No.
FINAL REPORT ON PROGRAM FORMULATION STUDY FOR AGRICULTURE AND RURAL DEVELOPMENT IN SINDHULI ROAD CORRIDOR IN NEPAL
AUGUST 2009
JAPAN INTERNATIONAL COOPERATION AGENCY
M&Y CONSULTANTS CO. LTD. KRI INTERNATIONAL CORP.
SAD JR 09-012
Location Map Final Report on Program Formulation Study for Agriculture and Rural Development in Sindhuli Road Corridor
SUMMARY1
CHAP. 1 INTRODUCTION
1.1 Background
After a long period of political chaos and civil unrest in Nepal, peace talks commenced in 2006 between the Seven Party Alliance (SPA) and the Maoist party. In 2007, the interim constitution, incorporating the concepts of “Abolishing the Kingdom” and “Introduction of the Federal Republic” was officially proclaimed and an Interim Congress was established in 2008 after a new constitution was formed. Since 1996 throughout these changing circumstances Japan has been providing assistance to Nepal in the construction of the Sindhuli Road with funding from Japan’s Grant Aid program, overcoming various difficulties encountered during the conflict.
The Sindhuli Road Corridor (SRC) area is one of the poorest regions in Nepal and was badly affected by the conflict. Accordingly, it is anticipated that economic development of the region would contribute to the correction of disparities among regions and serve as a determent to the conflict. This would inevitably lead to increased production of high value agricultural products and resulting market expansion.
In this circumstance, JICA decided to a formulate cooperation program for the SRC area to improve the lives of the area’ residents. A temporary access road was completed last year, and feeder roads to the Sindhuli Road are currently being constructed, with more planned for expansion. The Road construction will be completed within the next few years.
1.2 Objectives of the Study
In February 2009 JICA prepared a position paper to assist agricultural and rural development in Nepal that focused on the following aspects:
(1) Strengthening food security (2) Increasing farmers’ agricultural income (3) Strengthening technical extension activities and farmers’ organizations
In the Study, (2) and (3) above would be the focus in the SRC area to materialize impacts by the road constructed under Japan’s grant aid program, since it is not profitable to produce food grains in hill and mountain areas and major food grain production areas are located in the Tarai plain.
The objectives of this study are therefore to identify the constraints on agricultural development, other than the production of cereal crops, including fruits, HVC, livestock and so on; to assess the potential of agriculture and related industries in the SRC; and to formulate tangible cooperation programs for agricultural development in the area.
1 Section number of this Summary is not in sequence as it follows section number in the main text.
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1.3 Strategy of the Study
1.3.1 Organization of the Study
JICA has entrusted the Study on two institutions, one is the NARMA Consultancy Pvt. Ltd., in Nepal (hereinafter called the NARMA) and the M&Y Consultants Co. Ltd., in association with the KRI International Corp. in Japan (hereinafter called the Study Team).
The NARMA started the works in the beginning of February 2009 to conduct collection of data and information, defining the objective districts for the Study as well as field surveys on farmers’ households, marketing and so on.
One the other hand, the Study Team started the works in the early March 2009 by preparing the Inception Report in Japan. At the same time, the Study Team contacted the NARMA for coordination to finalize the questionnaire of the household (HH) survey and market and other surveys.
Accordingly, it was indispensable that the Study Team coordinates with the NARMA to carry out the Study. As a matter of fact, the Inception Report prepared by the NARMA provided adequate data and information through the available literature collected, which helped the Study Team understand the present conditions in agriculture, feeder road construction policies, agriculture policies, practices and agriculture production of the country and the objective area.
1.3.2 Basic Strategy for Conducting the Study
The following aspects are taken into consideration as basic strategies in carrying out the study:
(1) Formulation of tangible programs that are feasible to implement (2) Maximization of synergy effects among institution/policy, production/processing, marketing and social and economic infrastructure (3) Formulating ownership and leadership among stakeholders
1.3.3 Selection of Study Districts
The study districts are selected among districts in which the Sindhuli Road (SR) directly passes through as well as neighboring districts. The SR passes through the Kavre, Sindhuli and Mahottari Districts, and its neighboring districts are (clockwise from north) Sindhupalchok, Dolakha, Ramechhap, Okhaldhunga, Udayapur, Dhanusa, Sarlahi, Makwanpur, Lalitpur and Bhaktapur. Out of those neighboring districts, the Ramechhap and Dolakha districts were selected for the Study by the preliminary study by NARMA as Ramechhap is divided by the Sun Koshi River with the Sindhuli District and the SR passes along the Sun Koshi River in the Sindhuli District. Further, bridge construction crossing the Sun Koshi River connecting the Sindhuli and Ramechhap districts will be completed before the Section III of the SR will be completed, while Dolakha Districts is located to the north of Ramechhap and connected to the strategic road linked to the bridge connected to the SR. Accordingly, the Ramechhap and Dolakha Districts were selected as study districts. Other neighboring districts are not connected to any strategic road linked to the SR. Accordingly, the five districts, Kavre, Sindhuli, Mahottari, Ramechhap and Dolakha were selected for the Study. This was confirmed by the JICA Head office and the Kathmandu office.
1.4 Methodology
The Study has been implemented for the 6-month period from March to August 2009 as shown in the following Figure. This Final Report locates in the end of the Study period.
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Year 2009
Month Feb. Mar. Apr. May Jun. Jul. Aug.
Reports Ic/R Ｐ/R Df/R F/R
[1st Work in Japan] [2nd Work in Japan] [3rd Work in Japan] -Collection, Compilation and Analysis of the Available Data and Information -Preparation of P/R Works in Japan -Consideration of Surveying Technique and -Preparation of Study Implementation -Explanation of Df/R and Discussion Preparation of Study Implementation Plan Plan on the 2nd Stage Study -Preparation of F/R -Preparation of Ic/R and Review
[1st Work in Nepal]
Kick off Kick Explanation and Discussion on Ic/R
Exchange of View with other Donors Collection and Analysis of Data and Information
Review and Analysis of Survey Result by NARMA Defining of Objective Areas as Sindhuli Road Corridor
Identification of Development Potential and Disincentive Elements Work Items andFlow Development of Cooperation Program Works in Nepal [2nd Work in Nepal] and Livestock Operation Livestock and
Supplementary Survey of Farmers' Economy, Agriculture and Livestock Operation and Marketing
Information; Survey on Marketing and Agriculture and on Marketing Survey Information; Workshop Collection, Compilation andAnalysis of the Dataand Selection of Districts for Implementation of Cooperation Program Proposal of Concrete Cooperation Projects Program
Formulation Preparation of Df/R
Field Surveys on Farmers' Sample Surveys on Farmer's Economy, Agriculture and Livestock Operation household and marketing by Ic/R P/R Df/R F/R and Marketing (1st Stage) NARMA Consultancy Remarks: Ic/R; Inception Report, P/R; Progress Report, Df/R; Draft Final Report, F/R; Final Report
1.4.2 Activities Conducted by the Study Team in the 1st Stage Study
(1) Meeting with Relevant Government Agencies
The Study Team explained the Study to the relevant government offices including the Ministry of Agriculture and Cooperatives (MOAC), the Ministry of Local Development (MLD), the National Planning Commission (NPC), and the respective District Development Committees (DDCs) and selected Village Development Committees (VDCs) by submitting the Inception Report as soon as mobilizing in Nepal on 22nd March 2009.
The initial meetings in Kathmandu were held with all concerned ministries and agencies individually and objectives and expected outcomes of the Study were shared by all stakeholders and commitment of full cooperation of the agencies throughout the Study was obtained.
(2) Field Trips and Meetings with Stakeholders
After the meeting with the government agencies, the Study Team together with JICA officers and a NARMA representative carried out the 1st field trip throughout the Sindhuli Road, namely Kavrepalanchok, Sindhuli and Mahottari Districts and had meetings with officers of DDC and VDC, District Agriculture Development Office (DADO), District Livestock Service Office (DLSO), Cooperatives, farmers and Non-government Organization (NGO) during the period from 24th to 28th March to confirm actual field and farmers situations. The Study Team also visited the ATEIP project area in Dhading district together with JICA officers to know the actual field conditions just after the completion of the Project on 30th March.
The Study Team and a NARMA staff carried out the 2nd field trip on Dolakha and Ramechhap Districts from 5th to 8th April and had meetings with stakeholders. The observation of the field trips was reported in the Annex 1.1.
The Study Team visited the Agro Expo 2009 on 12th April and inspected all stalls of the exhibition to know the commodities displayed in the function and to understand the present level of
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(3) Collection and Compilation of Available Data and Information and Analysis
The Study Team collected reports and data in addition to data and information collected and compiled by the NARMA and studied them to understand the present situation of agriculture and rural development in Nepal and specifically in the target area. The details of the data and information collected and analysis of them are reported in Chapters 2, 3 and 6 in this report.
(4) Household Survey and Other Surveys
The sample HH survey was carried out by NARMA and the analysis of the survey was carried out jointly by the Study Team and NARMA.
The Team with NARMA carried out interviews from traders, retailers, and consumers at markets in Kathmandu to get some idea on other donors’ assistance for marketing of agricultural produce in addition to the interviews carried out during the field trips. Results are reported in Section 2.10 of this report.
(5) Exchange of Views with other Donors
There are many agencies and organizations such as World Bank (WB), Asian Development Bank (ADB), United Nations (UN) Agencies and bi-lateral Official Development Assistance (ODA) organizations and International Non-Government Organizations (INGOs) working in Nepal to assist in the improvement of people’s livelihoods. The Study team with JICA officers visited WB, ADB, International Fund for Agriculture Development (IFAD), and Agriculture Enterprise Centre of Federation of Nepalese Chambers of Commerce and Industries (AEC -FNCCI) to obtain their assistance policies and Projects being implemented and planned on 30th March and 1st April and visited Japanese Embassy to report initial findings.
At the last stage of the Study, the Study Team visited Poverty Alleviation Fund Project office as the Project carried out intensive activities in the SRC areas and organizing the poor into group.
1.4.3 Activities Conducted by the Study Team in the 2nd Stage Study
(1) Field Trips and Meetings with Stakeholders
In the second stage of the assignment from the middle of May, the Study Team together with Dr. B.B. Basnyat of NARMA’s Managing Director carried out the 3rd field trip to eastern part of Nepal including Jhapa, Sunsari, Moran and Dhankuta districts and visited Kakarbhitta and Jogbani Indian borders, Biltamod, Dharan and Biratnagar markets, Kuwapani tea garden and factory in Hile in the Dhankuta district and Tarahara Agriculture Research Station in the Sunsari district.
The 4th field trip was conducted together with Mr. Amil Poudel of NARMA to Hetauda in Makwanpur and Narayangart in Chitwan for market survey for potential competitive markets and Malekhu in Dhading district for cooperative survey.
(2) Marketing and Other Surveys
In addition to the HH survey during the 1st stage study, the Study Team entrusted market and other surveys on NARMA in the 2nd stage study through interviews of stakeholders in different aspects. The survey includes interviews of 200 wholesalers and retailers involving marketing of agriculture commodities. The results of are reported in Chapter 5.
(3) Workshops in Each District
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After substantial analysis of the HH survey completed, the Study Team with NARMA conducted the workshop in each district inviting relevant Government officers, cooperative managements, NGO representatives and district CCI representatives. In the workshop, the Study Team explained the findings on the HH survey and the field trips of the Study Team, and obtained comments and opinions on the findings. Further, the Team collected participants opinions on the focal points of the study namely, infrastructure, technical improvement, development of farmers’ organization, post harvest and marketing, and environmental aspects, which are identified by the Study Team as important aspects for program formulation.
(4) Workshops in Kathmandu
A workshop in Kathmandu requesting participation of officers of the central Government ministries, namely, MOAC, MLD and NPC, and FNCCI members was held on 28th June based on the outcome of the HH survey and the district workshops.
The Study Team explained the findings of the HH and Market surveys and of the field trips of the Study Team and the Study Team proposed concept and strategy of program formulation. Intensive discussions have been carried out and many positive opinions were coming out.
A list of the participants and opinions presented in the workshops are compiled in the report as shown in Annex 1.7.
Sections 1.5, 1.6 and 1.7 describe procedure of formulation of the cooperation program.
CHAP. 2 AGRICULTURE AND RURAL DEVELOPMENT IN NEPAL
2.1 Basic Data about Nepal
Basic Data: The basic country data of Nepal such as area, population, literacy rate, Gross Domestic Product (GDP) are shown in the following Table:
SN Particulars Unit Census 2001 1 Area Km2 147,181 2 Total Population, 2001 Nos. 22,736,934 a Male Population, 2001 Nos. 11,563,921 b Female Population, 2001 Nos. 11,587,502 c Urban Population 2001 % 13.9 3 Total Households, 2001 Nos. 4,174,374 4 Average Household Size, 2001 Nos./Family 5.44 5 Literacy Rate, 2001 % 53.74 6 Population Density, 2001 Nos./ Km2 157 7 Per Capita GDP, 2005/06 USD 350 Source: CBS Year Book, 2007
Poverty: In Nepal, the poverty is defined on the basis of cost-of-basic-need approach (CBN) in which poverty lines are calculated to represent the level of per capita expenditure required to meet the basic needs of the members of a household, including an allowance for non-food consumption. (Source: CBS/WFP, 2006). Trend of change (decrease of poverty) in the past 10 years is shown in the following Table 2.3.
