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The study focuses on the review of existing programs and policies regarding input subsidy in Nepal especially in seeds and fertilizers. The study aims to review timeline in subsidy programs, budget details and progress based on the gleaning of the secondary information available in the Ministry of Agricultural Development. The assured budget allocation for chemical fertilizers subsidy has led to increment in consumption over the years. Nepal spent 52.29 billion Nepali Rupees in importing chemical fertilizers and 23.19 billion in subsidy in last seven years. Nepal Government has also been promoting organic fertilizers however, the subsidy allocated to this program has not been able to take the pace. Seed subsidy program has been found to be impressive; however, it is confined to wheat and paddy only. The subsidy program is targeted mainly to the small and marginal farmers. The seed subsidy program should be expanded to pulses and oilseed crops as well. The organic fertilizers should be promoted to maintain long-term soil health. Inputs subsidy policy and programs should cover all farmer categories.
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The Journal of Agriculture and Environment Vol:17, Jun.2016
STATUS OF FERTILIZER AND SEED SUBSIDY IN NEPAL: REVIEW AND RECOMMENDATION
Diwas Raj Bista1, Sujan Dhungel2 and Santosh Adhikari3
ABSTRACT
The study focuses on the review of existing programs and policies regarding input subsidy in Nepal especially in
seeds and fertilizers. The study aims to review timeline in subsidy programs, budget details and progress based
on the gleaning of the secondary information available in the Ministry of Agricultural Development. The
assured budget allocation for chemical fertilizers subsidy has led to increment in consumption over the years.
Nepal spent 52.29 billion Nepali Rupees in importing chemical fertilizers and 23.19 billion in subsidy in last
seven years. Nepal Government has also been promoting organic fertilizers however, the subsidy allocated to
this program has not been able to take the pace. Seed subsidy program has been found to be impressive;
however, it is confined to wheat and paddy only. The subsidy program is targeted mainly to the small and
marginal farmers. The seed subsidy program should be expanded to pulses and oilseed crops as well. The
organic fertilizers should be promoted to maintain long-term soil health. Inputs subsidy policy and programs
should cover all farmer categories.
Key words: Subsidy, chemical fertilizer, organic fertilizer, seed,subsidy
INTRODUCTION
Nepal predominantly is an agricultural country with 3.8 million (70 percent) farmer household (CBS,
2012, CBS, 2013). Agriculture sector contributes about one third (33.09 percent) share in Gross
Domestic Product (MoF, 2014).
Nepalese agriculture is characterized by dominance of small and marginal farm holders following
traditional and indigenous farming technology which is regarded as low yielding technology. Over the
last 10 years, population has been increasing at 1.35 percent annually (CBS, 2012) while agricultural
land has decreased by 129 thousands hectares (CBS, 2013). Increasing population coupled with
declining agricultural land and stagnant productivity of major cereals has lead to food and self
insufficiency in some districts of the country. 31 out of 75 districts were reported to be experiencing
self-insufficiency in food production (MoAD, FAO & WFP, 2014).
Fertilizer, seed and irrigation are major inputs for agricultural production. APP has mentioned that
about half of the incremental output can be attributable to increased fertilizer use while National
Seed Vision (2013-2025) states that improved seed can contribute 20-30 percent increment in crop
yield. Inadequate access of farmers to seed and fertilizer has been identified as major contributing
factor for the low production and productivity of agricultural commodities. MoAD aims to achieve
food security by increasing agricultural productivity through assured supply of quality inputs. MoAD
has been implementing fertilizer and seed subsidy program with special focus on small and marginal
farmers.
The Agriculture Perspective Plan (APP, 1995-2014) has envisaged an increase in fertilizer use from 31
kg nutrient/hectare in the base year (1995) to 131 kg nutrient/hectare by 2015. Similarly,
Agriculture Development Strategy (2015-2034) has also highlighted the low use of fertilizer as the
major reason for low productivity and commercialization. It has envisaged the implementation of
voucher system for the effective extension service delivery and input supply including fertilizer. As
1 Senior Agri-economist, MoAD, bistadiwas@gmail.com Mobile: 9845091509 Corressponding: bistadiwas@gmail.com
2 Agriculture Extension Officer, MoAD, sujn.dhungel@gmail.com Mobile : 9851176126
3 Agri-economist, MoAD, santoshadhikari80@gmail.com Mobile : 9841787274
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The Journal of Agriculture and Environment Vol:17, Jun.2016
the majority of Nepalese farmers are small and marginal, characterized by low purchasing power of
costly fertilizer, adequate and timely supply of quality fertilizer has been the priority of Government
of Nepal (GoN). The agricultural Inputs Management Section (AIMS) under ministry is mandated to
formulate policy, guidelines for administration and implement the activities regarding inputs
management.
METHODOLOGY OF THE STUDY
The study is based on the secondary information available in the Ministry of Agricultural
Development and other institutions. The information was collected through published policy
documents, progress reports and position papers submitted to Ministry of Finance, National Planning
Commission, and Office of Prime Minister and Council of Ministers. Similarly, personal interview
using semi-structured questionnaire to the authorized personnel of MoAD was also employed to
validate the collected information.
Simple decomposition analysis was also used to assess the effect of area and yield on change in
production of paddy, wheat and maize during the period of FY 2065/66 to FY 2071/72.
