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National Medium-Term Priority Framework (NMTPF) for
Agriculture Development (2010/11 - 2012/13)
Government of Nepal
Ministry of Agriculture and Cooperatives
Kathmandu, Nepal
April 2010
Abbreviations and Acronyms
AGDP Agricultural Gross Domestic Product
NDSP National Development Strategy Paper
NGOs Non-Governmental Organizations
NMTPF National Medium Term Priority Framework
AEC Agro Enterprise Centre
APP Agriculture Perspective Plan
CBS Central Bureau of Statistics
CCA Common Country Assessment
DFID Department for International Development
DFTQC Department of Food Technology and Quality Control
DPs Development Partners
FAO Food and Agriculture Organization of the United Nations
FNCCI Federation of Nepalese Chamber of Commerce and Industries
GDP Gross Domestic Product
GoN Government of Nepal
HDI Human Development Index
HIPCs Highly Indebted Poor Countries
IMF International Monetary Fund
INGOs International Non-Governmental Organizations
IOM International Organization for Migration
IPM Integrated Pest Management
LSGA Local Self Governance Act
MDGs Millennium Development Goals
MoAC Ministry of Agriculture and Cooperatives
MoF Ministry of Finance
Mt Metric Tons
NARC Nepal Agriculture Research Council
NLSS Nepal Living Standards Survey
NMTPF National Medium Term PriorityAgriculture Sector Development
Prioirty Framework
NPC National Planning Commission
NPFS National Programme for Food Security
PRS Poverty Reduction Strategy
SDC Swiss Agency for Development Cooperation
SPPA Special Area Development Programme for Poverty Alleviation
TYIP Three-Year Interim Plan
UNCT United Nations Country Team
UNDAF United Nations Development Assistance Framework
UNIFEM United Nations Fund for Women
WFP World Food Programme
WFS World Food Summit
WTO World Trade Organization
ii
Table of Content
Page
I. INTRODUCTION 1
1.1 Objectives 2
1.2 Guiding Principles 2
1.3 Methodology Followed 3
1.4 Steps of Formulation 4
1.5 Scope for the Use of NMTPF 6
II. RELATION OF NMTPF WITH OTHER STRATEGIC FRAMEWORKS 7
2.1 MDGs and NMTPF 7
2.2 PRS and NMTPF 7
2.3 UNDAF and NMTPF 7
2.4 NPFS and NMTPF 7
III. ANALYSIS OF AGRICULTURE SITUATION 9
3.1 Importance of Agriculture in the Nepalese Economy 9
3.2 Institutions Serving Agriculture Sector 10
3.2.1 Government 10
3.2.2 International/Non-Government Organizations 11
3.2.3 Private Sector Organizations 11
3.3 Past Interventions and Achievements 12
3.4 MDGs Progress, 2010 16
3.5 Major Challenges Concerning Agriculture Development and Food 17
Security
IV. OVERRIDING NATIONAL DEVELOPMENT POLICIES AND PLANS 22
4.1 Periodic Development Plans 22
4.2 Agricultural Perspective Plan (1995/96 - 2014/15) 24
4.3 Three Year Interim Plan (2007/08 – 2009/10) 25
4.4 Master Plan for Forestry Sector, 1989 26
4.5 National Water Plan - Nepal, 2005 28
4.6 Localization of the MDG Targets 30
4.7 Government Policies, Acts, Rules, Regulations and International 30
Commitments Related to Agriculture Development and Food
Security
iii
V. SUPPORT STRATEGIES FOLLOWED BY THE DEVELOPMENT 32
PARTNERS
5.1 Strategies Followed by Multi-lateral and Bi-lateral Development 32
Partners
5.2 Collaborations within the UN System 34
5.2.1 Common Country Assessment, 2006 34
5.2.2 UNDAF (2008 – 2010) 36
5.3 Overall Implementation Experience of the Past Programmes and 37
Projects
5.4 Potential Development Partners in Supporting Agriculture and 37
Related Activities
5.5 Ongoing Projects Implemented by Different Ministries in relation to 39
Agriculture Sector
VI. PROPOSED NATIONAL MEDIUM-TERM PRIORITY FRAMEWORK 40
(NMTPF) FOR AGRICULTURE DEVELOPMENT
6.1 Identification of Common Priority Areas 40
6.2 Conceptual Outline of NMTPF for Agriculture Development 49
6.3 NMTPF Matrix for Agriculture Development 50
VII. CONCLUSION 53
Annexes
Annex – I: Line Ministries, Departments, Development Boards, Corporations and
Companies Associated with Different Agricultural Activities
Annex – II: Agricultural Extension Support System
Annex – III: Adaptation to Climate Change Effects for Agriculture and Food Security
Annex – IV Indicative Priorities of MoAC for Forthcoming Three-Year Interim Plan
(2010/11 – 2012/13)
Annex – V Legal Policies, Acts, Rules, Agreements and International
Commitments Made by the Government
Annex – VI Support Areas covered by Development Partners working in Nepal
Annex – VII Agriculture Sector Related Results Matrix of UNDAF
Annex – VIII List of Projects / Programmes Supported by the Development Partners
Annex – IX Agriculture Sector Related Ongoing Projects Implemented by Different
Ministries
Annex – X Matrix on “National Medium Term Priority Framework (NMTPF) for
Agriculture Development”
iv
I. INTRODUCTION
Due to its political transition, Nepal needs support for re-building national capacities
and rehabilitation for long-term development. In this context, it needs to address the
issues facing agriculture sector and rural development ensuring food security.
Commensurate with these thrust, the Government and other Development Partners
(DPs) need planning and implementation of joint programmes with commonly agreed
upon priorities. This National Medium-Term Framework (NMTPF) for Agriculture
Development has been prepared to facilitate this process,
This NMTPF is developed by the Ministry of Agriculture and Cooperatives (MoAC)
with technical assistance of Food and Agriculture Organization of the United Nations
(FAO) in view of the Government’s medium-term priorities related to agriculture and
food security, where the DPs could offer capital and technical support in line with
their respective mandates. The NMTPF covers analysis of issues and challenges
confronting agriculture. It attempts to capture priorities revealed in the current Interim
Plan (2007/08 – 2009/10) and the contexts highlighted by the approach papers being
prepared for the forthcoming Interim Plan (2010/11 – 2012/13).
With the formulation of NMTPF, the MoAC is expected to make use of necessary
assistance in the priority areas. As service providers, it will also help the DPs to
extend country level support with a visionary perspective for the medium-term.
The NMTPF facilitates the DPs in outlining where they can assist in meeting the
Government’s priorities in relation to Millennium Development Goals (MDGs)
commitments especially with regard to Goal No. 1 “Eradicate Extreme Poverty and
Hunger” and Goal No. 7 “ensure environmental sustainability”. It also contributes to
UN Common Country Programming Process of United Nations Development
Assistance Framework (UNDAF). Further, it also contributes toward the
Government’s commitment on World Food Summit (WFS) Plan of Action and Paris
Declaration on Aid Effectiveness.
As strategic planning and resource mobilization tool, the NMTPF aims at following
outputs:
(i) Setting up priorities for a medium-term perspective for the agriculture
sector;
(ii) Identification of priority areas requiring capital and technical assistance;
(iii) Identification of partnership potentials;
1
(iv) Identification of programme areas requiring further actions (e.g. concept
paper development, development of proposal, implementation plans etc.);
and
(v) Identification of DPs likely to support selected priorities.
It is believed that the NMTPF facilitates DPs to position themselves for collaboration
with the Government, UN Agencies, International/Non-Governmental Organizations
(I/NGOs) and the private sector. They can direct their leveraging focus with proper
analysis of utilization of scarce resources against various competing needs. Through
the aligned priorities, they can coordinate their activities better.
While recognizing each other’s comparative advantage, the DPs can complement to
add values for the achievement of national objectives. With the priority areas
identified, they can make their collaborations purposefully focused as well as
effective. This process can contribute to the reduction of scattered mobilization of
resources for fragmented planning and implementation of field programmes. The
NMTPF encourages triggering of joint commitments by pointing out collective
opportunities, which can ultimately enhance investment of more resources on
agriculture and food security.
Relating to the priority areas of NMTPF, the DPs can add value to food security and
agriculture development process in the field of their respective mandates.
1.1 Objectives
Major objective of NMTPF is to facilitate planning and implementation of priority
activities in coordination between Government and the DPs. It is believed that it
contributes to make both national and international DP responsive to the national
needs visualized under a medium-term perspective.
1.2 Guiding Principles
The formulation of NMTPF is based on the guiding principles that:
- It will be reflective of agriculture sector development and food security needs;
- It will be selective to the strategic policies and priorities for national
development in general and agriculture sector development, in particular;
- It will be inclusive of the priority areas involving enhanced resource
mobilization at both national and international levels (i.e. in the form of capital
assistance, infrastructure development and technical support);
2
- It will be selective to the support interest of UN Agencies, bilateral and multi-
lateral DPs.
- It will be country needs driven and aligned to the development agenda of
current and forthcoming Interim Plans (2007/08 – 2009/10 and 2010/11 -
2012/13); and
- It will be complementary to the recognition of each DP’s respective
comparative advantage / mandate.
1.3 Methodology Followed
The formulation of NMTPF is based on the review of secondary materials as primary
studies on 12 thematic areas identified to update information on priority issues
related to agriculture. These topics were identified from the Scoping Workshop held
in August 2009 and also in the course of review of documents and consultative
meetings with different stakeholders. The subject areas covered by these thematic
studies were as follows:
1 Agricultural Extension Support System
2 Agricultural Mechanization
3 Climate Change and Agriculture Production System
4 Dairy Development
5 Food Security and Nutrition
6 Hides and Skin
7 Integration of Gender in Agriculture (UNIFEM)
8 Labour Migration and Agriculture (IOM)
9 Land Use Policy and Planning
10 Livestock in High Altitude Areas
11 Market-led Meat Production and Processing
12 Pricing Policies for Agricultural Inputs and Outputs
Inter-Ministerial Task Force was established to discuss issues and provide technical
inputs. A High Level Committee was also formed to guide the formulation work. This
Committee was chaired by the Vice Chairperson of National Planning Commission
(NPC).
Identified priorities were discussed in the Filed Programme Development Workshop
held at Pokhara. This workshop was attended by the FAO staff members and the
invitees from the Departments and the Ministry of Agriculture and Cooperatives
(MoAC) and Ministry of Forest and Soil Conservation.
3
1.4 Steps of Formulation
Five steps have been followed for the formulation of NMTPF.
At Step-1, prevailing situation was assessed with review of past achievements and
ongoing interventions. It also covered analysis of contributions made by prevailing
policies and procedures.
The Scoping Workshop held in August 2009 ascertained thematic areas to be
covered. This workshop held discussions on issues, needs and priorities concerning
agriculture, livestock, fisheries, forestry and food security. Participants to the
Workshop were drawn from Government, NGOs, research institutions and the DPs
(bilateral and multilateral). The workshop recommended thematic studies to be
undertaken to understand emerging needs and priorities that NMTPF could consider.
It also reviewed the roles played by different stakeholders.
At Step – 2, priority areas were identified based on the analysis of issues and
opportunities. The implementation experience of current Interim Plan (2007/08 –
2009/10) was examined with lessons drawn for the approach papers to be prepared
for the forthcoming Interim Plan (2010/11 – 2012/13). These analyses led to the
identification of priorities along with the overriding guidance captured by the
Agriculture Perspective Plan (APP), 1995/96 – 2014/15.
Viewing that too many priorities could mean almost 'no priority', attempt was made to
make the list of priorities reasonably shorter to a manageable extent. Attempts were
also made to avoid the overlaps.
Given that different DPs have different comparative advantages, their respective
mandates were honoured, while reconciling the priorities for potential partnerships.
During selection of one activity over another, an approach of whether “X” is more
important than “Y” was applied (instead of simply listing priorities without examining
their relative importance).
At Step – 3, the likelihood of complementary support from the DPs was assessed
against the priority gaps to be met. In this context, the medium-term / long-term
support strategies of the DPs were reviewed along with their resource allocation
priorities. It helped to identify the DPs, who could add value to the intervention
process based on their respective mandates.
4
At Step – 4, attempts were made to understand the effects of past and ongoing
national development strategies and plans. Discussions were held with the NPC and
MoAC through meetings and workshops. Consultations were made with the Inter-
Ministerial Task Force chaired by the Joint Secretary, MoAC and High Level
Committee chaired by the Vice-Chairman of NPC.