Head Count Rate, % Particulars 1995-96 2003-04 Percent change (%) Whole Nepal 41.8 30.8 -26 Urban 21.5 9.5 -56 Rural 43.3 34.6 -20 Mountain 57.0 32.6 -43 Hill 40.7 34.5 -15 Terai 40.3 27.6 -32 Source: CBS, 2005
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It is generally understood that poverty in Nepal has been improved much for the last 10 years. But, poverty in rural area particularly in mountain and hill regions is still over 30%. Accordingly, it is appropriate to give priority to the hill and mountain regions for development cooperation.
2.2 Position of Agriculture in Nepal
Agriculture is the mainstay of the Nepalese economy, providing a livelihood for three-fourths of the population. Although the share of agriculture in the GDP has declined from about 49 percent in 1990/91 to 33.1 percent in 2007 (MOF, 2007), it is still the largest single sector of the economy. Besides being a major source of food, this sector is vital for the growth and development of the industrial and export sectors since both of these sectors are based on agriculture.
2.3 Government Policy
In Nepal, a 20-year Agriculture Perspective Plan (APP) is in operation since 1997 to accelerate agricultural growth for poverty reduction in a sustainable way. Since 1997 Nepal’s agriculture sector has been directed by this long-term plan. Not only did this plan provide a framework to the Ninth Plan (1997/98 – 2002/03) and the just completed Tenth Plan (2002/03 – 2006/07), but it did to the current Tree Year Interim Plans (TYIP; 2007/08 – 2009/10).
The Tenth Plan (2002/03 – 2006/07) was Nepal’s Poverty Reduction Strategy Paper (PRSP). It identified poverty reduction as the sole goal of the country. Focused on four pillars namely, (a) broad-based economic growth, (b) social and infrastructure development, (c) good governance and (d) targeted programs, it provided a highest priority to the agriculture sector like earlier periodic plans given the sector’s pivotal role in the livelihood of the majority of the population. The TYIP (2007/08 – 2009/10) formulated by the interim government formed after People’s Revolution II has also accorded a highest priority to the agriculture sector. Following the PRSP, this plan has moved a step giving due considerations to the national needs of reconstruction, reintegration and reconciliation.
2.3.1 Agriculture Policy, Acts, Rules and Regulations
Policies: Further to the APP, the GON promulgated National Agriculture Policy (NAP) in 2004. NAP presents Government’s renewed support and commitment to implement APP.
Apart from above two umbrella policies, the government of Nepal has promulgated following sub-sectors policies in the agricultural sector.
• National Seeds Policy 2000 • National Tea Policy 2000 • National Fertilizer Policy 2002 • National Coffee Policy 2003 • National Dairy Development Policy 2007 • Irrigation Policy 2003 • Agriculture Business Promotion Policy 2006
Most of these policies confirm government’s market - oriented economic policies, promotion of public-private partnership (PPP), institutional pluralisms, withdrawal of government’s direct support in terms of subsidies and grant, and recognition to the role and importance of NGOs and community-based organizations (CBOs) in the development processes.
Acts, Rules and Legislations: In agriculture development, the GON has implemented several acts and legislations. However, these have been promulgated to address specific problems and constraints. None are focused on the overall management of the agricultural development
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Development of Cooperatives and Government’s Policy on Cooperatives: The cooperative program that follows the globally recognized cooperative principles and values started in Nepal since 1956. However, it was led by the government and focused on mainly distributing agricultural inputs such as seeds and fertilizers.
Following the restoration of the multiparty democratic system in 1990, the GON promulgated Cooperative Act in 1992 repealing previous Act. The Cooperatives Act provides for organization of primary cooperatives, co-operative unions, district cooperative unions, federations of similar cooperatives and national cooperative federation.
2.3.2 Government Commitment
During the TYIP period (2007/08 -2009/10), the GON has committed to invest Rs. 15 billion in the agricultural sector as shown below. Apart from this, it expects private sector to invest nearly Rs. 30 billion over the same period. Thus, the approximate investment in the agriculture sector is expected to reach around Rs 45 billion over the TYIP period.
(At fixed price of fiscal year 2006/07) (Rs. In 10 million) S. N. Program Total 1. Agriculture Research Institutional Reforms and Strengthening (Nepal Agriculture Research 151.06 Council) 2. Crops, Horticulture and Fisheries Development, Integrated Crops Management System, Market 591.69 Development and Business Promotion (Department of Agriculture) 3. Livestock Development, Strengthening of Animal Health, Market Development and Business 523.19 Promotion (Department of Livestock Services) 4. Food Health, Quality Control, Food Technology and Nutrition (Department of Food Technology 46.49 and Quality Control) 5. Ministry (including Board, Corporation, Committee, APP) 198.55 6. Establishment of Deemed University 0.70 Total 1,511.68 Source: TYIP, National Planning Commission.
2.3.3 Institutional Structure / Arrangement of Agricultural Development in Nepal
The institutional framework of the agricultural sector consists of (i) the public sector institutions; (ii) the non-government sector including a large number of NGOs and CBOs, and (iii) the private sector including mainly producers, processors and marketing associations.
At the public sector, the MOAC is the principal institution responsible for policy and planning activities for the agricultural sector. Within MOAC the Secretary is assisted by five Joint Secretaries in-charge of Planning, Monitoring and Evaluation; Gender Equity and Environment; Agribusiness Promotion and Statistics; and Administration divisions.
2.4 Agriculture Production
2.4.1 Diversity of Crops by Physiography and Agro-climatic Conditions
With an area of 147,181 sq. km, Nepal is a country of enormous geographical diversity, and is situated in the southern slopes of the central Himalayas. Sandwiched between India on three sides - east, west, and south – and China to the North, Nepal is a land-locked country. Nepal is richly endowed with crop diversities.
Physiographically, Nepal is broadly divided into five roughly parallel east-west regions (ecological belts), which from north to south are known as High Mountain, Mountain, Hill, Siwalik and Tarai. The following map shows the five divisions of Nepal.
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Source: Nepal Atlas and Statistics, 2008
2.4.2 Tenancy and Land Holding Size
Land distribution in Nepal is highly skewed. More than two thirds of total land holdings have less than one ha of land and they own only 30 percent of the total farm area. The average size of land holding in this category is only 0.42 ha. On the other hand, 1.5 percent of the holdings in the more than 5 ha land holding class possesses 14 percent of the total farm area. Land tenure data indicate that average farm size is larger in the Tarai (1.29 ha) than in the hills (0.77 ha) or the mountains (0.66 ha).
2.4.3 Agriculture Production Situation
Cultivated land: The following Table shows the distribution of cultivated land by ecological zones. Most of the cultivated land is located in the Tarai (65% of total cultivated land in Nepal) and very little in the mountain (5.9%).
Agro-ecological zone (AEZ) Cultivated land (Nepal) Total Land Cultivated Land (ha) (sq km) as % of Total Land Mountain 304,059 51,817 5.87 Hills 1,639,196 61,345 26.72 Tarai 2,215,316 34,010 65.12 Total 4,158,571 147,181 28.25 Source: SINAS, MOAC 2008.
Area and Production of Key Crops and Commodities
Cereals: Paddy is the most important cereal crop in Nepal. It contributes nearly 20% to the agricultural GDP and provides more than 50% of the total caloric requirement to the Nepalese people. Share of the five key cereal crops in terms of area cropped is shown in the following Table.
Total Area Share in Total Area (%) Crops Total (ha) Mountain Hill Tarai Paddy 1,549,262 4.33 25.54 70.13 100 Maize 870,166 10.14 70.52 19.34 100 Millet 265,496 20.05 75.50 4.45 100 Wheat 706,481 7.57 35.04 57.39 100 Barley 26,106 45.24 51.08 3.68 100 Source: SINAS, MOAC 2008.
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Paddy crop contributed to more than 50% of the total cereal crop production. The following Table shows the share in the production of different food crops by physiographic regions.
Total Production Yield Share in Production (%) Crops Total (MT) (kg/ha) Mountain Hill Tarai Paddy 4,299,246 2,775 3.26 25.37 71.36 100 Maize 1,878,648 2,159 8.99 69.95 21.06 100 Millets 291,098 1,096 18.75 77.09 4.16 100 Wheat 1,572,065 2,225 5.35 28.83 65.82 100 Barley 28,082 1,076 44.77 51.14 4.09 100 Source: SINAS, MOAC 2008.
Cash crops: Area under major cash crops as percentage of total cultivated area and their yield in 2007/08 are shown in the following Table. This shows that in terms of area oilseed is followed by potato but in terms of production, potato is at the top followed by sugarcane.
% of cultivated land Yield (kg/ha) Year Oilseed Potato Sugarcane Jute Oilseed Potato Sugarcane Jute 2007/08 5.8 5.1 2 0.4 745 13,110 39,475 1,466 Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
Vegetables and Fruits: The following Table shows the area, production and yields of vegetables and fruits in 2007/08.
Vegetables Fruits Year Area Production Yield Productive Production Yield Area (ha) (Mt) (mt/ha) Area (ha) (Mt) (mt/ha) 2007/08 208108 2538904 12.2 100099 63432 630563 9.94 Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
Livestock Products: The production of milk and meat has increased at the rate of 3% and 2.9%, respectively between 2003/04 to 2007/08, and the productions in 2007/08 are as shown in the following Table.
Milk production, MT Meat (net) Production Year Mutton Total Cow Buffalo Total Buffalo Goat Pig Chicken Duck (Sheep) 2007/08 1388730 400950 987780 233897 151690 2733 46188 16425 16632 229 Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
CHAP. 3 AGRICULTURE DEVELOPMENT OF OBJECTIVE DISTRICTS
3.1 Basic Data of the Objective Districts
The basic data of the five Districts such as area, population, literacy rate, poverty incidence are shown in the following Table :
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Survey Districts No Particulars Unit Kavre- Whol e Ne pal Dolakha Ramechhap Sindhuli Mahottari palanchok 1 Area Sq. Km 2,191 1,546 1,396 2,491 1,002 147,181 2 Population 1000 Nos. 204.2 212.4 385.7 280 553.5 22,736.90 3 Male 1000 Nos. 100 100.8 188.9 139.3 287.9 11,563.90 4 Female 1000 Nos. 104 111.6 196.7 140.5 265.6 11,587.50 5 Sex Ratio % 96 90 96 99 108 100 6 Total Households 1000 Nos. 43.2 40.4 70.5 48.8 94.2 4,174.40 7 Average Household size Nos. 4.73 5.26 5.47 5.74 5.87 5.44 Nos./ Sq. 8 Population density 93 137 276 112 552 157 Km Proportion of urban 9 % 10.7 0 13.7 11.7 4 13.9 population 10 Literacy Rate % 50.6 39 63.7 50.1 34.4 53.7 11 Poverty incidence** % 33.6 48 35.1 60.3 29.1 33.5 Source: CBS, 2001 Census, **- Small Area Estimation, CBS/WB/WFP
3.2 Road Status of Objective Districts
The following Table shows number of VDCs and Municipalities with strategic roads, local roads and no vehicle pliable roads in the five districts.
No. of VDCs and Municipality VDCs and Municipality with VDCs having no vehicle Districts Strategic Road Local Road VDCs Municipality Total pliable roads No. % No. % No. % Dolakha 51 1 52 12 23.118 34.6 22 42.3 Ramechhap 55 0 55 13 23.6 34 61.8 8 14.5 Kavrepalanchok 87 3 90 27 30.0 54 60.0 9 10.0 Sindhuli 53 1 54 13 24.119 35.2 22 40.7 Mahottari 76 1 77 56 72.721 27.3 - - Total 322 6 328 121 30.0 146 44.5 61 18.6 Source: DOLIDAR
3.4 Districts Development
3.4.1 Periodic and Annual District Development Plans
The GON requires each DDC to formulate their respective district development plan based on country’s development objectives, priorities, policies, and district potentialities, priorities and resources etc. Of the five survey districts, all districts except Sindhuli prepared their annual district development plans (PDDPs) to be implemented with budget provided by GON.
The following Table below shows the government grant available to the DDCs over the fiscal year 2007/08. (Rs. In Million) Description Dolakha Ramechhap Kavrepalanchok Sindhuli Mahottari Sectoral Committees 901.4 474.6 1263.1 926.3 1430.0 96.00 % 31.48 % 95.68 % 87.20 % 97.29 % Infrastructure and Organization 275.1 88.0 554.0 440.4 622.7 Development 29.30 % 5.84 % 41.97 % 41.46 % 43.55 % Agriculture, Forest and Environment 94.8 69.2 44.1 71.3 730.9 10.10 % 4.59 % 3.34 % 6.71 % 51.11 % Population and Social Development 272.5 230.1 531.1 394.6 48.4 29.02 % 15.26 % 40.23 % 37.15 % 3.39 % Water Resources and Land 259.0 87.3 133.9 20.0 28.0 Management 27.58 % 5.79 % 10.14 % 1.88 % 1.96 % N/I NGOs 37.6 1033.2 57 136 39.9 4.00 % 68.52 % 4.32 % 12.80 % 2.71 % Total 939.0 1507.8 1320.1 1062.3 1469.9 Source: Annual District Development Plan of each District.
