Nepalese Agriculture Demands High Investment

Prolouge

           The primary objective of private sector of nation is always get higher profit. Service comes later. The Public Investment are never rewarding ( or  not oriented to profit ) , therefore the role of Government  is vital. Do agriculture is public service or investment; no ? Then, why private sector ( or say large parties) and bank and financial sector are reluctant to invest in agriculture? Off course, Governments of any developing country like Nepal are not in position to invest high in agriculture sector as required. Therefore, the investment should be shared by private sector. But why this is not working in Nepal? Present budget in agriculture sector for new fiscal year 2013/14  has almost doubled, this is an add, but not sufficient for Nepalese Agriculture . So PPP model is relevant. Lets' invest for agriculture, lets' feed the people, lets' substitute agricultural import and lets' make our nation self dependent.

Content

In a background of nation’s two third population engaged in agriculture, Nepal’s socio-economic transformation is believed to be directly proportionate to agriculture transformation. But, agriculture transformation is not as easy as assumed and not simple as provoked. Probably, this may be the reason, many political leaders, time and again repeat the same mantra of “Agricultural Revolution” but, achievements are hardly noticeable.

Government of Nepal is presently working for long-term plan in agriculture; Agriculture Development Strategy (ADS) as a successor of Agriculture Prospective Plan (APP). APP was among the best plan in agriculture sector, but achievements are down to the mark. The main reason for not having intended success is said to be insufficient investment in Agriculture. Therefore, agriculture sector demands high investment, but in reality the amount of investment in agriculture sector shares very low in national expenditure.

The sociopolitical situation of nation is unstable since along. The economic hardship experienced by most people in rural region of the nation has destined immeasurable outflow of youth to other countries. This has resulted, more and more productive agricultural land has been virtually taken out of production. To cope this, spending high in agriculture would be one of the most pivotal government instruments. It would be helpful for accelerating economic growth to alleviate 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. But present level of investment in agriculture sector cannot justify it's the importance.

Sufficiency of agriculture investment is always matter of discussion. Comprehensive amount of money have been invested in agricultural development initiative 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 import large amount of cereals, meat, milk, pulses, oilseeds and fruits shows our investment on agriculture was either not enough or wasted. 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 stopped form departing; which was around nine percent of our national budget for that fiscal year.

Agriculture revolution demands huge investment in agriculture, which is obviously the great challenge for us.  Nepal's agriculture would be underprivileged and we will depend on foreign import for agricultural products if present agriculture system remains for long. Availability of only 26 percent of land cultivable and 21 percent cultivated, we do not have possibility to expand our cultivable land. Thanks to advancement in agricultural technologies, which made possible to shift from one crop a year to three crops a year from same piece of land and one liter per day to 10 liters per day from a single cattle.

Amratya Sen, a famous Economist has popularly explained about disguised unemployment in agriculture. He explains disguised unemployment in agriculture is so high in developing nation; if two third of those population are shifted in another business or industry; agriculture industry will grow without adverse effect in production. That’s why Labour availability is not problem (as this issue is raised now and again) for country like Nepal. The problem is of proper management.

Now, advance research and extension services in agriculture have developed new avenues of technologies and new techniques of profit maximization from limited resources. Nevertheless, it demands high initial cost.  Yes, providing loan with subsidized interest rate or loan without security is needed, but amount of loan provided are not enough to cover the capital required for modern agriculture. Most of the commercial banks in Nepal are providing very limited amount of loan per farmer. Obviously, it is not possible for large scale of production, or say commercialization. Subsistence agriculture is never rewarding, that's why huge investment as a loan is needed, so that everyone interested can commercialize his or her agriculture business.

A controversial approach (at least for me) in agriculture development is diversification by which, from same farm unit many agricultural products are produced at same time. Diversification is a good strategy for minimization of business risk, for a small scale of production. But diversification in investment is not rewarding. Our geographical situation and agro-microclimate has potentiality of diverse farming and livestock rearing, which does not mean we should commercially grow or rear all those. Now, government policies, programs and budget are mainly focusing on main staple food only. In a way, concentrated focus is good, but concern here is how wisely those commodities are chosen for investment. There exist mismatch between our focus and high value potential commodity. Instead of giving more attention to staple food, tapping the income from high value agriculture is needed. Our production should be trade oriented and agricultural commodity having high absolute and comparative advantage should be given priority of investment and funding.

Epilouge

In conclusion, agriculture sector can do much, provided with sufficient and need based investment. Government, private sector, all banks and financial institutions should invest more in agriculture. As a result of which, we will self- sufficient for own consumption and produce enough to export.