Agricultural Sector and its Prospects in Nepal

The contribution of agriculture sector (agriculture, forest and fisheries) to GDP is estimated to be 26.98 percent in FY 2018/19 which was 27.59 percent in the FY 2017/18.

During the past two decades, Nepal’s agricultural sector’s production has increased by 3.2 percent. While the growth rate of agriculture sector was 2.7 percent in FY 2017/18, it is expected to stand at 5.1 percent in FY 2018/19. The growth in agricultural sector has been supported by the increase in the production of the major food grains and vegetable crops. Moreover, availability of seeds, fertilizers and other agricultural inputs, expansion in irrigation facility and favorable weather condition also supported the growth.

Current Status

Situation of Food Crops

The total cultivated area for food crop production has decreased by 0.9 percent in FY 2018/19. However, the change has due to increment in the area for winter vegetable crop production and ponds construction for fishery, and the fragmentation of flat areas of land from Terai region. Food crop production has increased by 6.2% and productivity increased by 7.1%. Paddy occupies 80.0% or more area of total cultivated land and its production and productivity has increased by 8.9% and 7.3% respectively due to smooth supply of chemical fertilizers, favorably weather condition and the development and expansion of new technology . Maize cultivation has decreased by 1.3% but production and productivity has increased by 3.5% and 4.8% respectively. Wheat and millet has increased production by 4.5% and 2.2% respectively. While, Barley production has decreased by 0.7% in FY 2018/19.

Province Wise Food Crop Production shows Paddy has produced highest in Province 2 as 27% of total paddy are produced here. Also, 28.6% of total wheat production is in the same province. Maize held its 29.3% in Province 1 while Millet production is more over same in Province 1,4 and Bagmati. Also, Buckwheat was produced highest in Bagmati and Barely in Karnali Province i.e. 43%.

Situation of Cash Crops

CropFarming AreaProduction
Oilseed0.6 %2.93 %
Potato0.9 % 4.3%
Vegetable1.75 % 1.86 %
Fruits3.3 % 14.16 %
Honey0.8 % 0.8 %
Sugarcane9.5 % 11 %
Jute-6.6%-5.2 %
Coffee6.6 % 34.5 %
Tea0.7 % 2.2 %
Cotton-8.3 % -3.2 %
Fishery3.1 % 3.8 %

Situation of Spice Crops

CropsFarming AreaProduction
Cardamom13.8%15.2%
Ginger3.2%1.6%

Situation of Livestock Production

In FY 2018/19, the total number of cows /oxen, buffaloes, goats, milking cows and buffaloes, pigs, chickens, egg laying chickens and egg laying ducks has increased by 0.2 percent to 3.7 percent in 2017/18 whereas the number of yaks, sheep, buffaloes, and donkey has decreased by the same level of percentage. Upto mid-March of FY 2018/19, milk and meat has increased 6.5 percent greater than the production in the corresponding period of FY 2017/18.

Import and Export Status in 2018/19

The food and livestock exports have declined by 9.9 percent to Rs.12.67 billion compared to 2017/18. During this period, exports of tobacco and beverages have increased by 7.7 percent to Rs.1.7 billion. Export of oil and fat based on vegetable and animal product has increased to Rs.5.8 billion. During this period, the imports of food items and animals has increased by 13.8 percent, tobacco and beverage by 17.1 percent and vegetable oil and animal fat by 15.3 percent, with a total amount of agricultural imports worth Rs.138.06 billion. During this period, export of agricultural goods equivalent to 31.1 percent of the total commodity export has been exported and import of agricultural goods equivalent 14.6 percent of the total imports have been imported.

Credit Status in Agriculture Sector

Year July (Rs. in Million) December (Rs. in Million) % Increase
2018/19135756.55173064.9827.5%
2019/20193457.40204323.215.6%

This states that Outstanding Credit of Banks and Financial Institutions in Agriculture sector has increased. But, Last 5 months of Year 2019/20 has lower increase in agricultural credit than same period in Year 2018/19.

What to do to improve Agricultural Sector in Nepal ?

  • Various Agricultural Research should be initiated and developed to make Agriculture and Livestock services should more effective in Local level.
  • Proper Infrastructures should be developed to provide irrigation facilities for fertile land all over the year.
  • Attract Foreign Returned Nepalese employees to work in agriculture sector.
  • Agricultural Production, Collection, Storage and Distribution should be mechanized and International-level laboratory should be developed.
  • Develop control mechanism to reduce illegal import of harmful insecticides, pesticides and various low standard seeds.
  • Marketization of agricultural product should be monitored by decreasing gap between farmers and consumers.
  • Extend the access of insurance facilities of agricultural products and livestock to the marginalized rural areas.
  • Various forms of cheaper loans and subsidies should be provided to make agriculture sector more attractive to invest.
  • Develop Mechanism to minimize the effect of climate changes on Agricultural Production
  • Agriculture and Livestock insurance program should be extended to farmers of rural areas too
  • Livestock Health Services should be made available in Local level to motivate Livestock Farmers to produce quality services
  • Training and Development should be provided to youth to attract them invest in Agricultural Sector.

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