At Step – 5, the NMTPF was validated. Prior to the validation, comments and
suggestions were obtained on the draft report from different stakeholders.
Figure 1: Steps Followed for the Preparation of NMTPF
Step - 1: Situation Analysis
Review of policies and strategies
Review of accomplishments made in the past
Analysis of current situation (including emerging issues)
Step - 2: Prioritization of Issues
Identification of priority issues for a medium-term (3 years)
Reconciliation of priorities aligned with the areas spotted under for Interim Plans (current and forthcoming)
Selection of priorities possible to cover according to the mandates and comparative advantage
Step - 3: Matching Priorities with Possible Support from DPs
Review of medium and long-term country support strategies followed by the DPs
Review of subject areas covered by completed, ongoing and pipeline projects of the DPs
Identification of areas for possible collaboration between Government and the DPs
Step - 4: Preparation of Draft NMTPF
Discussion of issues, opportunities and priorities in the meetings and workshops
(including discussions with the Inter-Ministerial Taskforce and High-Level Committee)
Identification of common priority areas between GoN and DPs (based on the analysis
of current situation, gaps and emerging priorities)
Selection of priorities to be addressed in the medium term (3 years)
Step- 5: Validation of NMTPF
Presentation of Draft NMTPF to key stakeholders (including the DPs)
Finalization of NMTPF in response to comments
Submission of NMTPF to the NPC through MoAC
5
Coherence, timeliness and assistance to common priorities are important for NMTPF.
For effective implementation, it requires mobilization of technical expertise at different
levels.
1.5 Scope for the Use of NMTPF
The NMTPF has attempted to capture key priority areas. However, it is not
exhaustive of all concerns. Taking into account the limited resource mobilization
potential of the DPs and subsequent absorption capacity of the Government, the
priority areas are specified in view of what could be achievable in three years’ time
timeframe.
It is possible that some subject areas not covered in the listed priorities at present
could emerge as new priorities in future, while this NMTPF is implemented. At such
situation, this NMTPF should not restrict accommodation of further priorities and
subsequent mobilization of resources. In this sense, this NMTPF should be treated
as a living document, which should remain open to accommodate emerging priorities.
It is also possible that some priority areas might have gone down in the priority order
and left outside the current coverage. If such left out priorities emerge as new priority
in the future, they should be accommodated as well.
The Government and DPs are expected to maintain flexibility in a need responsive
way. To ensure this, the NMTPF should be treated as a flexible tool in
accommodating priorities.
It should be understood that the purpose of preparing NMTPF is not to abruptly
terminate or wind down previous commitments that prevail in the form of ongoing or
pipeline programmes. However, emphasis is to ensure that such commitments would
be maintained till they reach their natural end before it is totally switched over to
NMTPF priority umbrella.
It is believed that the NMTPF would contribute to the mobilization of more funds at
national level. It provides opportunity to the country representation offices of the DPs
to play catalytic role for priority actions and enhance investment leverage for large-
scale initiatives based on the local experience.
6
II. RELATION OF NMTPF WITH OTHER STRATEGIC FRAMEWORKS
The formulation of NMTPF is linked with the national, regional and global frameworks
and commitments. It related to MDGs and Poverty Reduction Strategy (PRS).
2.1 MDGs and NMTPF
The NMTPF attempts to harmonize technical services related to the MDG No. 1
(Eradicate Extreme Poverty and Hunger) Target 1 “reduce by half the proportion of
people living on less than a dollar a day and MDG No. 7 “ensuring environmental
sustainability”. It also relates to human rights approach concerning “rights to food”.
The NPC has recently prepared Nepal MDGs Progress Report (Draft, 2010), which
identifies gaps between the targets and achievements. This NMTPF can be a good
tool to revise and refine priority sectoral targets in line with the MDGs. The NPC is
planning to develop Simplified Macro-economic Framework (SMF) for the
assessment of poverty impact of growth, which contributes to healthy projection of
resources needed for the achievement of MDGs by 2015. The NMTPF benefits from
such projection in terms ensuring support from the DPs.
2.2 PRS and NMTPF
As one of the 80 low-income countries, Nepal is entitled for concessional lending and
debt relief facilities of the World Bank and International Monitory Fund (IMF) under
the PRS category associated with Highly Indebted Poor Country (HIPCs). With the
formulation of NMTPF, the DPs can best place their support for Government’s thrust.
As agriculture is a lead sector in terms of employing majority of the poor in the
country, the NMTPF provides opportunity to the DPs in enhancing effective
implementation of activities under a broader Poverty Reduction Strategy (PRS)
framework. It helps to select interventions for positive impact on food security,
agriculture and rural development.
2.3 UNDAF and NMTPF
UNDAF is developed in line with the national plans and strategies. The priority
concerns of NMTPF for Government - FAO collaboration is also aligned with the
same. Its design provides input to overall UNDAF Result Matrix. It helps to consider
the role of different partner agencies and priority areas that are complementary to
7
their work including the work of United Nations Country Team (UNCT). UNDAF
document is a key reference for UN's collaborative support in this regard.
The NMTPF provides opportunity to FAO and its partner organizations in obtaining
elaborated priorities for agriculture, rural development and food security. Given that
the UNDAF also covers these collaboration priorities, such a detailed analysis of the
sectoral issues covered under the NMTPF would be useful.
2.4 NPFS and NMTPF
The NMTPF puts together sectoral concerns related to crop, livestock, fisheries and
forestry programmes into a framework in line with the national priorities. To make
them implementable, it indicates support possibilities of potential donors in the
technical assistance process.
The intention of NMTPF and National Programme for Food Security (NPFS) is
common with respect to seeking country-driven solutions to food security. The
NMTPF covers priority framework for agriculture development in general, while the
NPFS concentrates in the promotion of longer-term food security. The NPFS is
expected to be built upon the groundwork of NMTPF.
8
III. ANALYSIS OF AGRICULTURE SITUATION
Nepal emphasized poverty reduction through private sector-led growth during the
Tenth Plan (2002/03 – 2006/07). The Three Year Interim Plan (TYIP) (2007/08 –
2009/10) continued with the same thrust (i.e. growth with poverty reduction) and also
highlighted the need of greater presence of the state for development in the remote
areas and inclusion of the marginalized groups. Though conflict was intense in the
Tenth Plan period, the TYIP enjoyed changed environment after signing of
Comprehensive Peace Agreement. Despite such change, the country has still not
been able to win private sector's confidence in doing the business so much.
Compounded by frequent change of the Governments and their respective policies,
the process of building confidence has been considerably hindered.
Due to higher rise of petrol price in 2008, the consumer price for basic agricultural
commodities mounted significantly making access to food more difficult in the remote
areas. As the transportation cost increased, the subsidized food items also became
more expensive than before. This situation further marginalized access to food
among the poor families. Occasional droughts, floods and other natural disasters
added fuel to the problem of food security dismantling the protective cushion for
poorest of the poor. All these boil down to the challenge of economic development
and appropriate delivery of services.
3.1 Importance of Agriculture in the Nepalese Economy
Nepalese economy has been experiencing structural changes over the years, as
evidenced by the decline of agricultural contribution to Gross Domestic Product
(GDP) by more than 11 percent since 1990s. Nevertheless, the role of agriculture still
remains prominent, with around 66 percent of active labour force engaged in
agriculture and 38 percent of the GDP accruing from the farming sector. Given the
pivotal role of agriculture sector in the Nepalese economy, it has remained in priority
in all periodic plans to-date.
Nepal’s rural economy with greater number of people dependent on agriculture for
their livelihoods demands modernization and commercialization of agriculture.
Increasing need of food security and nutrition security further adds challenge to the
concerns for developing more irrigation, fertilizer, storage, marketing, improved
seeds and improved breeds, quality control, service delivery, research, credit and
human resources development facilities.
The demand for production of fruits and vegetables is also growing together with
increased importance of nutritious food. Though the country has attempted
9
commercialization and modernization of its production system in some pocket areas,
there is lot to be done yet. Vegetables growing and goat keeping have appeared as
relevant enterprises against poverty as they contribute to the generation of income
for small and poor households in the rural areas. Similarly, floriculture is gradually
picking up as export item in the recent years (MoAC, 2008).
3.2 Institutions Serving Agriculture Sector
The institutions engaged in providing support to agriculture development include:
Government, NGOs, private sector organizations and the DPs.
3.2.1 Government
Among the government organizations, four types of agencies are involved in
providing direct or indirect support to agriculture: (a) advisory body, (b) line ministries
and departments, (c) autonomous entities, and (d) public sector institutions outside
the government structure.
The NPC is an advisory body, which sets national development goals, objectives,
strategies and policies. It operates under the National Development Council (NDC) -
an apex body chaired by the Prime Minister. This Council is a venue for ensuring
political commitment of the Government towards the development process.
The design and implementation of sectoral policies, legislative instruments and
programmes are carried out through the line ministries. They are approved by the
Parliament upon endorsement from the Cabinet. All line ministries have their
respective Planning Cells contributing to the design of sectoral and sub-sectoral
plans.
The plans are formulated both at the national and district levels. At the district level,
Local Development Officer (LDO) coordinates the plan formulation process.
Around seven ministries contribute to the services concerning agriculture and its
associated sectors / sub-sectors. MoAC is mostly engaged in covering crop
production, food security, horticulture, livestock, fishery, technology system
management, inputs supply and marketing activities. Activities related to rural
development, irrigation, soil conservation, watershed management and forestry are
covered by other line ministries.
The departments of line ministries are implementation wings of planned activities.
Selected activities are implemented through the Development Boards, Corporations
10
and Companies as well. Most of these entities have their decentralized offices at the
district level, with some of them having offices even at the sub-district level. Some
autonomous entities are also engaged in supporting agriculture development
activities (See Annex I for further details).
3.2.2 International/Non-Government Organizations
The Government has been emphasizing mobilization of NGOs to complement to the
implementation of development plans. Their role has increased in supporting
backward communities. They contribute to development in collaboration with local
government agencies as envisaged under the Local Self-Governance Act 2055
(1999). Around 30,000 NGOs work in Nepal to support income generation, creation
of employment opportunities and infrastructure development with mobilization of
internal and external resources.
The activities of INGOs have increased in the recent years after the country stepped
into a new political set-up. They implement programmes focused on alleviation of
poverty and hunger including the development of rural infrastructures (e.g. trails,
market centres and micro-irrigation systems).
3.2.3 Private Sector Organizations
The private organizations contributing to the development of agriculture are:
- Farmers (engaged in the production process);
- Agro-enterprises (involved in the supply of inputs such as seeds and
fertilizers, processing and marketing of the agricultural products);
- Commodity marketing groups (e.g. specific groups for fruits, vegetables and
milk marketing); and
- Cooperative unions (established at the national and district levels such as
District Cooperative Union, National Federation of Milk Producers
Cooperative, Federation of Community Forestry Unions and Seed
Entrepreneurs Association of Nepal).
At local level, the traders are organized into district specific Chamber of Commerce
and Industries. At the national level, they are organized under the Federation of
Nepalese Chamber of Commerce and Industries (FNCCI). The FNCCI includes a
wing called Agri-Enterprise Centre (AEC), which is established to support
development of agricultural commodities such as tea, sericulture, floriculture and
apiculture.
11
3.3 Past Interventions and Achievements
Around 5.5 percent economic growth was targeted under the TYIP. The first year of
the plan recorded a growth closer to this target, while it was even more in the case of
non-agriculture sector. However, from the second year onwards, this momentum
could not be continued because of series of bandas, protests and worsening security
conditions.
Table : Target and Achievement of Three Year Interim Plan (2007/08 - 2009/10)
(In percent)
Actual Implementation
Average
Sector 2 Year's Gap
TYIP Target 2007/08 2008/09
Average
Economic Growth* 5.5 5.3 3.9 4.6 -0.9
Agriculture 3.6 4.7 2.1 3.4 -0.2
Non-agriculture 6.5 5.7 4.9 5.3 -1.2
Inflation 5.6 7.7 9.5** 8.6 3.0
Fiscal deficit (% of GDP) 3.0 4.0 0.04 2.0 -1.0
BOP surplus (% of GDP) 1.0 3.6 1.8** 2.7 1.7
* At base year price ** Revised estimate by NRB
Source: National Planning Commission, Central Bureau of Statistics and Nepal Rastra Bank,
2009.
Though the plan was reasonable to adopt positive growth projections on the
assumptions of political stability and improved security conditions, the action
environment took different routes. During planning improvements in political stability
and security situation were expected to pave way to the decline of recurrent
expenditure and increase in the capital expenditure with better investment climate.
