Nepal - 3.5 Food and Additional Suppliers

Nepal’s economy is largely dependent on agriculture and remittances. In 2022, the agriculture sector’s contribution to GDP stood at 23.95% (source: Nepal Economic Forum).  

Despite being an agricultural country, Nepal largely depends upon Indian market on the supply of foods and commodities. Rice, one of the major staple food crops in Nepal, is still being imported from India, as the production is less than the demand.   Although Nepal has harvested a record production of rice in recent years, it is still far behind in substituting rice imports. Various strategies are required to make Nepal self-sufficient in rice production. Nepal’s per capita rice consumption per year is 137.5 kg, one of the highest in the world. But there is a huge rice yield gap – the difference between attainable yield and potential yield which is between 45-55% in Nepal. [source:  Nepali Times – The rise in Rice, June 24, 2020] 




Production Paddy (MT) 










































(Source: Statistical Information on Nepalese Agriculture 2018/2019, MoALD)                           


Low agricultural surplus is the key reason for Nepal’s growing negative trade balance in food products. Nepal imports rice worth 28 billions of dollars (source online news portal June 24, 2021 – each year mainly from India, China, Japan, Philippines, and Thailand making it a major drain on the national budget. This diverts resources away from achieving food and nutrition security, reducing rural poverty, and the delivery of sustainable development goals (SDGs).  


The UN’s World Food Programme (WFP) in a recent survey found that about 4.26 million Nepalis eat insufficient diets. There are also regional disparities in household food consumption, with the lowest level in Karnali Province consuming an inadequate diet (22.5%), followed by Sudurpaschim Province (16.9%).  

While food security in Nepal has improved in recent years, 4.6 million people are food-insecure, with 20 percent of households mildly food-insecure, 22 percent moderately food-insecure, and 10 percent severely food-insecure, according the 2016 Nepal Demographic and Health Survey (DHS).  Overall, households in rural areas of the country—where food prices tend to be higher—are more likely to be food-insecure than people living in urban areas, according to the survey 


The retail sector in Nepal is highly fragmented. Approximately 78.55 percent of the population lives in rural areas (according to 2022 Statista), who are highly dependent upon the traditional family-run small stores with a limited selection of products where the use of credit purchase is applicable. While consumers in urban areas have access to supermarkets and convenience stores with a high variety of options. Surface access within the country is difficult and market access is a challenge. Poor infrastructure and high transportation costs negatively impact the price of local food crops and imported goods, especially in mid and high-mountain regions. 


The World Bank estimates Nepal’s GDP growth will decrease to 1.9% in the fiscal year 2023 and is estimated to grow by 3.9% in the fiscal year 2024. Nepal has a persistent trade deficit, it has imported USD 15.3 billion worth of goods and services and exported USD 1.74 billion worth of goods and services in the year 2021 according to the data published by the World Bank. Nepal’s main trade partners are India and China due to geographic and infrastructure constraints. 


The following product groups represent the highest dollar value in Nepal’s import purchases during 2021.  

  1. Refined Petroleum worth USD 1.5 billion (9.85%) 

  1. Semi-furnished iron worth USD 591 million (3.87%)  

  1. Soybean Oil worth USD 517 million (3.39%) 

  1. Rice worth USD 430 million (2.82%) 

  1. Gold worth USD 417 million (2.73%) 

  1. Petroleum Gas worth USD 412 million (2.7%)  

  1. Motorcycles and cycles worth USD 288 million (1.89%)  

  1. Vaccines, blood, antisera, toxins, and cultures worth USD 271 million (1.78%) Packaged Medicaments worth USD 248 million (1.63%)  

  1. Palm Oil worth USD 243 million (1.59%). 

The major import partners for Nepal are India (USD 9.4 B), China (USD 2.32 B), United Arab Emirates (USD 505 m), Argentina (USD 389 m) and Indonesia (USD 302 m). 


The following export product groups represent the highest dollar value in Nepalese global shipments during 2021. Below is the percentage share of each product category in terms of overall exports from Nepal. 

  1. Soybean Oil worth USD 591 million (34%) 

  1. Palm Oil worth USD 252 million (14.5%)  

  1. Non-Retail Synthetic Staple Fibers Yarn worth USD 72.5 million (4.17%) 

  1. Knotted Carpets worth USD 71.9 million (4.13%) 

  1. Nutmeg, mace, and cardamoms worth USD 47.5 million (2.73%) 

  1.  Fruit juice worth USD 43 million (2.47%) and flavored water worth USD 41.5 million (2.39%)  

  1. Synthetic Filament Yarn Woven Fabric worth USD 28.3 million (1.63%)  

  1. Other Vegetable Residues worth USD 26.2 million (1.51%) 

  1. Felt worth USD 26 million (1.5%). 

The major export partners for Nepal are India (USD 1.34 b), United States (USD 144 m), Germany (USD 36.5 m), United Kingdom (USD 27.1 m) and Turkey (USD 20.2 m) 

Source: Nepal (NPL) Exports, Imports, and Trade Partners | OEC - The Observatory of Economic Complexity 

Regarding the purchasing power of the population as per WFP data the purchasing power of daily wage labor marginally increased in January 2024 compared to December 2023, however remained relatively low, particularly in areas with a higher prevalence of food insecurity. 

An unskilled labor could purchase 10.1 kgs of medium rice in the mountains, 10.3 kgs in the hills and 11.4 kgs in the Terai from their daily wage in January, compared to 8.9, 9.2 and 10 kgs respectively in December 2023. The increase in purchasing power is mainly attributable to a decrease in the retail prices of essential food commodities in January 2024 compared to daily wage. 

Provincial disparities in purchasing power were observed in January 2024. For example, an unskilled labor could purchase 14 kgs and 12.7 kgs of medium rice with a day’s wage in Koshi and Lumbini provinces, respectively, while in Sudurpaschim and Karnali provinces a daily wage labor could purchase only 8.4 kgs and 9.1 kgs of medium rice, respectively, in January 2024. 

The difference in purchasing power is mostly attributed to the variations in the price of food commodities compared to wage rates due to relatively low competition and high transportation costs in remote areas, with a poor road network across the mountain belt of the country. 

Migration of youth has led to a serious shortage in labour and families are leaving their land fallow in hilly regions. A million hectares of land is uncultivated in the hilly districts. 

Besides high costs of agricultural inputs, low productivity in all three major cereal crops like paddy, wheat and maize are of serious concern. Fragmentation in farm size means challenges with achieving economies of scale in modernisation and corresponding profitability of farming.   

It is estimated that Nepal currently produces 10.5 million tons of cereals (5.5 million tons of rice, 2.7 million tons of maize, 2 mil. tons of wheat and about 0.3 million tons of other crops such as millets. There is an estimated supply gap of around 2 million tons of paddy for this year.  

India is the main source of food commodities for Nepal. In absence of price stabilisation measures in Nepal, when India announces restrictions on global food exports, there is concern about sudden food price rises across Nepal. 


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Please note: WFP / Logistics Cluster maintain complete impartiality and are not in a position to endorse, comment on any company's suitability as a reputable service provider.

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