Improved Policy and Legal Frameworks for Local Rice
Varieties in Nepal
Table of Contents
1. Introduction: About Nepal
1.1 Nepal‘s Cultural, Economic and Environmental Condition
1.2 The Role of Small Scale Farmers
1.3 Genetic Resources Policy Scenario in Nepal
1.4 About the GRPI Project
2. Laws and Policies Affecting the Conservation and Commercialization of Local Crop
3. Case Study
3.1 Commercialization and Market Linkages for the Promotion of Local Rice Varieties in
4. Fitting into the Policy Environment
5. Conclusions and Recommendations
1.1 About Nepal
Nepal is a landlocked country bordering China and India with a surface of 147000 square km
(citation??). The northern Himalayas include some of the world‘s highest mountains (up to
8850 meters above sea level) whereas the southern plains extend into the larger Indo-
Gangetic valley to a very low elevation (70 meters above sea level)(citation??). Nepal is
rectangular in shape and about 800 km long and on average 200 km wide. It is roughly
divided into three parallel east-west regions which moving from north to south are known as
the mountains, hills and Tarai. These three ecological belts are different in geography and
climate. The Tarai plains bordering India are part of the northern rim of the Indo-Gangetic
plains. They were formed and are fed by three major rivers: the Kosi, the Narayani, and the
Karnali (citation??). This region has a hot, humid climate. The mid-hills are the most
developed and most densely populated part of Nepal. Two low mountain ranges, the
Mahabharat Lekh and Shiwalik Range dominate this belt (citation??). Winters are cool and
summers are moderate. Unlike the valleys, elevations above 2,500 meters are sparsely
populated. This ecological region includes the Kathmandu valley, which is the most fertile
and urbanized part of Nepal (citation??). The northern mountains are cold to arctic and are
very sparsely populated. Some communities move from high altitudes to the valleys at the
beginning of the winter.
Nepal is one of the world‘s least developed nations, with low per capita income (US$ 320),
and generally low socio-economic indicators (citation??). The percentage of people living
below the poverty line varies per region and depends very much on the local geography.
Figures from the late 1990s show that in the far-western mountains 78 percent of the
population lived below the poverty line, whereas in the eastern Tarai and central hills this
number did not reach 30 percent.1 Recent (2003/04) living standard survey estimates that the
population living below the poverty line is 31 percent (citation??). Life expectancy at birth is
60 years and adult literacy is with 48 percent among the lowest in the world. Nepal is ranked
142 out of 173 countries worldwide on the human development index. Unemployment
statistics (42 percent) conceal a great deal of unreported unemployment and
underemployment.2 Nutritional indicators also put Nepal among the poorest in the world.
Almost half of the children are either under weight or stunted, and 75 percent of pregnant
women and 50 percent of women aged 15-59 are anemic.3
Despite the fact that the Nepalese economy grew at an average annual rate of 4.93 percent in
the 1990s and is estimated at 5 percent for 2006, growth varied widely between different
years. In most years it remained lower than population growth, though in 2006 this was no
1 Nepal agricultural policy and strategies for poverty alleviation and food security. Food and Agriculture
Organization of the United Nations, United Nations Development Programme. Nep/99/0023: SPPD Report.
Kathmandu, Nepal, June 2003. p. 22.
2 World Fact book figures, available at: https://www.cia.gov/cia/publications/factbook/geos/np.html
3 Malnutrition is more common among women/girls, since men/boys generally get better nutrition. Nepal
agricultural policy and strategies for poverty alleviation and food security. Food and Agriculture Organization of
the United Nations, United Nations Development Programme. Nep/99/0023: SPPD Report. Kathmandu, Nepal,
June 2003. p. 25.
longer the case.4 Nevertheless, the growth rate of the agricultural sector to the GDP is much
lower than of most Nepal‘s neighboring countries .5 The rate of growth of non-agricultural
GDP has in every year been positive, less variable and greater than the population growth rate
(citation??). Among the non-agricultural sub-sectors, manufacturing, transport,
communications, and community and social services sub-sectors grew fastest (citation??).
1.1.1 Nepal’s Cultural, Economic and Environmental Condition
Nepal is rich in cultural heritage as a result of diversity in language, culture and ethnicity. It
is also endowed with diverse ecology, farming systems and economic settings (citation??).
The production system is integrated with crops, livestock and forestry. The major
physiographic regions, climate, crops grown and livestock raised by the farmers in each
ecology is presented below (Table 1).
Table1. Crops and livestock production in major physiographic regions.
(source of the table??)
Major physiographic regions Climate Major crops Major
1. Tarai hot, humid Rice, Wheat, Maize, Cattle, buffalo,
Mustard, Brinjal, Onion, Goat
Main tarai (low land)
Garlic, Potato, Coriander,
Upper Tarai (up land) Mango, guava, Banana,
2. Hill cool, humid Rice, Wheat, Maize, Cattle, Buffalo,
Fingermillet, Soybean, Chyangra,
valley floor cultivation cool, dry
Onion, Garlic, Coriander, goat, Sheep,
Hill slope cultivation Ginger, Amaranths, pigs
(i) Leveled and nearly leveled Foxtail millet, Colocassia
terraces Citrus, Common
(ii) Sloppy terraces and
3. High Mountain cool, humid Bitter buckwheat, Sheep, Yak,
Prosomillet, Naked Nak, Chaurries
barley, Potato, Apple Chyangra, goat
1.1.2 Role of Small Scale Farmers
Nepal is predominantly dominated by small scale farmers where more than 64% of the farmers
have less than one hectare of land (NLSS, 2004). Small, fragmented and unproductive
landholdings are major constraints to improving agricultural productivity and livelihood of the
people. However, the small scale farmers which account for two-third of the population are the
main conservers, developers and users of genetic resources for food and agriculture
4World Fact book figures, available at: https://www.cia.gov/cia/publications/factbook/geos/np.html
5Nepal agricultural policy and strategies for poverty alleviation and food security. Food and Agriculture
Organization of the United Nations, United Nations Development Programme. Nep/99/0023: SPPD Report.
Kathmandu, Nepal, June 2003. p. 38-40.
