. Significant supply disruptions were also noted in the Eastern hill and mountain districts of Mechi.” It noted
The report also forecast that further price hike of key commodities in the coming months. “Price of wheat is likely to rise further until the next harvest in April, May. Although the price of rice has been stable in the past month due to recent harvest, it is likely to rise in the coming months and such increases are likely to continue until the next main harvest in November-December 2010,” the report concludes.