“A Review of
Input and Output Policies for Cereals Production in Nepal”
Citation: Pullabhotla,
H., G. Shreedhar, A. Ganesh-Kumar and A. Gulati.
2011. “A Review of Input and Output Policies for Cereals Production in Nepal”.
Report prepared for the Cereals System Initiative for South Asia (CSISA),
Discussion Paper 01114, International Food Policy Research Institute, Washington D.C.
Abstract:
This study
examines the existing status, policies, and institutions for promoting
agricultural output in Nepal, in particular cereals. In this context, it
reviews the policies on agricultural input such as seed, fertilizer, water,
agricultural equipment, research and extension, and agricultural credit. It
also provides an overview of the policies and programs related to agricultural
output marketing and procurement of food grains in Nepal.
The analysis
shows that although the overall GDPA growth has been on the positive side in
recent years, there seems to be some amount of stagnation in the growth of key
cereals—paddy, wheat, and maize. Except for maize, the production growth rates
show a decline in this decade (2001 onward) compared to the previous decade.
Paddy, which is by far the major crop in Nepal, as well as the main staple in
the Nepalese diet, shows a decline in the growth rate of production from 2.9
percent in the 1990s to a 1.7 percent average annual growth rate post-2000/01.
The overall cereal production growth rate also lags behind the population
growth rate in Nepal. This is likely to exacerbate the cereal availability
situation in the country and might have widespread impact on the food security
status of households, especially in those regions of the country that suffer
from poor infrastructural connectivity and a lack of market linkages.
The study
also finds that availability and usage is at a very low level for most of the
inputs in Nepal. Factors limiting the use of inputs for agriculture include
those related to the socioeconomic conditions of agricultural holdings in
Nepal, supply bottlenecks, policy gaps, and institutional constraints. Some of
these factors are fairly universal, affecting utilization across most of the
input sectors as well as affecting output marketing. These include limited
capital and limited access to affordable credit by farmers, and a lack of
transport and power infrastructure, which impedes input supply and domestic
manufacturing.
On the output
side, public intervention in cereal markets does not seem feasible due to
infrastructure and resource constraints, which also restricts the government’s
capacity for affecting/regulating output prices. Here the optimal way forward
for the government would be to focus on investments aimed at expanding and
improving basic infrastructure—roads, power, communications.