METHODOLOGY USED FOR DECOMPOSITION ANALYSIS
Pn- Po = (Yn-Yo) Ao + (An-Ao) Yo + (Yn-Yo) (An-Ao)
Where, Yn= average yield of last three years
Yo= average yield of initial three years
An= average area of last three years
Ao= average area of initial three years
Pn-Po= change in production
(Yn-Yo) Ao= Yield effect
(An-Ao) Yo= Area effect
(Yn-Yo) (An-Ao)= Interaction effect
RESULTS AND DISCUSSIONS
CHEMICAL FERTILIZER SUBSIDY IN NEPAL (BEFORE 2008/09)
Introduction of chemical fertilizer in Nepal dates back to early 1950's with the import of Ammonium
Sulphate from India by private traders. However, the systematic effort to import chemical fertilizer
started with the establishment of Agriculture Inputs Corporation (AIC) under MoAD in 1966.
With the rise in international price of chemical fertilizer during 1970s, GoN decided to introduce
price subsidy. AIC used to receive difference between actual cost and selling price as subsidy. Due to
growing demand for the fertilizer and increased international prices, financial burden of Government
started to creep up. Government’s failure to allocate sufficient budget for the subsidy resulted into
AIC’s loss. AIC became unable to import the quantity as per the demand leading to short supply.
Nepal received fertilizer under grant aid from Germany, Canada, Finland and Japan, however, some
countries stopped the supply in 1991/92 and others reduced the volume (Shrestha, 2010).
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Till 1997/98, AIC was the only agency for fertilizer trade in the country. The failure of Government
to allocate sufficient budget caused reduction in import and distribution of fertilizer. In November,
1997, subsidy was completely removed in DAP and MoP while in Urea subsidy was removed in 1999. It
also deregulated the price control. To institutionalize the fertilizer deregulation policy Government
promulgated Fertilizer (control) Order, 1997 and National Fertilizer Policy, 2002 that paved the way
for private traders to stand at equal footing with AIC. In the same period AIC was terminated to form
two companies namely, Agriculture Inputs Company Limited (AICL) responsible for fertilizer business
and National Seed Company Limited (NSCL) responsible for seed business under Company Act,
1996(Shrestha, 2010).
CURRENT SUBSIDY SCHEME (2008/09 TILL DATE)
The deregulation policy did not contribute to smooth supply of fertilizer in the country. Illegal inflow
of fertilizers from India was experienced in early periods due to rise in international prices, subsidy
provision of India to its farmers and poor purchasing power of Nepalese farmers. Similarly, due to
short supply of quality fertilizers to the farmers, they were forced to rely on fertilizer of
unidentified and unauthorized quality available in the market. Moreover, in absence of subsidy,
higher price of fertilizer led to higher cost of production and poor capacity to compete in the
international market. So, to assure the supply of quality fertilizer to the farmers, MoAD approved a
proposal by Council of Ministers in November, 2008. In addition, MoAD in coordination with Ministry
of Finance (MoF) developed operational modality of the subsidy administration which was endorsed
by Government in March, 2009.
FEATURES OF CURRENT SUBSIDY SCHEME (AS PER THE DECISION OF COUNCIL OF MINISTERS)
Provision of maintaining selling prices of fertilizer at 20-25% higher than that of India at
five import points (Biratnagar, Birgunj, Bhairahawa, Nepalgunj and Dhangadhi).
Agriculture Inputs Company Limited (AICL) and Salt Trading Corporation Limited (STCL)
are responsible to import and distribute the chemical fertilizer.
The difference amount between actual cost and subsidized price will be provided as
subsidy to AICL and STCL (subsidy administration is on cost sharing basis).
Provision of subsidy distribution management committee chaired by secretary of MoAD.
The committee is responsible for price fixation, fund release and overall monitoring and
evaluation of the subsidy program.
Subsidized fertilizer will be available for 0.75 hectare in hilly districts and 4 hectares in
terai districts to the technical requirement of three crops per year.
Subsidized fertilizer is distributed through offices of AICL, STCL and cooperatives.
Chief District Officer (CDO) of the respective district chairs the Fertilizer Supply and
Distribution Management Committee which is responsible for overall management of
fertilizer distribution at district level.
STATUS OF CHEMICAL FERTILIZER SUBSIDY
The amount of chemical fertilizer imported within country after the promulgation of current subsidy
scheme has increased significantly over the years. The import volume has increased from 22.50
thousand Mt in starting year (FY 2065/66) to 278 thousand Mt in FY 2071/72 (Figure 1).
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Figure 1: Amount of chemical fertilizer imported under subsidy scheme
With the rise in import volume, the amount distributed under subsidy has also increased over the
years. In FY 2065/66, a total of 7,090 Mt chemical fertilizer was distributed in subsidy throughout
the country which increased to 298 thousands Mt in FY 2071/72 (Table 1). The increase in import
and distribution indicates that the availability of quality chemical fertilizer has led to increased
demand from farmers' side.
Table 1: Amount of chemical fertilizer distributed in subsidy.
(quantity in Mt.)
Fertilizer/FY 2065/66 2066/67 2067/68 2068/69 2069/70 2070/71 2071/72
Urea 5932 50489 85191 97956 108553 146117 190163
DAP - 25211 22019 43146 65722 81738 101797
MoP - 2357 2821 3711 2688 5023 6717
Complexal 1158 3788 - - - - -
Total 7090 81845
(1054)
110031
(34)
144813
(31)
176963
(22)
232878
(31)
298677
(28)
(Source: AIMS-MoAD, 2016)
(Figures in the parentheses indicate percent increased compared to previous year.)
After FY 2066/67 the consumption of fertilizer has shown increment of more than 20% each year
compared to the previous year.