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3.4.2 Human Resource and Administrative Structures of DDC and DTO
DDC: Established pursuant to the LSGA within the framework of the decentralized governance, DDCs and VDCs are autonomous organizations responsible for overall development of their respective districts and villages and coordination of development activities in the district. DDCs and VDCs are formed from the elected and nominated local leaders from their constituencies. Key administrative officer is Local Development Officer in case of the DDC and VDC Secretary in case of the VDC. These officials are provided by the government through the MLD. This means that they operate under the indirect control/command of the MLD.
DTO: DOLIDAR under MLD has established DTOs in all the districts. While DOLIDAR is responsible for local roads, DTO, as a devolved organization within the DDC, is responsible for all types of local level infrastructure construction activities in the districts carried out by the DDC.
DADO & DLSO: DADO under DOA of MOAC is an organization to implement the agriculture development in a district, while DLSO under DLS of MOAC is responsible for livestock development in the district, though they have been devolved to the DDC. Field extension works are handled by JT/JTA under DADO & DLSO.
3.6 Agriculture Production
3.6.1 Tenancy and Land Holding by Land Type
The proportion of landless households in the survey districts varied from 0.1 percent each in Kavre and Ramechhap districts to 1.8 percent in Mahottari district as shown in the following Table.
Dolakha Ramechhap Kavrepalanchok Sindhuli Mahottari Holdings No. % No. % No. % No. % No. % Without 231 0.6 44 0.1 33 0.1 70 0.2 1,309 1.8 With 40,165 99.4 38,75699.9 64,537 99.9 46,226 99.8 71,323 98.2 Total 40,396 100.0 38,800 100.0 64,570 100.0 46,296 100.0 72,632 100.0 Source: National Sample Census of Agriculture, Nepal, 2001/02, CBS.
3.6.2 Diversity of Crops
The following Table shows cereal crops occupy more than two-thirds of cropped area in all the survey districts. After cereal crops, the second major crop is cash crops2 followed by pulses and vegetables. Very less portion of area is occupied by fruits in all the survey districts.
Dolakha Ramechhap Kavrepalanchok Sindhuli Mahottari Crops ha % ha % ha % ha % ha % Cereals 16924 73.5 4178685.2 50910 69.1 38965 73.3 71455 73.4 Cash Crops 2731 11.9 3429 7.0 9615 13.1 7148 13.4 10160 10.4 Pulses 1060 4.6 9151.9 32004.3 25974.9 6445 6.6 Spices 168 0.7 4170.8 9781.3 5030.9 697 0.7 Citrus 425 1.8 10622.2 10871.5 15412.9 0 0.0 Deciduous Fruit 223 1.0 279 0.6 372 0.5 146 0.3 2 0.0 Tropical Fruit 74 0.3 281 0.6 471 0.6 405 0.8 1893 1.9 Vegetables 1431 6.2 9001.8 6903 9.4 1882 3.5 6719 6.9 Coffee 0.0 0.0 116 0.2 0 0.0 0 0.0 Total 23036 100 49069100 73652 100 53187 100 97371 100 Source: Annual Report of DADO in each District
2 Cash crops designated are potato, oil seeds, jute and sugarcane
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3.6.4 Agriculture Production
The following Table shows the productions of major agriculture commodities of each district in 2007/08
Production (MT) Districts Paddy Wheat Maize Potato Pulses Vegetables Junar Dolakha 6,318 7,50010800 94,150 977 1,431 250 Ramechhap 15,757 9,080 46,016 15,950 933 900 12,950 Kavrepalanchok 35,845 22,050 53,500 43,605 2,765 6,903 538 Sindhuli 11,143 10,93038,693 30,430 2,420 1,862 17,692 Mahottari 115,000 46,4945,860 26,550 5,523 6,719 0 Source: Various Issues of Statistical Information on Nepalese Agriculture of different years, MoAC.
The following Table shows the animal numbers of livestock and milk production of each district in 2007/08
Production (No.) Districts Cattle Buffalo Sheep Goat Poultry Milk (Mt) Dolakha 93,114 40,721 23,044 178,409 358,948 13,134 Ramechhap 70,782 64,510 3,242 59,970 204,518 16,382 Kavrepalanchok 134,007 130,999 3,652 289,676 786,449 72,100 Sindhuli 110,100 60,6821,709 114,859 293,151 16,749 Mahottari 80,900 45,177618 108,510 299,150 20,365 Source: Various Issues of Statistical Information on Nepalese Agriculture of different years, MoAC.
3.7 Agricultural Marketing
The following Table presents location of key market centers and collection centers by District.
Key Districts Key Commodities Nature Market Centres Dolakha Manthali, Charikot, Dolakha, Fruits, potato, vegetables Transit Market in the Singati, Kirnetar, Gumukhola, road head Baghkhor, Mulkhola, Mainapokhari, Nayapul Ramechhap Manthali Junar, Orange, Lemon, District headquarters Maize, Buckwheat, market Potato, Vegetables Kavrepalanchok Banepa All types, particularly Transit Market in the cereals, vegetables and road head potato Bhakunde Rice, Wheat, Maize, Transit Market in the Coffee, Citrus, Potato road head Sindhuli Khurkot Rice and other cereal Village and road head market Bhiman Cereal, Pulse Transit Market in the road head Sindhuli Bazar Junar, Orange, Lemon, District headquarters Maize, Buckwheat, market, collection Potato, Vegetables centre Ratamata Junar, Orange, Lemon, Transit Market in the Maize, Rice, Buckwheat, road head Potato, Vegetables Mahottari Bardibas Oilseeds, Tomato, Transit Market in the Cereals, Pulses road head Weekly Market
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CHAP. 4 HOUSEHOLD SURVEY
In order to grasp the present condition of the objective area, sample HH survey and market survey have been carried out by the NARMA, and the Study Team.
The HH survey was carried out in the five districts. The survey was conducted in four VDCs in each district; two VDCs each connected with the Sindhuli road and strategic road network, and other two VDCs are connected with local road network or no road connection at present. 40 (forty) samples were selected in each VDC, thus 800 HH surveys were planned to grasp the present condition of the farmers in the area.
Although the survey was conducted by the NARMA on the questionnaire, the Study Team provided assistance to analyze the results of the survey. Taking the possibility that some samples might be rejected into account, actual number of samples surveyed were 966 numbers.
The Study Team visited the survey villages during the field trips and interviewed a few farmers to understand general situation in the villages.
VDC Surveyed: The following Table shows names of VDCs surveyed:
Survey VDCs/Municipality District With roads (SRN) LRN Dolakha Bhimeshor Municipality Jiri Gairimudi Pawati Ramechhap Tilpung Okhreni Dadhuwa Pakarbas Kavre Mahadevsthan Patlekhet Chalal Ganeshthan Ugra Chandi Nala Sindhuli Ratanchura Kakurthakur Ranibas Kaplikot Mahottari Bardibas Pipara Damhi Madai Pashupatinagar
4.2 Respondent of the Survey and 4.3 Results of the Survey
Some of significant results of HH survey are as summarized as follows:
Caste and Ethnicity: The following Figure shows caste and ethnic composition of the surveyed districts:
100%
80%
60%
40%
20%
0% Dolakha Ramechhap Kavre Sindhuli Mahottari Overall Brahmin/Chhetri 37.9% 37.5% 43.2% 38.0% 15.1% 34.4% Janajati 41.4% 41.7% 39.6% 42.7% 11.5% 35.4% Madhesi 0.0% 0.0% 0.0% 0.0% 45.8% 9.1% Dalit 20.7% 20.8% 17.2% 19.3% 20.3% 19.7% Others 0.0% 0.0% 0.0% 0.0% 7.3% 1.4%
Source: HH Survey 2009
Conflict Affected Respondents : the following Table shows the ratio of the conflict affected HH.
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Conflict affected HHs Others (Not directly affected by conflicts ) District Num. % Num. % Dolakha 20 10.1 178 89.9 Ramechhap 26 13.5 166 86.5 Kavrepalanchok 21 10.9 171 89.1 Sindhuli 18 9.4 174 90.6 Mahottari 5 2.6 187 97.4 Overall 90 9.3 876 90.7 Source: HH survey, 2009, JICA Study Team
Size of HH, Ratio of Women Headed HH, Land Holding and Cultivation Area per HH: are shown in the following Table:
No. Description Unit Dolakha Ramechhap Kavre Sindhuli Mahottari Overall 1 HH Member Nos. 6.3 6.9 6.7 6.5 7.0 6.7 2 Women Headed HH % 16 15 8 7 4 10 3 Land Holding Ha 0.68 0.60 0.63 0.56 0.73 0.64 4 Cultivation Area Ha 0.77 0.66 0.68 0.61 0.95 0.73 Source: HH Survey 2009
Ratio of HH for Crop Cultivation: is shown in the following Table: Unit: % No. Description Dolakha Ramechhap Kavre Sindhuli Mahottari Overall 1 Cereals 98.5 97.4 95.8 93.2 92.2 95.4 2 Fruits 48.5 55.2 35.9 50.5 18.7 41.8 3 Vegetables 99.0 94.8 84.4 74.0 46.3 80.0 4 Potato 94.9 63.0 66.7 58.9 38.4 66.6 5 Oilseeds 32.4 43.2 75.4 20.8 28.1 42.0 6 Pulses 10.1 68.7 29.2 47.9 61.5 56.7 Source: HH Survey 2009
Ratio of HH for Livestock: is shown in the following Table:
No. Description Dolakha Ramechhap Kavre Sindhuli Mahottari Overall 1 Chicken 76.8 86.5 48.4 78.6 13.5 60.9 2 Goat 82.3 85.4 78.6 68.7 35.9 70.3 3 Pig 8.6 12.5 1.6 21.9 1.0 9.1 4 Egg Production 48.5 85.9 39.6 51.6 9.4 47.0 5 Milk Production 59.6 74.0 74.5 47.4 57.3 62.5 Source: HH Survey 2009
4.3.3 Food Self-Sufficiency
Food self-sufficiency status by districts is illustrated in the following Figure:
Dolakha 18.2% 42.4% 19.2% 20.2%
Ramechhap 12.5% 43.8% 31.8% 12.0% Less than 3 months Kavre 13.5% 37.5% 25.5% 23.4% 3-6 months Sindhuli 11.5% 37.0% 28.1% 23.4% 6-9 months More than 9 months Mahottari 25.0% 29.2% 21.4% 24.5%
Overall 16.1% 38.0% 25.2% 20.7%
0% 25% 50% 75% 100%
Source: HH Survey 2009
More than 50% of HH responded that they can produce less than 6 months foods by their own farm, and only 20% HH responded that they produced more than 9 months foods. However, it is assumed
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4.3.4 Household Economy
HH income and agriculture income with ratio to HH income are shown in the following Table:
Average of Average of Agricultural Profit without Ratio of Ratio of Family Agriculture Cost without Self-employee District Agriculture Agriculture Income Turnover Self-employee (Rs/year) Turnover Profit (Rs/year) (Rs/year) (Rs/year) (1) (2) (2)/(1)=(3) (4) (2)-(4)=(5) (5)/(2) Dolakha 100,218 33,274 0.332 27,859 5,415 0.163 Ramechhap 90,926 11,220 0.123 7,404 3,816 0.340 Kavre 124,947 52,518 0.420 47,400 5,118 0.097 Sindhuli 75,801 21,472 0.283 10,818 10,654 0.496 Mahottari 99,693 41,833 0.420 19,435 22,398 0.535 Overall 98,329 32,071 0.326 22,616 9,455 0.295 Source: HH Survey 2009
The highest average HH income is in Kavre among 5 districts followed by Dolakha and Mahottari. Sindhuli is the lowest HH income followed by Ramechhap. The highest agriculture income also is in Kavre, followed by Mahottari and Dolakha, while the lowest agriculture income is in Ramechhap followed by Sindhuli. Ratio of agriculture income is the highest in Kavre and Mahottari at 42 % of whole HH income, while the lowest is in Ramechhap, only 12%.
Although the gross agriculture income in Kavre is the highest, net agriculture profit ratio is the lowest at 9.7% since agriculture costs in Kavre is the highest. One the other hand, in Mahottari net agriculture profit is the highest at 53.5%.
The following Table shows annual cash balance of HH economy in each district:
Agricultural cost Average family Average HH daily Average cost of District without Balance income expense utilities Self-employee Dolakha 100,218 27,859 56,930 4,804 10,625 Ramechhap 90,926 7,404 53,646 3,592 26,284 Kavre 124,947 47,400 82,806 7,128 -12,387 Sindhuli 75,801 10,818 63,378 3,547 -1,942 Mahottari 99,693 19,435 69,354 7,700 3,204 Overall 98,329 22,616 65,171 5,684 4,858 Source: HH survey, 2009, JICA Study Team
Although average HH income of the Kavre is the highest, balance of HH economy is the lowest and in negative, while HH income in the Ramechhap is the 2nd lowest, the balance is the highest.