Nepalese small scale farmers practice subsistence farming generally on smallholdings of
about one hectare or less (citation). In aggregate more than two-thirds of the cultivated land is
non-irrigated. Small and marginal farmers6 have small size of land holding that are generally
of low quality. The small lands are also scattered in different plots and irrigation is either not
available or seasonal. Nepal's agriculture is family agriculture and not large scale commercial
agriculture. The agriculture is mostly for the subsistence and part-time employment for many
small and marginal farmers with income supplement from non-agriculture. (citation???)The
subsistence part-time farms produce to meet their own demand of food, though partly most of
the time. The family farms in the mountains, hills and Terai have existed for centuries with a
sustainable integration of diverse crops and livestock. Small farms generally have mixed
farming system producing crops, livestock and trees in an integrated system which promotes
agro-biodiversity and environmental sustainability (citation??). The system produces good
crops and livestock breeds with low external inputs. Such farms provide sustenance, food
security and a surplus for sale to local markets (Pant, 2007). Some farms, particularly in the
better endowed and well connected areas are producing for the commercial purposes.
As the number of farm households increased and total cultivable land remained relatively
stagnant, the average size of holding decreased from 1.11 ha (in 1961/62) to 0.80 ha (in
2001/02) (citation??). The average number of parcels per farm holding decreased to a half
during the same period (Table 2). A large number of parcels per holding makes it difficult for
farm management and infrastructural facilities.
Table 2. Trend of average holding size and parcel size over the last 40 years
Particulars 1961/62 1971/72 1981/82 1991/92 2001/02
1 Average holding size (ha) 1.11 0.97 1.13 0.96 0.80
2 Average parcels per holding
(Number) 6.8 7.2 4.4 4 3.3
3 Average parcel size (ha) 0.16 0.13 0.26 0.24 0.24
Source: CBS (2002) and Pant (2007)
126.96.36.199 Challenges faced by Small Farmers
Nepal's agriculture production is highly fragmented into small holdings and the volume of
transactions is very small (Pant 2005). This leads to several problems like;
small production without economies of scale;
subsistence farming and therefore non-commercial farming meaning little connection
with market trends;
uneconomical to invest for research in product development and market promotion;
difficulties in the collection of the products,
heterogeneity to the aggregated production,
difficulties in product tracing back to the farm,
high expenditures on testing and certification as these services are charged on the basis
of the services rendered rather than the quantity of transaction ,
many crops and livestock grown together and difficult to track profit and loss
limited public support to scattered farms
too many small farmers are difficult to reach for their training
difficulty in documentation of the farm activities
6 The family farms with up to 0.50 ha of land are marginal farmers and those with more than 0.50 ha and up to
4.0 ha of land are small farms (MOAC, 2004).
Small uneconomical farm size and limited area under year-round irrigation, low use of
modern inputs like fertilizers and improved seeds and limited reach to extension services are
the main hindrances in agriculture to be instrumental for poverty reduction (NPC, 2003, p36).
This statement represents the general vision of the policy makers.
Marginal and small holding, in equitable distribution land
The challenge to traditional farming system is posed by the ever-growing population
and increasing incidence of poverty. Every year, nearly 600,000 new guests are
Tenancy problems- landless, agriculture labour-problems, high dependency on landlords
Needs and priorities of Kamaiya (tenant) have not been addressed well
Government systems is not well functioning to address
Deprived groups highly vulnerable due to lack of secured land and support services
Powerful elites have marginalized poor and vulnerable farmers
Limited off-farm options/opportunities
Limited access to infrastructure and support services (e.g. inputs, credit, market, health,
Poor organizational capacity- lack of systematic farm organizations, farmers are not
well organized in groups, cooperatives
PGRFA needs community actions, this require community organizations
Policy are less sensitive to small and resource poor farmers and are poorly integrated in
policy making process
Poverty gap - Rural vs. Urban
Several crop varieties and domestic animal breeds have been domesticated, selected, evolved
and nurtured by the efforts of small farmers in Nepal over millennia (Citation??). The
farmers have nurtured and maintained these rich genetic resources for their immediate food
needs and survival. Evidence shows that more than 90% of the seed supply in food crops
takes place through farmers own informal source of production and management (Baniya et
al, 2002). In recent times however, there have been widespread claims that the country is
losing its significant portion of GRFA due to its liberal economic policy, ad-hoc promotion of
modern varieties and breeds and lack of overall policy on genetic resources (citation??). Loss
of diversity enhances crop and animal vulnerability to pest and diseases. This is one of the
most serious issues related to monoculture with uniform crop. Crop vulnerability due to lack
of diversity in Nepal is evident by the emergence of the Brown Plant Hopper in 1998 and
1999. Modern varieties like CH-45 and Mashuli were damaged by the pest. Farmers suffered
heavy economic loss in rice production and the nation had to import rice from abroad.
1.2 General Policy Scenario in Nepal
Genetic resources for food and agriculture (GRFA) play vital role in the national economy of
economically active Nepal since around where 70 percent of economically active population
depends on agriculture for their livelihood (CBS, 2006). Agriculture contributes about 38 per
cent of gross domestic product (GDP) and it is a major source of income, employment and
livelihood of Nepalese people. Similarly, livestock within agriculture, contributes one third of
total agricultural gross domestic product (AGDP) and have a potential to contribute up to
nearly half (45%) of AGDP (APP, 1995).The country is rich in biodiversity and genetic
resources as a result of its extreme variation in ecology, farming systems and varied socio-
cultural settings. Although comprising only 0.09% of global land area, Nepal possesses a
disproportionately large diversity of flora and fauna at genetic, species and ecosystem levels
(NBS, 2002). Nepal‘s rich genetic resources are a reflection of its unique geographic position
as well as its altitudinal and climatic variations. However, in the recent times there have been
widespread claims that the country is losing its significant portion of genetic resources for
food and agriculture (GRFA) due to its liberal economic policy, ad-hoc promotion of modern
varieties and lack of overall policy on the conservation and sustainable use of genetic
resources for food and agriculture .
Systematic policymaking processes started in Nepal with the concept of national five year
development plans in the mid 1950s. Since the first Five Year plan of 1956-1961, national
periodic plans have been the chief means of articulating government development objectives,
policies and plans. Until now, ten periodic plans have been developed and implemented.
