Agricultural Performance and Food Security in Nepal:

Constraints and Challenges

Bishnu Dev Pant Aruna Palikhe

Institute for Integrated Development Studies (IIDS) Mandikatar, Kathmandu, Nepal

14 November, 2011

Mountain: 3000-8,848 masl, Cover 35 %land area, 2% of this land cultivable.

Hill: 800-2,400 masl, Covers 43 % land area, One-tenth of it is cultivable.

Terai: 60-300 masl, 23 % land area, Nearly half of it is cultivable.

• Area: 14.7 million hectares (147,181 sq.km) 93rd in the world

• Water: 2.8% • Population: 26.6 million 2011

Population growth rate; 1.4 (2011)

• Density: 199.3/km2, 62nd • Population below poverty line: 25.16% (2011) •

Labor force by occupation (2010)

0%

10%

20%

30%

40%

50%

60%

70%

Agriculutre

Industry

Services

64%

7%

18%

• A redistribution effect among the sectors as economy grows • Services today contributing over 50 percent to GDP • Industry stagnating after 1990—lack of electricity main cause

Production Trend of Major Cereal Crops (mt.)

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500000

1000000

1500000

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3500000

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5000000 19

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PADDY MAIZE MILLET WHEAT BARLEY

Edible Cereal Grain Production and Requirement of Nepal, 1989/90-2009/2010

-1000000

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0#

Total Production Totla Requirement Totla Balance

Prod

uctio

n in

mt.

Year

Total of 37 districts are still food deficit

First time in Nepal's history in 2010; • Terai districts namely: Sunsari, Saptari,

Mahottari, Sarlahi, Rautahat, Siraha, Kailali and Dhanusha were unable to produce adequate food grains for themselves due to bad weather

Edible Food Availability and Requirement according to Ecological and Development regions in 2009/10

Dev. Regions Total edible prod. (mt.) Requirement (mt) Balance (+,-)E.Region 1,258,495 1,187,845 70,650 C.Region 1,385,888 1,862,166 -476275W.Region 1,251,382 1,047,589 203,793 MW.Region 678,418 692,947 -14529FW.Region 393,286 506,897 -113611Ecological Regions Mountain 279,765 376,982 -97217Hill 2,040,441 2,451,345 -410904Terai 2,647,263 2,469,117 178,149 Total 4,967,469 5,297,444 -329972Source, Ministry of Agriculture, 2010

Food Distribution System Nepal Food Corporation (NFC) is the main player

which supplies food grains in the food deficit districts. Food Grain Distribution by Nepal Food Corporation Unit: Mt.

Fiscal Year Allocted Celling Quantity received Quantity available Quantity sold 2004/05 3,152 2,352 3,111 273 2005/06 3,192 2,371 2,756 2,332 2006/07 3,932 3,617 3,912 3,591 2007/08 3,480 5,372 5,693 4,523 2008/09 3,671 5,469 6,711 5,943 2009/10 9,056 8,573 9,447 7,488 2010/11 8,708 8,494 10,472 7,944 Source: Nepal Food Corporation, 2011

Total Edible Food Availability , Requirement and Quantity Supplied by NFC in 2009/10 S.No. District Total edible production Requirement Balance (+,-) NFC Food supplying Districts Quantity available

1 Taplejung 32515 29677 2838 Taplejung 2472 Sankhuwashava 34320 35076 -756 Shankhuwasabha 1623 Solukhumbu 31507 23619 7888 Solukhumbu 2204 Panchthar 33710 47310 -13600 Panchthar 05 Bhojpur 59733 45515 14218 Bhojpur 1856 Khotand 65258 52772 12486 Khotang Dhiktel 4197 Okhaldhunga 35341 36352 -1011 Okhaldhunga 1518 Udyapur 60415 70299 -9884 09 Sundari 119323 139507 -20184 0

