Betel nut import opens, Oli government's 'connection' exposed!

Kathmandu, February 27 — Betel nut, which has been imported under a quota system for a long time, is now fully open for import. The government removed the quota on the import of betel nut, pepper, and beans by publishing a notice in the Nepal Gazette on February 13.

The issue of whether to remove or maintain the quota on the import of these items had been a subject of prolonged debate and controversy. After a decision by the Council of Ministers and publication in the Gazette, the import was opened.

In 2020, under Prime Minister KP Sharma Oli's leadership, the government had partially opened up the import of the previously restricted items by setting quotas. Due to foreign exchange reserves issues, the central bank has intermittently imposed and lifted import restrictions on these items.

With the formation of Oli’s government, there was a discussion in the market about the beginning of lobbying for the import of these goods.

Economics of beetle nut in Nepal  

In Nepal, betel nut is commercially cultivated in around 4,100 hectares in districts such as Jhapa, Sunsari, Morang, and Ilam. According to Devi Khatiwada, the president of the Betel Nut Producers' Association, approximately 15,000 tons of betel nut are produced annually.

Of this, 11,000 metric tons are produced in Jhapa district alone. This betel nut was being exported to India, but following the government’s decision to require DNA testing for betel nut to be exported, betle nut produced in Nepal has been lying unsold at the farmers' homes, as stated by Khatiwada.

"Since Nepali betel nut is expensive, Nepalese industries do not use it. 99% of betel nut is exported to India," Khatiwada said. "However, since the DNA testing requirement for export was implemented, farmers have not been able to sell their betel nut. For the last two and a half years, the betel nut has been sitting in farmers' homes."

Why DNA testing could not be done?

Complaints arose about imported betel nut being labeled as Nepali and then exported to India. As a result, the Sustainable Development and Good Governance Committee of the National Assembly (now the Development, Economic Affairs, and Good Governance Committee) decided on July 29, 2022, that betel nut could only be exported after DNA testing to verify its origin.

The committee sent a letter to the Ministry of Finance and the Ministry of Industry, Commerce, and Supplies on August 1, 2022, instructing them to ensure that only Nepali betel nut, proven through DNA testing, could be exported. After this, the export of betel nut was made subject to DNA testing. However, the necessary equipment for DNA testing was not available in Nepal, making it impossible to export Nepali betel nut, according to Khatiwada.

Govinda Bahadur Karki, the secretary of the Ministry of Industry, Commerce, and Supplies, mentioned that although the committee instructed DNA testing, the process could not move forward as it was a complex issue and not within their jurisdiction.

Betel nut-Oli connection! 

For a long time, there has been a problem where betel nut was being smuggled into Nepal from foreign countries, while betel nut produced in Nepal was not being sold. The government had imposed a ban on the import of not just betel nut but also other goods like beans, pepper, and cloves, citing the rise in smuggling. On April 6, 2020, the government had used the Export and Import (Control) Act, 2013, to restrict the import of these goods.

During the COVID-19 pandemic, the government, led by then-Finance Minister Yubaraj Khatiwada, had imposed restrictions on imports to bolster foreign exchange reserves. However, on March 22, 2021, the government, under Prime Minister KP Sharma Oli's leadership, published a notice lifting the full ban and setting quotas for the import of these items. Each industry was allowed to import a set quantity of items like beans (80,000 tons), betel nut (25,000 tons), cloves (5,000 tons), and unwashed pepper (15,000 tons) annually.

Following this, the government introduced a procedure in January 24, 2022 under the Good Governance Act, 2006 for the regulation of betel nut, bean, and pepper imports for industrial purposes. Industries wishing to import betel nut had to apply to the Department of Industry with detailed information on production capacity and consumption. The system allowed imports of up to 200 metric tons of betel nut at a time, and the imported supari could only be used for the specified industrial purpose.