Historically, the policy formulation process remained in the government sector with formally
no or limited participation of private sectors (citation?). The policies were framed based on
advice of relevant technical experts in the government or with the assistance of foreign /local
consultants. They were basically guided by the western scientific paradigm that stems from
the notion that "economic benefits can be derived only from the promotion of modern varieties/
technologies" brought from outside. This appears to be still the guiding philosophy in policy
formulation in Nepal (Gauchan et al, 2000a).
Recently, however, there has been increased realization of the role and participation of civil
society in the policy formulation process. Civil society particularly the I/NGOs have since
been active in creating awareness and raising policy issues after the government opted to
join the World Trade Organization (WTO) in 1998. Government Ministries and other public
institutions have shown increasing interest to involve private sector and civil societies in the
policy debates and discussions particularly in relation to national preparation for entry to WTO.
However, participation of low-income farmers and grass-roots institutions has been very much
limited and they have rarely been involved in the consultation process (Gauchan et.al, 2002). As
a result genetic resource policies were either not formulated or translated into action or
inadequately developed and sectoral in nature.
Nepal‘s policy makers are presently faced with implementing a myriad of national and
international policy obligations which are relevant to the conservation, use and development
of genetic resources for food and agriculture. Rapid changes in the recent international policy
scenario, complexity of the emerging genetic resource policy issues, and the diversity of the
stakeholders involved in genetic resource sector require good information by the policy
makers for the development of realistic policy relevant to the needs and goals of Nepalese
agro-economy. However, presently policymakers lack adequate capacity, information and the
institutional arrangements on GR related policy developments. Institutions and stakeholders
involved in the development of genetic resource priorities, action plans and policies are
scattered in different government ministries. The flow of information between government
ministries and other stakeholders is often limited or irregular and ad-hoc (Gauchan et al.,
2002). Despite the importance of GRFA and predominance of traditional farming systems,
policy makers and other major stakeholder groups are not adequately aware of the potential
benefit of GRFA in Nepal. Policy makers have limited understanding of recent international
policy instruments such as ITPGRFA, WTO/TRIPs, including domestic safety regulations
and arrangements, such as biosafety law to guarantee safety, protect foreign investment, and
promote international co-operation for local research. Furthermore there is a lack of
harmonization and adaptation of these international instruments into recently developed
policies and laws.
In this context, participatory comprehensive policy making processes with the participation of
diverse stakeholders including non-traditional ones such as farmers, civil society and the
private sector in policy analysis and formulation was thought imperative (citation??).
However, the country had limited national capacity to understand, analyze and develop
policies relevant to the needs and priorities of the country. In this view the policy thematic
team of Nepal In situ Project undertook a study to identity current state of PGRFA policies in
the country which suggested a need of a multi- stakeholder project to develop and strengthen
the capacity of actors engaged in national genetic resources-related law and policy
development. As a result Nepal component of GRPI project was conceptualized and initiated
in 2003 with several rounds of in-country consultation of relevant stakeholders and the
technical guidance of Bioversity International (then IPGRI) and financial support of IDRC,
SDC and DGIS. The steps for implementation of GRPI Nepal project is briefly outlined
1.3 The Genetic Resources Policy Initiative (GRPI)
The identification of Nepal Agricultural Research Council (NARC) as a host institution to
lead the GRPI project and the process of composition of national task force started in multi
stakeholder meetings involving participants from GO, NGO, INGO, private sector and
farming communities. In due course of time the meeting of the preliminary task force
identified the full composition of national task force (Box 1) to implement the project. The
objectives of the task force were formalized through letters of agreements (LoA) between
NARC and the then IPGRI. The GRPI Task Force is an independent, multi-stakeholder
project governance unit responsible for directing and overseeing the implementation of the
project in Nepal.
BOX 1 Composition of task force
A. Public Sector (Govt.)
Ministry of Agriculture and Cooperative (MoAC), Gender Equity & Environment
Ministry of Forestry and Soil Conservation, CBD-Focal point
Ministry of Law and Justice
Ministry of Industry and Commerce (MoIC), WTO-Cell
National Agro biodiversity Conservation Committee (NABC)
WTO-cell, Ministry of Agriculture and Cooperative (MoAC)
National Agricultural Research Institute (NARI)
Agriculture Botany Division, NARC
Animal Breeding Division, NASRI
Biotechnology Unit, NARC
Socio Economic & Policy Research Division, NARC
Law Associates, Nepal
South Asia Watch on Trade, Economics & Environment (SAWTEE)
C. Private sector
AgAgro Enterprise Centre-Federation of Nepal Chambers of Commerce and Industry
Seed Entrepreneurs Association (SEAN), Nepal
D. Community based organizations
Pratigya Cooperatives, In-situ eco-site, Kaski
ADCS, In-situ eco-site, Bara
E. CG Centers
Bioversity International (then International Plant Genetic Resources Institute (IPGRI-
Efforts were made to ensure representative participation of multi-disciplinary, multi-sectoral
and multi-institutional sector in the task force (governance body) representing diverse
stakeholders ranging from public and private sectors, civil society and the farming
A working team of key stakeholders of diverse disciplines and sectors were formed to lead
and conduct action research, capacity building and policy advocacy to implement the project
activities. It included representation from the host institution, and NGOs. Such as LIBIRD,
ABTRACO and LAN. These constituted the working team that was to carry out day-to-day
activities and be responsible for smooth implementation of the project.
1.3.1 Policy Demand Analysis for Nepal
The project employed a Southern Country Demand Analysis (SCDA) framework in 2003 to
identify priority national needs and issues in genetic resource policy options in the country.
This involved a rapid appraisal of agricultural knowledge systems and multi stakeholder
process design in genetic resource policies (de Boef, 2002). The methodological framework
was discussed at the first task force meeting and the process was adapted to national needs. A
national survey of relevant stakeholders involved in genetic resources use and management
was conducted to identify major genetic resource policy issues. The stakeholders interviewed
represented diverse sectors and institutions such as public and private sectors, civil societies
and farming communities. The working team identified a list of stakeholders for consultation
in the survey and that was discussed and refined by the task force. A large number of issues
were identified during the survey which requires clustering and prioritization. These issues
were clustered and broadly prioritized by the working team and the task force through series
of consultation meetings.