However, this expectation went wrong.
Though the operational environment during TYIP period was disturbed by occasional
political turbulence, Nepal still remains rich in its agro-biodiversity conditions, which
enables the country to grow wide range of crops (cereals, pulses, oilseed crops,
fruits, vegetables and other cash crops). Animal husbandry is an integral part of
mixed farming system. Many farmers raise cattle, buffalo, goat, pig and poultry.
Aquaculture is one of the important enterprises in Terai, where around 21 percent of
the total land is cultivated (around 3.09 million ha). Of the total cultivated area,
around 1.2 million ha. Has access to irrigation facility. The average cropping intensity
of this area is 1.8.
12
The agricultural land holding per-capita is shrinking in the recent years due to
population increase. Average farm size in the country is less than 0.8 ha. The parcels
are scattered rendering difficulty for the management of agricultural activities. Of the
total land in the country, around 39.6 percent is covered by forest.
As major sector contributing to economic growth, the agriculture sector in Nepal has
to transform its subsistent agriculture to a vibrant business-focused commercial and
competitive agriculture system. Greater dependency on the monsoon rain has to
decrease. The country need to modernize agriculture to boost production with
significant industrial base, where people can get access to employment and reduce
their poverty. For this to happen, the country needs reforms in policies and strategies
to effectively address the issue of modern technology, inputs, credit, year-round
irrigation, market and agriculture-friendly infrastructure facilities.
Paddy production grew by 16.8 percent. The production of vegetables and fruits also
increased. The growth of agriculture sector as a whole was 5.65 percent. Its
contribution to GDP reached 32.54 (MoF, 2008). This was the highest level growth
recorded in the last seven years. It was contributed by the favourable weather
conditions of the year, among others.
Production of milk and milk products showed positive results. The Tenth Plan
(2002/03 – 2006/07) had targeted per capita production of milk by 50.85 litres.
However, the production level achieved was 51 litres per capita by 2006/07. Meat
production slightly increased from 8.5 to 8.6 kg per capita. Its target was to achieve
9.94 kg per capita.
Poultry meat and egg production could not meet the target due to the bird flu
outbreaks. Fish showed an achievement of 1.5 kg per capita at the beginning of TYIP
against a target of 1.87 kg per capita (NPC, 2007). Though fishery is emerging as
one of the fast growing sub-sector in agriculture, its contribution to GDP is still less
than one percent. Growing demand of nutrition-rich food in the urban areas render
vast potential for the growth of fish raising. The growth rate accomplished by this
sub-sector in 2007/08 was around 7.25 percent.
Improved cultivation practices were developed for the high value crops like Chiraito,
Allo and Keshar. It contributed to the diversification of crops to some extent.
Resource conservation technologies contributed to increase yields with reduced cost
of production and timely plantation of crops. They also contributed to the
conservation of moisture. Scaling up such efforts would be useful for further
diversification of crops with higher yields.
13
Modern varieties were recommended for cereals, pulses, oilseeds and vegetables.
However, the rate of adoption by the farmers was low. Numerous micro-climates,
lack of availability of quality seeds in time and place and the lack of year-round
irrigation constrained application of modern technologies. The hybrid seeds,
particularly vegetables and maize seeds, were imported from India despite potentials
for establishing production facilities at the national level. Compared to the demand of
improved technologies for fruits and livestock, their adoption rate is limited.
Annual agricultural loan disbursement was around NRs 14, 650.2 million. Around
44.7 percent loan was advanced for agro-industries, marketing and warehouse
construction followed by 24.8 percent for the production of food and cash crops
(MoF, 2008).
The use of chemical fertilizers (in nutrient terms) went down over the years mainly
due to the withdrawal of subsidy from the beginning of 1997. Compared to 38,950 Mt.
chemical fertilizers used in 2002/03, the use of fertilizers in 2007/08 was only 25,169
Mt.2 Average use of chemical fertilizers during the Tenth Plan (2002/03 - 2006/07)
was 6.3 kg. per ha. which is the lowest in South Asia. The total use of fertilizer has
remained far below the level envisaged by the APP.
Figure1: Demand, Import and Distribution of Fertilizer
(In Mt.)
Source: MoAC, 2007
2
Actual use could have been higher because of illegal import from India. Farmers are encouraged for
such import because of cheaper price prevailed in India (nearly 1/3 price, especially in the case of
phosphate fertilizers).
14
The use of fertilizers is imbalanced specifically in the areas where commercial
production of crops begun.3 The use of high yielding crop seeds (mainly rice, wheat
and maize) has also been almost stagnated.
The transformation process in agriculture remained slow with respect to
commercialization, research, marketing, extension services, food technology
development, quality control and rural infrastructure development (GoN / NPC,
2008). Agri-business Promotion Policy, 2006; Dairy Development Policy, 2007 and
Agriculture Bio-diversity Policy, 2007 were developed after emergence of the
National Agriculture Policy in 2004. Other policies such as tea, coffee, irrigation,
fertilizer and seeds policies were introduced prior to its emergence.
The community forestry programmes have remained almost stagnant in terms of the
number of its forest user groups. However, they empowered women with greater
participation in the institution development process.
The APP envisioned rural electrification as one of the priority inputs to modernize
agriculture as it could be instrumental to provide agro-processing power to the
households and also pump ground water for irrigation purpose in the Terai at
relatively lower cost.
Nepal is characterized with lowest Human Development Index (HDI) among the
South Asian countries. It is ranked 144th among 182 countries (UNDP, 2008). Per
capita GDP at the current price is around US$ 470.- The economic growth rate was
2.5 percent in the lowest among the South Asian countries. To overcome these,
Nepal has been emphasizing poverty reduction through broad based economic
growth with social inclusion.
According to the Nepal Living Standards Survey (NLSS-II) Nepalese people living
below the absolute poverty line are 31 percent, which is a reduction from 42 percent
in eight years. This reduction can be attributed to increased wage rate, urbanization,
development of skills and capacities and the inflow of remittance. However, the gap
between rich and poor widened further during the same period as indicated by the
increased Gini-coefficient value from 0.34 to 0.41
According to the MDGs progress report, Nepal is likely to meet most of its goals, if
the ongoing efforts continue (NPC, 2007). Majority of the poor people live in the rural
areas against 9.6 percent living in the urban setting. Around 78 percent of the poor
people are farmers and agricultural labourers (NPC, 2007). This indicates increased
3
Pokhrel, Deepak Mani and Pant, Kishor Prasad Pant (2009), Perspectives of Organic Agriculture
and Policy Concerns in Nepal, The Journal of Agriculture and Environment, Vol:10, June 2009.
15
need for agriculture production, which would have significant bearing on poverty
reduction
Creation of self-employment opportunities can be instrumental in reducing rural
poverty. In this context, agriculture modernization and promotion of cottage industries
(based on the mobilization of local resources) should be attempted. Agriculture
sector is constrained because of poor investment in yield-augmenting inputs and
infrastructures, while the cottage industries suffer from fierce global competition for
the quality products. Therefore, reforms are needed to create rural self-employment
opportunities and thereby address the problems of poverty.
Against the growing population, the per-capita food availability has been eroding.
With the current holdings of cultivated land, only six months’ consumption
requirements can be met (CBS, 2003). Fourty-two districts (out of 75) encounter the
deficits (WFP, 2006). During shortage, the poor families can hardly hedge against the
shocks such as drought, flood and prolonged illness.
Five districts in the country are still not connected by road. This makes the movement
of food difficult and costly from surplus to the deficit areas. Compared to the surplus
available in Terai, people in the hilly and mountainous areas encounter shortages.
More than one million prime-age male adults work abroad as migrant workers. They
remit about one billion dollars into the country each year. It is one of the important
sources for the procurement of food for the families.
3.4 MDGs Progress, 2010
Despite various socio-political difficulties, Nepal appears closer to the achievement of
most of its MDG targets except employment, mitigation of climate change effects and
the control of HIV/AIDS. Poverty decreased by around 6 percent with subsequent
reduction of the chronic food insecurity situation. Underemployment and
unemployment rates have decreased. Remittance has contributed as backbone of
the rural economy. Gender equality increased with balanced enrolment of girls and
boys in the primary schools.
As environmental sustainability is linked with the livelihoods, targets related to this
component need adequate allocation of resources. Nepal being vulnerable to bio-
diversity conservation, it demands community-based efforts for sustainable use of
forest and bio-diversity products. The reduction of bio-diversity loss is important in
the context of benefiting livelihoods for the poor. The progress report mentions that
the policy environment for the achievement of MDG targets is favourable as they are
16
guided by the emphasis for poverty reduction, inclusion and social justice. The
Interim Constitution of Nepal 2063 (2007) and its subsequent laws also emphasize
inclusive, participatory and decentralized governance.
Resource allocations have increased in favour of marginalized groups and the
remote geographic areas. Environmental protection and conservation have gained
attention compared to the past. The attention has deepened further with adaptation
to climate change agenda as a matter of international priority. The poverty monitoring
systems and implementation plans have both improved with the Medium Term
Expenditure Framework and Results Based Development Management processes.
It is expected that the Government would continue to emphasize employment
generation, poverty reduction, food security and climate change in the forthcoming
Interim Plan (2010/11 – 1012/13) as well.
The progress report recommends that meeting the specified MDG targets by 2015
would require attention towards the following priorities:
- Pull people up from their below poverty line status;
- Create better environment for private sector investments;
- Develop and enforce supportive policies;
- Address food security and climate change issues;
- Strike gender balance in the providing access to development opportunities;
and
- Ensure support entitlements for the benefit of marginalized groups.
3.5 Major Challenges Concerning Agriculture Development and Food Security
During the TYIP, the overall growth rate targeted for the agriculture sector was
around 3.6 percent per year. The growth rates accomplished for different agricultural
products during the period were as follows:
Production Targets, Growth Rates and Current Status of Major Agricultural Products
Status
SN Agricultural Products Unit Base year TYIP End Average 2008/09**
(2006/07) Year (2009/10) Increment (%)
1 Food Crops ‘000 Mt 7329 7778 2.00 8,114
2 Pulses ‘000 Mt 274 285 1.27 255
3 Cash Crops
Sugarcane ‘000 Mt 2600 2894 3.64 2,354
Potato ‘000 Mt 1943 2379 8.98 2,424
4 Fruits, Spices, Tea
Fruits ‘000 Mt 552 723 8.77 686
Spices ‘000 Mt 227 377 18.44 276
Tea Mt 13650 21180 15.77 16,208
Coffee Mt 360 685 23.89 268
5 Vegetables ‘000 Mt 2329 3001 8.82 2,754
17
6 Mushroom Mt 400 450
7 Honey Mt 650 850 850
8 Cocoons Mt 47 48 23.3
9 Livestock
Meat, Buff ‘000 Mt 113.8 128 4.11 157
Meat, Goat, Sheep ‘000 Mt 83.3 93 3.84 50.1
Meat, Pig ‘000 Mt 12.9 14 2.00 17.0
Meat, poultry ‘000 Mt 17.3 20 4.90 16.7
Milk ‘000 Mt 1351 1547 4.60 1,445
Eggs ‘000 Mt 615 715 5.17 630
10 Fish ‘000 Mt 46.75 56.73 5.95 48.23
Source: Three-Year Interim Plan (2007/08 - 2009/10)
** Statistical Information on Nepalese Agriculture 2008/09 (2065/66)
Several issues and challenges surround agriculture development and food security
efforts. Major issues confronting development of these subject areas are follows:
Increased food insecurity due to low agricultural productivity and production:
Majority of the farms in Nepal are small. The use of quality inputs is small due to
their short supply and limited adoption of modern technology. Compared to the
farmers in India, the Nepalese farmers have to bear higher cost of production.
Most of the farms don not have access to year-round irrigation facility. Marketing
and credit facilities are lacking. The sector as such suffers from under-investment.
As a result of all these, the productivity of agriculture is low. Consequently, the
problem of food in-security in the country is increasing.
Agricultural commercialization and diversification: Majority of the producers in
Nepal are subsistence oriented. The country needs to establish pre-requisites for
commercialization. Support is needed for enhancing the scale of production, post-
harvest operations, processing and trade. There is a need to develop commodity
value chains or internal and international markets. Quality control and safety
regulations are to be made effective encompassing the channels of production,
distribution, export and import of the agricultural and livestock products.
Agricultural extension service delivery system: Agricultural extension service
delivery system is not effective in offering enough quality service as demanded by
the farmers, which await opportunities for modernization. The service provisions
are devolved to the district level but lacks coordinated links.
