By Bishnu Raj Upreti and Sushant Acharya
Until few decades back, agriculture sector was considered as the backbone of country’s economy. In 1960s and 1970s, Nepal was one of the main rice exporting countries in South Asia. Till early nineties, more than 90 percent of population was engaged in agriculture and contribution to GDP was 42 percent. After the restoration of democracy in 1990, Nepal adopted liberal economic policies that fostered employment opportunities in non-farm service sector. Simultaneously, new job opportunities were explored in foreign countries and migration increased. In the meantime, the country entered into civil war (1996-2006). As a cumulative effect, there was high out-migration from rural to urban area and high flow of youths for foreign job. As a consequence, agricultural land was left fallow or agricultural production was more dependent on women. However, in the recent years, the government has brought several policies to attract people in agriculture and also recently promulgated law that prohibits to keep agricultural land fallow.
A serious question for Nepalese agriculture is: why this sector is lagging behind despite planned efforts? Nepal government has put agriculture in high priority since the first five-year plan in mid-1950s to date. Further, from 1995 to 2015, government implemented Agriculture Perspective Plan (APP) with felt need to commercialize and modernize the sector. But at the end of implementation of period of APP, engagement of people and contribution to GDP both said to be declined. Instead, according to Ministry of Finance, import of agriculture products increased unbelievably and reached to 196 billion NPR (roughly 2 billion USD) in 2017. Still large area of cultivable land (around 82 per cent, according to WB, 2014) is farmed with traditional crops with low productivity and therefore not able to supply the national requirement of agricultural products.
Despite the poor performance of agriculture sector in the past, the subsequent governments in the recent years have been providing more attention in promoting high value agriculture Nepal. The government has identified Ginger, Coffee, Cardamom, Tea, Fresh Vegetables, Fruits, Cut Flowers, Honey and Pulses as high value priority crops for export promotion and formulating different polices and strategies. In the past few decades high value cash crops were doing relatively better. For example the Nepal Country Evaluation Report Nepal of Asian Development Bank (ADB) (2009) revealed that even when share of cereal crops has declined from 41 % to 36%, the high-value agriculture crops grew from 17% to 21% in between 1997 – 2007.
The Constitution promulgated in 2015 has ensured right to food as fundamental human right that provided great opportunity and mandatory responsibility to advance agriculture for food security. In the new federal political structure, the local, provincial and federal levels are responsible for implementing the constitutional provisions. Consequently, all level of governments have put agricultural development as primary agenda and brought policy and programme as well as allocated required resources. However, the result of allocation of resources is still to be seen at ground level.
The aim of all 3 levels of government is to modernize, industrialize, commercialize, sustainable and self-reliant agriculture sector throughout Nepal. Within this policy, high value commercial agriculture got priority. The Agriculture Development Strategy (ADS, 2015-2035) prepared basis for the advancement of commercial agriculture. Within this framework, one of the largest initiatives is called the “Prime Minister Agriculture Modernization Programme” (PAMP), which intends to promote export and achieve trade balance, generate employment opportunities, ensure food and nutrients security, and advance agro-based industries. Hence, among other crops it has identified high value cash crops to be promoted in the different scales.
When we visited cash crop production sites in Eastern and Western Nepal, we observed that the local and provincial governments have a kind of rush to demonstrate something visible in promoting commercial agriculture. The Provincial Government of Karnali developed its slogan as: “Environment Friendly Green Economy: Foundation for Provincial Development” and declared to make province organic. Other provinces have also identified commercialization of agriculture as one of their development priorities. The priority activities of local and provincial governments are related to increase scale of production, value addition, construction of agricultural infrastructure i.e. rural agricultural roads, cold stores, collection centres, branding and packaging and assurance of quality for the export.