188.8.131.52 Prioritization of Nepal’s Policy Needs and Issues
The important research and development issues identified from the survey of key
stakeholders were revisited, validated and prioritized during the national multi-stakeholder
workshop held between January 6 and 9 of 2004 and were validated and prioritized during
the national multi stakeholder workshop in January 6-9, 2004 (Wongtschowski, 2003).
The important prioritized genetic resource issues were:
1. Empower farming communities in genetic resource management
2. Inter-institutional coordination in GR policy
3. Regulating access and benefit sharing
4. Promoting commercialization of local genetic resources
5. Sui generic protection (plant variety protection)
6. Adaptation of international agreements requirements to Nepal
7. Food quality and safety regulation in relation to local GR use and innovation
184.108.40.206 GRPI’s Response to Nepal’s Policy Needs
These prioritized issues are also well linked with national policy framework and proposal
development. As per the approval of the GRPI Nepal‘s governance body, key members of the
task force who have relevant expertise were actively involved in developing component
proposals in each of the above identified issues. The component proposals were developed in
six of the above seven issues, in which access and benefit sharing component was
amalgamated within empowering farming community component. This integrated Nepal-
GRPI proposal covers all of these six thematic complementary issues employing range of
institutions, sectors and disciplines. Employing the multi-stakeholder governance body, the
proposal aimed to identify and analyze major genetic resource policy issues and develop
policy options by creating awareness, conducting policy action research and enhancing the
capacity of national stakeholders. The uniqueness of the governance body is that it represents
participation from the CBD and the WTO focal points, the legal sector and representations
from non-traditional stakeholder such as civil society organizations, the private sector and
farming communities. Further more, involvement of the farming communities and other non-
traditional stakeholders in research, awareness creation and capacity building in this GRPI
project was important in enhancing their ownership in, and capacity on, national policy
Nepal is among one of the six ―GRPI pathfinder‖ countries, the other five being Ethiopia,
Egypt, Peru, Vietnam and Zambia that the overall GRPI project is supporting. GRPI is a
project aiming to strengthen the capacity of southern countries to develop comprehensive
genetic resources policy frameworks. The approach of the initiative is to support and
strengthen systems for multi-stakeholder, multi-sectoral and multidisciplinary participation in
policy analysis, design, and institutional governance. During its second phase, GRPI has
supported on-the-ground training, capacity building and research with national stakeholders
Laws and Policies Affecting the Conservation and Commercialization of
Local Crop Varieties in Nepal
Nyasha E. Chishakwe
Nepal has embarked on several initiatives in recent years, especially following political
change and restoration of multi-party politics in 1990. These initiatives have potentially far-
reaching consequences. The Constitution of the Kingdom of Nepal (1990) guarantees the
protection of human rights based on freedom and equality and maintenance of unity and
brotherhood. On the economic front, the country has adopted a policy of liberalisation and
privatisation – a radical departure from the past policy of state intervention in all spheres of
the economy. It has also joined the WTO, a move that brings new obligations, new
opportunities and new challenges.
The government has undertaken several complementary measures within the framework of
these initiatives. For example, an Agriculture Perspective Plan (APP) was approved by the
government in 1995. It provides a framework for accelerating agricultural growth, and for
promoting broad-based growth of the entire economy in an attempt to drastically reduce the
proportion of the people living below the poverty datum line. This twenty-year perspective
plan recommends key policy measures and makes assumptions that were reviewed for
authenticity during this study.
In tandem with the APP, the country adopted poverty alleviation as its sole goal for the
purpose of periodic planning. Such policy initiatives, however, will succeed in achieving
their objectives only when requisite enabling conditions prevail; the legal and administrative
regimes are the institutional elements that contribute to the creation of such conditions.
Consistency between the objectives of policy initiatives and the conditions created by the
country‘s legal regime are a prerequisite to achieving the country‘s development goals.
Considering this critical requisite, His Majesty‘s Government of Nepal (HMGN) requested
that the Food and Agriculture Organisation of the United Nations (FAO) assist it in reviewing
its existing agricultural policies and legislation in order to harmonise them as necessary7. The
report provided a useful synopsis on legal and policy gaps in the agricultural sector. Some of
the findings are used as source material in this study. The FAO report gave a broad
perspective on the legal and policy situation in Nepal, however this study provides a more
focused analysis of the role played by laws and policies in the conservation and
commercialization of local crops in Nepal. The study will first examine the laws and policies
affecting farm-level side of local crop production. This will be followed by an examination of
marketing and commercialization side of the continuum. The study will end with a
Review of Agricultural Policy and Legislation‖ (TCP/NEP/0165) under its Technical Co-operation Programme
Laws and Policies Affecting the Conservation and Commercialization of Local
Genetic Resources in Nepal
There are over 66 laws, 38 regulations, 39 executive orders and 39 by-laws relevant to
the conservation and commercialization of local genetic resources in Nepal. These can
be divided into two categories, namely: (i) those affecting conservation and farm-level
production and (ii) those affecting marketing and commercialization
(i) Laws and Policies Affecting Conservation and Farm-level Production
The Seed Act, 2045 and Seed Regulations, 2054
National Seed Policy
Draft Plant Variety and Farmers‘ Rights Bill (2005)
Draft Access to Genetic Resources and Benefit Sharing Bill (2002)
Agricultural Policy (2005)
Agricultural Perspective Plan
Nepal Agricultural Research Council Act, 2048
National Commission on Indigenous and Ethnic Communities Act (2001)
Environmental Protection Act (1997) and Regulations (1997)
Plant Protection Act, 2029
Forests Act (1995)
Bio safety Act (2005)
Biotechnology Policy (2005)
(ii) Laws and Policies Affecting Marketing and Commercialization
Food Act, 2023
Industrial Property Act (2005)
2.2 Laws and Policies Affecting Conservation and Farm-Level Side of Local Crops
Besides prerequisites such as land, water and conducive climatic conditions, local crop
production depends on the availability of inputs such as seeds, good farming practices and
know-how. The relevant laws and policies regulating the availability or access to such inputs
in Nepal include the National Seed Policy, The Seeds Act (…), the National Commission on
Indigenous and Ethnic Communities Act (2001), the Agricultural Policy (2005) and the
Agricultural Perspective Plan. Other instruments that are still in draft form include the draft
Plant Variety and Farmers‘ Rights Bill (2005) and the draft Access to Genetic Resources and
Benefit Sharing Bill (2002).