FERTILIZER AND NUTRIENT USE STATUS
The fertilizer consumption per hectare has increased after the implementation of chemical fertilizer
subsidy program. Based on the total consumption of chemical fertilzier in FY 2065/66 the fertilizer
and nutrient use per hectare was 2.29 kg and 1.03 kg which has significantly increased over the
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years and has reached to 96.62 kg and 50.68 kg respectively (figure 2) . The consumption level is
far below compared to that targeted by Agriculture Perspective Plan (APP). APP has targeted
nutrient use of 131 kg/ha by the end of 2015. The consumption level is very low compared to that of
neighbouring countries as well. Fertilizer use of 147 kg/ha, 176 kg/ha, 166 kg/ha and 101 kg/ha has
been reported in India, Bangladesh, Pakistan and Sri Lanka respectively in 2009 (Bista et al, 2013)
Figure 2: Fertilizer and nutrient use per hectare
(Source: AIMS, Ministry of Agricultural Development)
The budget allocation in chemical fertilizer subsidy has increased significantly from 366 million
rupees in FY 2065/66 to 5.32 billion rupees in FY 2071/72. In the period of 7 years (from FY
2065/66 to FY 2071/72) total expenditure on chemical fertilizer will be 52.29 billion rupees while
the subsidy expenditure for the program will be 23.19 billion rupees (Figure 4). Government's ability
to allocate budget regularly for the program has resulted smooth supply of chemical fertilizer in the
country.
Table 2: Budget description for chemical fertilizer subsidy
FY/Description Cost (in '000 NRs.) Subsidy (in '000 NRs.) Subsidy share (%)
065/66 688087
366813
53.30
066/67 2819139
1370518
48.61
067/68 6195372
2526380
40.78
068/69 5415758
3129947
57.79
069/70 11468933
5171837
45.09
070/71 12786106
5308772
41.51
071/72 12919773
5324806
41.21
Total 52293168
23199073
44.36
(Source: AIMS-MoAD, 2016)
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The subsidy over the year has declined except for the FY 2068/69 (Table 2). The main reason for the
decline in subsidy percentage is decline in international prices and fixed subsidized prices of
fertilizer maintained by the Government.
ORGANIC FERTILIZER SUBSIDY
STATUS OF ORGANIC FERTILIZER SUBSIDY
To minimize the negative consequences of chemical fertilizer and maintain the soil health, Ministry
of Agricultural Development started organic fertilizer subsidy program with the promulgation of
Organic Fertilizer Subsidy Guideline, 2068. According to the guideline subsidy is provided in organic
fertilizer produced in the country and registered as per the Organic and Bio-fertilizer Regulation
Guidelines, 2068. The Subsidy Distribution and Management Committee, chaired by the secretary of
Ministry of Agricultural Development is responsible for overall administration of organic fertilizer
subsidy program including fund release, fixing subsidy rate, price and monitoring of the program.
Fertilizer Supply and Distribution Management Committee chaired by Chief District Officer (CDO) of
in the district is responsible to look after the distribution, monitoring and evaluation of the program
at district level. The subsidized organic fertilizer at famers' level is distributed through AICL,
cooperatives and cooperative shops.
The second year of program implementation showed some increment in amount distributed which
went on to decrease on following year (Table 3). Despite budget allocation and increase in subsidy
percent over the years, the program has not been found to be impressive.
Table 3: Status of Organic fertilizer subsidy
Description/FY 2068/69 2069/70 2070/71
Quantity purchased (Mt) 3139 1861 1900
Actual sales (Mt) 788 3177 2615
Cost ('000 NRs.) 67670 39872 27084
Subsidy ('000 NRs.) 39419 23123 19248
Subsidy percentage 58.25 57.99 71.06
(Source: AIMS-MoAD, 2016)
The farmers are interested in chemical fertilizers due to its quick response to the crop. Moreover,
practice of using locally available farm yard manure, compost and organic fertilizer is popular among
farmers. However, ministry is implementing programs for shed improvement, supporting vermi-
compost preparation at local level and establishment of organic fertilizer industries throughout the
country to promote organic fertilizer.
STATUS OF SEED SUBSIDY
Subsidy on improved seed was started with the promulgation of Guidelines for subsidy on improved
seed in 2068. The Guidelines has made the provision of high level Seed Supply and Distribution
Management committee chaired by the secretary of Ministry of Agricultural Development. The
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committee is responsible for overall administration of the program, determination of quantity under
subsidy, fund release and monitoring. The program envisages providing subsidy in major cereals,
pulse and oilseed; however, the program has been confined to paddy and wheat only. The reason for
exclusion of other crops in the scheme is limited availability is quality seeds within country. District
Agricultural Inputs Supply Committee chaired by Chief District Officer (CDO) of the respective
district is responsible for overall administration, distribution and monitoring of the seed subsidy
program at district level. Seed subsidy can be provided in paddy, wheat, maize, millet, lentil, gram,
pigeon pea, green gram, pea and mustard. Subsidy scheme has the provision to provide seed for 2.66
ha in terai and 2 ha in hills per year per farmer. The subsidized seed at farmers' level is distributed
through dealers of NSCL.
