The government is expecting paddy production to go up by almost 4 percent to 5.4 million tonnes in the next fiscal year. This is welcome news for Nepal, which is likely to see a bumper paddy harvest of 5.2 million tonnes in the current fiscal year.
The rise in paddy output is always good news, as the cereal grain makes a contribution of over 20 percent to the country’s total agricultural output. The farm sector still contributes about 30 percent to Nepal’s gross domestic product (GDP), and the rise in paddy production automatically leads to a higher economic growth rate.
What is unfortunate though is that paddy output is increasing in the next fiscal year not on the back of the application of new technology or rise in efficiency and productivity, but because of a good monsoon. Reliance on external and uncontrollable factors like monsoon to raise agricultural output is risky. Still Nepal has been depending on the skies to boost agricultural production for ages. This practice should end if the country wants the farm sector to make a meaningful and stable contribution to the economy.
It is true that sectors like services have already overtaken agriculture in terms of their contribution to the economy. If bottlenecks like electricity shortage, policy instability and delays in expanding transport network are removed, the industrial sector may also start performing better in the coming days. Yet the agriculture sector’s role in economic development cannot be understated, because it is crucial to reducing rural poverty and accounts for two-thirds of the jobs available in the country. As such, due attention should be given to raising farm productivity.
Compared to other Asian countries, Nepal’s agricultural sector is marred by high volatility and low yields. Nepal’s paddy yield stands at 3.4 tonnes per hectare, whereas India produces 3.9 tonnes in the same area. Other countries like Bangladesh, China, Thailand and Vietnam are much ahead on this front, with per hectare yield hovering in the range of 4.5 tonnes (Bangladesh) to 9.5 tonnes (China). Similar is the case in the production of wheat and other cereal grains.
What this means is that Nepali farmers’ income is going up due to a hike in the prices of food grains rather than higher yields. No wonder, of the total increase in crop income of 21 percent between fiscal years 2003-04 and 2010-11, 18 percentage points came from a rise in global food prices, says a latest World Bank report.
It is, therefore, imperative that appropriate policies be formulated to boost agricultural productivity. Otherwise, the income of those engaged in the farm sector will continue to remain low and the country’s per capita income won’t rise fast enough.