4.3.9 Credit
The following Table shows the money borrowed during the last one year of average HH in each district:
No of times of Interest rate Percent of HH Average loan Duration Districts loan taken per (%) per taking loan (%) amount (Rs) (years) year annum Dolakha 61.1 1.79 67,107 2.2 18.4 Ramechhap 65.6 2.28 37,210 2.3 28.8 Kavre 76.6 2.6362,163 4.8 17.1 Sindhuli 76.0 2.40 68,016 4.8 28.1 Mahottari 74.0 1.35 79,996 3.6 28.2 Overall 70.6 2.10 63,396 3.6 24.1 Source: HH survey, 2009, JICA Study Team
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4.3.9 Membership in Community Organization
The following Table shows participation in community organizations (COs) of HH in each district:
Percent of HHs Membershi Gender distribution Total Districts obtaining p in no. of (No.) membership (%) groups Male (%) Female (%) Dolakha 74.2 1.64 244 63.1 36.9 Ramechhap 95.3 2.65 486 56.8 43.2 Kavre 81.3 2.15 350 44.9 55.1 Sindhuli 79.7 2.27 373 51.2 48.8 Mahottari 21.9 1.29 54 61.1 38.9 Overall 70.5 2.15 1,507 53.8 46.2 Source: HH survey, 2009, JICA Study Team
Participation in COs of HH in the SRC area is high. Women’s participation is also substantially high. Although it is also reported that movements of COs are not necessarily active, there is potentials to strengthen COs in connection with the Program.
CAHP. 5 MARKET SURVEY
5.4 Market Profile of 10 Designated Markets
5.4.1 Key Features of the Designated Markets
Considering the importance of the markets to the five surveyed districts in the SRC, the study prepared market profiles of the 10 key markets as shown in the following table:
Markets surveyed Charikot Jiri Bhangeri Tamaghat Sindhuli Madi SN Key features Dolakha Dolakha Ramechhap Kavre Sindhuli (1) (2) (3) (4) (5) 1 Market type Retail Retail Weekly market Collection Retail centre Collection Centre 2 Ownership MOAC MOAC VDC MOAC MOAC 3 Market MMC MMC VDC Cooperative MMC Management 4 Key commodities Vegetables Vegetables Vegetables Fruits Seasonal All agriculture traded Cereals Potato Live animals Vegetables produce but Spices Poultries, mainly vegetables Groceries, Cereals and Junar in the Pulses etc. season 5 Operation Daily Weekly Thurs Day weekly Daily Daily Schedule Haat in market in market Saturday Saturday Other day not operating 6 Time of operation 6 AM to 10 6 to 10 AM Morning to 3 to 6 PM Morning to AM Afternoon afternoon 7 Number of stalls A few A few Many (Over Many A few operating operating operating crowded) 8 Market activeness Poor Poor Very active Very active Poor 9 Traders Local Local Sindhuli Kathamndu Local Ramechhap Kavre Dhanusha Dhanusha Pokhara Mahottari Mahottari Sarlahi Dolakha 10 Price information Not posted Not posted Not posted Not posted Not posted
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Markets surveyed contd.. Bardibas Dhalkebar Hetuda Kalimati Baneshor Key features Mahottari Dhanusha Makwanpur Kathmandu Kathamndu (6) (7) (8) (9) (10) 1. Market type Retail Retail Wholesale/ Wholesale/ Wholesale/ Collection Retail Retail Retail centre 2. Ownership MOAC MOAC Municipality MOAC Private trader 3. Market Management MMC MMC Municipality Marketing Private trader and Traders’ Board Association 4. Key commodities traded All agriculture All Fruits Fruits Vegetables produce but agriculture Vegetables Vegetables Fish mainly produce but Potato Fish vegetables mainly Onion vegetables Garlic etc
5. Operation Schedule Twice a week Twice a week Daily Daily Daily (Wednesday market and Saturday) (Sunday and Wednesday 6, Time of operation Morning Morning Till evening 4 am to 8 pm 4 am to 9 pm day (16 hours) (17 Hrs.)
7. Number of stalls Many (Over Many (Over Not sufficient Over crowded Fully occupied crowded) crowded) 8. Market activeness Very active Very active Very active Very active Very active 9. Traders Sindhuli Sindhuli Local Majority from Local Mahottari Mahottari Nuwakot Dhanusha Dhanusha Dhading Siraha Siraha Kavre and local 10. Price information Not posted Not posted Not posted Not posted Not posted Source: NARMA Study
5.4.2 Distribution of Key Items: Potato, Tomato, Junar and Milk3
Tomato: The following Figure shows a sample of distribution system for Tomato;
Producers
60 % 5 % 20 % 5 % 10 %
Collectors/ Agents Farmer groups/ (100%) Cooperatives 65 %
25 % 5 % 90 % Wholesalers (100%)
90 % 10 % Retailers (100%)
10 % Processors 100 % 5 %
Consumers / Restraints
3 Distribution system of Tomato is place in the Summary as a sample.
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The following Figure shows monthly handling quantities of small tomato in Kalimati market:
Sale amount (Mt.)
3000 2500 2000 1500 1000 500 0 April May June July Augt Sept Oct Nov Dec Jan Feb March
Months 2004/05 2005/06 2006/07 2007/08 2008/09
Source: Kalimati Market
The following Table shows the monthly average prices of small potato in 2007/8 at Kalimati. Unit: Rs./kg Year Apr M ay Jun Jul Aug Sep Oct Nov Dec Jan Feb M ar 2005/06 19.8 7.5 10.8 31.6 17.3 15.4 17.6 18 8.2 8.8 10.2 19.9 2006/07 12.8 12.5 13.8 8.0 28.1 41.6 26.6 21.1 21.0 22.1 14.7 14.5 2007/08 18.0 15.7 11.4 29.8 33.1 28.3 23.3 19.7 11.7 12.4 10.7 15.6 Source: Kalimati Market Web site
The above Figure and Table shows that the price is inverse correlation to the handling quantities in the market.
5.3 Traders Survey
The following Table presents the frequency of traders by commodities dealt. Majority of the surveyed traders are involved in green fresh vegetables (both seasonal and off-seasonal) followed by root crops (potato), species (onion, ginger, garlic, chili) and fruits (seasonal). Very few surveyed traders were involved in live animals including meat and fish selling.
Whole- Commodities Both Retailer Total saler Frequency Grains 0 7 12 19 140 Beans 1 5 11 17 120 Root crops 10 26 37 73 100 Green fresh 28 41 61 130 80 vegetable Fruits 8 13 23 44 60 Live animals 2 4 5 11 40 Fish 0 1 2 3 20 Spices 7 20 34 61 0 Grains Beans Root Green Fruits Live Fish Spices Total 56 117 185 358 crops veg. animals
Note: Total exceeded the number of respondents belonging to each category due to multiple responses Source: Trader Survey 2009
The following Table presents balance sheet of the traders by transaction types.
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Monthly Average (NRs) Number (c) Type (a) (b) (d) Profit/ of sample Operation Sales Cost Price Profit capita Cost Wholesaler 41 900,488751,951 63,415 85,122 51,998 Wholesale & Retail 65 274,935 230,483 17,622 26,830 16,677 Retailer 94 75,36060,594 4,525 10,241 5,995 Total/ Average 200 309,373 257,536 20,854 30,983 18,897 Source: Trader Survey 2009
The following Table shows the origin of commodities sold by the traders surveyed: Unit: Percent Number of Monthly Weighted Average Margin Commodities concerned Operation cost ratio Added margin Profit margin ratio sample (c/a) ratio (a/b-1) (a/(b+c)-1) Root crops 73 6.6 21.1 12.1 Vegetables 130 6.7 19.5 10.6 Fruits 44 6.9 22.1 12.6 Spices 61 6.1 19.2 11.2 Source: Trader Survey 2009
CHAP. 6 DEVELOPMENT POTENTIALS AND CONSTRAINTS
6.1 Procedure of Compilation on Potentials and Constraints
The following Figure illustrates the position of Chap. 6: Chap. 6
Chap.1 -Chap.5 Zoning Potentials & Constraints
Current Situation Surveys Topography Agriculture Farming -Physiological map -Food security -(Geology map) -High-value crops Climate Farm Economy Existing Data -Precipitation map -Agriculture balance sheet -(Temperature) -Evaluation of profitability by items Household Survey Geography Commercialization of Agriculture -Administrative boundaries -Potential commercial crops -Road conditions -Constraints of marketing Marketing Survey -Population density by VDCs Development staffs -Poverty level Field Survey Positioning Discussion with Chap. 7 Stakeholders Correlations among factors -Land size and income -Distance time and income 1. Specific Issues Qualitative analysis -(Irrigation and income) 2. Prioritization of Specific Quantitative analysis -etc. Issues 3. Cooperation Activities 4. Focal Points JICA Nepal Position Paper for Agriculture & Rural Development
6.2 Evaluation of Geographical Conditions by Zoning and Positioning
The zoning has been studied in the following aspects:
(1) Physiographic Zoning, (2) Precipitation Zoning,
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(3) Population distribution on each VDC (4) Poverty level
The following Figures are illustrated for zoning (1) and (2) as samples:
Physiographic Zoning;
Precipitation Zoning
Positioning of Household
Income level is one of the indicators used to grasp the present conditions of the target areas and even target farmers, and the income level is related to sales of agricultural products. In order to come up with potentials and constraints, the Study Team to verify the hypotheses below by a study based on the data obtained through the field survey, the HH survey and stakeholders’ interviews.
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Hypothesis 1: Distance to town “market” affects sales of agricultural products. Hypothesis 2: Cultivated land size affects sales of agricultural products. Hypothesis 3: Irrigation availability affects agricultural products. Hypothesis 4: Items of agricultural produce influence sales of agricultural products. Hypothesis 5: Education level influences sales of agricultural products. Hypothesis 6: Other factors
Through the study, it was found that the statistical quantitative data cannot fully explain causes and effects, just as there are no simple mathematical formulas to explain success in business and projects. All development projects are challenging works involving some amount of “feeling one’s way in the dark.” Invisible factors such as enthusiasm, eagerness, mutual trust networks, experiences, continuous persistence, patience, sensitivity of market currency and so on, could influence the success of the business.
6.3 Agriculture Potentials and Constraints
6.3.1 Assessment of Agriculture in SRC
Food Security: The results of the HH survey indicate that there are severe food shortages in every district in the SRC area. On the other hand, the following Table shows the food production and calorie balance of cereals and potato in each district.
Paddy Wheat M aize M illet Barley Potato Total Population Production Requirement Balance Ton Ton Ton Ton Ton Ton Ton kg/capita % No District Kcal Kcal Kcal Kcal Kcal Kcal Kcal Nos. Kcal/ Kcal/Capita Kcal/capita M illion M illion M illion M illion M illion M illion M illion capita /Year /Year 6,318 7,500 10,800 2,896 63 26,550 54,127 233 -36 1Dolakha 232,788 13,460 25,950 36,936 8,949 212 25,754 111,260 477,944 746,790 -268,846 15,757 9,080 46,016 4,985 54 30,430 75,892 313 48 2 Ramechhap 242,136 33,568 31,417 157,375 15,404 181 29,517 267,462 1,104,594 746,790 357,804 35,845 22,050 55,640 2,873 203 94,150 116,611 265 35 3Kavre 439,698 76,363 76,293 190,289 8,878 682 91,326 443,830 1,009,398 746,790 262,608 11,143 10,935 38,693 9,135 15 15,950 69,921 219 0 4 Sindhuli 319,200 23,739 37,835 132,330 28,227 50 15,472 237,653 744,527 746,790 -2,263 115,000 46,494 5,860 314 9 43,605 167,677 266 8 5Mahottari 630,990 244,993 160,869 20,041 970 30 42,297 469,201 743,595 690,580 53,015 331,193 267,554 673,939 81,660 1,470 210,685 484,228 260 13 Total 1,864,812 569,868 420,923 683,180 79,734 1,437 204,364 1,529,406 820,139 727,770 92,369 Source: Prepared by Study Team based on M oAC & CBS data 1. Production data are statistical information of MoAC 2007/08 2. Only paddy is converted to rice at ratio of 0.6175 on the data provided in Population Monograph of Nepal. 3. Calorie conversion rates per 100g of crops are 345 (rice), 346 (wheat), 342 (maize), 309 (millet), 336 (barley), and 97 (potato) based on Population Monograph of Nepal. 4. Population is projected applying increment of CBS projection, 1.14 from 2001 to 2007. 5. Per capita calorie requirements in Hills and M ountain, and Tarai are 2046/day and 1892/day respectively according to Population Monograph of Nepal.
As shown in the above table, calorie balance in the SRC area on average is in surplus by 13 percent. However, only in Dolakha district, the balance is in deficit by 36 percent.
It is assumed that maize and potato may also be important food crops to substitute cereals in all districts, and therefore it could be considered that the deficits of foods in the SRC area may not be so severe as reported in the results of the HH survey, though further study would be required.
6.3.2 Agricultural Economy and Potential Crops
Agriculture Balance Sheet: The following Table shows agriculture balance sheet I terms of ratio of agriculture income over HH income and ratio of agriculture profit over agriculture income:
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Description Dolakha Ramechhap Kavre Sindhuli Mahottari Average HH Income (1) 100,218 90,926 124,947 75,801 99,693 98,329 Agriculture Income (2) 33,274 11,220 52,518 21,472 41,833 32,071 Ratio (%) (2)/(1) 33.2 12.3 42.0 28.3 42.0 32.6 Agriculture Cost (3) 27,859 7,404 47,400 10,818 19,435 22,616 Agriculture Profit (4) 5,415 3,816 5,118 10,654 22,398 9,455 Ratio (%) (4)/(2) 16.3 34.0 9.7 49.6 53.5 29.5 Source: HH Survey 2009
Although agriculture income and it’s ratio over HH income in Kavre are higher than other districts, agriculture profit and it’s ratio over agriculture income in Kavre are very low. Agriculture cost in Kavre is too high.