Table 4: Status of Seed subsidy
Description/FY 2068/69 2069/70 2070/71 2071/72
Sales Quantity (Mt.) 579 10 6550 (4769 Mt. wheat and
1781Mt. paddy) 7826
(5457 Mt. wheat
and 2369 Mt. Paddy)
Subsidy ('000 NRs.) 6530 475 111073 155379
Subsidy percentage 25-40 100 15-35 30-35
(Source: AIMS-MoAD, 2016)
The subsidy program on improved seeds has been impressive. The program initiated in FY 2068/69
with the distribution of 579 Mt. improved seeds of paddy which increased to 7826 Mt. (5457 Mt.
wheat and 2369 Mt. paddy) in FY 2071/72. The program could not function in FY 2069/70, however,
in the year only 10 Mt of paddy seeds were distributed freely in flood hit districts of far western
region. The subsidy percent in the first year of subsidy program was 25-40% of market price which
was 30-35% in paddy and 35% in wheat in FY 2071/72 (Table 4).
EFFECT OF SUBSIDY ON MAJOR CEREAL CROPS
The decomposition analysis of major cereals (paddy, maize and wheat) shows that the increase in
production between the period of FY 2065/66 to FY 2071/72 is due to increase in yield of the crop.
In case of paddy and maize entire increment in production is due to yield effect. In case of wheat
increment in production is due to area, yield and interaction of area and yield effect; however the
increment is largely due to yield effect which is 82% (Table 5).
Table 5: Decomposition analysis of paddy, maize and wheat
Crops Change in production (Mt.) Area effect Yield effect Interaction effect
Paddy 444236 -0.43 1.49 -0.06
Maize 191211 0.01 0.98 0.001
Wheat 365002 0.15 0.82 0.03
(Source: AIMS-MoAD, 2016)
The yield of crop depends on seed, fertilizer, irrigation and management. Improved seed and quality
fertilizer play important role in crop productivity. The smooth supply of chemical fertilizer under
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subsidy scheme and increasing amount of improved seed distribution must have played role for
positive yield effect.
Assured supply of fertilizer and improved seeds will have positive impact on production and
productivity. The subsidy program has assured the supply of inputs in the country and has impacted
positively on production and productivity of crops.
SWOT ANALYSIS OF INPUT SUBSIDY MECHANISM
STRENGTH
Provision of separate section (Agriculture Inputs Management Section) in MoAD for the
specific task of fertilizer and seed subsidy.
Already defined policy framework and guidelines for program implementation.
The program to support subsidy in Nepal is under First Priority Program (P1) thereby
assuring the regular budget allocation.
Involvement of Agriculture Inputs Company Limited (AICL) and Salt Trading Corporation
Limited (STCL) in import and distribution of fertilizers and National Seed Company
Limited (NSCL) in seed subsidy administration provides the opportunity to utilize their
business expertise.
WEAKNESS
Insufficient human resource at bottom level implementation units (DADOs).
Insufficient number of fertilizer and seed inspectors in DADOs to monitor and regulate
the program.
Lack of separate section in Department of Agriculture and Regional Agricultural
Directorate to administer input subsidy program.
Complicated procurement procedure under public procurement act leading difficulty in
timely supply of fertilizer and seed on season.
Current fertilizer subsidy policy targets cereal crops only.
The budget allocation is far below compared to the requirement of chemical fertilizer.
Subsidy is limited only to the Urea, DAP and MoP fertilizers.
Subsidy on seed is confined to major cereals only.
Due to undulated geographical terrain and transport facility, the subsidy scheme has not
been able to cover the farmers of remote areas.
Program targets small and marginal farmers only.
OPPORTUNITY
Increasing commercialization is demanding more of improved inputs like chemical
fertilizer and improved seeds.
Government is conducting a rigorous feasibility study to establish chemical fertilizer
plant within the country.
Ministry is providing trainings to produce and capacitate more number of fertilizer and
seed inspectors for regulatory works.
Existing network of DADOs and Service center at bottom level to effectively implement
the program.
Involvement of cooperatives for distribution at farmer level makes the distribution
mechanism more transparent.
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THREAT
Fertilizer supply is entirely dependent on import.
Price fluctuation of chemical fertilizers in international market.
Distortion of fertilizer market due to subsidy scheme leading to dismal participation of
private sector in the business.
Increasing use of chemical fertilizers may result to decline in soil health in long term.
Porous border of Nepal and India possesses threat of drain of subsidized fertilizer to
India.
CONCLUSION
The budget allocation and the amount of chemical fertilizer and seed distributed have increased
over the years. In case of organic fertilizer, the program has not been impressive. Organic fertilizer
production in Nepal is still in initial phase of commercialization thereby leading to limited choice
among the farmers. Moreover, locally available farm yard manure and compost are popular among
the farmers which shares large proportion of organic fertilizer consumption. With the experience of
slow pace of organic fertilizer subsidy program, MoAD has promulgated Organic Fertilizer Subsidy
(district level) Guideline, 2072. As per this provision farmers are independent to purchase the
fertilizer of their choice at subsidized rate and the respective District Agriculture Development
Office will refund the subsidy amount to the organic fertilizer seller. This is expected to increase the
completion among the organic fertilizer producers and helping the farmers to choose the quality
fertilizer.
Government's priority for assured supply of seed and fertilizer as well as increased allocation of
budget over the year has led to increased supply and consumption of seed and fertilizer in country.
RECOMMENDATION
The fertilizer subsidy scheme should cover medium and large farmers also. The minimal
participation of private traders and exclusion of large and medium farmers from the subsidy has
resulted into unavailability of chemical fertilizer to the large and medium farmers.
The subsidy scheme focuses for food crops and does not address the requirement for the
commercial crops. There should be provision for fertilizer subsidy to commercial crops as well.
