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Our assessment of the status of the agrifood system in Nepal during February of 2023 is ‘green’, with data suggesting that prices have remained relatively stable or have followed expected seasonal trends that are unlikely to have caused unusual challenges for smallholder farmers and poor consumers.

Nepal's agrifood system is experiencing moderate economic stability with generally controlled price fluctuations, provided there are no new shocks to the system. While moderate increases in rice prices have dual implications, benefiting rice farmers but negatively impacting a greater number of urban and rural households, wheat prices have been on an upward trajectory since mid-2022. These higher wheat prices could have negative repercussions for consumers, although the stable prices for other staples like rice may mitigate this impact to some extent.

The urban poor are identified as the most vulnerable demographic in this context, particularly sensitive to the price changes in staple foods like rice and wheat. They allocate a significant portion of their budget to these essential food items, meaning that even slight price changes can have a substantial impact on their well-being and food security. Policymakers should take these nuanced dynamics into account to develop strategies that balance the interests of farmers and consumers, while also focusing on safeguarding the food security of the most vulnerable populations.

With northern hemisphere grain and oilseed crops largely harvested, and the Black Sea Grain Initiative extended for another 120 days, market attention is shifting to growing conditions in the southern hemisphere. The third consecutive year of La Niña has prolonged drought conditions in Argentina, resulting in sharply reduced wheat production prospects relative to last year. By contrast, La Niña has resulted in abnormally wet conditions in Australia, which expects aboveaverage wheat yields; however, concerns remain over the quality of the crop, which could impact prices for milling wheat. Planting progress for South American maize and soybeans are on pace, but it is still too early to tell whether yields will return to more normal levels after last year's drought-reduced production.

Concerns are mounting regarding the extension of the United Nations Black Sea Grain Initiative beyond the 18 November deadline, especially after Russia's recent - albeit temporary - withdrawal from the agreement. Through this initiative, Ukraine has been able to ship over 9 million tonnes of grains and oilseeds via its Black Sea ports. While the volume of exports remains below year-ago levels, importers benefitted from larger supplies, especially those who depend on Ukraine's agricultural products, while consumers worldwide have gained through lower market prices. Unfortunately, the pace of exports slowed in recent weeks as inspections could not keep up with the number of shipments; and now the possible termination of the deal threatens to re-ignite market prices and further exacerbate global food security concerns.