Abstract
Agricultural diversification into high-value commodities improves the livelihoods of small-scale farmers in poor countries like Nepal. This chapter discusses diversification within the agriculture sector between 1995 and 2015, which highlights the expansion in the production of high-value agricultural products such as fruits, vegetables, livestock and fishery sub-sectors at the expense of cereal crops such as rice, maize and wheat. It analyses the main drivers of agricultural diversification, constraints to and opportunities for diversification, and identifies policy recommendations for faster pace of agricultural diversification.
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Notes
- 1.
Simpson index is defined as 1 − ∑ (Pi)2 with Pi as proportionate share of ith crop.
- 2.
Statistical Year Book, 2011, CBS.
- 3.
The government’s declaration of 159 new municipalities during 2014 and 2015 makes the total urban population 42%. However, declaration of some municipalities was based on political decision and is still rural type (National Urban Development Strategy, 2015, Ministry of Urban Development). Urban population estimate by Economic Survey, 2016, is 25%.
- 4.
Based on the population census data and including 61 new municipalities added by the government in 2014.
- 5.
Summary Results of Agriculture Census, 2012, CBS.
- 6.
Author’s Estimates Based on National Sample Census of Agriculture, 2011/12, Central Bureau of Statistics and Population Census, 2011.
- 7.
CBS Pocket Book of Statistics, 2014.
- 8.
Nepal Human Development Report, 2014, UNDP.
- 9.
On average, 59% of farm families raise cattle (2.8 animals/holding), 44% buffaloes (1.9/holding), 61% goats (4.7/per holding), 12% pigs (1.8/per holding), 3% sheep (6.3/holding) and other animals in much small percentages. Likewise, about 47% of farm holdings raise poultry birds (14.5 % bird per family, on average).
- 10.
The estimated ordinary least square regression equations for the period 2007–16
$${\text{Estimate}}\,{\text{of}}\;{\text{GDP}}\;{\text{annual}}\;{\text{growth}}\;{\text{rate}}\;{ = }\; 1. 1 3\;{\text{AGDP}}\;{\text{annual}}\;{\text{growth}}\;{\text{rate}}\;{ + }\,{\text{e}}\;\left( {\text{error term}} \right)$$(1)(Number of observations = 10; estimated R-square = 0.89, T-statistics of beta coefficient (1.13) = 8.4; F-stat = 69.9 and ρ = 0.000,002)
$${\text{Estimate}}\;{\text{of}}\;{\text{non-AGDP}}\;{\text{annual}}\;{\text{growth}}\;{\text{rate}}\;{ = }\; 1. 2 1\;{\text{AGDP}}\;{\text{annual}}\;{\text{growth}}\;{\text{rate}}\,{ + }\,{\text{e}}\; ( {\text{error term)}}$$(2)(Number of observations = 10; estimated R-square = 0.79, T-statistics of beta coefficient (1.21) = 5.8 and F-stat = 33.3, ρ = 0.0003)
Estimated ‘R-squares’ showing the power of AGDP in explaining variation in GDP and NAGDP in the equations are high around 80% or more, and beta coefficients are highly significant, at more than 99% confidence level, implying high reliability of the relations estimated
Source Estimates by the author.
- 11.
Nepal Agriculture Perspective Plan, 1995–2015, had expected it to be 1.5%. General understanding internationally is also similar in case of agriculture-dominated economies.
- 12.
Computed from Nepal Sample Census of Agriculture; Mountain, Hills and Terai Issues, 2011/12.
- 13.
Champak Pokharel, agriculture diversification in Nepal, agriculture diversification and smallholders in South Asia, Academic Foundation, New Delhi, 2007.
- 14.
Nepal Population and Housing Census, CBS, 2011, defined economically active population as those who perform at least one month of economic works (agricultural activities, wage/salary earnings, own non-agricultural business activities, extended economic activities and seeking jobs) in a year.
- 15.
NPHS (Nepal Population and Housing Census 2011) has shown 54.20% (11.1 million) of the population ten years of age. Among them, 90.5% are usually active having at least six months of engagement.
- 16.
Source: Average Cost, Returns, and Net Profit of Major Vegetable and Spice crops, Statistical Information on Nepalese Agriculture, MOA 2014/15 (for Net profit and B-C ration) and Cost of production Year book, 2013–14 for labour use, Agribusiness Promotion Centre DOA.
- 17.
Average Cost of Production and Gross Profit of Fruit Farming in Nepal 2071/072 (2014/15), Netra Bahadur Bhandari, Maniratna Aryal, Agribusiness Promotion and Marketing Development Directorate Market Research and Statistics Management Program, Department of Agriculture, Lalitpur, Nepal.
- 18.
Evaluation and Impact Assessment of Third Small Farmer Development Project, 1997; Agricultural Projects Services Centre, Kathmandu, Nepal.
- 19.
Regional breakdown of AGDP growth is not available in CBS growth accounting.
- 20.