The provision of 4 ha in terai and 0.75 ha in hills looks unfair from regional balance point of
view. The area limitation for hill should be increased.
The current scheme releases subsidy amount to AICL and STCL in advance. The subsidy should be
provided in actual sales basis of fertilizer so that burden of Government will be minimized.
The program of distribution of Farmer Identification Card (Kisan Parichaya Patra) should be tied
with the subsidy program. The card will identify small, medium and large farmers. Ministry
should look to provide subsidy to all the farmers but in different rates.
National Fertilizer Policy, 2002 also envisages providing equal opportunity to private and
cooperative sectors in fertilizer trade but due to direct involvement of Government in fertilizer
trade, private traders are unable to compete. Government should look to introduce a voucher
system that is valid for fertilizer and seed purchase by the farmers and based on the purchased
amount of fertilizer and/or seed subsidy amount should be refunded to farmers’ account.
AICL and STCL as well as MoAD should maintain a comprehensive data base of total fertilizer
sales, regional and district wise distribution as well as monthly distribution pattern so that the
data would be handy to analyze the consumption pattern according to season and crop.
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MoAD should maintain the buffer stock of fertilizer as envisaged by the National Fertilizer Policy,
2002.
The seed subsidy program should be widened to pulses and oilseed crops as well. Besides,
purchasing and distributing seed in subsidy, Ministry should look to assure production of quality
seeds within country.
The seed subsidy program is confined to the terai region. So, the program should cover mid hills
and high hills regions as well to increase the access to quality seeds.
The distribution of organic fertilizer should be done at local level through District Agricultural
Development offices. The operation at local level will create opportunity to compete the
producers thereby leading to increased choice for farmers.
Ministry should look for the program to support organic fertilizer producing farmers groups and
cooperatives to produce at local level.
As the productivity of crops also depends on other factor along with seed and fertilizer, ministry
should look to conduct studies on impact of the seed and fertilizer subsidy on crop production
and productivity as well as livelihood of farmers.
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ABPSD/MoAD, 2013. Statistical Information on Nepalese Agriculture Time Series Information
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AIMS-MoAD, 2016. Agriculture Inputs Management Section (Annual Progress report), Ministry of
Agricultural Development, Singhadurbar, Kathmandu.
APP (1995-2014). Agriculture Perspective Plan (1995-2014). His Majesty's Government of Nepal,
National Planning Commission, Singhadurbar, Kathmandu, Nepal.
ADS, 2015. Agriculture Development Strategy (2015-2034). Ministry of Agricultural Development,
Singhadurbar, Kathmandu, Nepal
Bista, D.R., Amgai, L.P., and Shrestha, S. 2013. Food security scenario, challenges and agronomic
research directions of Nepal in Agronomy Journal of Nepal (Agron JN) vol.3, 2013.
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MED/MoAD, 2013. Annual Progress Report. Government of Nepal, Ministry of Agricultural
Development, Monitoring and Evaluation Division, Singhdurbar, Kathmandu, Nepal.
MoAD, FAO & WFP, 2014. Crop situation analysis for 2012/13.
MoF, 2014. Economic survey, Ministry of Finance Nepal
MoF, 2014. Economic Survey. Government of Nepal, Ministry of Finance, Singhdurbar, Kathmandu.
National Seed Vision 2013-2025. Government of Nepal, Ministry of Agricultural Development,
National Seed Board, Seed Quality Control Centre, Hariharbhawan, Lalitpur, Nepal
Shrestha, R.K. 2010. Fertilizer Policy Development in Nepal. The Journal of Agriculture and
Environment, vol:11. Government of Nepal, Ministry of Agricultural Development, Gender
Equity and Environment Division, Singhdurbar, Kathmandu, Nepal.
... However, the government could not sustain the financial burden due to the increasing fertilizer demand and the price in the international market. As a result, AIC failed to import and distribute fertilizer according to the demand and the government eliminated subsidies on non-urea fertilizers in 1997 and on urea in 1999 (Bista et al., 2016). The deregulation policy (1997/98-2007/08) was implemented to bring reforms in import and distribution and to encourage private sectors for the smooth supply of fertilizer in the country. ...
... Deregulation policy largely failed to bring the expected improvement in supply and import because of the price hike in the international market and fertilizer available at cheaper prices from informal sources along the border (Panta, 2019). The government reintroduced the subsidy scheme in 2009 after many other sequential policies failed to fulfil the fertilizer demand of the country (B.C. et al., 2020;Bista et al., 2016;Panta, 2018). Fertilizer subsidy was introduced to improve the supply situation, increase agricultural productivity, and curb the inflow of low-quality fertilizer from informal sources (Bista et al., 2016). ...
... The government reintroduced the subsidy scheme in 2009 after many other sequential policies failed to fulfil the fertilizer demand of the country (B.C. et al., 2020;Bista et al., 2016;Panta, 2018). Fertilizer subsidy was introduced to improve the supply situation, increase agricultural productivity, and curb the inflow of low-quality fertilizer from informal sources (Bista et al., 2016). As seen in Figure 2, the fertilizer consumption gradually increased from the lowest sales between 2008/9 and 2010/11. ...
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... Indicators of input scarcity in Nepalese agriculture. Sources: (a) Labor migration (MoLE, 2018); (b) Labor wage rates (MoF, 2018); (c) Hybrid maize seed imports (SEAN, 2019); (d) Per capita land (MoAD, 2017); (e) Farm size (MoAD, 2016); (f) Hybrid maize seed value (SEAN, 2019); (g) Urea import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (h) DAP import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (i) Potash import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010).Notes: Monetary values are adjusted for inflation and are for the year 2010. Exchange rate: US$ 1 = NPR 104, during the survey year 2017 (NRB, 2019). ...