10 Saptari 112228 122847 -10619 011 Siraha 83242 123933 -40691 012 Dolakah 16721 45758 -29037 013 Rasuwa 5660 10138 -4478 014 Sindhuli 45819 67367 -21548 Sindhuli 015 Kavre 72704 91216 -18512 016 Bhaktapur 20279 55102 -34823 017 Lalitpur 30201 82786 -52585 018 Kathmanu 40645 284444 -243799 019 Dhading 45110 80783 -35673 Dhading 020 Makanwanpur 59943 94472 -34529 021 Dhanusa 140298 144931 -4633 022 Mahottari 75244 120259 -45015 023 Sarlahi 106898 139384 -32486 024 Rautahat 91049 120402 -29353 025 Chitwan 90694 104676 -13982 026 Manang 862 2490 -1628 Manang 27827 Mustang 1438 3220 -1782 Mustang 15028 Gorkha 71684 67185 4499 Gorkha 20729 Kaski 88879 92919 -4040 030 Palpa 56778 62530 -5752 031 Gulmi 60870 68578 -7708 032 Dolpa 5607 6592 -985 Dolpa 84233 Mugu 4890 9906 -5016 Mugu 59234 Humla 1836 9056 -7220 Humla 61335 Jumla 14509 19923 -5414 Jumla 94336 Kalikot 15091 23628 -8537 Kalikot 59137 Rukum 45649 44762 887 Rukkum 60438 Rolpa 31109 49079 -17970 Rolpa 33839 Pyuthan 29114 50639 -21525 Pyuthan Machhi 040 Jajarkot 31600 31697 -97 Jajarkot 40341 Dailekh 51527 53298 -1771 Dailekh 49342 Dang 101662 102314 -652 043 Bajura 7106 24383 -17277 Bajura 74344 Bajhang 12085 37647 -25562 Bajhang 48745 Darchula 16651 27489 -10838 Darchula 18146 Achham 19358 54302 -34944 Achham 43147 Doti 35370 49663 -14293 048 Baitadi 21139 55054 -33915 Baitadi 16649 Dadeldhura 17889 29968 -12079 0

Source: Ministry of Agriculutre and Nepal Food Corporation, 2010

Government's Agricultural Budget Allocation since 1999/2000 to 2010/11

Year Estimated expenditure Estimated expenditure in Agriculture Percent 1999/2000 77,238,226 3,015,713 3.92000/2001 91,621,335 3,501,040 3.82001/2002 99,792,219 4,018,455 4.022002/2003 96,124,796 2,285,176 2.372003/2004 102,400,000 2,355,916 2.32004/2005 111,689,900 2,682,819 2.42005/2006 126,885,100 3,807,995 32006/2007 143,912,300 3,955,231 2.752007/2008 168,995,600 5,824,568 3.452008/2009 236,015,897 5,908,113 2.52009/2010 285,930,000 8,064,437 2.822010/2011 337,900,000 10,225,403 3.03Source: MoF/GON, Compilation of budget speeches different fiscal years

Food and Agricultural Policies

Agriculture perspective plan (1994/95-2014/15)

Main Objectives : Poverty elevation & improve food security by accelerating agricultural growth Through

factor productivity, transforming the subsistence based agriculture into commercial Agriculture diversification promote private sectors in the development of agriculture, expanding opportunities for overall economic transformation identify guidelines for preparing periodic plans and future program. increase per capita growth of agricultural GDP by six fold from the level of 0.5 percent to 3 percent per year

Sixth five year plan (1980-85)

Seventh five year plan (1986–90)

Eighth five year plan (1992–97)

Ninth five year plan (1997–2002)

Tenth five year plan 2002-2007

National Agriculture Policy (NAP, 2004)

Three Year Interim Plan (2007-2010)

Three year Interim plan ( 2008-2013)

included as basic needs increase production at faster rate, and create productive employment opportunities allocated nearly 1/3rd of its total expenditure to agriculture and irrigation, budget allocated could not be fully utilized

Objectives similar to sixth plan , 65% of total expenditure allocated however country became a net importer in this period

adopted an open policy for foreign investment.

emphasized investments, increase production and productivity of high value crops &protection and promotion of agricultural biodiversity and environment

poverty reduction through agriculture development. protection and promotion of high value crops and agricultural biodiversity and environment.

designed to ensure food security and poverty alleviation by transforming the subsistence based agriculture into a commercialized and competitive system

The interim constitution 2006/7 recognized food sovereignty as the fundamental human right which was reflected in this interim plan as food security for all citizens

food and nutrition security and millennium development goals by competitive commercialization and modernization. first time a separate section on food security, Recently a steering committee established to develop food security

GDP growth rate of Nepal in different Plan Period

Variable Sixth

(1980-85)Seventh

(1985-90) Eighth

(1992-97)Ninth

(1997-2002) Tenth

(2002-07)Interim plan

(2007-10)Agriculture 4.7 4.1 3 3.3 2.7 3.36Non-Agriculture 4 5.5 6.3 3.9 3.8 5.13

Plan Period

Constraints, Challenges and Recommendations

Constraints and Challenges

• Low productivity • Inadequate infrastructures • Commercialization of agriculture • Effective Food Distribution System • Climate change Impacts and Adaptations • Improve research capacity and extension

services

Low productivity • The agricultural inputs are the major role player in productivity.

• Dependency on monsoon , low use of fertilizer, lack of production technology and agriculture extension services

• Only 28 percent of total cultivated land is irrigated in the country. • Per capita use of chemical fertilizer is one of the lowest in South

Asia. • GoN withdrawn subsidies on fertilizer sale. • This policy needs to be reviewed, since the Indian farmers are

still enjoying subsidies and it will be impossible for Nepali farmers to compete with them because of the long open border.

