For the third consecutive year, drought conditions have been severely affecting agricultural crop production in Nepal, in some cases turning traditionally suplus production areas into deficit districts.In addition to the heavily drought affected Mid- and Far-Western Regions, flood exacerbated by hailstones and crop disease in various VDCs caused extensive crop loss. Drought particularly affected the traditionally food surplus areas of the Eastern Terai, particularly Siraha, Saptari and Dhanusha which reported a decline in paddy production of 30%. A total of 109,855 hectares of paddy land (7.09%) remained fallow in 2006/07 as farmers were unable to plant due to drought. In addition, yields were lower by almost 6%. Paddy crop production consequently declined by 12.5 % compared to last year.