As public sector is the sole service provider of extension services in the country,
the participation of private sector has still to begin with. To address the needs of
poor and marginal groups living in the remote areas, the services need to be
made inclusive with equal treatment to all. However, a move towards this
direction is still at the orphan stage.
18
There is greater need of aligning agricultural research, education and extension
service with the demands and priorities of farmers. In this regard, introducing
institutional reforms for greater involvement of key stakeholders in policy
formulation and monitoring process is necessary (See Annex - II for further
details).
Cooperatives development: The cooperative societies are not effective in
absence of adequate training and information flow. They are more inclined to the
profit motive rather than applying cooperative principles in its real sense. Their
mobilization in addressing problems related to agro-production, processing and
marketing is necessary. The cooperatives also need facilitative rules and
regulations suitable to farmers’ demand focusing on the emerging agriculture
development opportunities.
Forest management to support agriculture development: The forest area covers
about 38 percent of the total land in the country. When Nepal’s population was
relatively small in the past, quality land reserves were available for conversion of
forest or grassland into the arable land. During those times, the country not only
fed its population but also exported surplus agricultural products.
The population pressure has increased in the recent years. It has contributed to
rising encroachment of forest areas for cash income to meet the food requirement
of families. These pressures have enhanced degradation of qualities of arable
land and forest cover. Such situation demands sustainable management of land
for both conservation and household income earning purposes, while maintaining
the environmental standards at the same time.
Land reform and management: Land is the basic resource for agriculture
development and food security. It signifies social well-being of a person in the
rural setting in Nepal. Dual ownership, poor management, squatter settlements,
indiscriminate use and fragmentation are problems associated with the issue of
land reform and use.
Nepal has to rehabilitate freed bonded laborers. It demands land reform and
management system. The database system on land holding, land use, landless
population and land tenure is poor. There is also a need for amendment of acts
and regulations. The formulation of land use policy and introduction of scientific
land management interventions are other priorities to be addressed.
19
Irrigation development: The year-round irrigation services are limited. Even the
available systems for such service are less reliable because of poor repair and
maintenance.
Participation of farmers in the maintenance of public irrigation systems is poor.
The country implemented Water Resources Strategy and National Water Plan to
encourage their participation but achievement to this effect was poor. These
frameworks did not contribute much in creating envisaged impact on agricultural
productivity and production.
Problems also exist regarding collection of irrigation service fees. Most of the
farmers are reluctant to pay irrigation fees because of irregularity of the services
they could access. Management transfer to the users is another difficult area.
Food quality and consumer protection: Low care about the food quality is
common. People are used to unhygienic food consumption habits. The
Government lacks food epidemiology database. Acts and regulations need to be
updated to maintain food hygiene requirements. Trustworthiness needs to be
established on the organic products. Laboratory services should be sufficiently
developed. Accreditation facilities should be promoted for access to both internal
and export markets.
Sustainable management and development of natural resources: Nepalese
mountains and hills are prone to soil erosion and landslides. The Terai plains
suffer from sedimentation and alluvial deposits. Monsoon torrential rains often
wash away top soils in the ill managed crop production systems. Some species
such as wild rice, Achhame and Lulu cattle and the medicinal herbs are on the
verge of extinction.
Excessive pesticides are often used in the commercial farms. There is a need to
expand Integrated Pest management (IPM) coverage of crops. Watersheds need
to be managed effectively. There is a need to minimize forest fire occurrences.
Sustainable farming practices should be promoted. Biodiversity conservation
efforts should be enhanced.
Agricultural credit and insurance: There are not many formal financial institutions
in the rural areas. The non-institutional sources charge exorbitantly high interest
rates. There is a need to earmark agricultural credit covering production,
processing and marketing value chains. It is also important to reduce the risk in
agriculture and livestock through the provision of agricultural insurance.
20
Adaptation to climate change effects: Nepal needs to safeguard vagaries of
climate change in agriculture for improved livelihoods of people. The country has
been experiencing irregular rainfalls, occasional droughts, cold waves, floods,
landslides, pests and diseases that directly affect food production.
The loss of lives and famines resulted from food insecurity have pushed local
people for out-migration from the rural areas. It pronounces the need for
persuading scientific mitigation and adaptation to climate change effects before it
becomes too late (For further details See Annex - III).
Migration of agriculture labour: Migration from rural to the urban areas and abroad
has affected agricultural productivity and food security. Poverty and limited
employment opportunities have become a push factor for out migration. It is also
induced by frequent occurrence of natural calamities, especially in the disaster-
prone areas.
Capacity of human resources: Planning and implementation capacity of public
institution personnel is inadequate for research and extension services deliveries
for producers, processors and traders. The country needs to enhance planning
and capacities of the personnel working for key institutions for agriculture
development.
21
IV. OVERRIDING NATIONAL DEVELOPMENT POLICIES AND PLANS
4.1 Periodic Development Plans
Nepal started planned development efforts since 1956. The First Five Year Plan
(1956/57 – 1960/61) allocated 9.7 percent of its resources for agriculture and
forestry with an additional 12.9 percent share for village development. The
allocations remained above 25 percent for agriculture and related sectors till
Eighth Five Year Plan (1992/93 – 1996/97). Though agriculture and rural
development continued to remain major source of employment and livelihoods for
majority of people, the relative share of allocations gradually declined from the
Ninth Five Year Plan (1997/98 – 2001/02) onwards. The proportion allocated for
agriculture, irrigation and forest in the current TYIP (2007/08 – 2009/10) is around
12.9 percent. Though the volumes of allocation have increased over the years,
the relative importance given for the allocation to agriculture and related sectors
indicates declining investment priority.
Table: Sectoral Allocation under Various Periodic Plans
Sectoral Allocation as
Total Outlay Percentage of Total Outlay
Sectors/Sub-sectors
(NRs. Million) Agriculture Other than
Related Agriculture
First Five-Year Plan (1956/57 - 1960/61) 330
Agriculture and Forestry 9.7
Irrigation and Drinking Water 6.1
Village Development 12.9
Public Works, Transport and Communications 37.6
Electricity 9.1
Industry, Mining and Tourism 7.6
Health 7.6
Education 5.8
Miscellaneous 3.8
Second Three-Year Plan (1962/63 - 1964/65) 600
Agriculture, Irrigation and Forest 13.6
Land Reform, Survey and Statistics and Training 13.2
Transport, Communications and Power 39.1
Social Services 17.1
Industry and Tourism 17.0
Third Five-Year Plan (1965/66 - 1969/70) 2,500
Agriculture and Irrigation 25.9
Transport, Communications and Power 37.2
Industry 17.5
Social Services 16.6
Miscellaneous 2.8
Fourth Five-Year Plan (1970/71 - 1974/75) 3,540
Agriculture, Land Reform, Irrigation, Forest and 33.1
22
Botany
Transport and Communications 35.4
Industry, Commerce, Power and Mining 20.3
Panchayat, Education, Health and Social Services 10.8
Statistics 0.4
Fifth Five-Year Plan (1975/76 - 1979/80) 11,404
Agriculture, Land Reform, Irrigation and Forestry 34.8
Transport and Communications 29.7
Industry, Commerce, Electricity and Mining 17.9
Education, Health, Drinking Water, Panchayat and
Social Services 17.6
Sixth Five-Year Plan (1980/81 - 1984/85) 33,940
Agriculture, Irrigation and Forest 31.1
Industry, Mining and Power 26.0
Social Services 25.6
Transport and Communications 17.3
Seventh Five-Year Plan (1985/86 - 1989/90) 50,410
Agriculture, Irrigation and Forest 34.3
Social Services 29.8
Industry, Mining and Power 21.5
Transport and Communications 14.4
Eighth Five-Year Plan (1992/93 - 1996/97) 113,479
Agriculture, Irrigation and Forest 25.7
Social Services 31.6
Electricity 20.9
Transport and Communications 17.7
Industry and Mining 2.0
Trade and Tourism 1.3
Miscellaneous 0.9
Ninth Five-Year Plan (1997/98 - 2001/02) 372,711
Agriculture, Irrigation and Forest 16.8
Electricity, Gas and Water 19.1
Social Services 17.1
Finance and Land (Real Estate) 16.4
Transport and Communications 13.0
Industry (including Quarrying and Mining) 9.5
Trade, Hotel and Restaurant 6.2
Construction 1.9
Tenth Five-Year Plan (2002/03 - 2006/07) 609,823
Agriculture, Irrigation and Forest 13.8
Social Services 21.5
Transport and Communications 20.1
Finance and Land (Real Estate) 15.0
Electricity, Gas and Water 14.1
Trade, Hotel and Restaurant 7.3
Industry and Mining 6.0
Construction 2.2
Three-Year Interim Plan (2007/08 - 2009/10) 280,281
Agriculture, Irrigation and Forest 12.9
Social Services 41.5
Electricity, Gas and Water 19.5
Transport, Communications and Storage 17.9
23
General Administration and Defence 3.1
Miscellaneous 2.7
Trade (Wholesale and Retail) 1.2
Hotel and Restaurant 0.7
Industry, Geology and Mining 0.6
Three Year Plan (2010/11 – 2012/13) 1,018,831
Agriculture and Forestry 12.8
Fishery 0.3
Industry 15.0
Services 71.9
Note: Classification of sectors / sub-sectors is presented as per the segments categorized under the respective periodic plans.
Source: Planned Development in Nepal - A Brief Survey, National Planning Commission, December 1986 and the respective
Plan Documents.
4.2 Agriculture Perspective Plan (1995/96 - 2014/15)
Nepal developed 20-Year Agriculture Perspective Plan (APP) in 1997. It emphasized
focus on four priority input areas (irrigation, fertilizer, technology and the roads and
power) for livestock, high value crops, agri-business and forestry sector growth.
Poverty reduction and food security are its priorities.
The APP emphasized demand-led commercialization of agriculture promotion of lead
commodities in the hills and mountains with coordinated production and marketing
relationships. Specific objectives followed by the Plan were:
- To accelerate growth in agriculture through increased productivity;
- To alleviate poverty with expansion of employment opportunities;
- To transform the subsistence agriculture into commercial agriculture with
diversification of crops through the identification of comparative advantage;
- To expand economic transformation opportunities by fulfilling pre-conditions
for agricultural development;
- To identify short and long term strategies for implementation; and
- To establish guidelines for preparing periodic plans and programmes.
The Plan believed to achieve 3 percent growth of Agricultural GDP per year and
reduce the incidence of poverty to 14 percent by 2015. It envisaged multiplier effects
of agricultural interventions on the non-agriculture sector too. Six strategies proposed
for ensuring the multiplier effects were:
- Accelerated economic growth through technology-driven agriculture
development;
- Agricultural growth creating production demand with multiplier effects on all
sectors of the economy;
- Higher employment growth;
24
- Investment on human capital, physical infrastructure and service delivery
institutions;
- Package approach to development with coordination of activities launched in
the Hills, Mountains and Terai; and
- Broader participation of key stakeholders including women.
Since its adoption in 1997, the APP has remained a major policy document for
agriculture and rural development. All successive governments formed thereafter
have directly or indirectly endorsed its platform in planning the agricultural activities.
It emphasizes implementation of programmes and projects based on the comparative
advantage. The APP in a way is a policy framework for the Government in agriculture
and rural development to date as it contributes to reiterate consistent aims and
approaches for poverty reduction.
4.3 Three-Year Interim Plan (2007/08 - 2009/10
The TYIP encompasses mandates provided by the Peoples’ Movement II and aims
to ensure prosperity, peace and social justice in the country. It was developed with a
vision for modernizing and commercializing agriculture in line with the APP and
National Agriculture Policy (2004). It underlines the importance of broad-based,
gender-inclusive and sustainable agricultural growth with the mention of following
specific objectives:
To increase agricultural production and productivity;
To maintain food sovereignty;
To transform subsistence agriculture into commercial agriculture;
To increase employment opportunities, conservation and promotion; and
To ensure sustainable use of agricultural biodiversities.
The TYIP adopts PRS and MDG priorities undertaking the responsibilities of reforms
that were envisaged but had remained pending in the Tenth Five Year Plan (2002/03
- 2006/07).
The NLSS – II reported that the absolute poverty level of the country came down to
31 percent from 42 percent between 1995/96 and 2003/04. The TYIP aims to reduce
it further down to below 24 percent.
The Plan targeted annual economic growth of 5.5 percent with 3.6 percent and 6.5
percent growths in the agriculture and non-agriculture sectors respectively. The
integration of the MDGs into the national development strategy is one of the priorities
of this Plan.