Local crops as opposed to improved crop varieties are a product of the knowledge and
practices of past and present generations of farmers (IIED, 2005). The proliferation of such
practices in turn depends on the free movement or exchange of seeds of local crop varieties
and traditional knowledge among local farmers. The current legal and policy framework that
is existent in Nepal however does not foster free exchange of seeds among farmers. Instead, it
aims at advancing the private seed production sector which enhances the distribution of
improved seed varieties. For instance, the Seed Policy focuses on four main areas that include
(i) variety development (ii) seed multiplication (iii) seed quality control and (iv) promotion of
the private sector in the seed business. Under variety development, the policy promotes the
inclusion of the private sector in variety development, registration and release of variety and
engendering national public/private sector partnerships. Under seed multiplication, it
encourages seed production especially variety maintenance which protects breeders‘ rights
and specifies a mechanism to produce and distribute seeds. Under seed quality control, the
policy recognises a ‗quality-declared seed system‘ in addition to certified and labelled seeds.
Under promotion of the private sector in seed business, the policy focuses on providing
financial support to cover part of the cost for procuring seed through loans, concessions on
local tax and customs duty, provision of training to the private sector entrepreneurs, and
providing the seed industry with the same facilities as are given to priority industries.
While all the focus areas of the Seed Policy are generally geared towards increasing private
sector involvement in the production and distribution of improved seed varieties, the focus
area of seed quality control is probably the only one that provides an opportunity for the
wider distribution of local crop varieties. It provides for the recognition of a ‗quality-declared
seed system‘ that does not require rigorous compliance conditions such as those found under
seed certification. If a seed lot meets certain minimum conditions, it can be declared to be of
sufficient quality and legally distributed.
The Seed Act was approved as early as 1990 to assure production and distribution of quality
seeds. Yet, its legal enforcement is still confined to three districts in the Kathmandu Valley.
Even within the valley, it is not effectively enforced for reasons of legal snags and lack of
Many of Nepal‘s agricultural laws seem motivated by the assumption that by creating an
organisation or an institutional structure, the nation can address the issues facing the area
mandated to that particular organisation. However, none of the laws are explicit in areas of
responsibilities assigned to these organisations. In fact, the obligations of these organisations,
in general, are rarely addressed. Decisions related to these obligations are generally left to
HMGN, and they either allow HMGN to frame rules or regulations to implement these laws
or to leave these issues to be addressed by other laws, even though those ‗other laws‘ may be
the source of difficulties that necessitated enactment of the law in question.
Many of Nepal‘s policies were conceived without consideration for the realities of Nepal,
and often contradict the policies enshrined in Nepal‘s fundamental law - the Constitution of
the Kingdom of Nepal, 2047 (1990). Its current macro-economic policies relating to
privatisation and liberalisation, while having stabilising efforts on many parts of the
economy, have a particularly strong impact on the agricultural sector. The current policies
Deregulation in foreign trade and investment
Opening of the economy to foreign investment and technology
Divestment of public enterprises
Reduction or abolition of subsidies to balance government expenditure and revenue
Trimming the size of government employees
Introduction of a flexible exchange rate regime while allowing the exchange rate between
Nepali and Indian rupees to remain fixed
While many of the policies mentioned above are admirable in concept, they are not being
applied uniformly across sectors, and their implementation approaches are generally biased
against the agricultural sector. Similarly, Nepal‘s liberal trade policy affects the agricultural
sector much more than any other sectors.
2.3 Laws and Policies Affecting the Commercialization side of the Local Crop
Commercialization and Market Linkages for Promoting the use Local Rice
J. C. Gautam
Commercial use of genetic resources (GRs) is one of the major strategies of effective
biodiversity conservation. More specifically, the use of GRs can generate income for
conservers and providers of GRs and making them aware of the economic importance of the
resources for their livelihoods. Additionally, this will also help in designing cost and benefits
sharing approaches for the conservation and use of the natural resources.
Commercialization of GRs crucially depends on their potential market value. The market
value, in turn depends on how much one can commercialize it and how much the
biotechnology industry is willing to pay for samples of GRs and on how much revenues a
single provider can earn within a market with many potential suppliers.
The major policy related issues for commercialization of GRs are to support and promote
industries in using GRs, promote biotechnology industries to create gene markets, encourage
credit flow for promoting commercialization of GRs, and encourage farmers and small
entrepreneurs to diversify products for GRs.
The purpose of this study is to generate relevant information that will contribute towards
developing a policy framework for the commercialization of traditional GRs including local
rice varieties. Commercialization and marketing of traditional GRs and their products is taken
as one of the policy options to address conservation and sustainable use of these genetic
3.2 Value Chain Analysis of Local Rice Varieties:Methodology
For the value chain analysis of local rice landrace based on market approach was undertaken
in the Begnas area of Kaski district. Fifteen farm house holds cultivating the rice were
selected and they represent the sample for the study. The following relationships for the
income and the cost valuation of local landraces on the market approach were applied.
Net Income (Rs/ropani) = Total Income – Total cost
Farm Business Income (Rs/ropani) = Total Income – Purchased inputs cost
The concept of Farm Business Income used in study is as follows.
Farm business income is the income to the farm family from the crop after deducting the cost
of purchased inputs. Here the value of own (non-purchased) inputs are not included in the
cost. This income gives an idea as to how much the farmer can earn due to farming with the
assumption that his owned inputs have no opportunity costs or at least very little alternative
uses under the subsistence agriculture. Though this assumption is not quiet correct, it
nonetheless explains the rationale for engaging themselves in farming despite net loss in the
cultivation of the crop. Under such conditions the farmer gains some value for owned inputs.