We found agriculture is more commercialized in east Nepal as compared to west part of the country. In the Eastern part of Nepal, high-value crops such as cardamom, ginger, broom, tea, milk, fresh vegetables, chilies, kiwi, and tea are produced by farmers. Hence, local governments have selected few crops like cardamom and ginger as priority crops and invested on them as important means of economic development of their villages. But in Western Nepal, shifting from traditional crops like: maize, wheat, millet, potato, dried beans to high value commercial agriculture is slow due to lack of access to technology, knowledge and market. Most common high-value export oriented cash crops in west are apple, walnut, olive oil, ginger, medicinal and aromatic plants. We frequently observed that cardamom and kiwi are widely expanding to Western Nepal and mainly from the Eastern Nepal because of their demand and price. Interestingly, in many Western districts farmers are pro-actively establishing cardamom pilot plots and they are getting support from government and non-government organizations.
Climatic difference between plains and hills provide comparative advantage for farmers. For example: farmers from hills supply fresh vegetables to the plains when it is off season in plains and vice-versa. Similarly, due to agro-ecological difference, both parts provide market to each other. Beside, products from hills get comparatively very high price in major cities due to their unique taste, nutrient value and organic nature. For example, price per kg of a local variety of rice named marsi gets almost five times higher price than the average quality rice produced in plains. Farmers of hills are gradually capturing such opportunities.
The private sector is aggressively coming to invest in the high value commercial agriculture and invested a lot in the recent past. The returnees migrant workers, agricultural professionals, political leaders and entrepreneurs all have started engaging in high value commercial agriculture. The Central bank also directed the commercial and development banks to invest more in agriculture. Similarly, international development partners, who were not interested to invest in agriculture in the past because of their priority in other sector are also giving priority to agriculture to generate employment opportunity, enhance export and improve livelihoods of farmers. We observed that even large scale processing plants started to install in the Western Nepal. For example, a ginger processing plant was established in Surkhet, Western region. This plant has increased confidence of farmers and they were able to sale of ginger and better price. Ginger processed in Surkhet is now exported to Germany and the Netherlands.
Though good initiatives have started in promoting high value export led crops in Nepal, there are several practical and policy challenges ahead to promote high value cash crops.
- Price instability: the price of cash crops frequently fluctuates and the government is not able to achieve price stability. So, observation of sharp fall and rise in price of cash crops in the past raise question of future price stability.
- India is major cash corps exporting country from Nepal. However, Nepali farmers constantly face hurdles in Indian customs while exporting their products. In peak season the challenge is higher with the harvesting and export of perishable commodities like: ginger or vegetable. In 2018 too, farmers and traders lost millions of Nepali rupees by decay of hundreds of tons of ginger.
- Knowledge, skills and technologies: Producers are still largely using traditional knowledge and use of modern technology is limited. Majority of producers have weak capacity to use advance knowledge, skills and technologies in processing: cleaning, drying, grading and packaging. Consequently their products get lower price.
- Nepal government is developing policies and strategies. However, there are still poor inter-ministerial coordination, bureaucratic procedures, manipulations of middle-men and brokers, and corruption.
- High value cash corps are also affected by natural processes like climate conditions, seasonality, intensity of rainfall and hailstorm etc.). This influences prices.
- The marketing system is still at the initial stage of development. The traditional market place, locally known as Haat Bazzar are still dominant platform for farmers and buyers. Developing theses local market systems into modern market requires time and efforts.
- Connectivity is still a bottleneck for agriculture development in remote Nepal. Even when the road networks connect different parts of the country horizontally as well as vertically, many areas are inaccessible or seasonally inaccessible. Nowadays, mobile phones and agriculture related applications have increased access to information but institutionalization of technological advancement is far away.
- Banking sector (saving and credit co-operatives and banks) are not yet fully committed to provide easy access to finance. However, the banking sector is jow increasing its investment in agriculture sector due to provisions made by the central bank.
- In the short term, the availability of skilled labour is a major challenge for commercialization of high value agriculture because of lack of competent skilled labour force in the market.
Considering the recent positive development at political, constitutional and legal and farmers’ levels, we can conclude that the prospects of commercialization of high value agriculture is high in both Eastern and Western parts of the country. The current policy and institutional set up, pro-active initiation from newly elected governments, process of development of agricultural infrastructures efforts are paving ways for the commercialization and modernization of high value agriculture. However, the road ahead is not as straight as there are many challenges and uncertainties in this sector.