25
The country is in the process of formulating another Three Year Plan (2010/11 –
2012/13). It will again be PRS and MDGs focused.
The TYIP emphasizes use of quality seeds and raising of improved breed animals. It
highlights the importance of sustainable use of productive resources (land and water)
and irrigation services. Other aspects underlined are: provisions for access to
institutional credit; modern technologies; and marketing capacity development.
Similarly, infrastructure development support for productive pocket areas; promotion
of agricultural value chains; human resource development; promotion of agriculture
biodiversities and maintenance of genetic resources are also emphasized.
As the current TYIP terminates in June 2010, the MoAC has worked out indicative
priorities for the Forthcoming Three Year Plan (2010/11 – 2012/13). It plans to
transform subsistence agriculture into competitive, commercial and employment
generating sector for poverty reduction and food security. Stress has been given to
agri-business promotion through commercialization of agriculture and utilisation of
opportunities available both at the internal and external markets.
Modernization of agriculture has emerged as a need of the day. The policy
framework of MDGs and National Agriculture Policy also emphasize this aspect
among other subject areas. Keeping in view the ongoing priorities, the MoAC intends
to adopt following objectives for the agriculture sector in its forthcoming Three Year
Plan.
To ensure food and nutrition security;
To make agriculture sector competitive and business-oriented with increased
production and productivity;
To reduce poverty by increasing employment and income generating
opportunities;
To minimize adverse effects of environment and climate change in the
agriculture sector;
To develop cooperatives for agriculture development; and
To develop human resources for sustainable agriculture development process.
(See Annex IV for details on the indicative priorities of the agriculture sector in
the forthcoming TYIP).
4.4 Master Plan for Forestry Sector, 1989
Nepal developed Master Plan for the Forestry Sector (MPFS) in 1989, which
provides 25-years policy and planning framework for the forestry sector in Nepal. The
long-term objectives specified by the MPFS are:
26
To meet people’s basic needs for forest products on a sustained basis;
To conserve ecosystems and genetic resources;
To protect land against degradation and the effects of ecological imbalance;
and
To contribute to local and national economic growth.
For the medium-term, following objectives are specified:
To promote people’s participation for forestry resources development,
management and conservation;
To develop legal framework needed to enhance contribution of individuals,
communities and institutions; and
To strengthen organizational capacity of forestry sector related institutions.
MPFS has laid out 6 primary programmes for forestry by putting greater emphasis on
'community and private forestry' development through collective conservation and
use practices. It laid out programmes related to ccommunity and private forestry
development; national and leasehold forestry development; medicinal and aromatic
plants (MAPs) development; soil conversion and watershed management;
conservation of ecosystems and genetic resources; and the policy, legal and
institutional reforms.
Community and private forestry development: It emphasizes development and
management of forest resources through active participation of individuals and
communities to meet their basic necessities. .
National and leasehold forestry development: It emphasizes development and
management of national forest through the government agencies or private sector
lessees complementing to the community and private forestry for increased supply of
forest products.
Medicinal and aromatic plants development: It emphasizes increased supply of MAPs
through their conversion and conversion into useful commodities for distribution to
the local and foreign markets to contribute to the local and national economy with
trade and employment generation. The promotion plantation, managed natural forest
and farms could also go a long way in the conservation of forest resource base.
Establishment of regional herbal centres, training in herbal farming and sustained
yield collection of MAPs could make the resource base strong.
Soil conversion and watershed management: It emphasizes protection of land
against degradation and conservation of its value by mobilizing national and local
resources. It follows preventive, rehabilitation and conservation education to
minimize soil erosion and environmental degradation. One of the preventive
measures emphasized is the restoration of forest cover on open and degraded land.
27
Conservation of ecosystems and genetic resources: It emphasizes protection of
special areas for their ecosystem and genetic resource values. It also highlights the
provision of amenities to promote In-situ and ex-situ conservation of plant and wildlife
genetic resources. Conserving forest ecosystems and genetic resources through
gene banks and botanical gardens is essential with proper management and use of
land and forest resources. These conservation measures could become major assets
for income generation through tourism.
Policy and legal reforms: The need for policy and legal reforms has been felt
necessary to enhance contribution of individuals, communities and institutions for
forest resource development, management and conservation. The Plan emphasizes
the need for adoption of policies on providing long-term support to forest
development with sustainable community forestry, enforcement of law for forest
protection, production of raw materials for forest-based industries and definition of
the role of forestry with regard to pasture.
Institutional reforms: Institutional reforms are considered necessary for more efficient
and effective development and implementation of the programmes.
The Forest Act, 1993 made provision for granting leasehold forest to operate agro-
forestry for income generation and poverty reduction. It emphasized facilitation for
the production of raw materials required by the industries based on the forest
products; sell or utilize forest products by promoting production through afforestation;
operate agro-forestry, tourism industry, farm of insects, butterflies and the wildlife in
compatibility with conservation and development of forest.
4.5 National Water Plan – Nepal, 2005
Nepal has an average annual rainfall of 1530 mm. with sharp spatial variations. The
monsoon rain is intense in the east and goes declining westward. Contrary to this,
the winter rainfall is heavy in the west and goes declining to the east. The country
has more than 6000 rivers. The southern rivers rising from Siwalik range have little
water during dry season but cause floods during monsoon. Annual run-off from all
river systems is estimated at 225 billion cubic meters (BCM), while the hydro-
geological potential indicates availability of BCM of ground water in Terai. According
to an estimate, around 756 million cubic meters (MCM) of groundwater is used for
irrigation and 297 MCM for domestic purposes. In the case of other economic
purposes, around 15 BCM is used.4
As both conservation and use of water are important for overall development and
maintenance of the livelihoods of people, Nepal formulated National Water Plan
(NWP), 2005 for systematic management of this resource. The Plan emphasizes
4
The rechargeable groundwater in the Terai is estimated between 5.8 and 11.5 BCM per year.
28
sustainable use, while contributing to economic growth. Aspects like mitigation of
hazards, environmental protection and resolving water use conflicts are its priorities.
The Plan specifies three output areas: security, utilization and institutional systems
for effective service delivery.
Security: Disaster management and environmental protection have been emphasized
to maintain secured availability of water. Institutional capabilities enhancement for
water-induced disasters management have been underlined to mitigate adverse
effects. Emphasis has also been laid for institutional arrangements for strengthening
watershed / ecosystem protection. The need for sustainable management of full
scale watershed / aquatic ecosystem has been considered essential.
Utilization: Utilization of water resources for drinking purpose, irrigation development,
hydropower generation and the uses for other economic development activities has
been prioritized. Emphasis is given for both improvement and expansion of water
supply and sanitation services. Sustainable irrigation systems development and
effective water management practices have been emphasized to maintain optimal
utilization of irrigable land.
Priority is given to the development of hydropower to meet domestic energy needs,
industrial needs and the potential export of power. Promotion of economic activities
through the development of fisheries, aquaculture, recreational service, tourism,
navigation and industrial water uses have also been considered important.
Institutional systems for effective service delivery: Priority is assigned for information
systems development, policy reforms and legal reforms. To enhance access to
information, strengthening of functional water-related information collection and
dissemination system has been planned. For maintaining equitable water use rights,
design of necessary policies and legal frameworks has been proposed. The Plan
also highlights the need for adjustments to respond to the changing circumstances as
necessary.
Strong institutional mechanisms have been considered necessary for efficient as well
as integrated water management systems development. Priority has also been given
to the promotion of regional / bilateral cooperation for mutual benefits.
Overall objective of the NWP is to contribute to economic development, poverty
alleviation, food security, public health and safety and the protection of national
environment. The Plan follows doctrines of integration, coordination, decentralization,
popular participation and implementation of water-related programmes within the
envisaged framework of good governance, equitable distribution and sustainable
development.
29
4.6 Localization of the MDGs Targets
While preparing Progress Report on the MDGs in 2005, the Government
recommended development of supportive policies and programmes to overcome the
institutional gaps against the envisaged progress. A comprehensive MDG Needs
Assessment was carried out in 2006, which suggested supportive national
development strategies to make the targets achievable (NPC and UNDP, 2006).
The Needs Assessment Report indicated requirements for new investments and
effective service deliveries above the “business-as-usual” position (NPC and UNDP,
2006). This invites the need for enhancing both national and international
development initiatives for the coordinated actions achieve the MDG targets. For the
MDG – 1 (eradicate extreme poverty and hunger) the need for improving agricultural
productivity; market access / linkage development; rural employment; targeted food
assistance and the control of food quality have been highlighted.
Following its commitment to achieve the MDG targets by 2015, the Government
intends to fully align its periodic plans with the MDGs. In view of the gaps to be filled,
the Government has updated existing status on each MDG and identified the way
forward to expedite achievement process within the remaining 5 years. The update
covers assessment of the progress made towards reduction of poverty (related to
Goal - 1) and the extent of supportive nature of the policy environment, risks and
challenges. This assessment contributes to the identification of gaps with concrete
policy recommendations for inclusive growth to be attained in the next 5 years.
4.7 Government Policies, Acts, Rules, Regulations and International
Commitments Related to Agriculture Development and Food Security
Nepal aims to transform subsistence agriculture into a competitive and commercial
one. The National Agriculture Policy, 2004 of the country holds long-term vision of
developing sustainable agriculture with emphasis on food security and poverty
reduction. Specific objectives followed by the Policy are:
To increase agricultural production and productivity;
To make agriculture competitive with regional and world markets by
developing commercial agriculture system; and
To protect, promote and utilize natural resources, environment and biological
diversities.
The Policy intends to cover all kinds of farmers including those with or without access
to adequate means and resources. It emphasizes production and productivity
increase, while protecting, promoting and utilizing the natural resources.
30
Sub-sector policies, acts, regulations and guidelines are developed on various
subject areas related to agriculture (e.g. food, feed, pesticide, livestock, meat,
aquatic species, fertilizers, dairy, tea and coffee, seeds, research, agriculture service,
consumer protection, forest and wildlife, environment, water, irrigation and electricity,
land, bank). International commitments are made and the conventions are ratified as
they relate to agriculture development (See Annex – V for details).
31
V. SUPPORT STRETGIES FOLLOWED BY THE DEVELOPMENT PARTNERS
5.1 Strategies Followed by the Multi-lateral and Bi-lateral Development
Partners
Nepal has access to generous support of multiple agencies. Both multi-lateral and
bilateral DPs have been providing financial and technical assistance (See Annex –
VI for the list of DPs and their sectors of support).
World Bank: The Country Assistance Strategy (CAS-2004-07) of World Bank
emphasizes two pronged approach for its assistance to Nepal: (a) Bringing resources
closer to the beneficiaries, where they are most likely to be productively used, and (b)
Collective donor action to foster strong governance of the resources to reduce their
waste and mismanagement.
The Bank implements activities in line with decentralization. It underlines importance
of involving local stakeholders including the private sector in preparation and
implementation of the plans. It emphasizes donor cooperation, while formulating and
implementing programmes.
The Bank’s priority-lending to agriculture emphasizes ground water development (in
Terai), rural development and investments in the public irrigation systems including
their operation and maintenance. Other areas covered are: land tenure, off-farm
employment and agriculture marketing.
Asian Development Bank (ADB): The Country Strategy and Programmes (CSP-
2005-09) of the ADB emphasizes capacity building of stakeholders for sustained
impact of investments. Support is extended for policy reforms and institutional
capacity building. It emphasizes increased production with diversification of
opportunities as its two-pronged development strategy.
The Bank has been supporting fertilizer trade, irrigation development, food grain
marketing and rural credit. It emphasizes community mobilization during
identification, design, implementation and maintenance of the irrigation systems. It
accords priority to planning and implementation capacity building at all levels.
International Fund for Agricultural Development (IFAD): Nepal is one of the first
countries to benefit from IFAD loans since 1978. It anticipates bilateral contributions
in its lending process (i.e. for one dollar lent by IFAD, equivalent one dollar should be
arranged from the Government either on its own or in collaboration with other
donors).
32
IFAD supports development of policies and programmes in relation to peace-building,
reconciliation, reconstruction and economic recovery. Its deals with poverty issue that
lie at the heart of conflict. IFAD preferably directs its support to the hills and
mountains, where poverty levels are relatively high and the access to infrastructure
services and markets are extremely limited. Its interventions are often designed to:
Provide infrastructure and services;
Target marginalized groups;
Improve income-generating opportunities; and
Promote community cohesion and resilience.