3.3 Commercialization and Marketing of Local PGRFA and Their Products
In order to assess the prospects of commercialization and potential for promoting marketing
of local land races of PGRFA that are grown by the Nepali farmers Consumers and Sellers in
Kathmandu (Kathmandu, Lalitpur and Bhaktpur), Entrepreneurs and Consumers of Palpa
(Tansen Municipality and Suburb Pokhrathok) Mid-hills areas of Nepal, and Butwal haat
bazaar- a terai market with mixed community of hill and terai peoples were surveyed.
Respondents were randomly selected for the interviews.
Findings of an earlier study on Neglected and Under-utilized Species in Nepal (ABTRACO,
2006) and a Marketing Survey of local products in Pokhara Valley (ABTRACO, 2007) have
also been cited in this study.
3.4 Description of study site
The study area Kaski district is in the mid-hill region (800-1500 m asl) of Nepal. The
topography of the region consists of ancient lake and river terraces found on moderate to
steep slopes. It experiences high rainfall (>3900 mm/annum) with a warm temperature to
subtropical climate. Mean daily minimum temperature of the coldest month is 70 C and the
mean daily maximum of the hottest month is 30.50C with monthly mean of 20.90 C (Sthapit
et al., 1999, Rana et al., 2000).
The area is reported to be a hotspot in terms of crop diversity (Rijal et al., 1998). A total of 32
crops were reported as being grown. The major crops are rice, maize and finger millet. Rice
being a major staple crop, it is grown in different environments (lowland, irrigated land,
partially irrigated land, rain-fed and upland). The total rice varieties maintained by the local
farmers are 69 (Rijal et al., 1998), 63 of them local landraces (Rana et al., 1999).
Valuation of Local rice landrace and cost of production: A market based Approach
The sample farmers are growing 12 rice landraces. Out of total frequency of 56 the highest
frequency was found in Anadhi (21.4%) followed by Jhetho budo (17.9%), Local Mansuli
(12.5%), Ekle (10.7%).
Total input and net income
The data analyzed showed that the total net income was found maximum in Jhetho Budo
which was grown in total 10 ropani (0.5 ha) and gain Rs 1568.53 per ropani. The maximum
loss was in Jarneli which was grown in 2 ropani and the total net loss was found Rs1209 per
ropani (Table 1) Total net income was positive in Anadhi, Bayerni Jhinuwa, Chhote, Ekle,
Gauriya, and Madheshi. Net loss incurred in Agna, Gurdhi, Jarneli, Local Mansuli and
Mansara. The loss in net income could be due to the larger number of labor for intercultural
operation and the low selling price of the paddy. However, the farm business income was
found profitable in case of all land races of rice.
Jhetho budo and Anadhi show the high net income because they are rice high in demand, so
the market value of that rice is also higher than others. Despite the net loss in growing some
other varieties of land races, the farm business income is positive. So farmers grow rice
landraces and make use of their own inputs. If they do not use, it has no or very little
alternative market. The landraces have their own culture importance also: for example,
Anadhi is used in special festivals for making "latte" (rice made with large amount of ghee)
because it has high capacity to absorb ghee in cooking condition. Due to the unique
characteristics rice landrace are highly demanded by consumers. So the farmers grow them.
Table 1: Composition of own and Purchased inputs in the Production cost of different Local rice landrace
Cultivar Own inputs in Rs/ropani Purchased inputs in Rs/ropani
r Inputs Total Total
Total Organic + in Cost Income
Area bulloc fertilize Bulloc insectici Rs/ropa Rs/ropa Rs/ropa Net
(rop) Seed k r labor Total k de labor Total ni ni ni Income
Anadhi 5.5 360 630 735 4065 5790 550 182 5300 6032 1096.73 2149.45 3209.09 1059.64
Agna 4 230 630 900 2700 4460 415 6875 7290 1822.5 2937.5 2550 -387.5
Jhinuwa 2 140 528 450 2280 3398 1725 1725 862.5 2561.5 3300 738.5
Chhote 5.5 262.5 930 1050 3105 5347.5 575 6900 7475 1359.09 4 2436.36 105
Ekle 16.16 741.2 2760 2035 2280 7816.2 3125 196 13100 16421 1015.96 2 2381.97 882.43
Gauriya 1 60 270 150 960 1440 1100 1100 1100 2540 2800 260
Gurdi 1 60 270 150 960 1440 1300 1300 1300 2740 2400 -340
Jarneli 2 120 400 1125 1645 600 548 3925 5073 2536.5 3359 2600 -759
Jhetho 713.7 10746.2 3081.47
budo 10 5 967.5 4010 5055 5 2312.5 1281 16475 20068.5 2006.85 5 4650 1568.53
L.Mansuli 9 450 2190 3000 5640 3225 3073 21500 27798 3088.67 3715.33 3166.67 -548.67
Manamuri 4 180 450 780 1410 1500 2800 4300 1075 1427.5 2400 972.5
Mansara 1 45 270 300 875 1490 850 850 850 2340 1800 -540
3362. 2748 50922.9 11312. 100032. 2474.62 33494.1 31019.4
Total 61.16 5 7255.5 12820 5 5 5 6270 82450 5 1635.51 2 0 7
1 hector = 20 ropani; US $ 1 = Rs 64.45 on April 6, 2008
3.5 Cost chain Analysis
A value chain is made up of a series of actors (or stakeholders)—from input suppliers,
producers and processors, to exporters and buyers—engaged in the activities required to
bring a product from its conception to its end use (Kaplinsky and Morris 2001). Analysis
goes beyond the farm and the farm family and looks into common business relationships and
interactions between and among farm enterprises and agribusinesses along the pathway from
planning for production to the consumption of the final product. The aim is to improve the
performance of the value chain by reducing losses, reducing marketing and/ or other
transaction costs, improving the quality and delivery of the product (or range of products),
and placing all the chain actors in an improved position.
The production cost chain analysis of rice land race of different five cultivars was done in the
study which shows that in total component cost more than 90% cost is in production and the
rest 10% is for the seed storage and drying. As an example the case of Anadhi Paddy upto
milling is presented in the Figure 1.
