Prime Minister KP Sharma Oli on Thursday said that a slowdown in agricultural growth was worrisome because it would make it difficult for Nepal to achieve economic prosperity as the sector provides livelihoods for two-thirds of the population, but accounts for only one-third of the Gross Domestic Product (GDP).

“Two-thirds of the working population is engaged in agriculture, but it accounts for only one-third of the economy. This shows that our condition is very bad,” PM Oli told an international conference entitled Doubling the Income of Farmers of Saarc Countries: Extension Strategies and Approaches. “We are still following the subsistence farming system, and there is an urgent need to bring tremendous change in the country’s farm sector.”

The PM added that one of the reasons for the sector’s poor performance was policy implementation. Traditional land reform policy is a very serious obstacle that will need to be designed and implemented better, he said. “A shift is needed, and we need agri businesses and commercialisation of our farm sector. But we should not copy others. We have to find our own way and develop our own model,” the prime minister said.

The poor performance of the farm sector means huge challenges ahead. The government has decided to graduate Nepal from the least developed countries (LDC) category to the developing country category by 2022. Besides, Nepal needs to attain the United Nations-backed Sustainable Development Goals (SDGs) by 2030.

“It’s a huge challenge to meet the target against a backdrop of the existing agriculture practices. Without clear policy and programmes on agriculture and the development of big projects, it’s not easy for Nepal to meet the development goals,” he said.  

Nepal’s poor performance in the agriculture sector is reflected in the import trend of agricultural goods. According to the Department of Customs, Nepal imported farm products worth a whopping Rs215.50 billion in the last fiscal year, up 10 percent year-on-year.

The share of agro products in the total import bill has swelled to 17 percent. The country’s total import bill amounted to Rs1,243 billion in the last fiscal year. Nepal’s reliance on foreign markets for agricultural goods has increased nearly fivefold in the last nine years. The food import bill in 2009-10 totalled Rs44.43 billion.

Imports of farm products have been ballooning because youths have been abandoning agriculture due to low returns. Yubak Dhoj GC, secretary at the Ministry of Agriculture and Livestock Development, said that Nepal was one of the countries where incomes in the farm sector were low.

“The average income in the farm sector is less than $1,000 a year,” he said. One of the biggest challenges is the rain-fed agriculture system. “Nepal’s economic growth rate fluctuates with the monsoon rains. If the monsoon is good, we have a growth rate of up to 6 percent; and if it’s bad, we have observed 1 percent growth.”

A new phenomenon in the farm sector is shrinking land due to rapid urbanisation. GC said that Nepal’s arable land had shrunk 6 percent in the last few years. Against this backdrop, the government has launched ambitious programmes to double farm production within five years.

“It’s a very challenging task. The only alternative is increasing productivity,” he said, adding that technology and inputs could drastically increase productivity. For example, 40 years ago, Nepal used to produce 1.2 million tonnes of paddy per year, and now production has increased to 5.2 million tonnes. “We have not done any magic. This is due to increased use of technology and inputs,” he said. “The farm sector’s road ahead is clear. We need technology and a climate smart agriculture system to increase production.”