Present Features of HVC Cultivation: Analysis on potato farmers who cultivate only for self-consumption and for sales too were conducted as following Tables:
Self-consumption only;
No. Description Unit Dolakha Ramechhap Kavre Sindhuli M ahottari Overall 1 Number of Farmers Nos. 92 12 90 6 58 258 2 Average Cultivation Area ha 0.97 0.72 0.62 0.74 1.36 0.92 3 Average HH Income Rs. 123,261 100,383 141,466 106,167 118,448 127,068 4 Average Agriculture Income Rs. 54,022 20,161 69,986 43,850 73,272 62,107 5 Average Agriculture Cost Rs. 45,720 26,623 77,091 19,053 34,305 52,589 6 Average Agriculture Profit Rs. 8,302 -6,462 -7,105 24,797 38,967 9,518 Source: Study Team based on HH Survey
Self-consumption and sales;
No. Description Unit Dolakha Ramechhap Kavre Sindhuli M ahottari Overall 1 Number of Farmers Nos. 96 109 38 107 35 385 2 Average Cultivation Area ha 0.59 0.70 0.73 0.71 1.38 0.74 3 Average HH Income Rs. 80,094 94,845 88,359 80,892 114,714 88,455 4 Average Agriculture Income Rs. 15,359 9,548 42,848 24,800 48,270 22,042 5 Average Agriculture Cost Rs. 20,332 21,089 49,946 18,110 22,713 23,068 6 Average Agriculture Profit Rs. -4,973 -11,541 -7,098 6,690 25,557 -1,026 Source: Study Team based on HH Survey
The above two tables show that potato farmers in Kavre is in loss, while Mahottari potato farmers are in profit.
There are several successful farmers in the SRC area relating neither to distance from the market nor to extent of cultivation area.
Issues Farmers Concern: The HH survey shows that issues farmers raised are at first, irrigation, and second, road and transportation, followed by agriculture inputs and business opportunity.
6.3.5 Potentials and Constraints on Group Activities
On average, more than 70 % of HH are participating in some sorts of community organizations. However, agriculture related organizations are not much though many farmers understood advantages of farmers’ organization and cooperatives. There are well functioning farmers’ cooperatives in and out of the SRC areas and most of them were established in the last five years.
The HH survey indicates that farmers in the Ramechhap, Sindhuli and Mahottari districts still depend on moneylenders, while farmers in the Dolakha and Kavre districts depend on other sources, such as relatives/friends, cooperatives and micro-credit groups. The interest of loans also differs, as
S - 22 the interest in the former group was more than 28 percent, while the latter was more or less 18 percent, which gives a substantial difference of loan interests of 10 percent or more.
CHAP. 7 SPECIFIC ISSUES, COOPERATION ACTIVITIES AND FOCAL POINTS
JICA prepared “Nepal Position Paper for Agriculture and Rural Development (NPP)”. In the NPP, Program Goal is as “The livelihood in rural area is improved through better and fair access to commodities (food, resources, etc.) for the people in rural area.” To achieve the program goal, the NPP concluded that the program shall consist of following three approaches:
(1) Food Security (2) Income Generation (3) Capacity Development of Government and Farmers’ Groups
In the NPP, the specific issues for agriculture and rural development were defined within the frame of the JICA Thematic Guideline for the Development Objectives on Agriculture and Rural Development, and the same specific issues are applied and scrutinized in this Study. The Study Team put priorities on the specific issues based on the Study, taking other indicators, such as priorities of the GON and local authority, JICA experiences, availability of applicable schemes and other donors’ plan, into account.
The potential cooperation activities on each prioritized specific issue are studied taking potentials and constraints into account. Further, the potential cooperation activities are sorted out into the following five categories as focal points:
(1) Infrastructure. (2) Farming skill improvement (3) Development of farmers’ group activities (4) Post harvest and marketing of products, and (5) Environmental aspects
CHAP. 8 PROGRAM FORMULATION
Procedure to formulate cooperation program is illustrated as follows:
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Increment of Agriculture Income
Planning and Implementation of Projects
Phasing of Implementation: Focal Points 3 Phases: 1st Phase; before SR completion, 2nd Phase; full development, Infrastructure Component of 3rd Phase; follow-up & Expansion Program : Objective & Priority Areas: OA: 5 Districts, Skill Strength PA: Depending on each Project Improvement ening of 1. Vegetable, Farmers' 2. Livestock, Post Harvest Group 3. Fruits, and Schemes to be Adopted: 1. Technical & Marketing 4. Mahottari Area Cooperation with Development Study, 2. Technical Cooperation, 3. Grant Aids, 4. PPP, 5. JOCV, 6. Others Environment Participation and Contribution of Beneficiaries:
Cooperation Activities Potentials & Constraints, Zoning and Positioning Identified through the Study
Prioritized Specific Issues on JICA's Development Objectives Chart Agriculture & Rural Development
8.1 Basic Concept in Formulating the Cooperation Program
Taking the Study results, potentials and constraints, into consideration, the program concept was defined as “Increment of agriculture income and profit ratio through introduction of HVC, commercialized agriculture and skill and management improvement on agriculture.”
Further, program outputs are set as specific figures to increase agriculture income and agriculture profit ratio of each district depending on the present conditions.
8.2 Basic Strategy of the Cooperation Program
The following aspects shall be taken into consideration for formulating cooperation program;
(1) Focal Points, (2) Component of the program, (3) Phasing of program implementation, (4) Objective area and priority area, (5) Schemes to be adopted by the program, and (6) Participation and contribution of beneficiaries
8.3 Plan of Projects
Individual cooperation project will be planned taking the program discussed and formulated into consideration. The five focal points shall be integrated as much as possible to plan individual project. And phasing and component are also incorporated for project planning. Specific area of a project planned shall be selected taking priority area of the project into consideration. Further, cooperation schemes to be adopted for a project shall be carefully looked at.
As a result of careful study, the following projects are planned and proposed under the cooperation program as shown in the following Table:
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Coverage*1 Project Implementing No. Name of Project Phase Component*2 Area Scheme*3 ABCDE Period (Year) Agency Sindhuli Road Construction Partially 0 ◎ 3 years - SRC DOH Grant Project, Section III Committed
Community Access 1 ◎ Under Study 2.5 years - SRC MLD Grant Improvement Project
TC with small Technical Cooperation for 3 years for VDC directly infrastructure Farming Skill Improvement Dev. Study & attached to MOAC & 2 ○◎◎○○ I a & b & with Development Study 5 years for SR & All DADO Development Project TC SRC Area Study
Ramechhap, M arketing Strengthening Kavre, MOAC & 3 Project with provision of ◎○◎ I & II 5 years b & d TC & Grant Sindhuli & DADO facilities Mahottari
Agricultural Products Storage Facilities MOAC & 4 ◎○○ II 3 years b & d SRC Grant Improvement & DADO Construction Project Post Harvest & Agro- MOAC & 5 ○○○◎△ III 3 years b & d SRC TC & Grant processing Project DADO Livestock Produvtion MOAC & 6 ○◎◎ I & II 5 years c SRC TC & Grant Strengthening Project DLSO Environment Improvement DADO, 7 for Agriculture & Livestock ○○ ◎ II & III 3.5 years b, c, & d SRC DLSO & TC & PPP Project DSCWM Commercial Agriculture MOAC & 8 ◎○○ Committed 2.5 years b & d Whole Nepal Expert Promotion Advisor AEC MOAC & 9 Fruits Corridor ○○◎◎ I & II 4 years d & b Along SR Grant & PPP Develoment Project DOH Wholesale M arket 10 ◎○○○II & III 3 years b & d SRC MOAC Grant Development Project
SV & JOCV Assignment ◎○ I 2 years b Dolakha DADO SV & JOCV for Tea Development 11 SV & JOCV Assignment ◎○ I 2 years b Dolakha DADO SV & JOCV for Seed Production M ahottari and Adjacent Area Tube Well MOAC, DOI, 12 ◎○ II 5 years e Mahottari TC & Grant Rehabilitation & DADO Construction Project Note: *1 Focal Points: A: Infrastructure, B; Skill Improvement, C; Farmers' Organization, D; Marketing, & E; Environment Aspect *2 Component: a; Development Study b. Vegetables c; ,Livestock & Fish Culture, d; Fruits, e; Mahottari Development *3: Scheme; TC; Technical Cooperation, PPP; Public Private Pertonership, SV; Senior Volunteer
The Project No.0 is Sindhuli Road construction has been committed partially, and the Project 01 Community Access Improvement Project is under consideration for the Grant Aid scheme. Further, the project 08 Commercial Agriculture Promotion Advisor was also committed by JICA. Accordingly, the plan of projects is made from the Project No.2 onwards excluding No. 08.
8.4 Implementation Schedule
The phasing and implementation schedule of the cooperation program with individual project is illustrated in the following Figure:
S - 25
Phasing & Implementation Schedule No Name of Project 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Phase I Phase II Phase III 00 Sindhuli Road Construction Project
01 Community Access Improvement Project
Technical Cooperation for Farming Skill Improvement with 02 Development Study Project
03 Marketing Strengthening Project with provision of facilities
Agricultural Products Storage Facilities Improvement & 04 Construction Project
05 Post Harvest & Agro-processing Project
06 Livestock Produvtion Strengthening Project
Environment Improvement for Agriculture & Livestock 07 Project
08 Commercial Agriculture Promotion Advisor
09 Fruits Corridor Develoment Project
10 Wholesale M arket Development Project
11 Volunteer Assignment (Rural Development)
M ahottari and Adjacent Area Tube Well Rehabilitation & 12 Construction Project
: Partially or Fully Committed Project : Under consideration : Technical Cooperation under the Program : Public Private Partnership Project : Grant Aid Project : Volunteer Schemes : GoN project utilizing knowledge and ecperiences of the JICA Project
CHAP. 9 RECOMMENDATIONS
The Study Team recommends the followings in connection with implementation of the cooperation program for agriculture and rural development in the SRC:
(1) Earliest Implementation of a Project (2) Strengthening of Farmers’ Organization (3) Holistic Approach (4) Integration of Schemes (5) Cooperation with other Donors (6) Encouraging Private Sector Participation (7) Gender Consideration (8) Encouraging Self-Dependence (9) Understanding of the Limitation of the Study and Future Study to be undertaken a. Geology and soil conditions in the objective areas b. Individual commodities’ farm economy c. The present irrigation extent d. The detailed farm economy of each district and individual farmers, e. The detail implication of compost for farm economy in relation to livestock development f. The present tube well conditions and potential studies in Mahottari and adjacent areas g. Farm and processing waste h. A study on community forest activities in the SRC areas i. Food sufficiency in Dolakha in connection with calorie balance j. Seasonal quantities of flow and prices of commodities on import and export, and from district to district
S - 26
Photographs of the Study
A spring, a drinking and irrigation water source at Milk chilling station at Kurisak milk cooperative in Ugra Chandi Nala VDC in Kavre District Kavre District
Fodder haulage on Sindhuli Road Junar trees and vacant farm, back ground Sindhuli road at Khanyakharka village in Sindhuli District
Junar sapling production by farmer at Khanyakharka Machines of Junar cold storage at Sindhulimadhi village in Sindhuli District operated by Junar Association
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Photographs of the Study
Bardibas Market in Mahottari District Anicut along the road between Dhalkebar to Janakpur in Dhanusa District
