The Covid19 pandemic has brought the world to a standstill, affecting billions of lives worldwide. Countries are torn over the trade-off between lives and livelihood. For developing countries, the wrath of the pandemic is even larger, throwing already struggling economies into chaos. Like other countries, Nepal has chosen lives over livelihood as a measure to curb the snowball effect of the virus by imposing a lockdown. But beyond a certain point, the trade-off reaches a critical juncture where economic, social, political, and psychological effects will become unsustainable.
With looming uncertainty, it may be too early to predict the overall health and socio-economic effects of the pandemic. There is even the prediction of a second wave, signalling that South Asia could be the epicentre. The dangers might be greater if we are not well-prepared and the world may witness the worst humanitarian crisis in 2020 since world war. Among the many challenges we face, food security will be most pressing for developing countries. The World Food Program (WFP) has estimated that around 265 million people could suffer from acute food shortages due to the Covid19 pandemic if swift action is not taken. The poorest section of the population will be hit hardest due to the double burden of the virus and well as the economic ailment.
As Nepal struggles to recover from the pandemic, food security will be one of the major challenges it will face. The challenge to food security arises mainly due to two reasons: availability and affordability. The pandemic is likely to affect both. The availability of food may be affected by several factors.
Firstly, Nepal is a net-importer of food. In the last fiscal year, Nepal’s import of agricultural goods, mainly food grains and cereals, consisted of 16 percent of total imports. Disruption in the global supply chain is definitely going to affect Nepal’s food security. The situation will be worse when rich countries will start hoarding food and buffer stocks while restricting the export of food grains by exporting countries. The huge food price inflation arising as a result of restrictions in food export in the aftermath of the global financial crisis of 2008 is a case in point. The scale of the current crisis is much broader.
Secondly, a shrinking global economy, on one hand, will push many migrant workers to return to Nepal and stop those wishing to leave for foreign employment. More than five million people are estimated to be working abroad, thus, even a moderate estimate of returnee adds up to a number so large that it will definitely impact food demand.
Another important factor in food availability is domestic production. Unlike other sectors, agriculture follows a strict planting and harvesting calendar. The major planting season – monsoon – is right on our doorsteps and the availability of seeds, fertilisers and other agricultural inputs are essential for planting. Given the extended lockdown with restrictions on mobility, the availability of agricultural inputs may fall short which may lower food production.
Similarly, South Asia, including Nepal, could face challenges to food security due to locust swarm infestations that have devastated crop production in East Africa. Pakistan had to declare a national emergency due to a locust swarm infestation that might affect India as well. Hence, Nepal, being the importer of agricultural inputs from India, might be affected by India’s food security policy.
Affordability of food is affected mainly by income and price. When it comes to income, the slowdown of the economy decreases household earnings, which might affect their buying potential. On the other hand, income of remittance dependent households will continue to decrease because of the global economic halt. A World Bank report shows a 14 percent decrease in remittance inflow for Nepal this year. This will inevitably impact the affordability of food. Food prices may increase mainly due to shortages, compromising the poorest from being able to afford food.
According to the Annual Household Survey 2015-16, more than half of total household consumption spending goes into food alone. Hence, any change in income or price of food will severely impact consumption. Generally, food is considered to have inelastic demand. However, due to decreasing income and increasing prices, people may have to forgo adequate nutrition. This will increase hunger and malnutrition and have a serious long-term impact on the economy.
Given the challenges in food security, it is imperative for the government to take necessary measures as market mechanisms alone will not be enough to ensure food security for all. In this regard, the government should focus on short and medium-term measures which we have highlighted below.
The effect of the pandemic will be disproportionately higher among poor households and people working in the informal sector whose livelihood has been severed by the lockdown. Hence, in the short-run, the focus of the government should be to meet the immediate needs of people in the lower economic strata.
Additionally, the government must work towards prioritising the agriculture sector in order to secure domestic production, ensuring the adequate supply and distribution of agricultural inputs before the plantation season begins. Another factor which needs immediate attention is the supply chain mechanism and better coordination to transport perishable food items like dairy, poultry and other farm products to consumers.
A ‘v’ shaped recovery of Nepal’s economy is unlikely due to the severe impact of the pandemic worldwide. Remittances, hotel and tourism are sectors contributing to the economy which have been heavily affected. The loss of employment as well as earnings will create negative feedback loops and contract the overall economy. Immediate steps should be taken in the medium-run for economic recovery. The government should actively take steps to prevent blackmarketeering and artificial food shortages as well as price inflations. It should also focus on equitable distribution of food within the country. Buffer stocks should be maintained in order to ensure an uninterrupted supply of food.
Since the pandemic will disproportionately affect small-scale farmers, who are the backbone of Nepal’s food security, they are likely to face difficulties in maintaining a cash flow and may even have to lose productive assets like livestock. A coordinated effort will be required from the government and banks and financial institutions in the flow of credit to the agricultural sector, especially small and medium enterprises.
A proper, data-driven plan of action is required to deal with the current situation. Given the open border with India and a tendency to miss-report evasions at custom points, the reliability of existing data is questionable. This should also be kept in mind while forming policies.
In conclusion, the Covid19 pandemic will bring many challenges threatening the lives and livelihood of many people in Nepal, pushing them towards poverty and further vulnerabilities. Of the many challenges, food security will be a significant one. Coordinated efforts from all concerned stakeholders are essential to maintain food security and food sovereignty.
Bijeta Shrestha* and Ram Narayan Shrestha**
*Bijeta Shrestha has an M.A. in Economics from Jawaharlal Nehru University (JNU).
*Ram Narayan Shrestha is currently a PhD candidate at South Asian University, New Delhi, and a researcher at Sankhya Solutions in Kathmandu.
Source : Record Nepal