Government Proposes NPR 51.14 Billion Budget for Agriculture Sector in FY 2083/84

Kathmandu. The budget for the agriculture sector in the upcoming fiscal year 2083/84 is being closely watched. According to the proposal prepared by the Agriculture Department of the Ministry of Agriculture, Forest and Environment, the main focus of the agriculture budget for the coming year will be on increasing production and productivity, modernization of commercial farming, and subsidies provided to farmers.

According to the data received, a total ceiling of NPR 51 billion 149.3 million has been proposed for the agriculture budget for the upcoming fiscal year. This ceiling is approximately NPR 4 billion 761.3 million less than the allocated budget of NPR 57 billion 471.4 million for the current fiscal year 2082/83. Despite a slight reduction in the budget size, the ministry aims to make the available resources production-oriented and farmer-centric.

The largest share in the upcoming year's budget has been allocated for the supply and distribution of chemical fertilizers. The ministry has proposed a budget of NPR 28 billion earmarked for fertilizer subsidies, which accounts for 54.74 percent of the total agriculture budget. This clearly indicates that the government's main priority remains fertilizer supply.

Similarly, a budget of NPR 2.80 billion has been proposed for the Nepal Agricultural Research Council (NARC) to intensify agricultural research. NPR 1.54 billion has been proposed for agricultural insurance premium subsidies to mitigate risks in the agriculture sector, and NPR 1.50 billion for incentive subsidies for sugarcane farmers.

These programs are expected to directly help reduce farmers' costs and provide security.

The contribution and production trends of the agriculture sector, which is the backbone of Nepal's economy, have been mixed. According to the Economic Survey of Fiscal Year 2081/82, the agriculture sector's contribution to Nepal's Gross Domestic Product (GDP) is 25.16 percent.

Among the main programs in the budget, the transformation of the agriculture sector will be continued through the National Agriculture Modernization Project, for which NPR 2.55 billion has been proposed. Additionally, NPR 1.54 billion is targeted to be allocated through the project for expanding fruit cultivation in the mid-hill regions.

A budget of NPR 2.21 billion has been allocated for the project to promote organic farming, and NPR 1.36 billion for financial management. The government plans to allocate NPR 800 million for vaccine management against livestock diseases, NPR 590 million for technical services and human resource management at the local level, and NPR 640 million for food technology and hygiene programs.

Not Many New Programs

In terms of policy, the upcoming budget does not seem to have much groundwork for new programs. The ministry stated that special emphasis will be placed on coordination and collaboration between governments at all three levels.

The priorities of the budget include the easy supply of chemical fertilizers, expansion of agricultural insurance, promotion of spring paddy and indigenous crops, and food security missions (paddy, maize, wheat). The government has also put forward an ambitious plan to establish a 'one municipality, one cold storage center' and cold stores in each district in the coming year. Furthermore, strengthening the agricultural data system, farmer registration program, and climate-resilient agriculture programs have been given high priority in the budget. To attract youth to the agriculture sector, new programs such as agricultural entrepreneurship, startups, and business incubation have also been included in the budget.

What is the Current Situation?

The contribution and production trends of the agriculture sector, which is the backbone of Nepal's economy, have been mixed. According to the Economic Survey of Fiscal Year 2081/82, the agriculture sector's contribution to Nepal's Gross Domestic Product (GDP) is 25.16 percent.

While 50.1 percent of the total skilled workforce is dependent on agriculture, forestry, and fisheries sectors, the population dependent on agriculture is 19.4 million. However, statistics show a worrying situation regarding land use and productivity.

In the livestock sector, Nepal is close to self-sufficiency in milk, fish, and meat production, and has become fully self-sufficient in egg production. However, the increasing non-agricultural use of fertile agricultural land, high production costs, and the ineffective implementation of concessional agricultural loans are seen as existing challenges in the agriculture sector.

The total cultivated land has decreased by 12.2 percent to 2.22 million hectares, and approximately 1.03 million hectares of arable land still remain fallow. The average agricultural land per farmer household has decreased from 0.68 hectares to 0.52 hectares, and the average size per plot is only 0.19 hectares.

According to the report submitted by the Ministry of Agriculture to the committee of the Federal Parliament, the production of food crops in the fiscal year 2080/81 was 5.705 million metric tons of paddy, 3.193 million metric tons of maize, and 2.035 million metric tons of wheat.

The average productivity of all food crops is 3.43 metric tons per hectare. In terms of fruits, the total production of fruits, including rainy season and citrus fruits, reached approximately 1.35 million metric tons, and that of vegetable crops reached 4.44 million metric tons.

In the livestock sector, Nepal is close to self-sufficiency in milk, fish, and meat production, and has become fully self-sufficient in egg production. However, the increasing non-agricultural use of fertile agricultural land, high production costs, and the ineffective implementation of concessional agricultural loans are seen as existing challenges in the agriculture sector.

New Strategy for Green Manure

Considering the potential impact of the reduced budget ceiling for the upcoming year on production and productivity growth, the ministry has put forward the promotion of 'green manure' as a new strategy.

To minimize the negative effects of increasing chemical fertilizer use on the soil, an integrated nutrient management system will be adopted. Under this, plants like 'dhaincha' will be used as green manure to improve soil fertility and reduce farmers' production costs, according to the ministry's claim. Technical analysis shows that cultivating dhaincha on one hectare yields approximately 140 kg of natural nitrogen, equivalent to 300 kg of urea fertilizer, which can save farmers about NPR 45,000 and also reduce the government's burden of fertilizer subsidies.

What Should the Budget Be Like?

Agricultural entrepreneur and market economist Avinash Silwal states that the budget should bring implementable provisions. He mentioned that a large portion of the agriculture budget is spent on purchasing fertilizers, leading to a lack of budget for research and innovation. 'Recently, due to climate change, unexpected weather patterns like rainfall in February-March have caused great hardship to farmers. In such a situation, agricultural insurance should be made hassle-free; such things should be included in the budget.'

He suggested that foreign investment should be opened up in agriculture, similar to hydropower and tourism. 'When foreign technology and investment come, Nepalis can also learn new things. Modernization in agriculture is possible by operating large projects in collaboration with local partners,' he says.

He advises that the budget should bring special packages to attract young people returning from countries like Gulf nations, Israel, or others who have learned skills in agriculture. He states that the state should connect the technology and experience of these youths with capital and markets.

'Just because some people misused loans, it does not mean that real farmers should not get loans or the process should be stopped,' Silwal said. 'The state should not punish five good farmers because of five bad people. The budget should also address this,' Silwal says.

Farmer leader Badri Kandel expressed disappointment, saying that regardless of the budget the government brings, it will not reach the farmers. 'Every year they talk about budgets and make grand statements, but the budget should be such that farmers feel it. If farmers do not experience it, regardless of the programs or names, the budget is meaningless,' he said. He believes that the budget should include farmer-oriented provisions to compete with the market of Indian vegetables and fruits, as farmers are now finally getting prices.

'Just as farmers are now trying to increase investment in bananas, all fruit and vegetable farmers should be attracted. Things that improve the social and economic status of farmers should be included in the budget,' he said.

Young farmer Manoj Chaulagain, who is doing Tandell farming in Kavre, says that the budget should be brought in a way that ensures the safety of farmers' investments. 'The situation where vegetables rot in the field after harvesting should not happen; the state should create a secure environment after investment. Agricultural technicians should also be discussed in the budget,' he said.

Chaulagain stated that if labs and markets are created for organic farming, investment will increase, and the budget should focus on such aspects.