Historically, Nepal did not import rice in numbers that we are witnessing today. Dr. Rajendra Upreti former head of division at the Food Security and Agribusiness Promotion Division highlighted that in 1961, India imported 736 thousand metric tons of rice, and Bangladesh imported 491 thousand metric tons, while Nepal exported 289 thousand metric tons of rice, valued at USD 43 Million. This trend persisted until the mid-1980s. By 1985, Nepal's rice exports had decreased to 59 thousand metric tons, worth 13 million US dollars. Today, the tides have turned completely as Nepal's rice exports amount to  NPR 250,690 as visible in Figure 1 below. In contrast, the country imported a total of 25,310,442 kilograms of semi-milled or wholly milled rice, amounting to NPR 2,075,156,842 (approximately USD 15,547,400) in the fiscal year 2080/81.

Figure 1: Share in Export of Semi-milled or wholly milled rice, whether or not polished in 2022. (Source: NTIP)

In the 1990s, Nepal's role in the rice market shifted dramatically, transitioning from an exporter to an importer. Meanwhile, India and Vietnam have consistently improved their positions, becoming the first and third largest rice exporters in the world, respectively. The production of rice during the initial years of the 1960s shows that Nepal was on par with countries like Pakistan and had good numbers in terms of production as shown in Figure 1 and Table 1.

 

Figure 2: Comparison of rice production amongst South Asian countries with two other major rice-producing countries from  1965-2022. (Source: FAO)

Table 1: Comparison of rice production in tonnes amongst South Asian countries with two other major rice-producing countries from  1965-2022.  (Source: FAO)

*Maldives is not included in the list because it doesn’t produce rice.

Table 2: Comparison of import values in 1000 USD amongst South Asian countries from 1965-2022. (Source: FAO)

As per Tables 1 and 2, we can infer that at a time when the population of Nepal was 94,12,996 as per the census of 1961 A.D., the country did fulfill its demand for rice through domestic production resulting in minimal imports. Gradually as the country witnessed an increase in population, it evidently couldn’t meet the demands of rice resulting in a growing rate of imports. While this trend may seem understandable, countries that host one-third of the world's population, such as India and China, have shown significant growth in rice production. These countries have ultimately become the top two exporters of rice in the world today.

Contemporary Scenario

The press note released by the Ministry of Agriculture and Livestock Development on January 7, 2024, stated that the total production of paddy in 2080 B.S. was the same as in 2079 B.S. But when it comes to productivity, the numbers seem to be growing from a slight dip at 3.47 in 2078/79 B.S. to 3.98 in 2080/81 B.S. as provided in Figure 2 below.

Figure 2: Productivity of Paddy in different fiscal years (Source: Press Note of Ministry of Agriculture and Livestock Development)

The press note also provides that the production had increased by 4.33 per cent and reached 5,724,234 metric tons (mt. tons) ≈ 5,724,234,000 Kgs which was 5.08 per cent more than the average production from 2076/77 - 2079/80 B.S. as illustrated in Figure 3. 

 

 

Figure 2: Total production of paddy in metric tons from F.Y. 2076/77 to 2080/91 B.S. (Source: Press Note of Ministry of Agriculture and Livestock Development)

Likewise, it also mentioned that the total area of paddy crop had decreased by 0.61% i.e. 8,800 hectares compared to last year and has reached 1,438,989 hectares. This area is 1.73 per cent less than the average area of the last four years. The average productivity of paddy increased by 4.97 per cent compared to 2079 and reached 3.98 metric tons per hectare, which was 6.92 per cent higher than the average productivity of the last four years. This was further bolstered by the fact that in the fiscal year 2079/80 B.S (2022/23) Nepal’s rice production increased by 6.9 per cent. 

But contrary to the above numbers, Nepal's latest data from the Nepal Trade Information Portal (NTIP) shows that Nepal imported a total of 25,310,442 Kgs of “Semi-milled or wholly milled rice, whether or not polished or glazed” of a total NPR 2,075,156,842  ≈ USD 15,547,400 in the fiscal year 2080/81 as shown by Table 3.

Table 3: Import Report by Commodity and Country F.Y 2080/2081(Source: NTIP)

 

Additionally, the recent data of the Customs Department, shows that in the first 10 months of the fiscal year 2080/81, Nepal faced a trade deficit of NPR 1,177,183,491. Much of the deficit is also through importing NPR 5,420,162,000 worth of Basmati rice from India alone, along with an additional NPR 2,513,326,000 of other types of rice from the same country. India’s export of rice across the South Asia region in 2022/23can be seen as follows:

In 2022/23, India exported Basmati and other types of rice to Nepal, earning a substantial USD 284 Million, while importing no rice from Nepal. This trade imbalance is heavily in favour of India, showcasing its dominance in the rice market. India's significant role in supplying rice to Nepal gives it a quasi-monopoly status. This dominance became evident when India imposed several export restrictions: banning broken rice exports in 2022, imposing additional duties on non-basmati white rice (excluding parboiled rice), and subsequently banning non-basmati rice in July 2023. Further restrictions on Basmati and parboiled rice were implemented in August 2023. Therefore ever since India reduced its rice exports to more than half coupled with el nino effect across South and Southeast Asia, the global prices for rice witnessed a 20% increase.

Way forward for Nepal

Today, the annual demand for individual rice consumption as per the Household Survey of 2016/17 conducted by the Central Bureau of Statistics stands at 131 Kgs. Given that the present population as per the latest census is 29,164,578, the total rice demands stand at approximately 3,820,560 metric tons. Considering a standard sack of 100kgs of paddy produces 62 kgs of rice, to produce 3,820,560 mt. tons of rice, 6,162,193 metric tons of paddy is required. Nepal’s current production (2080/81) is 5,724,234 metric tons of paddy which would render approximately 3,548,226.08 metric tonnes of rice. To fulfil the demand for the remaining 272,335 metric tons of rice, Nepal has no other option than to rely on imports. But at the same time it is equally important to consider that while the Netherlands has 530,000 hectares of arable land, it nevertheless exported paddy of 139,715,000 kgs of rice. Thus, it is not only about how much a country produces and how much arable land it has but largely depends on how the resources are utilised for optimum output in a way that satisfies the demand of the country.

To reduce reliance on imports and boost yields, Nepal needs to overhaul its domestic production of paddy and rice. One of the main challenges hindering significant increases in domestic rice production is the quality of paddy seeds. Bhanubhakta Pokhrel, Former coordinator of the National Rice Crop Research Program, explains, "If we can improve the quality of paddy seeds, rice production can increase by about 20 per cent from improved varieties alone." He notes that although paddy seeds should be replaced every 3 to 4 years, the current rate of replacement is low. At present, the seed replacement rate for paddy is only about 20 per cent.

In addition to this, water plays a foundational role in the production and productivity of rice. The lack of a well-structured irrigation system has forced Nepal's rice production to rely heavily on rainfall. Although 87.0 per cent of the total irrigable land of 1,760,000 hectares and 58.0 per cent of the total arable land of 2,640,000 hectares have been provided with irrigation facilities, year-round irrigation is available on only approximately 850,000 hectares. Every year, farmers depend on rainfall for rice planting, resulting in higher rice production only in years with good monsoon rains but can again witness a decline in cases of no or less rainfall. Therefore, by providing farmers with an adequate amount of government-subsidised fertiliser, increasing access to irrigation facilities, and offering additional subsidies, Nepal can markedly reduce its reliance on rice imports and shift towards greater self-sufficiency in rice production ensuring food security and economic stability.