Sunday, February 21, 2010

Hold on with pulse export, Nepal!

Nepal’s Ministry of Industry, Commerce & Supplies (MoICS) denied the Department of Commerce’s request to export 16,000 metric tones of pulses. The government had banned export of pulses on July 20, 2009 as domestic prices spiraled over 60 percent.

DoC has forwarded the file as it believes it is feasible to export, said Anil Kumar Thakur, director general. According to him, mills have sought permission to export ‘whole red lentil without husk’ which is not consumed in Nepal.

However, a MoCS source rejected the argument saying, “As production is going to decrease this year, pulse export can wreak havoc in the domestic market.” All this happening due to pressure from exporters, he added. According to the Ministry of Agriculture and Cooperatives, pulse production will decrease in Nepal by 30 per cent compared to last due to bad weather in the planting season.

Good decision! I am not a protectionist advocate but making sure that domestic producers first satisfy domestic demand at a time when there is deficit food production in a country where more than 70 percent of the population depend on the agriculture sector for livelihood is a right decision. Chasing after higher prices abroad when there is huge unmet demand in the domestic market is not morally right. Okay, I understand the concept of competition and the essentiality of free markets. But, this situation is different. It requires opting out of that principle until the domestic demand is met, i.e. making sure that prices do not further spiral up and the number of hungry people do not increase.

This is what I wrote last week:

Food crisis is acute in the mid- and far-western regions. In fact, last July, the UN World Food Program (WFP) reported that starvation in these regions is as severe as in Congo and Ethiopia. In rural Nepal, over 600,000 people are facing starvation every day and around two million will potentially experience the same fate in the coming days. The WFP is running out of resources to feed the hungry people. Landless agricultural wage earners are particularly hit hard. Production of major agricultural crops such as paddy, wheat, and pulses has nosedived. The country might face food deficit of over 400,000 metric tons this fiscal year, according to the Ministry of Agriculture & Cooperatives. The most isolated regions are facing high intensity of starvation and food deficit. This problem has to be deal with swiftly and with a decisive food security policy to address not only the immediate causes but also to prevent occurrence of such cases in the long run.

It is encouraging to see the donors and development agencies taking promising steps to address the short-term challenges. However, the same cannot be said about the government’s plan of action. It allowed export of lentil and pulses at a time when the domestic demand is far greater than domestic supply, leading to severe food shortage in the rural areas. It is also importing 50,000 metric tons of wheat from India. The government should have purchased food from the domestic private sector at the prevailing international price and supplied it to the regions facing food shortage. Note that prices of both pulses and lentil are already skyrocketing in the domestic market. In fact, due to supply constraints, prices of most food items are already going up.