Department for International Development (DFID): The Country Assistance Plan
(2004 - 2008) of DFID emphasizes broad based sustainable growth; human / social
sector development; social inclusion; improved governance and peace-building.
Priority is assigned for poverty reduction and inclusion to establish lasting peace in
the country.
Keeping in view the uncertain political environment, DFID maintains flexibility in the
implementation of planned activities. It believes that such flexibility would effectively
contribute to respond emerging development needs and opportunities.
Japan: The Government of Japan emphasizes support to poverty reduction and
political stability. Its Country Operation Plan is aligned with Nepal’s recent priorities. It
advocates pro-poor growth strategy as basic approach to economic development.
Accordingly, the short, medium and long-term goals for collaboration are identified.
As a short-term goal, emphasis is given for poverty reduction with local initiatives. For
the medium-term, emphasis is given for sustainable growth. As a long-term goal,
industrial growth has been identified as a priority. Human resource development and
environmental conservation are adopted cross-cutting themes relevant to the
accomplishment of these goals.
Food and Agriculture Organization of the United Nations: FAOs’ vision is “a world
free of hunger and malnutrition, where food and agriculture contribute to improving
the living standards of all, especially the poorest, in an economically, socially and
environmentally sustainable manner”. Its mandate is to raise the level of food and
nutrition securing sustained agriculture production and productivity for improved living
conditions free from the hunger.
FAO’s comparative advantage lies in offering policy assistance, technical capacity
building, early warning for food security alerts, exchange of policy dialogues,
33
promotion of good practices, monitoring progress on aspects highlighted by WFS and
natural resource conservation as well as management to support agriculture
development and food security.
Others: Norway, Denmark, Finland, Switzerland and German Governments
emphasize support to democracy, human rights and economic development in
Nepal. They contribute to natural resource conservation and adaptation to climate
change (e.g. Government of Finland). Support is also extended for agriculture
development (e.g. SDC and Norway for IPM).
As one of the least developed countries in the region, Nepal’s case is appealing for
support attraction. The donors have been positively responding to its position as the
country is in the thrust of reviving its lost development position because of conflict.
5.2 Collaborations within the UN System
The UN development partners commonly prioritize effective mobilization of support to
the country’s need-based development for peace building. In the activities related to
agriculture and food security, they highlight the relevance of APP and Special Area
Development Programme for Poverty Alleviation (SPPA).
5.2.1 Common Country Assessment, 2006
The Common Country Assessment (CCA), 2006 emphasizes support for
reconstruction, reconciliation and peace building. In this context, the reduction of
poverty and hunger has been considered essential. It highlights the need for
maintaining environmental sustainability, increased agricultural productivity and
generation of employment opportunities through the following measures:
- Crop diversification with adoption of improved technologies (including
improved seeds, fertilizers and agro-forestry) that suit Nepal’s agro-ecology;
- Commercialization of agriculture;
- Farmers’ access to inputs;
- Market infrastructure development in line with the recommendations of APP;
- Accountability of service providers to the local people;
- Incentive to service providers for their priorities targeted to the poor;
- Collection and management of disaggregated data for improved policy making
and planning;
- Community irrigation schemes alongside the larger-scale schemes;
- Reduction of post-harvest losses with adoption of improved food storage and
processing technologies;
34
- Targeted involvement of private sector in the distribution of food to the remote
areas;
- Establishment of marketing links (with improved roads and market information
system) between the production sites and market centres);
- Agrarian reform for access of farmers to the land and other natural resources;
- Food or cash for work / activities for the vulnerable people;
- Development of small enterprises for non-farm employment opportunities;
- Micro-credit services;
- Skills development for better wage earning;
- Gender equity in workload sharing; and
- Integration of nutrition education and related support services with agricultural
extension services.
The CCA gives priority to balanced development interventions across the regions
targeting the socially excluded groups (e.g. poor, Janajati, Dalit, women etc.).
Likewise, it emphasizes environmental sustainability through:
- Increased participation of vulnerable people in the decision making process for
sustainable access to natural resources;
- Recognition of people’s rights for a reasonable access to the national forests,
water sources and other non-privately owned natural resources;
- Improved governance in the organizations involved for environmental / natural
resources management responsibilities;
- National standard for sustainable forest management;
- Environmental conservation with reduced reliance on firewood; and
- Generation of more off-farm income opportunities.
For the achievement of MDGs, the CCA has suggests four possible areas of
cooperation (UNCT, 2007):
- Strengthened human rights, rule of law and good governance;
- Improved access to quality education and health services;
- Opportunities generation for sustainable livelihoods; and
- Protection of natural and cultural wealth for the future generation.
The CCA, 2006 hoped to expand operational space for development, which was
otherwise narrowed down during the security threats in the past. It considers that the
problem of underemployment, low income and lack of secure jobs should be
uprooted through sustainable economic growth oriented towards the poor (UNCT,
2007). It emphasizes irrigation development with users’ participation for better
35
management of farm water. Increased access of to land; income generation skills
development; gender-sensitive development and adaptation to climate change are
other priority areas focused.
5.2.2 UNDAF (2008 – 2010)
UNDAF (2008 - 2010) was designed in line with the planning cycle of current Three-
Year Interim Plan and extended up to 2012. It recognizes that the exclusion of people
from participation in the political, social and economic spheres has become one of
the root causes of decade long conflict in the country. To overcome this, it
emphasized inclusive transformation focusing on the following (UNCT, 2007).
- Consolidating peace;
- Delivery of quality basic services;
- Ensuring sustainable livelihoods; and
- Establishing human rights, gender equality and systems for social inclusion.
To accomplish these, following strategies are followed (UNCT, 2007):
- Improve policies, institutions and programmes for poverty reduction:
Strengthen state capacity for poverty reduction; MDGs monitoring and
economic opportunities development for the benefit of excluded groups.
- Improve household food security: Support local resource mobilization and
income generation processes with increased agricultural production based on
the supply of improved seeds, fertilizers and irrigation services (as
recommended by APP) and also develop market access.
- Improve equitable access to energy and environmental services: Support
conservation efforts; and increase the access to environmental as well as
energy services (especially for the benefit of women, poor and other socially
excluded groups).
- Be prepared for natural disasters: Support gender-responsive disaster
preparedness activities; and capacitate partners to mitigate impact of
droughts, floods, earthquakes and other calamities.
UNDAF promotes partnership with a range of Government counterparts (central,
district and local), donor agencies, NGOs, civil society organizations and community
based organizations (CBOs). As its commitment to UNDAF, FAO has been
supporting activities related to poverty reduction, rural employment generation, food
36
security, institutional capacity enhancement, delivery of improved inputs,
conservation of bio-diversities, disaster preparedness and adaptation to climate
change effects (See Annex - VII for further details).
5.3 Overall Implementation Experience of the Past Programmes and Projects
It is quite natural that some development programmes and projects implemented in
the past were more successful than others. Such experience could become a source
for future improvements. Some programmes contributed to economic growth but
could not reduce poverty and improve food security among the marginalized groups.
For careful interventions in the future, following lessons have been drawn from their
implementation experience:
- Political stability of the Government is necessary to maintain consistency in
making important decisions (i.e. to facilitate development);
- Effective implementation of the development interventions needs strong
commitment from the Government;
- Good governance in the delivery of institutional services is necessary to
enhance production and access to food;
- Programmes and projects should be anchored with the realities of adequate
availability of resource;
- Timely implementation of planned activities needs coordinated commitment of
all stakeholders;
- Monitoring is necessary to guide implementation towards the right track;
- Decentralization of implementation process is necessary for effective local
development;
- Broad-based economic growth is necessary to reduce poverty;
- Incentives are necessary to encourage participation of private sector; and
- Inclusive approach is necessary to accommodate the needs of poor,
vulnerable and socially excluded groups into the mainstream development.
5.4 Potential Development Partners in Supporting Agriculture and Related
Activities
Various DPs have been supporting programmes and projects directly or indirectly
related agriculture and rural development. They cover the subject areas such as food
security, conservation and utilization of agricultural bio-diversities, commercialization
of agriculture, management of forest resources, irrigation development, conservation
of land productivity, land reform and management, fisheries development, water
induced disaster management, environmental development, technical capacity
building and cooperatives development. They also cover multi-sectoral / cross-cutting
37
areas such as gender, environment and adaptation to climate change etc. (For
further details, see Annex - VIII).
In view of their continued interest to support agriculture development and food
security, following development partners are likely to support forthcoming
programmes and projects in line with their priority focus areas:
Table: Major Subject Areas Covered by the Development Partners’ Support to
Agriculture Sector Related Activities
S. N. Development Partners Likely Support Areasi
1 ADB Infrastructure development; agri-business /
commercial agriculture; community livestock
development; irrigation; agriculture roads.
2 Danida Forest conservation and development; good
governance support to local government bodies.
3 DFID Agriculture development (e.g. APP Support
Programme); food security, rural development;
land reform and use.
4 EU Food security; infrastructure development.
5 FAO Technical assistance for production, food
security, rural development; leasehold forestry;
natural resource conservation; land use;
agriculture marketing; preparedness for disaster
management (production incentive provisions).
6 Finland / FINIDA Natural resource management; leasehold
forestry; adaptation to climate change.
7 Germany / GTZ Poverty reduction; inclusive economic
development; commodity value chains.
8 IFAD Poverty reduction; agriculture and rural
development support for hill and mountain
areas; agri-business.
9 ILO Agriculture labour; employment.
10 IOM Migration issues; socio-economic effects of
remittance.
11 JICA Irrigation and agriculture development …..
12 Netherlands / SNV Agricultural commodity value chains; forest
management; support to the remote areas
(Western Nepal).
13 Norway Integrated pest management; climate change
14 SDC Agriculture; natural resources management.
15 UNDP Climate change; land reform and use; UNDAF.
38
16 USAID Agriculture production (e.g. seed support); food
security; infrastructure development.
17 WFP Food security (emergency food assistance).
18 World Bank Commercial agriculture; irrigation development;
agriculture roads; agri-business.
5.5 Ongoing Projects Implemented by Different Ministries in relation to
Agriculture Sector
The MoAC and other ministries related to the agriculture sector are currently
implementing around 40 projects with the support of different DPs. Some of them are
also supported by the INGOs (see Annex – IX for details).
39
VI. PROPOSED NATIONAL MEDIUM-TERM PRIORITY FRAMEWORK (NMTPF) FOR
AGRICULTURE DEVELOPMENT
6.1 Identification of Common Priority Areas
The Agriculture Perspective Plan (1995-2015) follows twin objectives of poverty
reduction and sustainable agricultural growth envisaging multiplier effects on the non-
agriculture sector. The National Agricultural Policy 2004 lends from APP and outlines
implementation mechanism to achieve the goals set. The Three-Year Interim Plan
(2007-2010) encompasses the objectives of ensuring food security with enhanced
agricultural productivity and commercialization. Emphasis is also led for inclusive
delivery of the extension services and agro-biodiversity conservation for sustainable
environment. Further, it highlights greater attention towards some cross cutting
issues such as gender integration, migration of agricultural labour, adaptation to
climate change and reforms on land utilization policies with incentives for increased
investments. These priorities coincide with the concerns for support revealed by
various DPs as well. By reconciling the complementarities between the
Government’s priorities and the possible areas of support the development partners
would wish to extend, following priority outcomes have been indentified for the
NMTPF:
Productivity Enhancement for Access to Income, Ensured Food Security and
Nutrition: The agriculture system in Nepal represents fragmented land holdings,
small size, poor irrigation facility, inadequate use of inputs and low quality seed. The
production largely suffers from the lack of access to basic agricultural inputs,
improved animal breed and adequate animal feed. Pasture land for livestock rearing
is declining over the years together with an increase in the encroachment of forest.
The access of farmers to the institutional source of credit is limited.
Agriculture development has been accorded high priority in relation to other activities
but budgetary allocation is still low. Commensurate with the importance of this sector
for fo9od security, it demands increased investment. For more production and
increased productivity, it also needs increased transfer of technology to farmers
ensuring delivery of basic inputs (i.e. seeds and fertilizers). Compared to other areas,
the production pockets of the remote areas substantially need improvements in the
access to such services. This subsequently means that the delivery of the services
(technology and inputs) should be enhanced. There is a wide gap between demand
and supply of artificial insemination services for cows and buffaloes. Same is the
case in the delivery of quality veterinary services.