Vegetable sold at retailer shop at Jiri in Dolakha Potato cultivation Jiri area, wheat is also seen far District sight in Dolakha District
Small irrigation facility near Charikot in Dolakha Plowing by buffalos along Khimti Khola in District Ramechhap District
P - 2
Photographs of the Study
Truck full of ginger imported from China at Kodari Interview of a farmer at Bardibas in Mahottari custom at China boundary
Baraju Vegetable Market (extension of Kalimati Dendrobium produced by tissue culture at Agro market) in Kathmandu Expo. 2009 in Kathmandu
Rose and other cut flowers displayed at Agro Expo. Lady Trader at Kalimati Wholesale Market 2009 in Kathmandu
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Photographs of the Study
District Workshop at Ramechhap on 12th June District Workshop at Sindhuli on 16th June attended attended by 24 participants by 22 participants
Fish Market at Jaleshwar in Mahottari. All fishes are Malekhu Collection Center Interview. Member from India reached to 1,800
Panchkhal Collection Center in Kavre. Farmers Workshop in Kathmandu on 28th July attended by 20 waiting for good prices. participants
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Program Formulation Study for Agriculture and Rural Development in Sindhuli Road Corridor
FINAL REPORT
Contents
Location Map Summary Photographs Page CHAPTER 1 INTRODUCTION 1.1 Background ...... 1-1 1.2 Objectives of the Study ...... 1-1 1.3 Strategy of the Study ...... 1-1 1.3.1 Organization of the Study ...... 1-1 1.3.2 Basic Strategy for Conducting the Study ...... 1-2 1.3.3 Selection of Study Districts ...... 1-2 1.4 Methodology ...... 1-2 1.4.1 Work Flow of the Study ...... 1-2 1.4.2 Activities Conducted by the Study Team in the 1st Stage Study ...... 1-3 1.4.3 Activities Conducted by the Study Team in the 2nd Stage Study ...... 1-6 1.5 Identification of Development Potential and Constraints ...... 1-8 1.6 Formulation of Cooperation Program ...... 1-9 1.7 Final Report ...... 1-10
CHAPTER 2 AGRICULTURE AND RULAL DEVELOPMENT IN NEPAL 2.1 Basic Data of Nepal ...... 2-1 2.2 Position of Agriculture in Nepal ...... 2-2 2.3 Government Policy ...... 2-2 2.3.1 Agriculture Policy, Acts, Rules and Regulations ...... 2-3 2.3.2 Government Commitment ...... 2-12 2.3.3 Institutional Structure/ Arrangement of AgriculturalDevelopment in Nepal 2-13 2.4 Agriculture Production ...... 2-15 2.4.1 Diversity of Crops by Physiography and Agro-climatic Conditions ...... 2-15 2.4.2 Tenancy and Land Holding Size ...... 2-16 2.4.3 Agriculture Production Situation ...... 2-17 2.4.4 Identification of Pocket Production Area of Horticultural Crops and Dairy/Meat Farming ...... 2-21
- i - 2.4.5 Agricultural Inputs and Finance ...... 2-22 2.5 Marketing of Agriculture Produce ...... 2-24 2.5.1 Agriculture Business Promotion Policy ...... 2-24 2.5.2 Import and Export of Major Agricultural Produce ...... 2-25 2.5.3 Identification of Surface Routes and Points of Major Agriculture Produce . 2-27 2.5.4 Wholesale Trading of Major Agricultural Produce ...... 2-33 2.5.5 Price and Price Trend of Produce at Major Wholesale Markets and Collection Hubs ...... 2-33 2.5.6 Forecast of Domestic Market and Consumers Trend ...... 2-39 2.6 Local Development ...... 2-39 2.7 One Village and One Product (OVOP) Program ...... 2-40 2.7.1 OVOP Concept and Policy in Nepal ...... 2-40 2.7.2 Modality of OVOP Implementation ...... 2-42 2.7.3 Administration and Management Structure ...... 2-43 2.7.4 Pilot Project and its Status ...... 2-44 2.7.5 First Cymbidium Orchid Show 2009 ...... 2-46 2.8 JICA Nepal Position Paper on Agriculture and Rural Development ...... 2-47 2.8.1 Purposes ...... 2-47 2.8.2 Priority Issue ...... 2-47 2.9 Learning from the Past JICA Projects ...... 2-47 2.10 Assistance of Other Donors ...... 2-49 2.10.1 Commercial Agriculture Development Project, ADB (2006-2012) ...... 2-49 2.10.2 Sustainable Soil Management Program (SSMP) (1998 – 2010, 3 Phases) ... 2-50 2.10.3 Smallholder Irrigation Market Initiative (SIMI) (2003-2009) ...... 2-50 2.10.4 Coffee Promotion Project (2003-2010) ...... 2-51 2.10.5 Poverty Alleviation in Selected Rural Areas of Nepal (2005-10) ...... 2-51 2.10.6 Project for Agriculture Commercialization and Trade (PACT 2009-2015) ... 2-51 2.10.7 Community Livestock Development Project (2005-2011) ...... 2-52 2.10.8 Poverty Alleviation Fund Project (2006 – not defined) ...... 2-52
CHAPTER 3 AGRICULTURE DEVELOPMENT OF OBJECTIVE DISTRICTS 3.1 Basic Data of the Objective Districts ...... 3-1 3.2 Road Status of the Objective Districts ...... 3-1 3.3 Introduction to the Survey Districts ...... 3-2 3.3.1 Sindhuli Road Aligned Districts ...... 3-2 3.3.2 Districts Neighboring Sindhuli Road ...... 3-3 3.4 District Development ...... 3-3 3.4.1 Periodic and Annual District Development Plans ...... 3-3 3.4.2 Human Resource and Administrative Structures of DDC and DTO ...... 3-4
- ii - 3.4.3 Information of Major NGOs and Their Activity Field in the Districts ...... 3-6 3.5 District Agriculture Policy and Program ...... 3-6 3.5.1 Agricultural Development Plan by DADO ...... 3-6 3.5.2 Human Resource and Administrative Structures of DADO ...... 3-8 3.5.3 Institution Structure/ Arrangement of Agricultural Development in the Districts ...... 3-10 3.5.4 Extension Activities by JTs/JTAs in the Districts ...... 3-11 3.6 Agriculture Production ...... 3-11 3.6.1 Tenancy and Land Holding by Land Type ...... 3-11 3.6.2 Diversity of Crops According to Different Climate and Altitude ...... 3-12 3.6.3 Cultivation Area, Value of Production and Average Production Cost ...... 3-13 3.6.4 Recent Trend in Production of Agriculture and Livestock Produce ...... 3-14 3.6.5 Identification of Production Pocket Area of Horticulture Crop and Dairy / Meat Farming ...... 3-32 3.7 Agricultural Marketing ...... 3-33 3.7.1 Post harvest Handling by Item ...... 3-33 3.7.2 Location and Handling Capacity of Collection Center/Points by Item ...... 3-34
CHAPTER 4 HOUSEHOLD SURVEY 4.1 Survey Method and Procedure ...... 4-1 4.1.1 Purpose of Household Survey ...... 4-1 4.1.2 Target Districts and VDCs ...... 4-1 4.1.3 Duration of the Survey ...... 4-2 4.2 Respondents of the Survey ...... 4-2 4.2.1 Number of Collected Samples ...... 4-2 4.2.2 Characteristics of the Respondents ...... 4-2 4.3 Results of the Survey ...... 4-6 4.3.1 Tenancy and Land Ownership ...... 4-6 4.3.2 Farming Practices ...... 4-9 4.3.3 Food Self-sufficiency ...... 4-16 4.3.4 Household Economy ...... 4-16 4.3.5 Household Asset and Utilities ...... 4-23 4.3.6 Public Service and Infrastructure ...... 4-27 4.3.7 Environment ...... 4-27 4.3.8 Information Sharing and Marketing ...... 4-29 4.3.9 Credit ...... 4-29 4.3.10 Membership in Community Organizations ...... 4-31
- iii - CHAPTER 5 MARKET SURVEYS 5.1 Purpose of Market Survey ...... 5-1 5.2 History and Type of Markets in Nepal ...... 5-１ 5.2.1 History of Markets in Nepal ...... 5-1 5.2.2 Functions of Markets by Type ...... 5-3 5.2.3 Fruit and Vegetable Markets ...... 5-4 5.2.4 Line Animal and Livestock Products ...... 5-5 5.3 Market Information ...... 5-7 5.4 Market Profiles of 10 Designated Markets ...... 5-9 5.4.1 Key Feature of the Designated Markets ...... 5-9 5.4.2 Distribution of Key Items; Potato, Tomato, Junar and Milk ...... 5-11 5.5 Trader Survey ...... 5-28 5.5.1 Purpose of Trader Survey ...... 5-28 5.5.2 Outline of the Respondents ...... 5-29 5.5.3 Features of Business Transaction Types ...... 5-30 5.5.4 Sales and Costs of Traders ...... 5-33 5.5.5 Tendency of the Business ...... 5-36 5.5.6 Consumers’ Attitude ...... 5-38 5.5.7 Suppliers’ Attitude ...... 5-38
CHAPTER 6 DEVELOPMENT POTENTIALS AND CONSTRAINTS 6.1 Procedure of Compilation on Potentials and Constrains ...... 6-1 6.2 Evaluation of Geographical Conditions by Zoning and Positioning ...... 6-2 6.2.1 Physiographic Zoning ...... 6-2 6.2.2 Precipitation Zoning ...... 6-4 6.2.3 Population Distribution in VDCs ...... 6-5 6.2.4 Poverty Level of the Survey Area ...... 6-6 6.2.5 Positioning of the Households by Various Factors ...... 6-7 6.3 Agriculture Potentials and Constraints ...... 6-12 6.3.1 Assessment of Agriculture in SRC ...... 6-12 6.3.2 Agriculture Economy and Potential Crops ...... 6-16 6.3.3 Potential from Marketing Viewpoint ...... 6-22 6.3.4 Development Budget and Staff ...... 6-23 6.3.5 Potentials and Constraints on Group Activities ...... 6-24 6.4 Effects of Sindhuli Road ...... 6-26 6.4.1 Positive Effects ...... 6-26 6.4.2 Negative Effect ...... 6-27
- iv - CHAPTER 7 SPECIFIC ISSUES, COOPERATION ACTIVITIES AND FOCAL POINTS 7.1 Specific Issues and Priority ...... 7-1 7.1.1 Nepal Position Paper for Agriculture and Rural Development by JICA ...... 7-1 7.1.2 Specific Issues and the Priorities ...... 7-2 7.1.3 Overall Rating of Priorities on Specific Issues ...... 7-6 7.1.4 Cooperation Activities ...... 7-8 7.2 Focal Points ...... 7-8 7.2.1 Infrastructure ...... 7-9 7.2.2 Farming Skill Improvement ...... 7-12 7.2.3 Strengthening of Farmers’ Organizations ...... 7-17 7.2.4 Marketing ...... 7-18 7.2.5 Environmental Aspects ...... 7-18
CHAPTER 8 PROGRAM FORMULATION 8.1. Basic Concept in Formulate the Cooperation Program ...... 8-1 8.1.1 Background ...... 8-1 8.1.2 Alternatives for Realizing the Concept ...... 8-2 8.1.3 Selection of Alternatives ...... 8-2 8.1.4 Reminder Points for Formulation of the Cooperation Program ...... 8-3 8.1.5 Program Outputs ...... 8-3 8.1.6 Beneficiaries ...... 8-4 8.1.7 Risks and Countermeasures ...... 8-4 8.2 Basic Strategy of the Cooperation Program ...... 8-4 8.2.1 Focal Points ...... 8-5 8.2.2 Components of the Program ...... 8-6 8.2.3 Phasing of Program Implementation ...... 8-8 8.2.4 Objective Areas and Priority Areas ...... 8-9 8.2.5 Schemes to be Adopted for the Program ...... 8-10 8.2.6 Participation and Contribution by Beneficiaries ...... 8-10 8.3 Plan of Projects ...... 8-10 8.4 Implementation Schedule ...... 8-28
CHAPTER 9 RECOMENDATIONS
- v - List of Table
Table 1.1 Itinerary of the 1st Field Trip and Meetings ...... 1-4 Table 1.2 Itinerary of the 2nd Field Trip and Meetings ...... 1-5 Table 1.3 Itinerary of the 3rd Field Trip and Meetings ...... 1-7 Table 1.4 Itinerary of the 4th Field Trip and Meetings ...... 1-7
Table 2.1 Basic Data of Nepal ...... 2-1 Table 2.2 Comparison with South Asian Countries and Japan ...... 2-1 Table 2.3 Poverty Measurement in Nepal (1995/96 – 2003/04) ...... 2-2 Table 2.4 Major Acts, Rules and Legislations ...... 2-9 Table 2.5 Capital and Income of Cooperatives in Nepal ...... 2-10 Table 2.6 Proposed Estimates of Public Sector Investment during TYIP Period (Corporate) ... 2-12 Table 2.7 Proposed Public Sector Investment by Objective during TYIP Period ...... 2-12 Table 2.8 Key Donor Projects in the Agriculture Sector ...... 2-13 Table 2.9 Agriculture Sector Institutions by Type and Function ...... 2-14 Table 2.10 Major Crops Grown in Different Physiographic Regions of Nepal ...... 2-16 Table 2.11 Status of Cultivated Land, 2001 ...... 2-16 Table 2.12 Farm Size and Distribution of Cultivated Landholdings in Nepal, 2001 ...... 2-17 Table 2.13 Size Distribution of Land Ownership by Household and Region ...... 2-17 Table 2.14 Size Distribution of Agricultural Land Ownership by Household and Region ...... 2-17 Table 2.15 Status of Cultivated Land in Nepal ...... 2-18 Table 2.16 Total Area under Cereal Crops and their Shares by Physiographic Region, 2007/08 2-18 Table 2.17 Production of Major Cereal Crops and their Shares by Physiographic Region, 2007/08 ...... 2-18 Table 2.18 Area, Production and Yields of Major Cereal Crops ...... 2-19 Table 2.19 Area under Major Cash Crops as Percentage of Total Cultivated Area and Yield ...... 2-19 Table 2.20 Area, Production and Yields of Vegetables and Fruits ...... 2-20 Table 2.21 Milk and Meat Production ...... 2-20 Table 2.22 Average Cost of Production per Hectare of Major Cereal Crops (2007/08) ...... 2-21 Table 2.23 Average Cost of Production per Hectare of Major Vegetable Crops (2007/08) ...... 2-21 Table 2.24 Criteria for the Identification of Pocket Areas ...... 2-21 Table 2.25 Characterization of Pocket Area by MOAC ...... 2-22 Table 2.26 Fertilizer Price Differentials between India and Nepal ...... 2-22 Table 2.27 Institutional Arrangements for the Provision of Agricultural Inputs ...... 2-23 Table 2.28 Distribution of Agricultural Credit through Agricultural Development Bank ...... 2-23 Table 2.29 Key Commodities Exported to India and Other Countries ...... 2-26 Table 2.30 Import and Export of Major Agricultural and Related Commodities from and to India, 2006/07 ...... 2-26 Table 2.31 Import and Export of Major Agricultural and Related Commodities from and to Countries Other than India, 2006/07 ...... 2-27 Table 2.32 National Average Annual Price of Rice ...... 2-33 Table 2.33 National Average Annual Price of Pulses ...... 2-34 Table 2.34 National Average Annual Price of Vegetables ...... 2-34 Table 2.35 National Average Annual Price of Livestock Products ...... 2-34 Table 2.36 Price of Vegetables, Fruits and Spices at Wholesale Market in Nepal, 2008 ...... 2-35 Table 2.37 Price Trends of Vegetables in Kalimati Wholesale Market, Kathmandu ...... 2-36