... Indicators of input scarcity in Nepalese agriculture. Sources: (a) Labor migration (MoLE, 2018); (b) Labor wage rates (MoF, 2018); (c) Hybrid maize seed imports (SEAN, 2019); (d) Per capita land (MoAD, 2017); (e) Farm size (MoAD, 2016); (f) Hybrid maize seed value (SEAN, 2019); (g) Urea import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (h) DAP import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (i) Potash import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010).Notes: Monetary values are adjusted for inflation and are for the year 2010. Exchange rate: US$ 1 = NPR 104, during the survey year 2017 (NRB, 2019). ...
... Indicators of input scarcity in Nepalese agriculture. Sources: (a) Labor migration (MoLE, 2018); (b) Labor wage rates (MoF, 2018); (c) Hybrid maize seed imports (SEAN, 2019); (d) Per capita land (MoAD, 2017); (e) Farm size (MoAD, 2016); (f) Hybrid maize seed value (SEAN, 2019); (g) Urea import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (h) DAP import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010); (i) Potash import(Bista et al., 2016;MoAD, 2017;Shrestha, 2010).Notes: Monetary values are adjusted for inflation and are for the year 2010. Exchange rate: US$ 1 = NPR 104, during the survey year 2017 (NRB, 2019). ...
Conference Paper
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Managerial practices for farming system intensification have received increased focus in research-and-development (R&D) initiatives. These technologies are proven to close the yield gaps in researcher-managed field trials and are recommended for farmer's adoption. However, not all farmers have the technical, financial, and social capital to adopt and benefit from these recommended technologies. Is the current level of productivity enhancement achieved by smallholder system intensification sufficient to sustain rural livelihoods? To this end, the study assesses the impacts of hybrid maize adoption on productivity and livelihoods in the mid-hill region of Nepal. We find that maize hybrid adoption increases crop productivity by 109%, making the crop profitable for smallholders and enhancing per capita food expenditure by 20%. Nevertheless, these benefits were unevenly distributed: relatively small farms (≤0.3 ha.) achieved greater gains in productivity and profitability from hybrid maize adoption, but only larger farms (>0.3 ha.) enjoyed the aggregate livelihood benefits of the technology. Increasing market access to material inputs did not significantly alter the observed patterns. More studies are required on the relationship between farm size and the livelihood impacts of sustainable intensification to facilitate R&D targeting and to ensure inclusive development.
... The investment in seed and fertilizer subsidy is mainly directed for major food crops (rice and wheat) in the Terai and market accessible areas of Kathmandu. Moreover, the price subsidy on improved seeds of these major crops is channeled only through the dealers of state-owned National Seed Company (Bista et al. 2016). As a result, private sector faces disincentives in seed business as they have to compete with subsidized seeds of state-owned National Seed Company. ...
... Nepal is a landlocked country in South Asia with an economy heavily reliant on the agricultural sector, which accounts for 28% of the gross domestic product (GDP) and employs 60% of the labor force (Ministry of Finance, 2019). Nepali agriculture is dominated by smallholder farmers following traditional farming practices (Adhikari et al., 2018). Low agricultural productivity has been endemic as more than half (54%) of the Nepali population is affected by chronic food insecurity (IPC, 2014). ...
Article
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There has been much optimism about the potential of information and communication technologies (ICTs) to provide agricultural extension services to remote households. Yet, little is known about how different communication methods fare, and, moreover, whether different segments of the population adopt information communicated via different means equally. We conduct a randomized controlled trial comparing the effectiveness of three ICTs—radio, voice response messages, and a smartphone app—with traditional extension training in communicating fertilizer management practices across four districts in rural Nepal. We find that farmers in the smartphone app and the extension training programs are on average 8.4 and 13 percentage points more likely to adopt top dressing fertilizer practices compared to control farmers, statistically significant at the 1% and 5% levels, respectively. Farmers in the smartphone app treatment achieve the highest agronomic literacy test scores, 7.8 percentage points higher than the control, statistically significant at the 1% level. In contrast, farmers receiving radio or voice response messages were not more likely to adopt the same fertilizer recommendations nor show improved specific or general agronomic knowledge relative to control farmers. Our results suggest that smartphone apps are more cost effective at inducing farmer knowledge and technology adoption than extension trainings. Heterogeneous treatment effects, however, reveal that a targeted ICT approach may be more effective in disseminating extension advice.
... Fertilizer shortage is an perennial problem faced by Nepal and is one of the major contributing factor for the low agricultural output of the country (Bista et al., 2018;Deshar, 2013;Panta, 2018). Although 66% of the workforce is directly or indirectly employed in agricultural and livestock production, the country is fully dependent on food import for daily consumption (Paudel, 2016). ...
