Estimation of demands for rice imports in Nepal: an autoregressive distributed lag (ARDL) approach

Rice is the principal food crop of Nepal with key role in food security and livelihood improvement. However, domestic rice production has not kept pace with growing demand, resulting in increasing reliance on imported rice. This study addresses the gap of limited empirical evidence on rice import demand determinants by applying an Auto Regressive Distributed Lag (ARDL) model. The cointegration test revealed existence of a long-run relationships of variables; import price, producer price, domestic production, domestic consumption, per capita income and population with rice import demand. The long-run results revealed that per capita income had a significant positive elasticity, with a 1% increase in income raising imports by nearly 4%. Furthermore, long-run results showed that a 1% increase in producers’ price leads to a decrease in imports by 3%, and 1% increase in domestic production causes decrease in imports by nearly 3%. The dominance of structural economic factors was found to shape the long-run trade patterns. The highly significant error correction term (ECT) of value –1.46 indicates rapid adjustment toward equilibrium. The study highlights a need to strengthen domestic production and competitiveness to manage long-run import dependency, while adopting flexible measures to accommodate short-term volatility. Policymakers should focus on adequate buffer stocks, flexible trade policies, and targeted import management to mitigate temporary shocks. The findings aim to support evidence-based policy interventions to strengthen food security and improve economic resilience in Nepal.