Supply chain and food security

Meeting the dietary needs of all Nepalis has been a problem, with or without Covid-19.

The Covid-19 pandemic has added unprecedented challenges to maintaining the supply chain at every level—global, national and local—mainly of essential items. It foreseeably is poised to have a telling effect on food security and nutrition, particularly of the most vulnerable and marginalised sections of society. Meeting the dietary needs of all citizens of a least developed country like Nepal has persistently been a pressing problem, with or without the pandemic.

The management of the food security ecosystem has two fundamental objectives—ensuring the production of enough food items to meet market demand and ensuring supply to meet the minimum nutrition requirement of 2,200 calories per day for an adult. For production, the availability of factor inputs and logistics, and transit facilities for price exploration and market access of the produce are key. The whole array of demand patterns of food items such as staples, fruits and extra luxuries is often dependent on the culture and traditional value system of consumers which, in turn, has a direct bearing on nutrition management.

Consumption culture

Food security and nutrition at times appear to be divorced from each other in our consumption psyche. For example, people tend to fallaciously assume an absence of food security whenever rice in Karnaliis in short supply even though food grains such as indigenous buckwheat, barley and wheat provide more nutrition than commercially available rice. Rice has been so much ingrained in our consumption culture that its short supply is often axiomatically portrayed as food insecurity. This conditioned consumer mindset calls for an attitudinal change through higher levels of awareness especially because food scarcity looms large due to the lockdown and supply chain disruptions.

Integrating food security and nutrition in Nepal’s context entails production management, logistics management, access to market (including marketing and branding), price exploration (both on the side of suppliers and buyers), knowledge of consumers about managing the minimum nutrition level, and market information management, ideally through the use of information technology.

This is important because Nepal, a mixed economy, is largely import-dependent despite its potential to be self-sufficient in food production. Though there is no credible data, a rough estimate suggests that Nepal imports $3.5 billion worth of food items like rice, wheat, vegetables, fruits and processed food in packaged form from its largest trade partner, India, while the domestic market supplies 60 percent of its food needs.

The key aspects of market integration of agricultural products are price exploration, market access and management of seasonality. The relation between production and supply is now largely handled by middlemen. They rule the roost as they monopolise the logistics such as vehicles for transportation. Product labelling is hardly practised. Seasonality of harvesting off-season products is a challenge; and due to lack of proper warehousing facilities and transportation, the rejection and rotting rate of fruits and vegetables is around 25 percent. Apples produced in Bajura and Jumlafail to reach markets on time due to lack of transit infrastructure and large agricultural enterprises that take risks. The absence of an assured level of harvest poses a threat when local distributors don’t get the promised amount of food, vegetables or fruits from Nepali producers, making them dependent on their Indian, and for some products, Chinese, counterparts.

A ‘limping and herding mentality’ results in all farmers cultivating the same crops, fruits and vegetables without evaluating demand-supply market dynamics, generating losses from the very same product yield that produced profits in the preceding year. The budget for fiscal 2020-21 has highlighted some attractive schemes such as credit cards for farmers as the use of digital infrastructure is expected to protect their rights. However, the manner in which it comes to fruition is a moot question given the inadequate banking infrastructure in Nepal.

Alternatively, Nepal is well-advised to follow in the footsteps of India that has developed an app whereby Facebook and Reliance Jio collaborated to create a more resilient food industry by focusing on 120 million farmers in the informal sector. Facebook is acting as a major player in Indian agriculture space and WhatsApp, as an efficient knowledge-sharing platform, has been serving smallholders in Maharashtra state fabulously.

Collaboration and integration are possible mainly in three areas, namely investment, mechanisation and technology transfer in hybrid seeds, high-yielding crops and genetically modified organisms. It is a fact that Nepal suffers from chronic underinvestment in agriculture enterprises, which has largely been of a ‘subsistence’ kind for centuries primarily due to land fragmentation. Right now, agriculture contributes 22 percent of the gross domestic product and employs 67 percent of the population which is likely to increase by 76 percent next year with migrant labourers returning home.

Keeping in mind the huge Chinese demand for soybean and having the capacity to produce it, exploring international markets becomes imperative for Nepal. However, a failure to match their requirements of seed and species resulted in China emerging as the second-largest importer of soybean from the United States, with annual shipments worth about $6.5 billion. Nepal can also explore comparative advantage in the juice products market if it can focus on their processing and branding and reaping economies of scale. Agro-enterprises should no longer be developed for livelihood alone. Moving beyond food security and cereal crop support, Nepal should formulate a nutrition policy that it woefully lacks. Banks have not paid much attention to priority sector lending in agriculture that is mostly unorganised and consists of smallholding farming.

Way forward

There is recurrent news about supply chain disruptions causing agricultural produce to rot in the fields because farmers cannot ship them to market during the lockdown as a result of the inefficiency of government agencies and information asymmetry.

While fertiliser scarcity is going to affect agricultural production in the next cycle, the 44 agri-ambulances started in Province 5 are a welcome initiative. The government has been routinely sharing information regarding stocks and availability of food to boost consumer confidence. Currently, there is no shortage in Kathmandu Valley primarily because 3-3.2 million people residing here have left for their hometowns. The government should also create awareness about the consumption of vegetables and fruits after proper sanitisation. The availability of land remains a big question as both legal and inheritance rights have a huge impact on the fragmentation of arable land.The Land Bank concept for barren land presented in the budget for 2020-21 will prove effective only when implemented especially for absentee landlords.

This article was first published on The Kathmandu Post by Ms. Roshee Lamichhane. Ms. Lamichhane is an Assistant Professor of Marketing and Associate at the Enterprise and Management Development Programme at Kathmandu University. The views expressed in this article are those of the author and do not necessarily represent or reflect the views of this organization and should not be thought to represent official ideas, attitudes, or policies of any institution.

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