Article
This paper presents a detailed design, cost estimation and sensitivity analysis for establishing a CO 2 capture plant for use in urea manufacturing in the context of Nepal. The commercially proven post combustion capture process , monoethanolamine (MEA) solvent based scrubbing, was designed with the help of Aspen Plus to determine the size of scrubbing towers, accessory equipment's and the utilities for capturing 90% of CO 2 from the flue gas. The flue gas stream data was obtained from a local cement industry. Our analysis showed that absorber and stripper columns of 10 m and 7 m packing height respectively are required to capture approximately 250 Ktons/ year of CO 2. The columns will have packing diameters of 6 m and 4 m respectively. The total capital cost and the production cost for the plant of this scale was calculated to be $10 million and $21 million respectively. The bulk of the total production cost, $18 million per year, was the utility (electricity) cost for regenerating the solvent. The profitability of the capture plant was found to be highly sensitive to the electricity cost which presents a huge opportunity for Nepal. Based on our estimate, the total cost per kg of CO 2 capture in Nepal will be about $0.086. A 30% lower electricity cost would lower the capture cost to $0.063/kg CO 2. The availability of cheap hydro-power electricity (lower than $0.01/kWh) makes CO 2 capture based urea manufacturing process to be a viable alternative for Nepal. We hope this economic evaluation data will serve as the baseline for the policy makers to undertake a more detailed study on the carbon capture and electrolysis based urea manufacturing plant in the country.
... In most parts of the country, nitrogen is supplied mainly in the form of urea and di-ammonium phosphate (DAP) with increased use and dependency (Raut et al., 2011). Nepal is entirely dependent on imported fertilizer which causes uncertainty to ensure the supply of quality fertilizer in the required quantity and time (Shrestha, 2010;Bista et al., 2016). There is no chemical fertilizer factory in Nepal and the present combined demand for urea, DAP, and muriate of potash (MoP) is 785,000 tons per annum (Baran Mazumdar, 2012). ...
Article
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For the quantitative evaluation of the efficacy of Nitrogen through different plant nutrient sources in the growth and yield of radish, the field experiment was conducted from March 2020 to June 2020 in an Inceptisol with sandy loam soil of the research field of G. P. Koirala College of Agriculture and Research Centre, Gothgaun, Morang, Nepal. The experiment was carried out in a Randomized Complete Block Design with eight treatments (Biogas Byproduct, Poultry Manure, Goat Manure, Farmyard Manure, Vermicompost, Packaged Organic Manure, Recommended Dose of Chemical Fertilizer, and Control) and four replications. Forty Day (released in 1994 AD) variety of radish was used as a test crop. The recommended 100 kg N per hectare was supplied from each treatment, calculated based on the nitrogen content of each nutrient source. Results showed that there was a significant difference in almost all studied parameters from all treatments over control (P≤ 0.05). The highest total fresh biomass yield (123.415 Mt/ha) and highest delta fresh shoot yield (22.806 Mt/ha) were recorded from the application of a recommended dose of fertilizer, and the highest delta fresh root yield (30.127 Mt/ha) was obtained from the application of FYM. The experiment suggests that the application of FYM significantly increased root yield and was positively correlated with other parameters, which might be a good alternative for chemical fertilizers. Int. J. Appl. Sci. Biotechnol. Vol 9(3): 203-212.
... And, it is one of the major affected crops due to a shortage of chemical fertilizers during paddy planting season. The country requires 0.6 to 0.8 million MT of chemical fertilizers every year [42]. However, the supply was only 0.45 million metrics tons [43] to date. ...
Article
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Humanity has been threatened by pandemics since several decades with devastating effects on all human activities including the economy, and environment. Currently, the world is reeling from the COVID-19 pandemic. The COVID-19 pandemic has been a major threat to the livelihood of billions of people worldwide. Nepal is not an exception to this and has been seriously threatened by the COVID-19 pandemic. The thousands of the peoples who depend on daily wages to join hand to mouth has been under the brunt of the COVID-19 pandemic because of job loss, disruption in the food supply chain. Also, the COVID-19 pandemic has thwarted Nepal's targets to achieve UN Sustainable Development Goals including an unprecedented state of vulnerability to hunger and poverty in the country. Though some informal shreds of evidence have reported the negative impacts of COVID-19 on Sustainable Development Goals, none of the scientific literature has been available regarding such impacts in Nepal yet. This review aims to synthesize extant literature that reports the effects of COVID-19 on the Nepalese economy and implications for achieving UN Sustainable Development Goals.We found that the COVID-19 pandemic has created unprecedented challenges to achieve the country's committed United Nation's Sustainable Development Goals for Nepal. Further, the COVID-19 pandemic has created a unique “income shock” that is supposed to precipitate household food insecurity in developing economy like Nepal. Our review indicated that the percentage of populations below poverty could rise even more than the present national reported value of 18% in the post-pandemic era. We emphasized generating employment and income-earning opportunities to build a resilient food system. Further, we urged to build international consensus to reset and rethink the course of sustainable development goals.