The value chain presented in the Figure 1 depicts the value additions at different stages of the
flow of Anadhi paddy up to the milling stage. The dotted lines indicate the purchased inputs,
while the bold line indicate the use of own inputs by the farmers. The figure shows that input
costs for seeds, Farm Yard Manure (FYM), drying and storage; and transportation belong to
farmers‘ own source. Costs for field preparation and management and; harvesting and
threshing are composed of both the purchased and won inputs. Costs for inorganic fertilizers
and milling charges belong to purchased category. The costs for each of the components are
given at the bottom of the figure. The total estimated cost up to milling is at Rs .2469.84. Of
this total cost, the value of own inputs is Rs 1318.18 (53.37%) and that of the purchased
inputs is Rs 1151.66 (46.63%).
In the same manner this type of the chain can be constructed for other landraces and the value
addition at different cost centers can be derived. This type of analysis helps identify where
cost savings can be attempted. In the present case of Anadhi paddy cost for field preparation
is more than 50% of the total cost. There appears to be some rooms to work on cost savings
techniques such as low tillage practice in paddy cultivation.
Figure 1: Flow diagram of cost chain analysis of rice production in Rs/Ropani of landrace Anadhi
Field preparation Inorganicfertilizer Drying
& Management & Chemicals Transportation
Seed preparation & fertilizer & Harvesting&
& Storage Milling
Management Chemicals Threshing n
22.52% 6.41% & Storage g 53.37% al
30.39% 11.96 46.63%
1306.36 33.09 % 453.6 227.27 100 73.12 2469.84
Component cost in Rs
% of total 2.65% 8.54% 52.84% 1.34% 18.37% 9.20% 4.05% 2.96%
Seed procurement, storage and sale of local landrace rice
The seed source, its acquisition and seed replacement systems are different with different
farmers. In Begnas, about 92.9 % of farmers retain their own rice seed for next year planting.
About 5.4 % of farmers received seed from the neighbor farmers and only about 1.8%
farmers obtained from development organizations (NGO, cooperatives etc).
Among the respondents 60% of the farmers stored rice seed for 6 month and 40% of the
respondents stored rice seed for 7 month.
The respondent farmers were asked where they sell seed paddy. Very high majority i.e. about
73.33% of farmers sell to their neighbor but not for money but exchange with paddy. Only
20% of the respondent farmers sell seed to the cooperatives and NGO. Some times the
cooperatives and NGO come to buy the seed. In the previous year only 20% farmers sold
seeds to cooperatives and NGO.
Price variation of local landraces rice and Paddy during harvest season and after
The price of Landraces was found different in different time as one could expect. Just after
harvesting the price of rice was found lower than after 12 month of harvesting. Consumers
preferred old rice to newly harvested rice. So, the difference in price is exhibited. The
percentage of difference in prices during harvest time and later period was found higher for
paddy than for the milled rice. Such difference in price of paddy was found upto 30.43%
whereas in the case of millled rice the difference was found 26.31% in local Mansuli rice.
This comparison is made between the prices during harvest and after 12 month of the harvest.
Marketing channel is the path through which the commodity flows via different media from
producers‘ up to the consumers. In marketing channel of rice seed farmers are producers as
well as consumers. In the Nepalese farming, seed distribution system especially for local
cultivars is mostly based on the barter exchange between farmers to neighboring farmer. It
means in marketing channel from direct producers to consumers.
Agricultural products are reported to pass through different functionaries/channels or middle
men before reaching to the final consumers. In the case of our study area, such middle men or
functionaries identified mainly include: collectors / vendors, processors, group suppliers, and
In general cases producers sell their paddy to traders or local millers. In some cases the
cooperatives are working in seed marketing. Cooperatives buy seed from farmers and sell to
the others farmers. The general system of marketing of local paddy cultivars is shown in
Figure 2: Marketing channel of local landraces of rice
Producer / Farmers
Some seed to Consumers
Source: Based on the interview/survey at Begnas area of Kaski district.
Notes; 1.The Producers are also the consumers. Sometimes, paddy seeds are sold by
cooperatives to the producer farmers.
2. Traditional systems of milling also prevail in some area.
Commercialization and Marketing Process of Local PGRFA
Market survey in Kathmandu valley was done for various local PGR Products that included
also the species belonging to Neglected and Underutilized species such as Maseura,
Buckwheat flour, Finger millet flour, Gundruk, Soybean, Horsegram, Perilla, Sesame, Rice
bean, Cowpea, Bhang, Blackgram, Timur, Jimmu, and Ash gourd.
The number of consumers buying local products from the stores and wholesalers ranged from
5 to 500 per week in Kathmandu valley. Reasons for buying these products are because of the
medicinal value of such products and also as new items for foreigners. Most of the stores
expressed there interest to deal with these products. They also reported that exportable
markets of such products are India, Japan, Isreal and USA.
Consumers of local products
In order to know the major types of consumers of the local agricultural products, the retailers
were asked to rank the consumer categorically. The result showed that local people are the
main consumers. At the same time many foreigners are also reported to have been consuming
Price Margins for Sellers
The price margin is defined as the difference between the price paid by the consumer and
buying price of the sellers. In this study, the price margin of sellers was calculated on the
basis of the purchasing price and selling price of the sellers.
In the case of certain items such as Maseura, Perilla, Sesame and Rice bean the wholesale and
retailers‘ prices were reported as the same. This is mainly because of the small nature of the
markets of these species and that the whole selling and retailing are not well organized in
The price margin for selected departmental stores varied some times from low margin i.e.
from Rs 2 to Rs. 10 for Soybean per Kg. In case of retailers, it varied from Rs. 2 up to Rs. 20
for Perilla, Cowpea, Timur and Jimmu. Wholesellers also take margin (difference of selling
and buying price) from Rs. 5 upto Rs.20.
1. Plant genetic resources are the important source of genetic diversity and they should
be conserved for the sustainability of agriculture and farmers‘ livelihoods.
Commercialization of the product of plant genetic resource is one of the important
methods of conserving and utilizing plant genetic resources. The commercialization
of PGR can lead to conserve them at farmer level. So, linking the market for
commercialization of PGR by promoting the use of product of plant GRs is the prime
mechanism to conserve PGR. This leads to policy recommendations to promote
commercial use of native/ local GRs and their products.
2. The valuation of local rice landrace on the basis of trait approach shows that the
farmers are willing to pay high price for the rice seed having the quality like high
yielding, resistance to disease & pest, taste and scented (ABTRACO, 2007). These
traits need to be considered in breeding program.
