A very low growth rate in the agricultural GDP and a declining share of agricultural output depict slow transformation in the agriculture sector in Nepal. Saturation of arable and productive land, low growth in yield, low level of technology and input uses, poor investment and capital formation, increased labor outmigration, inadequate policy support and climate change have all attributed to this situation; turning Nepal into a net food importing country.
However, to pull out a large number of people from poverty and to usher in economic transformation, it is imperative that the country go through successive phases of agricultural transformation. In the years to come, the Constitution of Nepal, and longer term strategies like Agriculture Development Strategy 2015-2035 (ADS) and Sustainable Development Goals 2016-2030 (SDGs) will be the driving instruments behind this transformation. Achieving the goals and targets set by ADS and SDGs will however require forming necessary policies, reforming administrative and legal procedures, and arranging necessary investments by mobilizing public, private and development partner resources.
The role of agriculture has been rapidly changing worldwide due to globalization, integrated value chains, rapid technological and institutional innovations, and environmental constraints. In such contexts, Nepal should make a structural shift to recognize agriculture’s multiple functions for development. This will require shifting the political economy to overcome anti-commercial agriculture policy biases, strengthening governance for agriculture, and identifying and setting priorities to Nepal’s conditions.
The prime focus of the government at this stage is to develop competitiveness of smallholder farmers to enter into markets, generation of skilled labor in agriculture and to some extent establish effective value chains. The government’s current rationale for subsidies to farmers groups, community based organizations, cooperatives and promotional polices should also be extended towards supporting private sector agribusiness operators and other value chain operators.
Qualitative changes are also required in agriculture. Massive capital investments will be required for commercialization or modernization of agriculture along with increasing investments for effective research and development, technology transfer, human resource development, and transport infrastructure. High Value Crops and agricultural products with comparative as well as competitive advantages should be identified and promoted in clusters for attaining economies of scale.
The Federal Constitution has significant implications for agricultural governance, however it is still a big challenge at the political and bureaucratic levels to agree on the most suitable modality; which will allow implementation of the ADS and Vision 2030 – considered as roadmaps for agricultural transformation and sustainable development in Nepal. By quickly addressing the risks and overcoming challenges mentioned above, Nepal could make immense progress towards agricultural transformation.