Article
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The extensive use of agro-chemicals deemed the conventional agricultural system of Nepal as unsustainable, regarding which organic agriculture seems as a realistic alternative, which lays its major focus on sustainable production system rather than on productivity. It has been gaining huge interest and is being widespread in contemporary context. In this regard, the paper attempts to outline the status and practices of organic agriculture in Nepal. Highlighting the major policy initiatives taken for promoting and advancing organic agriculture in Nepal, the paper also brings in light the relevancy of global agenda Sustainable Development Goals 2030 and other international conventions for prioritizing organic agriculture in Nepal. Though being determined in the direction of organic agriculture, contradictory decisions and policies deterring organic agriculture continue to emerge in Nepal. The paper, thus, highlights those deterring policies and identifies the major policy gaps hindering the growth of organic agriculture in Nepal. Presenting the case of ambitious mission of Karnali province to gradually transform itself to fully organic province, the paper assesses the major constraints for organic agriculture and suggests some policy recommendations that needs to be addressed to further its growth and development and eventually develop a sustainable food production system to ensure the long term national objectives of food security and inclusive economic growth for healthy and quality life of all Nepalese
Article
Managerial practices for farming-system intensification have received increased focus in research-and-development (R&D) initiatives. These technologies are proven to close the yield gaps in researcher-managed field trials and are recommended for farmer’s adoption. However, not all farmers have the technical, financial, and social capital to adopt and benefit from these recommended technologies. Is the current level of productivity enhancement achieved by smallholder system intensification sufficient to sustain rural livelihoods? To this end, the study assessed the impacts of hybrid maize (Zea mays L.) adoption on productivity and livelihoods in the mid-hill region of Nepal. Smallholders in the study region face severe shortages of labor, improved cultivars, and inorganic fertilizers, resulting in very low yields and profitability. We find that maize hybrid adoption increased crop productivity by 109%, making the crop profitable for smallholders and enhancing the per capita food expenditure by 20%. Nevertheless, these benefits were unevenly distributed: relatively small farms (≤0.3 ha) achieved greater gains in productivity and livelihood per land unit from hybrid maize adoption, but only larger farms (>0.3 ha) enjoyed the aggregate livelihood benefits of the technology. System intensification gains economic relevance because of the severe scarcity of resources, whereas the resource scarcity itself determines the economic relevance of system intensification, presenting a paradox. Increasing market access to material inputs did not significantly alter the observed patterns. More studies are required on the relationship between farm size and the livelihood impacts of sustainable intensification to facilitate R&D targeting and ensure inclusive development.
Article
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Changes in soil organic matter (SOM) are slow and difficult to monitor, usually apparent after few decades. Recent changes in the agriculture had its influence on soil, including the soil organic matter content. About 60% of soil in Nepal now have low organic matter content. Agriculture Perspective Plan (APP) was focused more on the concept of green revolution to increase the chemical fertilizer inputs, however, the scenario is changing. Use of organic fertilizers is promoted extensively by government and different organizations with a target of increasing SOM content from 1.92% in 2015 to 4% by 2035. This paper aims at analysing the current status, targeted goal and the challenges faced in the augmentation of the soil organic matter using data available. Achieving this target requires an addition of extra 2.244 ton/ha of organic matter on a yearly basis for 20 years. The average amount of organic matter (2.5-3 ton/ha) applied is lesser than a single season grain harvest. 4.69% of sites had high soil organic matter in fiscal year 075/76 which slipped to 2.64% in 2076/77. The sites with low soil organic matter increased from 12.73% to 15.31%. The causes behind the SOM decline varies according to different agro-ecological zones like soil erosion, residue burning, imbalanced fertilizer use, defective FYM production etc. Findings suggest precise technologies required to be adopted to tackle with the different niche specific causes of soil fertility decline. Despite the complete nutrient content, bulky nature of organic fertilizers sets a major drawback regarding their transportation, distribution and commercialization. Government of Nepal is promoting organic fertilizer use by subsidizing their production cost by 50%. Following integrated nutrient management (INM) techniques, sustainable soil management practices (SSMP) and promotion of use of locally available resources can play a huge role in making the technology sustainable to the farmers.
Article
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Fertilizer is a vital input for agriculture production. With the growing popularity of modern agriculture, fertilizer consumption in Nepal has been increasing over the years. Since, Nepal does not produce any fertilizers, demand for fertilizers are being met through formal and informal imports. Over the years, fertilizer policy changes have been observed several times in a bid to satisfy farmers' demand for quality fertilizers. While fertilizer policy change of deregulating the fertilizer trade initially produced positive impact in overall supply situation, deregulation policy could not largely ensure the supply of quality fertilizers in required quantity and time. Re-introducing subsidy regime in chemical fertilizer by the government's recent decision could be considered as a positive development towards meeting farmers demand for quality fertilizer. However, given the quota of subsidized fertilizer, which is far less than the actual demand, the problem of supply is likely to continue. To address current problem of short supply government should increase the quota at least up to three hundred thousand metric tons. Moreover, Ministry of Agriculture and Cooperatives should come up with a long-term plan aiming at sustainable management of soil fertility.
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The interim constitution of Nepal has mentioned "food sovereignty as fundamental right in its constituents 18.3". However, Nepal is experiencing decline in food security situation due to collision of domestic, national and international crises viz. poor agricultural growth, declined national agricultural priority, global climate change, global food crisis, and political instability. There is domination of small and marginal holders in Nepalese agriculture. Although the share of agriculture in country's GDP is decreasing, it is still 33%, and the highest among the South Asian countries. Cereals are the most important staple food crops in Nepal and rice number one from area and production followed by maize, wheat, millets and barley. The grain-legumes and potatoes are considered the protective food crops for the maintenance of balance human nutrition in Nepal. Out of 88 countries, Nepal ranked 57 th in Global Hunger Index (GHI) with GHI value of 19.8 depicting alarming situation of hunger in different regions of the country. Since the III Five year plan (1975-80), the government of Nepal has given high priority in agriculture, focusing major approaches on promotion of integrated farming systems to address food and nutrition security. However, the food security situation is deteriorating. Adaptive measures on climate change, food distribution policy, crop and livestock insurance, subsidies on fertilizers and seeds, research and development activities on food-grain crops and bio-diversity conservation, inter agency coordination, food and seed buffer stock, and institutional capacity building would the viable options to maintain the food security in Nepal. From the rigorous study of various past research works, it can be concluded that the wider gap of several food grain crops can be reduced by system research, crop modelling, and up-scaling the use of agricultural machineries and tools.
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