- vi - Table 2.38 Price Trends of Fruits in Kalimati Wholesale Market, Kathmandu ...... 2-37 Table 2.39 Price Trends of Spices in Kalimati Wholesale Market, Kathmandu ...... 2-37 Table 2.40 Price Trends of Vegetables in Amarhat Wholesale Market, Sunsari ...... 2-38 Table 2.41 Price Trends of Fruits in Amarhat Wholesale Market, Sunsari ...... 2-38 Table 2.42 Price Trends of Spices in Amarhat Wholesale Market, Sunsari ...... 2-38 Table 2.43 Monthly Average Price of Fresh Fruits and Vegetables at Charaundi, Dhading ...... 2-39 Table 2.44 Key Agencies Involved in the Implementation of OVOP Program...... 2-44 Table 2.45 Products Selected in the Pilot Phase of OVOP Program...... 2-45 Table 2.46 Implementation Status of Sweet Orange, Lapsi and Bel under OVOP Program...... 2-46
Table 3.1 Basic Data of the Objective Districts ...... 3-1 Table 3.2 Road Status in the Objective Districts ...... 3-2 Table 3.3 DDCs’ Budget, 2008/09 (2065/66) ...... 3-4 Table 3.4 Sources and Purpose of District Budget in 2007/2008 ...... 3-4 Table 3.5 Staffing Structure of the DDC ...... 3-5 Table 3.6 Staffing Structure of the DTO ...... 3-6 Table 3.7 Budget of DADOs in Survey Districts, 2008/09 ...... 3-7 Table 3.8 Status of District Agriculture Budget per Household and VDC, 2008/09 ...... 3-7 Table 3.9 Human Resources of DADOs in Survey Districts ...... 3-8 Table 3.10 Organization of DADOs and Service Centers in Survey Districts ...... 3-9 Table 3.11 Institutions Responsible for Implementing Different Components of the Agriculture in the District ...... 3-10 Table 3.12 Proportion of Households with Land in the Survey Districts ...... 3-11 Table 3.13 Distribution of Agriculture Land Holding ...... 3-12 Table 3.14 Land Tenure Arrangement in Survey Districts ...... 3-12 Table 3.15 Typical Cropping Patterns Based on the Commercial Crops ...... 3-12 Table 3.16 Proportion of Cropped Area under Different Crops, 2007/08 ...... 3-13 Table 3.17 Land Use Pattern of the Survey Districts ...... 3-14 Table 3.18 Cultivated Land in the Survey Districts ...... 3-14 Table 3.19 Trend of Paddy Cultivated Area ...... 3-14 Table 3.20 Trend of Paddy Production ...... 3-15 Table 3.21 Trend of Paddy Yield ...... 3-15 Table 3.22 Trend of Wheat Cultivated Area ...... 3-16 Table 3.23 Trend of Wheat Production ...... 3-16 Table 3.24 Trend of Wheat Yield ...... 3-16 Table 3.25 Trend of Maize Cultivated Area...... 3-17 Table 3.26 Trend of Maize Production ...... 3-17 Table 3.27 Trend of Maize Yield ...... 3-18 Table 3.28 Trend of Potato Cultivated Area ...... 3-18 Table 3.29 Trend of Potato Production ...... 3-18 Table 3.30 Trend of Potato Yield ...... 3-19 Table 3.31 Trend of Pulses Cultivated Area ...... 3-20 Table 3.32 Trend of Pulses Production ...... 3-20 Table 3.33 Trend of Pulses Yield ...... 3-21 Table 3.34 Trend of Vegetable Cultivation Area ...... 3-21 Table 3.35 Trend of Vegetables Production ...... 3-21
- vii - Table 3.36 Trend of Vegetable Yield ...... 3-22 Table 3.37 Trend of Oilseeds Cultivated Area ...... 3-23 Table 3.38 Trend of Oilseeds Production ...... 3-23 Table 3.39 Trend of Oilseeds Yield ...... 3-23 Table 3.40 Trend of Spices Cultivated Area ...... 3-23 Table 3.41 Trend of Spices Production ...... 3-24 Table 3.42 Trend of Productive Area under Winter Fruits ...... 3-24 Table 3.43 Trend of Production of Winter Fruits ...... 3-24 Table 3.44 Trend of Productive Area under Pear ...... 3-25 Table 3.45 Trend of Pear Production ...... 3-25 Table 3.46 Trend of Productive Area under Summer Fruits ...... 3-25 Table 3.47 Trend of Summer Fruits Production ...... 3-25 Table 3.48 Trend of Productive Area under Mango ...... 3-26 Table 3.49 Trend of Mango Production ...... 3-26 Table 3.50 Trend of Productive Area under Banana ...... 3-26 Table 3.51 Trend of Banana Production ...... 3-27 Table 3.52 Trend of Total Productive Area under Citrus ...... 3-27 Table 3.53 Trend of Total Citrus Production ...... 3-27 Table 3.54 Trend of Productive Area under Junar ...... 3-28 Table 3.55 Trend of Junar Production ...... 3-28 Table 3.56 Trend of Productive Area under Orange ...... 3-29 Table 3.57 Trend of Orange Production ...... 3-29 Table 3.58 Trend of Cattle Number ...... 3-29 Table 3.59 Trend of Buffalo Number ...... 3-30 Table 3.60 Trend of Sheep Number ...... 3-30 Table 3.61 Trend of Goat Number ...... 3-30 Table 3.62 Trend of Poultry Bird Number ...... 3-31 Table 3.63 Total Quantity of Milk Produced in the Survey Districts ...... 3-31 Table 3.64 Quantity of Cow Milk Produced in the Survey Districts ...... 3-31 Table 3.65 Quantity of Buffalo Milk Produced in the Survey Districts ...... 3-32 Table 3.66 Number of VDCs with High Agriculture Potential by Commodities ...... 3-33 Table 3.67 Post Harvest Handling Practices ...... 3-34 Table 3.67 Key Market Centers by Survey District ...... 3-34
Table 4.1 Name of Survey VDCs by District and Types of Roads Connected ...... 4-2 Table 4.2 Number of Sample VDCs by District and Road Connection ...... 4-2 Table 4.3 Caste and Ethnic Composition of Survey Districts ...... 4-4 Table 4.4 Respondents by Religion ...... 4-4 Table 4.5 Percent of Respondents Directly Affected by Conflict ...... 4-4 Table 4.6 Gender and Age Balance ...... 4-5 Table 4.7 Size of Owned Land ...... 4-6 Table 4.8 Land Status of Irrigation ...... 4-7 Table 4.9 Renting In and Renting Out ...... 4-7 Table 4.10 Land Size per HH by Irrigation Status ...... 4-8 Table 4.11 Percent of HHs Growing Cereals and Purpose...... 4-10 Table 4.12 Percent of HHs Growing Fruits and Purpose ...... 4-10
- viii - Table 4.13 Percent of HHs Cultivating Vegetables and Purpose...... 4-11 Table 4.14 Percent of HHs Growing Potato and Purpose ...... 4-11 Table 4.15 Percent of HHs Growing Oil Seeds and Purpose ...... 4-11 Table 4.16 Percent of HHs Growing Industrial Crop and Purpose ...... 4-12 Table 4.17 Percent of HHs Growing Spices and Purpose ...... 4-12 Table 4.18 Percent of HHs Involved in Beekeeping and Purpose ...... 4-12 Table 4.19 Percent of HH Growing Pulses and Purpose...... 4-13 Table 4.20 Percent of HHs Engaged in Fisheries and Purpose ...... 4-13 Table 4.21 Percent of HHs Rearing Chicken and Purpose ...... 4-14 Table 4.22 Percent of HHs Rearing Goats and Purpose ...... 4-14 Table 4.23 Percent of HHs Rearing Pigs and Purpose ...... 4-14 Table 4.24 Percent of HHs Producing Egg for Different Purposes...... 4-15 Table 4.25 Percent of HHs Producing Milk and Purpose ...... 4-15 Table 4.26 Percent of HHs Producing Milk Products and Purpose ...... 4-16 Table 4.27 Income Level by Education...... 4-17 Table 4.28 Income Level by Caste...... 4-18 Table 4.29 Shear of Agriculture Sales in Cash Income and Profit from Agriculture ...... 4-19 Table 4.30 Number of Concerned HHs by Item...... 4-21 Table 4.31 Average Agricultural Cost of Concerned HHs by Item ...... 4-21 Table 4.32 Summary of Average Agricultural Cost & Profit of Concerned HHs ...... 4-22 Table 4.33 Average HH Expenditure and Share of Different Items ...... 4-22 Table 4.34 Average Annual Expenditure on Household Utilities ...... 4-22 Table 4.35 Balance of Household Economy (Rs./Year)...... 4-23 Table 4.36 Housing Unit and Type of Roofing ...... 4-24 Table 4.37 Percent of HHs Having Different Physical Assets ...... 4-24 Table 4.38 Lighting Source and Level of Use...... 4-25 Table 4.39 Fuel for Cooking and Level of Use...... 4-25 Table 4.40 Source of Drinking Water and Level of Use ...... 4-26 Table 4.41 Percent of HHs Having Different Types of Toilet ...... 4-26 Table 4.42 Household’s Perceptions on the Cleanliness of the Living Environment...... 4-28 Table 4.43 Percent of HHs Involved in Cleaning Their Village...... 4-28 Table 4.44 Percentage of HHs Involved in Different Solid Waste Management Practice ...... 4-28 Table 4.45 Percent of HHs Perceiving Adverse Changes in the Surrounding Environment...... 4-29 Table 4.46 Types of Information Required by Farmers by District ...... 4-29 Table 4.47 HHs Borrowing Money during the Past Year...... 4-30 Table 4.48 Sources of Credit...... 4-30 Table 4.49 Purpose of Credit...... 4-31 Table 4.50 Distribution of COs Surveyed ...... 4-32 Table 4.51 CO Membership Structure by District ...... 4-32 Table 4.52 HHs’ Participation in Different Types of Groups ...... 4-33 Table 4.53 Benefits from CO membership ...... 4-33
Table 5.1 History of Agricultural Market Development in Nepal...... 5-2 Table 5.2 Distribution of Periodic Markets (Haat Bazaar) by Development Region...... 5-3 Table 5.3 Key Features of the Selected Markets...... 5-10 Table 5.4 Area, Production and Yield of Potato...... 5-12
- ix - Table 5.5 Area, Production and Yield of Potato in SRC Districts, 2007/08...... 5-12 Table 5.6 Area and Production of Tomato in the SRC Districts, 2006/7 ...... 5-16 Table 5.7 Post-harvest Practices by Actors ...... 5-19 Table 5.8 Monthly Average Price of Small Tomatoes at the Kalimati Market...... 5-20 Table 5.9 Productive Area and Production of Junar in Sindhuli and Ramechhap...... 5-20 Table 5.10 Sale and Consumption of Junar...... 5-21 Table 5.11 Number of Milk Animals, Production and Productivity in the SRC Districts...... 5-24 Table 5.12 Number of Milk Cooperatives in the SRC Districts...... 5-25 Table 5.13 Markets and Sample Number of the Trader Survey ...... 5-29 Table 5.14 Sexes and Ages of the Respondents (Traders) by District...... 5-29 Table 5.15 Castes, Sexes and Ages of the Respondents (Traders) ...... 5-30 Table 5.16 Sampled Traders by Transaction Types...... 5-30 Table 5.17 Caste of Traders...... 5-30 Table 5.18 Positions of Shops and/or Stalls ...... 5-31 Table 5.19 Ownership and/or Tenancy of the Shops/Stalls...... 5-31 Table 5.20 Period of the Business...... 5-31 Table 5.21 Branch Shops ...... 5-31 Table 5.22 Traders Moving to Other Places to Sell Their Agriculture Produce...... 5-32 Table 5.23 Status of the Business, Trade and Produce...... 5-32 Table 5.24 Number of Traders by Commodities Handled ...... 5-33 Table 5.25 Proportion of Origin of Commodities Sold...... 5-33 Table 5.26 Sales and Costs of Traders by Transaction Type ...... 5-34 Table 5.27 Margin of the Trade by Transaction Type ...... 5-34 Table 5.28 Number and Proportion of Traders by Transaction Types...... 5-35 Table 5.29 Sales and Cost of Traders by Type of Commodities Handled ...... 5-35 Table 5.30 Margin of the Traders by Type of Commodities Handled ...... 5-36 Table 5.31 Pricing Factors and Their Priority ...... 5-38 Table 5.32 Suppliers Status...... 5-39
Table 6.1 Characteristics of Climatic Zones in the SRC Area ...... 6-3 Table 6.2 Specific Potentials and Constraints of Climatic Zones in the SRC Area ...... 6-3 Table 6.3 Poverty Incident in Each District ...... 6-6 Table 6.4 Poverty Line and Median HH Incomes ...... 6-7 Table 6.5 Basic Statistics of Sales (in Rs.) by Time to Market ...... 6-8 Table 6.6 Basic Statistics of Sales Volume (in Rs.) by Education Level ...... 6-11 Table 6.7 Cultivation Area and Livestock Population (2007/08)...... 6-12 Table 6.8 Food Production and Calorie Balance ...... 6-14 Table 6.9 Average HH Income, Agriculture Cost and Profit in Each District ...... 6-16 Table 6.10 Typical Cost, Income and Profit of Cereals ...... 6-17 Table 6.11 Typical Cost, Income and Profit of Vegetables and Spice...... 6-18 Table 6.12 Typical Cost, Income and Profit of Potato and Vegetables ...... 6-18 Table 6.13 Potato Cultivators’ Balance Sheet for Self-Consumption Only ...... 6-19 Table 6.14 Potato Cultivators’ Balance Sheet for Self-Consumption and Sale...... 6-19 Table 6.15 Balance Sheet of Leading Farmers in the SRC ...... 6-20 Table 6.16 Import from India at Kalimati Market in 2007/08...... 6-21 Table 6.17 Import from China at Kalimati Market in 2007/08 ...... 6-21
