Fuel shortages exacerbating food insecurity

Millions of farmers have been hit by an acute fuel shortage, say local petroleum dealers.

According to the dealers, the state-run Nepal Oil Corporation (NOC), which imports all its fuel from India, has not been able to supply even 50 percent of the required diesel and petrol. NOC has failed to pay outstanding dues of about US$30 million to the Indian Oil Corporation, and hence the shortage, according to officials.

NOC sells fuel on the local market at a highly subsidised rate, is running at a loss, and is unable to get any more financial support from the government, according to Finance Minister Ram Sharan Mahat. Local petroleum dealers said the situation could get worse if the government did not find a solution soon.

“The crisis is growing and there seems very little hope of resolving this problem,” said farmer Kali Prasad from Paraspur village of Banke District (some 600km west of Kathmandu), adding that most petrol stations had been gradually shutting down.

Farmers depend on diesel to be able to use their water-pumps and tractors. The harvesting and planting season has already started and there is concern that fuel shortages could not only affect harvests but also lead to price increases for fertilizer and food.

Over 75 percent of Nepal’s 28 million people depend on agriculture for their livelihood. Low farm productivity means Nepal is a net food importer, and fuel shortages could exacerbate food insecurity, said agricultural experts from the Nepal Rice, Oil and Pulse Producers’ Association.

“This is our only source of livelihood and if the crops get destroyed, I will be completely ruined,” said Manohar Kurmi, also from Paraspur village in Banke District.

''This is our only source of livelihood and if the crops get destroyed, I will be completely ruined.''

The fuel shortage is mostly affecting farmers in the lowland Terai region along the border with India - the country’s agricultural and industrial heartland - where thousands of families have borrowed money to buy tractors. Very poor unmechanised subsistence farmers are less directly affected.

“Every day I go to the petrol station to queue up for diesel but I get nothing,” said Ram Ratan Shah, a farmer who explained that he queues up with over 100 other people but almost always ends up empty-handed.

The fuel shortage has reduced the number of vehicles available to transport grain, seeds and fertilizer, further restricting supplies and tending to push up prices.

“[Food] prices have increased by over 30 percent [in the last three months] and could go up further if the fuel shortages continue,” said Suresh Chaudhary, a local food trader. He said local food traders were now exploiting the situation by charging higher prices for rice, wheat and other food grains. Many villagers had resorted to hoarding food, he said.

Nepal is ranked 142 out of 177 countries on the UN Development Programme’s 2007-08 Human Development Index.