Will Double Budget in Agriculture be a Magic?

            It is not astonishing, even today majority of rural Nepalese don't ponder further to surety of Gans, Bans and Kapas ( food, shelter and clothes ) if they are contemplated, what they endeavor from the government? And it has been measurable time, policies are formulated, expenditures are made to asymptote on those community but achievement is far from the contemplation.

            Recently news are circulated, government budget in agriculture is plausible to be doubled in next fiscal year; PM Bhattarai is divulging at different functions. This has fabricated an aspiration in promotion of Nepalese economy through commercialization in agriculture sector. Agricultural commercialization calls for augmented investment and capital formation for more intensive production. Hence, the magnitude of commercialization and amplitude of investment are positively correlated. Antithetical to the PM's testimony; Whether there wasn't ample investment for agriculture in past? This question is being  common for us.

            Comprehensive amount of money have been invested in agricultural development  in Nepal, but unfortunately most of them have not been fruitful. Starting form 5th periodic plan to 9th periodic plan, agriculture was the first prioritized sector of the country. But, yet to be imported large amount of cereals, meat, milk, pulses, oilseeds and fruits shows our investment on agriculture was either not abundant or despoiled. The record from trade and export promotion center (TEPC) shows agricultural product amounted  NRs 46,825 million have been imported in Nepal in FY 2010/11 from different parts of the world; major being India, while this figure for export is only NRs 13,580 million. This shows if we were self-sufficient in production, NRs 33,245 million could be scrimped form departing; which is around nine percent of our national budget for fiscal year 2011/12.

            The economic hardship experienced by most people in rural region of the country has destined outflow of youth population from the country, so more and more productive agricultural land has been virtually taken out of production. Spending to agriculture is one of the most pivotal government instruments for accelerating economic growth and alleviating poverty in rural areas of Nepal. This is because , the majorities of poor people in Nepal live in rural areas and depend upon agriculture for their livelihood. Agriculture is therefore eminent both for economic development and poverty reduction.

            The time has come to give rigorous attention during investing in agriculture. There might be stream of funds in agriculture sector, but if this could not be routed well, that will again be a huge excrement. So government has to aware of this.

            First of all, the comprehensive study of performance of present agriculture sector should be conducted. It should be converged on disposition of existing agriculture system, its institutional framework, strengths and weaknesses. Based on this, the skeleton for investment will be formulated. The second step, should be scrutiny of past policies affecting the agriculture. This covers not only agricultural policies but also policies juxtaposed with trade and marketing, import, export, subsidy to farmers, banking policies and agribusiness promotion policies etc. More to this, how investment decisions are taken and what is the role of farmers on that judgment? is one of the important query to be anatomized on policies. As a result, an idea of deficient part on policies and agility to be incorporated for immediate and  long run response is achieved.

            As a third step, an arbitration of investment processes in Nepalese agriculture should be thoroughly executed. This not only covers investment from government  compartment ( ministry, banks ) but also from private sector, private banks, different NGOs, INGOs, CBOs and UN agencies. This will somewhat assist in disclosing  investment duplicating, lacking and potential investment area. Besides  assessing the investment area, it also covers the disbursement process, and find out effective method in our context.

            Until government is nimble to take advantage of every rupee their national hold, the development seems almost unattainable for any country. A number of countries are now undertaking ambitious attempts to transform their agriculture sector, engaging in public-private collaboration. So, as fourth step, an analysis to constraints to private sector investment in Nepalese agriculture should be done. This will unmask , why private sector is reluctant to invest in agriculture ? and give an idea to inspire them for the outlay.

            During this dissertation process, it is almost sure, many alternatives of investment will be there in front of government. As we know, If we possess many alternatives with limited budget, we should choose that gives highest output with minimum payback period, same doctrine should be followed here. Thus, the study of choices  for investment gives an idea about the superior option to be implemented. So the  fifth step should be identification and evaluation of investment options. This whole process will divide the work to be done in to two categories i.e. of immediate response and long term. Thus as a last step implementation of the chosen investment activities should be sequenced on priority basis.

            Now I would like to highlight some of the major constraints being faced in Nepalese agriculture, which demands immediate attention.

            The first solicitation of farmers anywhere in the country is availability of irrigation. Thousands of hectares of land are barren, less productive and infertile. If government could manage irrigation to them, it will certainly work in multifaceted way. First of all, the production will be boosted, which means amalgamation of income level of farmers that results gravitation of youths toward the agriculture. Thus, irrigation is the most distinguished instrument to jump toward agricultural commercialization. Irrigation not necessarily means large budgeted canal irrigation, but our geographical location and topography indulges small irrigation in hilly region and canal irrigation in terai.

            There is one important fact about agribusiness; the prices of farm inputs has increased magnificently since last decade but price of the farm produce at farmers level is increased to a lesser extent. Thus, second most noteworthy component is subsidized and sufficient high quality agricultural inputs like fertilizer, seeds ,animal breeds, equipments and machineries. There may be many reasons, mechanization in Nepal is at rudimentary stage. Traditional farming practices are still established here. High yielding varieties of crops  and  breeds of animals are still not common in farmers level. Farmers never get timely and prosperous fertilizers during cultivation of crops. So input accessibility is important factor to be considered.

            The third up most important component is availability of credit to the farmers. If sufficient credit and technical assistance is bestowed to the  farmers, they would then be in a position to apply improved production techniques, thereby increasing yields and production, and achieving the stated policy goal to boost exports and reduce imports through commercialization of agribusiness practices. At present condition, high level of investing for commercial purpose in agriculture is not prevailing in Nepal. Thus government should provide sizable amount of credit to the farmers at highly subsidized interest rate. The investment also should be in denomination of animal and crop insurance through the credit providing agencies.

            Thus, the pattern of agriculture and its output could be molded by government policies adopted during the time on agricultural investment. High investment in agriculture will not work as a magic if not utilized precisely. So, government should give attentive eye to many such key issues antecedence to investing on agriculture sector; the sector which employs two third of nation's population and provides one third of national income. The demand driven and return oriented investment will certainly work paramount rather than abruptly deciding for the investment.