Flour Mills of Nepal in Crisis 

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Flour Mills of Nepal in Crisis 

July 1: Wheat imports from Biratnagar customs have dropped to zero after India imposed a ban on wheat exports. Before India imposed a ban on wheat exports, ready-made flour did not enter Nepal through the green channel of customs.

India banned exports of wheat in the last week of April saying wheat production had fallen short of its target. Nevertheless, India has been exporting wheat to Fiji. India has said it can provide certain amount of wheat to its neighboring countries as per the requirement. However, 36 flour mills of Nepal are in crisis as Nepal has not taken diplomatic initiative to bring wheat from India.

According to Ram Chandra Dhungana, spokesperson of the Biratnagar Customs Office, import of wheat to Nepal has come to a halt after India imposed a ban on wheat export. He said that the import of flour has started instead. Last May, 80 metric tonnes of wheat flour worth Rs 3.148 million was imported.

According to spokesperson Dhungana, after India's ban on wheat exports, the biscuit and noodle industries of Nepal have started ordering wheat flour. In June, more wheat flour was imported than in May.

The import of wheat flour started after the Government of Nepal did not show any interest to take up this issue with the Government of India. This has put the flour mills of Nepal at risk. Altogether 36 flour mills of the country produce 650,000 tonnes of flour annually. 

According to the Biratnagar Customs, about 100,000 quintals of wheat worth Rs 327.79 million was imported through this checkpoint in the first ten months of the current fiscal year.

Radheshyam Agrawal, general secretary of the Flour Producers' Association, said that the industry could not even bear the cost as the flour from India was cheaper than the locally produced flour. He said, "The flour mills here are on the verge of closure."

Import duty on wheat is 5 percent. When importing flour, 10 percent customs duty has to be paid. However, Indian flour is cheaper than local produce. The annual production capacity of the domestic flour industry is 1.6 million metric tons. However, due to shortage of wheat, they have been producing only 650,000 tons annually.

Agrawal said that there is no situation of production this time after India banned export of wheat but allowed export of flour.

At present, the country has about one million tonnes of domestically produced wheat. It is enough for the 36 industries for a maximum of one month. Agarwal said that all the flour industries would be shut down after they run out of stock.

Bikas Vegwani, vice-president of the Morang Trade Association and operator of Vishal Maida Mills, said that there was no alternative to shutting down the local flour mills as India kept the flour exports open by banning wheat exports.

Earlier, when India banned the export of wheat, it had still provided wheat to Nepal and its neighbors through the quota system. Russia-Ukraine tensions have reduced global wheat and grain supplies. Harivansh Rathi, the operator of Gaumati Foods, said if the government did not facilitate wheat import by holding talks with the Indian government, there would be a big shortage in Nepal. 


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