Current sale of improved seed form the National Seed Company stands only at 2.6 kg per ha of paddy, 7.6 kg per ha of wheat and none in maize. Private sector supply has low reliability due to weak regulations.
- 21.
Nepal Trade Statistics, Department of Custom, Nepal 2016.
- 22.
Development of Manufacturing Industries in Nepal: Current State and Future Challenges, Government of Nepal, National Planning Commission Secretariat, Central Bureau of Statistics, November 2014.
- 23.
Author’s estimates based on Irrigation Status Database Study: MOWR (2006) and area added later ( based on Economic Surveys, Government of Nepal).
- 24.
Budget speech 2017 specifies 2100 pockets each of minimum 10 ha along road, two agriculture production blocks (greater than 100 ha each) per district, 30 agriculture production and processing zones per district and one super zone of 1000 ha per province (7 provinces are proposed in constitution of Nepal).
- 25.
It would be 5.5% a year for the recent one and half decade based on population of 2001 and the estimated urban population 25% in 2016 by Economic Survey.
- 26.
This figure closely resembles also with the CBS Household Survey, 2015.
- 27.
More on these are available in Nepal Trade and Integration Strategy, 2016, Ministry of Industry.
Abbreviations
- AFND:
-
Academic Foundation, New Delhi
- APROSC:
-
Agricultural Projects Service Centre
- AgGDP:
-
Agricultural gross domestic product
- APP:
-
Agriculture Perspective Plan
- CBS:
-
Central Bureau of Statistics
- CFUG:
-
Community Forestry Users’ Group
- CMS:
-
Consolidated Management Services Nepal
- DOA:
-
Department of Agriculture
- DoLIDAR:
-
Department of Local Infrastructure and Agricultural Road
- DDC:
-
Dairy Development Corporation
- FNCCI:
-
Federation of Nepalese Chambers of Commerce and Industry
- GDP:
-
Gross domestic product
- GNP:
-
Gross national product
- ha:
-
Hector
- Interim APP:
-
Nepal Interim Agriculture Perspective Plan
- JMA:
-
John Mellor Associates
- MI:
-
Ministry of Industry
- MOAD:
-
Ministry of Agricultural Development
- MOF:
-
Ministry of Finance
- Mt:
-
Metric ton
- MUD:
-
Ministry of Urban Development
- NASPR:
-
Nepal Agriculture Sector Performance Review
- NDDB:
-
Nepal Dairy Development Board
- NLSS:
-
Nepal Living Standard Survey
- NGOs:
-
Non-government organizations
- NMMSS:
-
National Milk Marketing and Strategy Study
- NPC:
-
National Planning Commission
- NRB:
-
Nepal Rastra Bank
- SAARC:
-
South Asian Association for Regional Cooperation
- PMAMP:
-
Prime Minister’s Agriculture Modernization Project
- SINA:
-
Statistical Information on Nepalese Agriculture
- UHT:
-
Ultra-heat treated
- UNDP:
-
United Nations Development Programme
- WTO:
-
World Trade Organization
References
AFND. (2007). Agriculture Diversification and small holders in South Asia.
APROSC. (1997). Evaluation and Impact Assessment of Third Small Farmer Development Project, Nepal.
CBS. (2011). Nepal Living Standard survey, Nepal.
CBS, National Account of Nepal (series), Nepal.
CBS. (1992/2002/2012). National Sample Census of Agriculture, Nepal.
CBS. (2011). Nepal Population and Housing Census: National Report, Nepal.
CBS, Statistical Pocket Book of Nepal, Series, Nepal.
CBS. (2002/212) Census of Manufacturing Establishments Nepal, Nepal.
Department of Custom. (2016). Nepal Trade Statistics, Nepal.
DOA. (2014). Cost of Production Year Book, Nepal.
DOA. (2015). Average Cost of Production and Gross Profit of Fruit Farming in Nepal, Nepal.
DoLIDAR. (2016). Annual Report, Nepal.
JMA/APROSC. (1995). Nepal Agriculture Perspective Plan, Nepal.
MOAD, Statistical Information on Nepalese Agriculture, (series), Nepal.
MOF, Economic Surveys, Series, Nepal.
MOF. (2016), Budget Speech 2016/17, Nepal.
MUD. (2015). National Urban Development Strategy, Nepal.
MI, Nepal Trade and Integration Strategy 2016.
NRB, Quarterly Economic Bulletin, Series, Nepal Rasta Bank (central bank), Nepal.
NPC, Thirteenth Plan (2013–16), Nepal.
NPC. (2016). Fourteenth Plan Approach Paper (20017–19), Nepal.
NPC. (2014). Development of Manufacturing Industries in Nepal Current State and Future Challenges, Nepal.
NRB, Quarterly Economic Bulletins, Series.
UNDP, 2014, Nepal Human Development Report, UND, Nep.
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Pokharel, C. (2019). Agricultural Diversification in Nepal. In: Thapa, G., Kumar, A., Joshi, P. (eds) Agricultural Transformation in Nepal. Springer, Singapore. https://doi.org/10.1007/978-981-32-9648-0_12
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