Commercialization of Agriculture with Product Diversification and Sustainable
Market Linkage Development: The Nepalese agricultural production system is not
40
so much market-oriented yet. Though the country is emphasizing commercialization
of agriculture it lacks adequate infrastructural support. Beside this, the access to
markets also suffers from higher cost of production and frequent price fluctuations.
Nepal is import-dependent for the raw materials and inputs (e.g. feed for the
livestock, seeds and fertilizers). The open border import of chicks and eggs make the
sale of local products unfavourably competitive as the local products are already
affected by higher cost of production.5 The livestock sub-sector also involves the risk
of trans-boundary disease (e.g. swine flu and bird flu that affect the raising and
hatching cycles). Making Nepalese products competitive in the international market is
a major challenge against higher cost of production. Gap also exists between the
selling price of inputs in India and Nepal.
To promote commercialization, Nepal needs to access competitive as well as
comparative advantage based international markets. With this perspective, the
Nepalese farmers may require support on inputs and marketing of products.
Strengthening sustainable links between the production and marketing system is
therefore necessary. Support is also necessary for increased adoption of processing
technology.
Establishing quality control and safety mechanisms in production, distribution, import
and export of agricultural products including livestock is necessary. The policies,
regulations and institutional competency should be made compliant to the provisions
of the WTO (in the context of country’s membership to WTO). The consumers want
to secure confidence on the quality of products be they national or international.
Market demand largely depends on the quality of products at all value chains.
With the market based economic policies, involvement of private sector is important.
However, its participation is still constrained by the arbitrary and discretionary nature
of authority of the public sector. Therefore, there is a need for policy interventions
that contribute to their competitive participation in the labour and product markets.
The private sector is often focused on a myopic profit-oriented vision. As they are
mostly family based, they hardly participate without incentives. They may be keen for
farm level micro-interests, which often overshadows the macro perspective and
priorities.
5
The market price of Nepalese product is often high compared to similar product made available
from the Indian market. The Indian products benefit from subsidy, while the Nepalese farmers are
deprived of such facilities. As a result, they cannot compete with Indian commodities produced
across the border.
41
Instituting Enabling Environment for Effective Agriculture Development: There
is a need for improving governance systems and processes for better performance of
the agriculture sector. Aiming at efficient and effective management of the
development interventions, Nepal has developed several policies, acts, rules and
regulations. Their effective implementation demands adoption of good governance
practices both at the macro and micro levels. In one hand, the Government should
take up the challenge of filling the policy and legislation gaps 6, while on the other it
should streamline effective implementation of already existing provisions. The
Government also needs effective implementation of Local Self-Governance Act, 1999
in the context of devolved activities of agriculture. All these necessities suggest that
the country has greater need for strengthening related institutional capacities.
It is necessary that the policies and strategies should be backed up by subsequent
acts, rules and regulations to make the planning and implementation process more
operational and effective. This demands consistency in the priorities and political
commitments. Without such support, the policies, strategies and legislations
developed in the country simply remain unattended and get crashed before they
become operational in the current Nepalese situation, which is compounded by
frequent changes in the Government.7
Lack of transparency in the utilization of financial resource is an area subjected to
occasional criticisms. The adoption good governance practices should attempt
greater transparency and accountability.
Another critical lacuna related to the enhancement of efficiency and effectiveness in
planning and implementation of the development interventions is lack of monitoring
system. In the context of contributing towards evolution of sustainable development
process, the monitoring of both periodic progress and impact are essential.
Sustainable Management of Natural Resources for Food Security: Agriculture
development is dependent on the conservation and utilization of natural resources.
However, owing to the population pressure, the watershed areas in the country is on
serious stress. The deforestation rate is estimated at 1.7 percent per year due to
increased forest encroachments. Occurrence of flood, landslide and soil erosion have
6
For example, some subject areas are covered by already designed policies and legislations, while
many other areas still need to design similar measures. .
7
For example, almost all Governments talked about private sector participation as one of the priorities
but practical implementation of such priority has still to be realized yet. This kind of situation does
not give good message to the private sector, which often plans its investments with fairly long-term
consideration.
42
been adding hazards each year at various locations. The natural resources are over
exploited than their retaining capacity. However, their environmental effects are
hardly monitored.
The forest land is increasingly degrading. People are increasingly cultivating marginal
lands with no adoption of environment-friendly technology. Research on the
environmental effects of such land does not exist.
Every year more than 400,000 youths enter into the labour market but employment
opportunities to accommodate them in jobs are limited. As a result, the
unemployment rate is increasing against the desperate need of many poor people
demanding food security.
Due to deteriorating forest and watershed conditions, the conservation of bio-
diversities has suffered too. The depletion of rare and native resources is on rise.
Because of the need for meeting the livelihood pressure as a matter of priority, the
poor people are unable to balance the harvest of forest resources. They are hardly
aware about the sustainable ways of bio-diversity management.
There is a greater need in the country to conserve and effectively manage
watersheds. It requires enforcement of necessary environmental quality standards
and sustainable management of forest. .
Keeping in view the increasing number of food insecure people each year, Nepal
needs to sustainably manage the natural resources (land, water and bio-diversity) to
provide access to income generating opportunities. It this process, the country needs
to enhance income generating opportunities consistent to sustainable conservation
and utilization of natural resources.
Promotion of leasehold forestry has become one of the ways of supporting
livelihoods, poverty reduction and food security for the poor families. Similar efforts
should be expanded with pro-poor / marginalized people friendly forest management
practices. The forest areas should be productively used for their sustainable
livelihoods. Institutionally, developing a federation of leasehold forestry groups would
be useful.
Promoting plantation of NTFPs, medicinal and aromatic plants (MAPs) in the private
land, CF and LF would be useful for the generation of more employment
opportunities. In this regard, developing private investment friendly policies and
guidelines for NTFP would be useful.
43
There is a need for action research on sustainable utilization of forestry resources for
the benefit of agriculture sector, while maintaining its sustainability at the same time.
The bio-diversity rich areas should be delineated and conserved. Rare and native
species should be protected. Establishing a gene bank at the National Agricultural
Research Council (NARC) would be useful.
Development and Management of Support Infrastructure for Agriculture:
Nepalese agriculture is largely rain-fed.8 Because of higher dependency of cultivation
on the uncertainties of rainfall, the farming system is less predictable due to
increasing climate change effects. The timings of cultivation are uncertain thus
affecting the level of productivity.
Nepal being a rich country in terms of availability of water resources, there are
potentials for the development of more number of irrigation infrastructures. However,
the progress towards this end is still limited. In addition to the development of gravity
flow and ground water use systems, the country could also promote water harvest
techniques as another option to increase the command area of irrigation. The country
needs to develop and rehabilitate irrigation infrastructures, while reducing
sedimentation problems and enhancing overall water management efficiency.
Low road density9 or no road connection10 in the district is another problem area
affecting mobility of inputs to the farms and outputs to the market. Due to higher
transport cost of inputs to be applied and the unfavourable price for farm products,
there is no market-oriented production incentive among the farmers. To overcome
this situation, the country needs to connect farmers with market by increasing rural
road connections, especially in the production pocket areas as a matter or priority.
Further, new market centres should also be developed.
Preparedness against Natural Hazard and Climate Change Risks with Safety
Nets for Food Insecure Vulnerable Population: Both human-induced and natural
hazards affect production and productivity of agriculture and subsequently at the
level of food security. People in the country are not fully aware about the effects of
climate change at different levels (national, district and community). The rainfall
deficit is often triggering intensive emergency operations in the country (e.g. in 2006
and 2009). The country seriously needs adaptation to climate change effects in
8
Only around 35.4 percent of the cultivated land has been recorded as irrigated in 2008/09.
9
Only around 30 percent of the rural population have access to all weather roads. More than 60
percent of such road network falls in the lowland area.
10
Around 15 out of 75 districts are still not connected by all weather roads.
44
agriculture. It requires promotion of environment-friendly production practices.11 The
institutional and technical capacities should be strengthened for disaster risks
management. Assessments and monitoring of adverse effects should be carried out
to protect vulnerabilities through early warning system.
People are to be made aware about the climate change impacts, methods of
adaptation and disaster risks management. Enterprises should be diversified where
possible.12 Bio-engineering approach should be promoted.13
The country needs to utilize benefit of the National Adaptation of Action Programme
(NAPA) process. It should be used as a vehicle to establish coordinated interventions
among different stakeholders (e.g. Government, non-state actors and international
communities). Further, it should upscale climate change adaptation and disaster
management system experience gained from piloted activities. 14 The technical
capacity of MoAC, DoA and DoLS should be strengthened to pro-actively address
the climate change risks management and disasters prevention / preparedness
activities from the agricultural perspectives. The Disaster Risk Management (DRM)
system should be introduced in planning sustainable agriculture and rural
development activities of the MoAC
People holding small size of land (less than 0.5 ha.) or having no land (landless) are
largely food in-secured in Nepal. The vulnerable groups of this category are:
sharecroppers, non-tourist porters, agricultural labourers and the so-called lower
caste groups. Currently, 42 hill and mountain districts (out of 75) in the country
encounter food deficit. Ensuring food safety nets for these vulnerable groups is very
much necessary. There is a need for increasing their access to farm and non-farm
employment opportunities. At the farm level, involving them into a collective
agricultural system through farmers' organization could remain one of the options.
In relative terms, the marginalized communities such as Kamaiyas, Baadis, Deukis
and other poor families are the most affected ones by food insecurity problems. Most
of them are poor farmers or landless. The country lacks mapping of such vulnerable
groups living in the hazard-prone areas. To prevent from the effects of natural and
human-induced disasters, these groups should be provided with access to productive
incentives (e.g. seed, fertilizer support etc.) and NTFP-based leasehold forestry
11
By developing drought / heat stress tolerant varieties and supportive technologies.
12
For example, by changing farming of food grains to vegetables,
13
For examples, by planting trees to protect the soil from erosion.
14
For example, FAO has tested some location specific pro-poor adaptation interventions already at
the local level in the risk-prone districts.
45
activities. For this, the country should assess natural resource endowments
associated with the livelihoods of vulnerable households. Alertness should be
enhanced against the possible disasters, while developing agricultural research
suitable to the adaptation of climate change effects.
Priorities Related to Cross-cutting Areas: The situation analysis of the agriculture
sector in Nepal reveals the need of tackling migration of agriculture labour,
enhancing capacity for the integration of gender in agriculture and improving reform
measures for better land utilization practices. Accordingly, these subject areas have
been selected as the cross-cutting priorities.
Coping with the push and pull factors of out-migration for the benefit of
agriculture sector: Nepalese people in the remote areas are affected by food
deficit for about 6 to 8 months in a year. As the productivity of agriculture is low
and also that there are no adequate off-farm employment opportunities at the
local level, the poor people15 often tend to migrate outside. For the past many
years, the country has not been able to enhance the rate of agriculture growth
as compared to the rate of population growth taking place. As a result, it is
adding fuel to the push and pull factors of migration.
Subsequent to the out-migration people from village, the shortage of agriculture
labour is increasing in the country. It has added drudgery on the family
members who do not migrate (mostly women).16 The increasing trend of
migration has not only caused labour shortage in the agriculture season but also
added risk to the inter-generational transfer of agricultural knowledge from the
elders to rural youths. Nepal needs to correct this situation by attracting youths
to agriculture. Value chain activities should be promoted to generate more
employment opportunities in the country. Increased adoption of mechanized
technologies would also be useful to prevent the withdrawing tendency from
agriculture.
As investment in agriculture is limited, there is a need to enhance investment of
remitted money in this sector with more packages of productive incentives.17
Employment opportunities should also be made youths-friendly. In this regard,
15
Around 22 percent people in the rural areas are poor, while their proportion is around 8 percent in
the urban areas, In the Mid-western Development Region their proportion is 37.4 percent as the
highest.
16
The migration of village youths for foreign job indicates that around 90 percent of the migrants are
male, while the female migrants are only 10 percent.
17
Currently, around 30 percent households receive remittance of around NRs 65,755.- in average per
year. Of this, they invest only one percent in agriculture.
46
the expansion of agro-based activities managed by the groups would be useful
for self-employment.
Enhancing capacity for effective integration of gender in agriculture: The
women in Nepal are not only marginalized in accessing resources but also
getting benefit from the development opportunities when compared to men. As
the HDR puts it "unequal human development is both a cause and result of their
exclusion". To overcome this situation, the country needs strong socio-economic
transformation to close the gap between excluded and the privileged.
