KATHMANDU, 27 February 2008 (IRIN) - About 3.8 million people in Nepal are face food insecurity in the coming months due to a combination of sharp increases in food prices and strikes in the south, according to the UN World Food Programme (WFP) in Nepal.

The international increase in the price of rice, the staple food of Nepal's 27 million people, is directly affecting local people, according to local rice supplying companies.

Countries like Nepal, which are already experiencing food shortages, could be hit even worse, according to the UN's Food and Agriculture Organisation (FAO), and people in the northwest, where the rice yield is very low - and most local production does not last for more than three to six months - could be hit hardest of all.

"The extremely poor have no cash reserves and therefore will find it increasingly difficult to cope with increased food prices," said Richard Ragan, country director of WFP Nepal.

Rice, wheat and other food prices were likely to rise further, according to WFP's Market Watch report, published earlier in February.

Indian export ban

Nepal in the past has depended heavily on India for imports of rice, but India has banned rice exports to bolster its own food supply situation - a fact that is exerting further upward pressure on prices.

Local food supply companies told IRIN food prices had gone up by over 60 percent over the past few weeks due, to a large extent, to pro-Madhesi strikes in the southern region of Terai.

"If this situation [the strike] continues for another week, we can expect an acute shortage of rice in most parts of the country, even in the capital," said Ashok Sinha, manager of Hulas Food Division of Hulas Industries, a leading industrial group in Nepal.

Sinha said most markets were almost out of rice and other food supplies due to the shutdown of key cities and towns in Terai, which supplies most of the country's food grains.

Concern for Bhutanese refugees

A particular UN concern is for the Bhutanese refugees. WFP delivers at least 400 metric tonnes of rice every week to the seven camps in eastern Nepal which accommodate over 107,000 refugees, but the strike in the Terai has been delaying supplies to the camps, according to WFP.

"Basically, we are struggling day by day to meet the food needs of the refugees. As of now, we are able to provide enough food to the population but if we are faced with more delays, we will be unable to do our job," said Ragan of WFP.

"The Bhutanese refugees rely 100 percent on the WFP food basket, having no other food sources or coping mechanisms. After years of continuous support, any pipeline break will have negative implications on camp security, especially as the third country resettlement process has started," WFP said in its Operational Requirements, Shortfalls and Priorities for 2008 report issued earlier this month.

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