Growing food prices are now a global phenomenon. The rise in food prices is attributed to the economic progress made by China and India in the recent years where the rate of food consumption has increased with the improved standard of living of their people. However, this is affecting the lower income groups of the world, and Nepal, despite being an agrarian economy, has not remained unaffected by this global phenomenon. The annual survey of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) 2008 has revealed that the increasing food prices are affecting the poor. In fact, for a country whose overall economic growth remained sluggish at 2.5 per cent, the price rises are an added challenge in maintaining even this growth rate. The stagnant agricultural productivity coupled with fuel and power shortages have caused industrial growth to fall as well. Though it was expected that Nepal’s economy would see an upturn after the cessation of hostilities, the overall performance of the economy does not look encouraging at all due mainly due to low agricultural productivity. Of course, it is an irony that the agriculture sector has been neglected, with a substantial decline in investment in agriculture over the last decade. The share of the annual government budget to agriculture cooperatives has dropped to 2.5 per cent from 3.4 per cent over a decade. It is natural that productivity should drop with the reduction in the budget set aside for agriculture and with the population increasing at an alarming rate of 2.3 per cent annually. The decade-long conflict forced the respective governments to cut down on the agriculture budget to meet the increasing defense budget. But now that the country has already entered the peace process, efforts should be made to give top priority to the agriculture sector so as to increase productivity. For Nepal, its overall development is impossible unless the country becomes self-reliant on food production. Thus, it is high time the government introduced measures to modernise the country’s agriculture sector by providing the farmers with all the needed facilities, including irrigation, technology and market. Only then will the Nepali people be able to mitigate the problems brought in by the global rise in food prices.

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