Nepal, where approximately 70 per cent of the population is engaged in farming and livestock rearing, faces a paradox of agricultural underdevelopment despite substantial governmental investments. For instance, in the fiscal year 2023/24, the government allocated Rs 58.98 billion for agriculture and livestock development.
Yet, due to poor coordination among government agencies and a lack of awareness among farmers about available facilities, a significant portion of these funds remains unutilized.
The legislative gap
Unlike neighbouring countries like India and China, which have dedicated Agriculture Acts to streamline and support their agricultural sectors, Nepal relies on a patchwork of laws such as the Land Act (1967), Food Act (1996), Pesticide Act (1991), Nepal Agricultural Research Council Act (1992), Mines and Mineral Act (1993), and CITES Act (2017).
These laws inadequately address the specific needs of agriculture and livestock, leading to inefficiencies in policy implementation and sector development. The absence of a dedicated Agriculture Act exacerbates the sector’s issues, highlighting the need for comprehensive legislative reform.
A study by the World Food Programme (WFP) and Central Bureau of Statistics (CBS) in 2022 underscored the critical role of local production in Nepal’s food security. Despite this, agricultural and commodity goods worth Rs 250 billion were imported in the fiscal year 2022/23.
Meanwhile, thousands of hectares of arable land lie fallow as many youths migrate overseas for work. The potential of these youths to rejuvenate the agriculture sector with modern farming techniques, such as cold storage facilities, remains untapped.
The role of middlemen and market access
Farmers face significant challenges in accessing local markets. Middlemen often buy agricultural produce at low prices and sell them at much higher rates to consumers, dissuading youths from taking up farming.
Establishing entities like the Kalimati Fruits and Vegetables Market Development Board could help farmers sell their produce directly to consumers, eliminating middlemen and ensuring fair prices for both farmers and consumers.
Investing in the modernization of the farming sector, rather than importing food, vegetables, meat, and fruits, could significantly benefit the national economy and reduce poverty more effectively than industrial growth.
Farmers frequently protest in the capital, demanding fair prices and market access. The lack of proper legislation drives farmers to seek work abroad, with youth, who could drive agricultural growth, showing little interest in farming due to low motivation, returns on investment, and market access.
Despite these challenges, the Gross output by the Industrial Division under agriculture, forestry, and fishing has been steadily increasing, highlighting the sector’s potential if current problems are addressed.
Cold storage and infrastructure challenges
Cold storage facilities, crucial for preserving produce, often lie unused due to high operating costs and a lack of local farm products. For example, a Rs 9 million cold store in Diktel, Khotang, remains unused, and a Rs 4 million facility in Parbat remains unused due to decaying produce.
Additionally, Nepal’s lack of modern farming methods results in about 25% of the land remaining uncultivated. Poor penetration of formal seed markets and inadequate infrastructure further hampers agricultural productivity.
Extension services and academic curriculum
The Ministry of Agriculture and Development (MOAD) of Nepal has 378 extension offices, with each office serving over 11,000 farmers. This is in stark contrast to developed countries where one technician typically serves around 400 farmers. Moreover, academic curriculums need constant updates to address the current needs and challenges of agriculture, which are rapidly evolving.
Legislative and policy recommendations
- Implementing Minimum Support Prices (MSP)
To support major cereal crops and other essential commodities, implementing Minimum Support Prices (MSP) is crucial. The Food Management and Trading Company Limited should be responsible for implementing the support price, with infrastructure like storage houses, drying floors, mills, and selling outlets being strengthened.
- Strengthening Institutional Mechanisms
- Establish a separate commission for cost and price determination of agricultural commodities.
- Bring the Food Management and Trading Company Limited under the direct management of the Ministry of Agriculture and Livestock Development (MoALD).
- Continue the deficit payment mechanism for sugarcane for the first three years.
- Supporting Perishable Commodities
For perishable commodities like vegetables, buyback arrangements are important. Price policies should be implemented at sub-national levels, with provincial governments fixing support prices and local governments implementing the schemes.
- The Agriculture Bill
The ongoing discussion of the Agriculture Bill in parliament is a critical step toward comprehensive reform. Coordinated efforts between the Ministry of Agriculture, Ministry of Lands, Ministry of Irrigation, and the Ministry of Forestry are needed to create an integrated Agriculture Act. This legislation should prioritize institutional restructuring, empower farmers, and promote sustainable agricultural practices.
Significant discussions are necessary to address key issues such as arable land management, conservation for farmers’ groups, and youth involvement. The act should focus on localizing and empowering farmers, with research institutes and universities actively contributing to knowledge creation and policy implementation. A robust price policy is essential to ensure increased production and profitability, learning from India’s experiences and establishing strong institutional mechanisms for price support. Effective coordination among responsible ministries and local governments is crucial for successful implementation.
The delay in passing the Agriculture Bill impedes progress in addressing Nepal’s agricultural challenges and opportunities. Swift implementation of the bill is crucial to fostering a direct farmer-market connection, reducing youth migration, and securing Nepal’s agricultural future. Transforming the agricultural sector into a more productive, sustainable, and profitable industry requires legislative measures, modernization, investment in infrastructure, and the active participation of youth.
Nepal stands at a crossroads. By addressing these legislative gaps and embracing a comprehensive reform strategy, the nation can unlock the full potential of its agricultural sector, ensuring a prosperous future for its farmers and its economy.
