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inventory, and future expected produc� on level, have also contributed to
price shocks (HLPE, 2011).
All of these events have not only aff ected demand, supply, and prices
of agricultural goods at the global level, but also, to some extent, our own
economy. A Nepalese ci� zen spends, on average, 59 percent of his income
on food. Of this about 58 percent and 15 percent are spent on breads and
cereals, and fruits and vegetables, respec� vely. Since food prices are already
high in the domes� c market, any further price rise will force more people to
scale down discre� onary expenditures and savings, which will directly aff ect
savings, investment and economic growth.
Donors’ role
The failure to address the impact of rising food prices will have adverse
eff ect on the progress made in achieving Millennium Development Goals
(MDGs) on poverty and malnourishment. As men� oned earlier, rising
food prices might undo the astonishing achievement in reducing absolute
poverty. Worse s� ll, it might worsen malnutri� on, which is at “alarming”
level since 1990 (Sapkota, 2011b). Achieving the MDGs is one of the top
priori� es of donors. The mul� dimensional impact of rising food prices and
defi cit food produc� on will have an impact on the progress on MDGs and
warrant increased donor focus and interven� on.
Since aid money is limited, it has to be spent effi ciently in the most
targeted projects and programs. There is no central es� ma� on of how
much food aid Nepal receives each year. However, mul� lateral and bilateral
donors such as WFP, USAID, DFID, ADB, and WB among others donors are
launching projects and implan� ng interven� ons to address food insecurity
in Nepal. While WFP is focused on addressing the emergency needs, the
others are primarily assis� ng in increasing produc� on and produc� vity in
the agriculture sector, which has not received much a� en� on from the
government except for the customary budgetary alloca� on for subsidies and
irriga� on projects in various districts.
Aid interven� on should primarily focus on increasing produc� on and
produc� vity in the 38 food- defi cit districts. Some of these districts bear
such geographical terrain that it is unfeasible to produce goods that are
consumed daily by households. In such cases, both the government and
donors should focus on facilita� ng supply of essen� al food items. This might
mean subsidizing transporta� on costs and building roads network. The right
kind of interven� on depends on the remoteness of food defi cit districts.
Meanwhile, donors could also assist in funding temporary condi� onal and
uncondi� onal transfers and safety net programs depending on local context.
Providing in-kind assistance (food and other necessary household items) in
return for manual agriculture works in villages could also help to tackle both
rural unemployment and food insecurity problems.
As always, the fi rst priority should be to dampen rising food prices in food
defi cit districts. This should be followed by interven� ons aimed at increasing
produc� on and produc� vity.
Changing paradigms of aid eff ec� veness in Nepal 163