3. The net income was found negative in the case of landraces which are grown on small
area and less preferred. But cultivars like Jhetho budo & Anadhi show positive net
income because they have high value in market.
However, the growers of these landraces of rice get positive farm business income
which is derived by deducting the cost of purchased inputs from the total income.
This is the income due to farming or cultivating the crop. By utilizing these resources
they get some benefit or else these resources could not be used as productively. This
is the why farmers are growing rice land races in spite of net loss in net income. To
get maximum benefit they have to reduce the purchased inputs and use more of own
inputs. At the same time the local species which are not producing net positive
income may in the long run be discarded by the farmers. So, such species with
important traits should be conserved for breeding purposes through
Government/public efforts under in-situ as well as ex-situ condition. Public efforts
could be collaborated with the concern communities through compensatory measures
to conserve these races with long-term arrangements.
4. The markets for some local landraces with aroma, tastes such as for Jethobudo are
expanding and demand is prevalent. In such case, even exports prospects exist. Such
potential need to be utilized through organized production and marketing.
5. The market channel of product of some of the local species such as Buckwheat is
expanding to export market. So, promotional programs including quality product
development, packaging, labeling and export are to be effectively organized.
6. In terms of cost of cultivation, of the total cost 90% was found incurring for field
preparation and management, FYM, threshing and harvesting and only 10% of the
cost amounted for seed storage & drying purpose. If the farmers afford storing for 12
months of harvesting, they can get higher benefit. Support of storage facilities for
farmers would enable them to gain more benefit from the differential prices in
Based on the findings from the study, following recommendations can be made.
1. Scented Rice has good value for consumers. So, a programme on development of
aromatic rice needs to be implemented with participation of the farmers. A
consolidated network of aromatic rice could be launched with linked programmes
from production to marketing.
2. Since, the farmers have expressed higher preferences in the valuation study
undertaken along with this study- for high yielding varieties with the traits of diseases
resistances characteristics and expansion after coking, and also the rice variety for less
fertile land, these areas need to be considered in the Varietal Selection and
3. Expansion of market linkages with promotion of enterprises for value addition and
marketing activities for local races and their products should be carried out.
4. A participatory strategic plan for conservation and use of PGRFA combining in-situ
and ex-situ programmes should be framed out and implemented in lieu with the
recently adopted policy on PGRFA.
5. Appropriate recognition to the values and importance of the products of the local
PGRFA in generating employments and incomes to the local entrepreneurs should be
6. The marketing and value-chain studies of the important products of the PGRFA need
to be conducted and local enterprises of local products need to be promoted.
7. Appropriate research on nutritional values, product design, processing and attractive
packaging of the local products need to be promoted. Standardization, quality
regulation and food safety should be established.
8. Exploration of local Market, nitsche markets for exports should be made so that
potential products of the PGR can be promoted.
9. Farmers should be provided with appropriate technologies that help reduce the
production cost to get higher benefit from the rice landraces.
10. Government organization, non-government organization and other agencies should
promote market linkages so, as to gain efficiency in the value-chain.
11. Small industries based on product of PGR should be established on participatory and
12. Further study and implementation of in situ community conservation should be
carried out so as to help share cost of conservation of local crop genetic diversity.
Fitting into the Policy Environment
GRPI activities are designed in line with national policy documents like the Tenth
Development Plan (2002-2007), Agriculture Prospective Plan (1995-2015) and Nepal
Biodiversity Strategy (2002) (Figure 1). The six component GRPI activities that are currently
being implemented are related either of these key national policy documents which are
highlighted and the activities is connected with concerned policy documents.
20 Years’ Agriculture
Prospective Plan (APP) 10th 5 year plan Nepal Biodiversity
(1995-2015) (2002-2007) Strategy (2002)
Empower Farmer Communities in GR Management
Inter-Institutional Coordination in GR Policy
Promoting Commercialization of Local GR
Sui generis protection (FR/PVP)
Adaptation of International Agreements
Requirements to Nepal
Food Quality and Safety Regulation in relation to
local GR use and local innovations.
Figure. 1: Linkage of GRPI activities with national policy and documents.
The inclusion of nationally recognized programmes and policies in GRPI has increased the
significance of GRPI team. The team has been duly recognized and invited to provide
technical inputs in national policy and legislation documents. Such a leverage created by
GRPI can be instrumental in putting forward policy reform options to enhance the
conservation and commercialization of local crops in the country.
Box 1: Process of formulating national agrobiodiversity policy, Nepal
Identify legitimate resource persons from MoAC and NABC.
Invite the resource persons to meetings, workshops and field visits for
sensitization and enlightenment on issues related to conservation and sustainable
utilization of agrobiodiversity.
Motivate member secretary of NABC to invite in-situ team and participate in
regular meetings of NABC to brief and update on findings of the project, need for
national agrobiodiversity policy and benefits of agrobiodiversity conservation and
sustainable use in national development agenda.
MoAC/NABC commissioned in-situ/Genetic Resources Policy Initiative (GRPI)
Nepal team to draft national policy on agrobiodiversity.
In-situ/GRPI policy team forms a core team of experts from
NARC/LIBIRD/IPGRI and invites thematic experts from horticulture, livestock,
fisheries, seed, biotechnology, insects, microorganisms and food processing/food
technology sectors and prepares preliminary draft.
In-situ GRPI policy team organizes three meetings for interaction, review and
finalization of draft policy.
Meeting with experts from departments under MoAC and NARC.
Meeting with national project steering committee of in-situ conservation project.
One-day 3M stakeholders workshop facilitated by GRPI project.
The in-situ/GRPI policy team synthesizes the outputs of the meetings and submits
NARC forwards the draft policy to Gender Equity and Environment Division,
Ministry of Agriculture and Cooperatives sends the document to MoFSC, MoLJ,
MoE and NPC for their comments.
A committee is formed in the MoAC to review and include comments where
appropriate. The committee invites GRPI team to provide technical inputs.
Second draft national agrobiodiversity policy is formulated and MoAC forwards
the documents to the cabinet for approval.
(Source: Adapted from Upadhyay et. al., 2005).
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