According to the CBS 2009, women's participation in economic activities is 55.2
percent as opposed to 71.6 percent men. Since women’s access to the
household assets and other productive resources is limited, the poor women
outnumber the figures of poor men (HDR 2009). The number of female-headed
households is on the rise in the rural areas.18
Nepal has been emphasizing commercialized agriculture, which is possible only
by transforming the current production oriented economy into a market
economy. This demands equal and effective participation of both men and
women. Women contribute significant proportion of labor force in the economy.
They are the real contributors to agriculture production. To improve human
capital, there is a need for empowering women. It needs a conducive gender
friendly environment. Some factors that contribute to such environment are:
involving women equally in the agricultural training programmes; incentives for
women's involvement in agri-business; application of the women friendly
modern tools and technologies; introduction of drudgery reducing technologies;
and promoting women’s groups in the productive activities and linking them with
market.
In view of the distracted interest of youths from agriculture, the country needs to
make the agriculture sector more glamorous and so that the trends of out-
migration could be minimized, to some extent. To reduce feminization of
poverty, emphasis should be given for gender budgeting accompanied by the
capacity building process for gender planning, implementation and auditing.
Emphasis should also be laid for planning the initiatives for reallocation and
redistribution of household level work between men and women with the
economic valuation of women’s contribution to household work.
18
It has reached 22 percent in 2008 from 14 percent in 2001.
47
More extension and training activities should reach to women. Their
entrepreneurship skills should be developed through result-oriented training on
production and marketing. Associated services should be provided for the
application of acquired skills at work. It is also important to introduce provisions
of reward / incentive for the empowerment of gender targeted to the
disadvantaged groups. Among other things, gender needs to be accepted as a
social issue and its mainstreaming as a development culture to be promoted.
Improving land utilization practices through better reform measures: The
production of food per capita has been declining due to low growth rate of
agriculture against high increase in population. The country is increasingly
facing food shortage.19 To overcome this situation, the country needs to develop
proper land use system20 that can contribute to increase agricultural production,
achieve environmental sustainability and maintain bio-diversity conservation. In
the absence of definite land use plan, the status of land use in the country is
less known. The Ministry of Agriculture, Ministry of Forestry and Ministry of
Housing and Transportation have done some land use planning but they are not
done in an integrated manner.21
The land in Nepal has also been a source of conflict and political instability.
Unequal distribution, greater number of landless people and the squatters
moving into urban areas are the problem areas associated with land. The
confiscation of land, encroachment of the forest areas and the occupancy of
open areas in the cities are growing. Plotting of fertile land areas for housing
purpose has adversely affected food production. In the recent years, the land in
the sub-urban areas is not owned to produce food but to earn more money
through price speculation.
Considering the importance of land, the Government has formed three high
level commissions – Commission on Land Reform, Commission on Providing
Solutions to Problems of Resettlement of Squatters and the Commission on
Solving the Problems of Kamaiyas. A National Land Use Project is implemented
19
About 3.4 million households in the country are facing food insecurity problems (WFP et al 2009).
Sixty-six percent of rural households surveyed as part of this assessment are already experiencing
food shortages; the worst hit areas are in the Far- and Mid-Western Hill and Mountain Districts.
20
The term "land use system" discussed in this report covers agricultural land, forestland, community
forestry, leasehold forestry, pasture and waste land. It also considers the management regime of
land such as owner cultivated, user rights, leasehold and management with traditional rights.
21
For example, the Ministry of Forestry maintains 40 percent of the country’s land as area under
forest (which is more or less the same as it exists now), while the MoAC maintains agriculture land
at about 20 percent of the total area of the country.
48
to facilitate land use planning. A provision of Land Council also exists under the
National Planning Commission. However, this Council, together with its district
level committees, is non-functional.
Nepal needs to formulate an Integrated Land Use Plan Policy (i.e. an ‘integrated
land policy’, which stipulates clear priorities with decentralized process and
allows the application of improved technologies through the private agencies. It
also needs to reform present legal systems. The country needs ‘integrated land
use law’ with specific guidelines.
Ground study would be useful to explore unused land (like river beds) and
expand cultivation of such areas through the poor and landless communities.
The capacity of MLRM should be strengthened on land administrative. Policies
should be developed for preservation of pasture, especially in the highland to
support animals like yaks, highland sheep and goats.
Piloting of different modalities of land consolidation would be useful in reducing
land fragmentation. Policies and strategies needs to be developed for the
expansion of ‘leasehold forestry’ with provisions for the benefit of landless
households. The Community Forestry (CF) activities should be expanded where
possible with policies and practices to increase food, especially for the poor and
landless people. Appropriateness of the "land tax structure" should be reviewed
to discourage misuse of land.
6.2 Conceptual Outline of "NMTPF for Agriculture Development"22
The NMTPF for Agriculture Development is proposed in conformity to the
Government’s priorities and compliance with mandates and comparative advantages
of the development partners. It has attempted to capture grey areas identified as
priorities and compliance to the capital and technical assistance, which the DPs
would like to offer.
The priorities have been selected from the review of documents (i.e. overriding policies,
plans and the contemporary thrusts) and consultations with the stakeholders. They are
derived from the analysis of both current situation of agriculture and complementarities
indicated by the past support trends of the development partners. These analyses
contributed to funnel down contemporary concerns for both Government and the
international support organizations. The results of such exercise are captured as the
clustered outcomes in the following conceptual framework:
l
Also interchangeably termed as National Agriculture Sector Development Priority (NASDP)
49
Figure -1: NMTPF for Agriculture Development (2010/11 – 2012/13)
Priority Outcomes for the Country Strategies Followed by
Agriculture Perspective Plan "NMTPF for Agriculture Multilateral and Bilateral
(1995/96 – 2014/15) Development"
Development Partners
Productivity enhancement Food Security and Nutrition (EU, FAO,
for access to income, UNICEF, USAID, WFP)
Sector Related Policies ensured food security
and nutrition Natural resource conservation and
Management (FAO, Finland, Japan,
National Agriculture
Commercialization of SDC)
agriculture with product
Policy, 2004
diversification and Commercial agriculture development
National Fertilizer Policy, sustainable market (ADB, WB)
2002 linkage development Leasehold forestry (FAO, Finland,
Agri-business Promotion Instituting enabling IFAD, Japan)
Policy, 2006 environment for effective Pro-poor growth (Japan); Poverty
Dairy Development
agriculture development Reduction (GTZ, WB, IFAD)
Policy, 2007 Sustainable management
Livelihoods development and lasting
of natural resources for
National Seed Policy, food security
Peace (DFID, UNDP)
2000
Development and Policy reforms (ADB, FAO, WB)
Irrigation Policy, 2003 management of support Capacity building in agriculture (ADB,
Agriculture Bio-diversity infrastructure for
Localization of the MDGs
FAO)
Policy, 2007 agriculture
Adaptation to climate change (FAO,
National Tea Policy, 2000
Preparedness against Finland, UNDP)
natural hazard and
National Coffee Policy, climate change risks Preparedness for disaster
2004 with safety nets for food management (EU, FAO, WFP)
Policy and Institutional
insecure vulnerable Enhancing productive use of
population Resources – priority lending to
Arrangement for the
Effective Implementation Priorities related to cross- agriculture (WB)
of APP, 2001 cutting areas Irrigation Development (ADB, WB,
Master Plan for Forestry - Coping with the push and Japan)
Sector, 1989 pull factors of out-migration
for the benefit of agriculture
Irrigation water management (FAO)
National Water Plan – sector Agriculture marketing (WB)
Nepal, 2005
- Enhancing capacity for Land reform and use (FAO, UNDP,
effective integration of WB)
gender in agriculture
Employment promotion (ADB, FAO,
- Improving land utilization ILO, WB)
practices through better
reform measures Increased production and
Interim Plan
diversification of agriculture (ADB,
(2007/08 – 2009/10) - FAO, WB)
6.3 NMTPF Matrix for Agriculture Development
Under each of the seven priority outcomes identified, expected outputs have also been
outlined. It is believed that by accomplishing these outputs, the selected priority
outcomes will be attained.
50
PRIORITY OUTCOME 1: PRODUCTIVITY ENHANCEMENT FOR ACCESS TO
INCOME, ENSURED FOOD SECURITY AND
NUTRITION
Output 1.1: Productivity and production of crop, livestock and fisheries enhanced.
Output 1.2: Selective mechanization to ensure timely farm operation, reduce
drudgery and to enhance labour productivity.
Output 1.3: Agricultural extension, research and support services expanded and
diversified to improve access of farmers.
Output 1.4: Rural finance and agriculture insurance services promoted.
Output 1.5: Inclusive access maintained for adequate and safer food.
PRIORITY OUTCOME 2: COMMERCIALIZATION OF AGRICULTURE WITH
PRODUCT DIVERSIFICATION AND
SUSTAINABLE MARKET LINKAGE
DEVELOPMENT
Output 2.1: Market-led production process diversified and commercialized.
Output 2.2: Price and non-price measures for inputs and outputs made supportive.
Output 2.3: Market infrastructure and institutional support arrangements enhanced.
Output 2.4: Cross border trade facilitated with institutional / policy reforms.
PRIORITY OUTCOME 3: INSTITUTING ENABLING ENVIRONMENT FOR
EFFECTIVE AGRICULTURE DEVELOPMENT
Output 3.1: Strengthened institutional capacities for the delivery of services
demanded by the agriculture sector.
Output 3.2: Functional links strengthened among the interrelated policies, acts,
rules and regulations.
Output 3.3: Sustainable conservation and utilization of bio-diversities promoted.
PRIORITY OUTCOME 4: SUSTAINABLE MANAGEMENT OF NATURAL
RESOURCES FOR FOOD SECURITY
Output 4.1: Watershed conservation and management practices improved.
Output 4.2: Forest sustainably managed for income generating opportunities and
food security.
PRIORITY OUTCOME: 5 DEVELOPMENT AND MANAGEMENT OF
SUPPORT INFRASTRUCTURE FOR
AGRICULTURE
Output 5.1: Irrigation infrastructure developed and efficient water management
practices enhanced.
Output 5.2: Increased rural road connections for access to market.
Output 5.3: Food safety nets maintained for the poor and vulnerable groups.
51
PRIORITY OUTCOME: 6 PREPAREDNESS AGAINST NATURAL HAZARD AND
CLIMATE CHANGE RISKS WITH SAFETY NETS FOR
FOOD INSECURE VULNERABLE POPULATION
Output 6.1: Possible effects of natural and human-induced disasters prevented.
Output 6.2: Institutional and technical capacities for adaptation to climate change
effects in agriculture strengthened.
PRIORITY OUTCOME: 7 PRIORITIES RELATED TO CROSS CUTTING AREAS
Output 7.1: Coping with push and pull factors of out-migration for the benefit of
agriculture sector.
Output 7.2: Enhancing capacity for effective integration of gender in agriculture.
Output 7.3: Improving land utilization practices through better reform measures.
(See Annex X for activity focus related to the outputs and the potential DPs that
may be interested to collaborate).
52
VII. CONCLUSION
Nepal has been emphasizing broad based agricultural growth accompanied by
inclusive targeting of the vulnerable groups. Emphasis is laid for enhancing
implementation capacity of the public service agencies in delivering demand-led
services, while promoting participation of the private sector in the areas of their
comparative advantages. Agriculture being the area specific development activity,
attempts have been made to strengthen the role of local government agencies in the
sub-sectors covered by devolution.
The prospect for expanding cultivation area for more production is gradually shrinking
in the country. Against a low performance scenario of production characterized by
low productivity, the redistributive capacity of growth is poor. However, it is a reality in
the country that around 80 percent people still rely on agriculture as their primary
occupation. Such situation tends to squeeze the domestic market due to low
purchasing power of majority of people thus limiting the prospects for further growth.
The low productivity and production of agriculture have not only increased the risk of
food insecurity in the country but also accelerated unsustainable use of natural
resources. The poor people are desperately attempting to cultivate extended parcels
of marginal lands to meet their livelihoods.
Despite realization of the need of improving performance of agriculture, the country
has not been able to do much. One of the problems associated with such situation is
frequent change of the Governments, which often shifted their respective priorities.
On the other hand, compared to the priority accorded to the sector to support
livelihoods of the majority of households, the investments made so far is less
promising.
It is believed that with the formulation of this NMTPF the Government and other
development partners would benefit to promote the performance, of the sector. It
would contribute to the design of agriculture friendly policies and approaches leading
to the delivery of demand-led services. It is also hoped that the investments would
correspond to the priorities and the objectives of food security, poverty alleviation,
inclusive growth, commercialization and environmental sustainability would be
successfully fulfilled.
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