Inadequate infrastructures • Rural agricultural infrastructure, especially road connectivity is

a key factor in raising agricultural production • 45 out of 75 districts of the country fall in hilly and

mountainous regions. • There are still 9 hilly and mountain districts which are yet to

be connected by roads. • lack of physical access hampered the delivery of agricultural

inputs on a regular basis , creates difficulties on the supply of food, thereby deepening poverty level.

• Hence, there is an urgent need to invest massively for developing the network of rural infrastructure so that most of the village development committees within a district will have access to agricultural roads.

Commercialization of agriculture • Currently, the economy is largely remittance driven. • There is a challenge to get the remittance money invested in the productive sector

which could escalate the much needed economic growth of Nepal. • In this context, agriculture commercialization is an important option in

development agendas, both economic and social. • Even though share of (AGDP) has been declining over the years, it still contributes

to one-third of the GDP. • As this sector not being able to grow as planned has hampered the picture of

broader economic growth of Nepal. • Overall economic growth rate declined from 4.8 percent in the 1990s to 3.2

percent during 2001-2006. • Agriculture has virtually stagnated -- agriculture sector growth rate was 2.7

percent per annum in the 90s and 2.8 percent during 2001 to 2006. Hence, this stagnation in the agriculture sector has a huge part in impeding the economic growth of Nepal and fight against poverty.

• Commercialization of Agriculture has been deemed necessary for a long time in the growth planning of Nepal.

• It requires action along several factors that include policy support, capacity building, investment in research, human resources and agricultural infrastructure, market information for producers and associated stakeholders.

Effective Food Distribution System • The Nepal Food Corporation (NFC) was established in 1974 with a number of

objectives mainly to accumulate food stocks for distribution to deficit districts, maintain price stability of food products, and implement the government’s food policies.

• It has been purchasing food grains from the market and selling them in various districts since its establishment.

• NFC began accepting food grain from donors with 2003/04. • The demand for food grains in the deficit hilly and mountain districts of the

country is significantly higher than what is distributed by NFC • Hence, NFC assistance is insufficient to protect poor people in deficit areas

from rising food grain prices. • NFC does not have adequate capacity to be effective in delivering effective

food distribution in the country. • There is an urgent need to review the present activities of NFC and

significantly strengthen its capacity.

Climate change Impacts and Adaptations

• In recent years, significant changes have been observed in the climatic conditions in Nepal.

• The monsoon rainfall has been increasingly erratic. • Increased landslides in the hilly and mountain districts. • The Terai districts increasingly experienced frequent and severe

flooding causing heavy crop losses. • Such climatic changes are likely to have severe impact on

agricultural production and food security in the country. • Finding cost effective, sustainable strategies for adapting to

climate change must remain a priority for the government policy makers and researchers in the country.

Improve research capacity and extension services

• The Nepal Agricultural Research Council (NARC) is the principal agency undertaking research in Nepal.

• NARC conducts research program either itself or in collaboration with other regional and international institutions.

• However NARC’s ability to raise up to challenge of developing appropriate high quality seeds, improved livestock breeds, and technologies appropriate to agro-ecological conditions in Nepal have been questioned.

• A DFID funded Review of Research Impact, Responsiveness and Future Priorities carried out in 2005 found that rice varieties developed by NARC did not generate much impact in terms of yield gains while impressive progress has been achieved in the case of vegetables (mainly off-season vegetables).

• Research impacts have not been seen to such an extent, however, with respect to improved breeds of livestock (IFPRI/IIDS/USAID 2010).

Conclusion

• Nepal lagged far behind in both agricultural production and productivity comparing to its neighboring country

• The country’s agricultural output has declined over the past several years.

• Vast majority of Nepalese youths migrating to foreign countries in search of better jobs and livelihoods is creating laborers scarcity in agriculture

• The government has not created job opportunities within the nation but rather relied on income generated by outsourced labor.

• Agriculture sector must be revamped for achieving a sustainable economic development and poverty alleviation in the nation.

• Thus, we need to attract youths in agriculture sector. To do so, there is a need to create greater awareness about the importance of agriculture.

• The immense potentialities associated with agriculture need to be well imparted to the youths of Nepal.

• Furthermore, it must be well incorporated in education sector of Nepal.

• Most importantly, national-level policies aimed toward boosting agricultural production and productivity have not been effectively implemented.

• Several food aid programs, in conjunction with the government, have been operating in Nepal for years.

• Despite such efforts, the government of Nepal has been unable to solve the problem of food deficiency. The government has time and again failed to successfully implement various plans and policies, primarily due to lack of political commitment and social accountability.

Thank you for your kind attention