Poor crops yield to pull growth rate down

The delayed monsoon and erratic distribution of rain caused a reduction in the 2009-10 summer crop production across the country, hitting major crops like paddy and maize.

"Paddy production reduced to 4.02 million metric tonnes (MT) and maize reduced to 1.86 million metric tonnes, pulling down the yield by 11 per cent and four per cent, respectively, compared with last year," said a report jointly published by the Ministry of Agriculture and Cooperatives (MoAC) Food Security Monitoring Unit and World Food Programme (WFP) Food Security Monitoring and Analysis Unit for the month of February.

"It is anticipated that the country will face a substantial food deficit during the current fiscal year despite the positive outlook for the current winter crop," it said.

In August 2009, MoAC estimated the edible cereal deficit to be 400,000 MT for the current fiscal year compared with the total requirement of 5.4 million MT. "This deficit represented the cereal requirement of seven per cent of the population though the figure will be revised after the winter harvest," according to the report.

The global food market situation is currently not favourable for Nepal. Natural disasters caused substantial regional summer crop losses in countries such as India and the Philippines, which resulted in an increase in the international price of important summer crops like rice. The international price will impact the domestic price though domestic food prices are currently stable at the higher-level. "During the year 2010, food prices will go up," the report said.

Mid-Nepal and Far-West hill and mountain regions were most affected by poor summer crop production and these districts also faced summer crop reduction by up to 30 to 50 per cent, resulting in a situation of high to severe food insecurity amongst the vulnerable population.

According to the IMF report, the macro-economic outlook also is challenging as the real GDP growth is expected to decelerate to three per cent in the current fiscal year due to weak monsoon apart from slowdown in remittance inflows and tighter monetary conditions.

According to the CBS data on sectorwise contribution to GDP, the Agriculture and Forestry sector contributed around 30-35 per cent to the total GDP. Thus, the poor crop yield is going to bring the gross domestic production (GDP) too down to around three per cent.