The Price That Way

The Price That Way

April 21, 2016, 5:45 p.m. Published in Magazine Issue: Vol.9 No 19, April 22,2016 (Baisakh 10,2073)

It does not come as a surprise that the natural and political calamities that Nepal witnessed in 2015 left their undesired remnants for the Nepalese people to deal with this year and in the years to come. One of the remnants so undesired is the further decrease in the purchasing power of the Nepalese currency. The state of the economy, combined with the consequences of the earthquake and the fuel crisis, has resulted in severe inflation. What is especially worrisome is that this inflation comes with great increase in the price of food in Nepal. The cost of food in Nepal has increased by 12.80 percent in February of 2016 over February 2015. Food price inflation in Nepal has averaged to 11.83 percent over the past nine years.

Nepal will not be able to escape the long term consequences of such inflation in food prices if this problem is not immediately tackled. It is a problem not just to be discussed in conversations with friends or relatives, but a problem for the nation to address.

          Hike in the prices of food is problematic for many reasons. First and foremost, it is an indication of decrease in the value of Nepalese money and therefore, an indication of an economy that is not improving by any means. Second, Nepalese people from various socio-economic backgrounds are forced to expand their spending capacity, while their earning capacity remains constant. This leads to people spending a significant portion of their income on food or them finding it difficult to purchase nutritious and healthy foods. Third, spending a significant portion of income of food consumption leads to lower savings, and thus lower investment in productive activities. Therefore, if food prices continue to go up at the current rate and if remedial measures are not taken, then it is Nepal’s human and working capital that will suffer the most.

Women and girls comprise more than half of the country’s population, and thus a significant part of the country’s human capital. Food price inflation is very likely to affect this segment of the nation’s human capital. It is customary for Nepalese families, more likely in the rural areas, to prioritize food consumption of male members of the family due to their bread winner status and the hierarchy enforced by the patriarchal structure. If food prices rise, then families with low purchasing power will lack the ability to purchase adequate or nutritious food. Thus, women will have a scanty share of food that is already purchased in small quantity, hampering their nutrition habits and also their physical and mental well-being. The well-being of this segment of the population is intertwined with the well-being of the nation. First, a strong and healthy woman can contribute to strong and healthy households, communities, and nation. Second, women constitute a major part of the agricultural work force of the nation. Deterioration in women’s health is likely to hamper the agricultural productivity of the nation. Agricultural productivity is already on the lower side than what is desired – one of the leading causes of the severe hike in food prices. If the problem of food inflation remains unaddressed, then the vicious cycle – it decelerating growth of agricultural productivity which, in turn, hiking food prices, will continue.

In order to resolve the problem of hike in food prices, the nation needs to prioritize improving the agricultural productivity. And enhancing the roles of women in agriculture is likely to yield significant results. Women should be encouraged to take an active part in farming, increasing agricultural productivity, and diversifying the use of their agricultural products by investing their resources for commercial and semi-commercial production. In other words, the nation should seek to make women truly invested in agricultural activities, rather than them considering it as part of their household chores. This is likely to increase household consumption of essential and nutrient foods, increase households’ purchasing power due to diversified sources of income, increase agricultural entrepreneurship, and the overall agricultural productivity of the nation. All these factors will contribute towards reducing the current inflation in food prices.

 Women’s involvement in agricultural production and entrepreneurship is also likely to counterbalance the money being supplied into the country through remittances. Studies show that increase in remittances could lead to decrease in productivity and investment and increase the money supply into the nation, causing inflation. Many rural farmer households in Nepal are recipients of remittance money, which confines women to households, reinforces gender roles, and decreases the effort required to enhance agricultural production. Women’s increased role in agriculture may cause remittance money to also be utilized towards investment, contributing to greater agricultural production within the country and food prices to stabilize.

 In order to regulate the prices of food, the government should monitor and regulate monetary policies accordingly. However, most importantly, the problem can only be solved if those that are affected the most are encouraged to tackle and overcome it.

 

 

 

 

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