- x - Table 6.18 Budget and Stuff Numbers of Each District...... 6-23 Table 6.19 Participation in Organizations...... 6-25 Table 6.20 Credit Source, Average Interest Rate and Loan Amount...... 6-26
Table 7.1 Prioritization of Specific Issues ...... 7-3 Table 7.2 Priority of Specific Issues by Rating...... 7-7 Table 7.3 Potential Cooperation Activities...... 7-8 Table 7.4 Irrigated Areas and Irrigation Ratio ...... 7-9 Table 7.5 Annual Production and Increment of Livestock ...... 7-13
Table 8.1 Proposed Project Lists ...... 8-13 Table 8.2 Projects under the Program for Agriculture and Rural Development in the SRC ...... 8-14
List of Figures
Figure 1.1 Work Flow of the Study ...... 1-3 Figure 1.2 Flow to Formulate Cooperation Program ...... 1-10
Figure 2.1 Yields of Major Cereal Crops between 2003/04 and 2007/08 ...... 2-19 Figure 2.2 Yields of Vegetables and Fruits between 2003/04 and 2007/08 ...... 2-20 Figure 2.3 Marketing Channels for Fruits and Vegetables in Nepal ...... 2-31 Figure 2.4 Marketing Channels for Live Animals in Nepal ...... 2-32 Figure 2.5 Conceptual Model of OVOP Program ...... 2-41
Figure 3.1 Decentralized Planning Process ...... 3-5 Figure 3.2 Organizational Structure of DADO, Sindhuli ...... 3-9 Figure 3.3 Paddy Cultivation Area and Production in 2007/08 ...... 3-15 Figure 3.4 Wheat Cultivation Area and Production in 2007/08 ...... 3-16 Figure 3.5 Maize Cultivation Area and Production in 2007/08 ...... 3-17 Figure 3.6 Cultivation Area and Production of Potato in Each District ...... 3-19 Figure 3.7 Cultivation Area and Production of Pulses in Each District ...... 3-20 Figure 3.8 Cultivation Area and Production of Vegetables in Each District ...... 3-22 Figure 3.9 Cultivation Area and Production of Junar in Each District ...... 3-28 Figure 3.10 Milk Production in 2007/08 ...... 3-32
Figure 4.1 Map of Survey Districts Showing Sampled VDCs ...... 4-1 Figure 4.2 Working Schedule of the Survey ...... 4-2 Figure 4.3 Caste of the Respondents ...... 4-3 Figure 4.4 Size of Household by Districts ...... 4-5 Figure 4.5 Gender of Head of Household by District ...... 4-6 Figure 4.6 Proportion by Land Size ...... 4-6 Figure 4.7 Farmland Size per HH by District (ha) ...... 4-8 Figure 4.8 Reasons of Leaving Land Fallow ...... 4-9 Figure 4.9 Food Sufficiency Status by District ...... 4-16 Figure 4.10 Annual Cash Income per Household by District ...... 4-17 Figure 4.11 Education by Caste ...... 4-18 Figure 4.12 Poverty Ratio by District ...... 4-18
- xi - Figure 4.13 Contribution of Agriculture Income ...... 4-19 Figure 4.14 Sales and Cost ...... 4-20 Figure 4.15 Sales and Cost by Share of Agri-income ...... 4-20 Figure 4.16 Sales and Cost of Agriculture by District ...... 4-21 Figure 4.17 Degree of Satisfaction by Topic ...... 4-23 Figure 4.18 Degree of Satisfactions with Services ...... 4-27
Figure 5.1 Marketing Calendar for Potato in SRC Districts ...... 5-13 Figure 5.2 Distribution Systems for Potato in the Survey Districts ...... 5-13 Figure 5.3 Wholesale Price of Red Potato in Kalimati Market ...... 5-14 Figure 5.4 Wholesale Price of White Potato in Kalimati Market ...... 5-15 Figure 5.5 Distribution System of Tomato in the Production Districts ...... 5-17 Figure 5.6 Wholesale Price of Big Tomato in Kalimati Market ...... 5-18 Figure 5.7 Wholesale Price of Small Tomato in Kalimati Market ...... 5-18 Figure 5.8 Sale of Big Tomato in Kalimati Market ...... 5-19 Figure 5.9 Sale of Small Tomato in Kalimati Market ...... 5-20 Figure 5.10 Distribution System for Junar in the Survey Districts ...... 5-21 Figure 5.11 Wholesale Price of Junar in Kalimati Market ...... 5-23 Figure 5.12 Distribution System for Milk in the Survey Districts ...... 5-26 Figure 5.13 Price of Milk Over the Last Five Years ...... 5-28 Figure 5.14 Turnover by Transaction Type ...... 5-34 Figure 5.15 Tendency of Business in Last Three years ...... 5-37 Figure 5.16 Key Points of Selling Commodities to Consumers ...... 5-38 Figure 5.17 Percent of Traders Changing Suppliers ...... 5-39 Figure 5.18 Key Points of Purchasing Commodities from Suppliers ...... 5-40
Figure 6.1 Position of Chapter 6 ...... 6-1 Figure 6.2 Physiographic Zoning of the Central and Eastern Regions ...... 6-4 Figure 6.3 Precipitation Zoning Map of the Central and Eastern Regions ...... 6-4 Figure 6.4 Population Density of Central and Eastern Regions by VDC ...... 6-5 Figure 6.5 Incidence of Poverty in Nepal...... 6-6 Figure 6.6 Scatter Chart of HHs in Agriculture Sales and Distance to town...... 6-8 Figure 6.7 Scatter Chart of HHs in Agriculture Sales and Land Size ...... 6-9 Figure 6.8 Scatter Chart of HHs in Agriculture Sales and Land Size by District ...... 6-10 Figure 6.9 Food Self-Sufficiency in the Target Districts ...... 6-13 Figure 6.10 Production and Commercial Ratios of Commodities (Milk)...... 6-15 Figure 6.11 Production and Commercial Ratios of Commodities (Vegetables)...... 6-15 Figure 6.12 Production and Commercial Ratios of Commodities (Potato) ...... 6-15 Figure 6.13 Production and Commercial Ratios of Commodities (Fruits)...... 6-15 Figure 6.14 Distribution of Commercial Vegetable in the SRC ...... 6-22 Figure 6.15 Potential Fruits in the SRC...... 6-23
Figure 7.1 Schematic Diagram of JICA NPP ...... 7-2
Figure 8.1 Schematic Diagram to Formulate Cooperation Program ...... 8-1 Figure 8.2 Conceptual Diagram of Circulations of Focal Points...... 8-12
- xii - Figure 8.3 Phasing and Implementation Schedule of the Program...... 8-27
List of Map
Map 2.1 Different Physiographic Regions of Nepal with Major Cities ...... 2-15 Map 2.2 OVOP Program Coverage ...... 2-45
List of Annex
Annex 1.1 List of Officers and Stakeholders Met (1st Stage) Annex 1.2 Field Trip Report Annex 1.3 Key Literatures and Reports Reviewed Annex 1.4 List of Officers and Stakeholders Met (2nd Stage) Annex 1.5 Questionnaire for Household Survey Annex 1.6 Traders Survey Questionnaire Annex 1.7 Report of Workshops
Annex 2.1 Organization Chart of MOAC Annex 2.2 Major Functions /Roles of Different Organizational Unit of DOA Annex 2.3 Import of Selected Agricultural and Related Commodities from India and Countries other than India Annex 2.4 Export of Selected Agricultural and Related Commodities to India and Countries other than India Annex 2.5 Agriculture Markets Network in Nepal Annex 2.6 Map of Nepal Showing Agriculture Markets Network in Nepal Annex 2.7 Organization Chart of MoLD
Annex 3.1 Map of Nepal Showing Survey Districts Annex 3.2 Map of Kavrepalanchok District Showing the Proposed VDCs for Survey Annex 3.3 Map of Sindhuli District Showing the Proposed VDCs for Survey Annex 3.4 Map of Mahottari District Showing the Proposed VDCs for Survey Annex 3.5 Map of Ramechhap District Showing the Proposed VDCs for Survey Annex 3.6 Map of Dolakha District Showing the Proposed VDCs for Survey Annex 3.7 Summary of Periodic District Development Plans Annex 3.8 Organizational Structure of DDC Annex 3.9 Organizational Structure of District Technical Office Annex 3.10 Key Agriculture Sector INGOs /NGOs /COs Working in the Survey Districts Annex 3.11 Annual Programs and Projects Implemented by DADO in FY 2008/09 Annex 3.12 Proportions of Cropped Area under Different Crops, 2007/08 Annex 3.13 Lists of VDCs by Potentiality Commodities
Annex 5.1 Profile of Selected Markets
- xiii - Abbreviations
ABPMDD Agri-business Promotion and Marketing Development Directorate ABPSD Agri-business Promotion Statistics Division ADB Asian Development Bank ADBN Agriculture Development Bank Nepal ADC Agriculture Development Committee AEC Agriculture Enterprise Centre AH Asian Highway AI Artificial Insemination AICC Agriculture Information and Communication Centre AICL Agricultural Inputs Company Limited AMIB Agriculture Marketing and Information Bulletin APP - ISR APP Implementation Status Review APP Agriculture Perspective Plan APPSP Agriculture Perspective Plan Support Program ASC Agriculture Service Centre ATEIP Agriculture Training and Extension Improvement Project BOOT Build Own Operate and Transfer BOT Build, Operate and Transfer CAP Conflict Affected People CBN Cost-of-Basic-Need Approach CBOs Community Based Organizations CBS Central Bureau of Statistics CCI Chamber of Commerce and Industry CDB Children’s Development Bank CDC Converge Design Consultancy CDR Central Development Region COs Community Organizations CSQCC Central Seeds Quality Control Centre CSR Cooperate Social Responsibility CTEVT Center for Technical Education and Vocational Training CYMOGG Cymbidium Orchid Growers’ Group DADC District Agricultural Development Committee DADO District Agriculture Development Office DAG Disadvantaged Group DDCN Dairy Development Corporation Nepal DDC District Development Committee DFTQC Department of Food Technology and Quality Control DLS Department of Livestock Services DLSO District Livestock Service Office DOA Department of Agriculture DOC Department of Cooperatives DOF Department of Forests DOH Department of Highway DOI Department of Irrigation DOIO Division Department of Irrigation Office DOLIDAR Department of Local Infrastructure Development and Agricultural Road DOR Department of Road DSL Deprived Sector Lending DSCWM Department of Soil Conservation and Watershed Management DTMP District Transport Master Plan DTO District Technical Office EDR Eastern Development Region E/M Extension Model
- xiv - EWH East West Highway FAO Food and Agriculture Organization of the United Nation FCO Fertilizer Control Order FDD Fruit Development Directorate FINGOs Financial Intermediary Non-Governmental Organizations FNCCI Federation of Nepalese Chambers of Commerce and Industries FWDR Far-Western Development Region GDP Gross Domestic Product GOJ Government of Japan GON Government of Nepal HDD Horticulture Development Directorate HH Household HPPCL Herbs Production and Processing Co. Ltd HVCs High Value Commodities IAAS Institute of Agriculture and Animal Sciences IFAD International Fund for Agriculture Development IG Income Generation INGO International Non-Government Organization IPNS Integrated Plant Nutrients System IRSC Intensive Research and Study Center JADP Janakpur Zone Agriculture Development Project JICA Japan International Cooperation Agency JT/JTA Junior Technician/Junior Technical Assistant LBs Local Bodies LIDP Local Infrastructure Development Policy LRN Local Road Network LSGA Local Self Governance Act MFIs Micro-finance Institutions MHH Mid-Hills Highway MLD Ministry of Local Development MMC Market Management Committee MOAC Ministry of Agriculture and Cooperatives MOF Ministry of Finance MOI Ministry of Industry MOWCSW Ministry of Women, Children and Social Welfare MOWR Ministry of Water Resources MPPW Ministry of Physical Planning and Works MWDR Mid-western Development Region NAP National Agricultural Policy NARC Nepal Agriculture Research Council NARDF National Agriculture Research and Development Fund NARI Nepal Agricultural Research Institute NARMA Centre for Natural Resources Management, Analysis, Training and Policy Research NASRI National Animal Science Research Institute NCDB National Cooperatives Development Board NDDB National Dairy Development Board NDDP National Dairy Development Policy NFC Nepal Food Cooperation NGO Non-government Organization NPC National Planning Commission NPP Nepal Position Paper for Agriculture and Rural Development prepared by JICA NRB Nepal Rashtra Bank NRTC Resin and Terpentine Company NSCL National Seed Company Limited
- xv - NTCDB National Tea and Coffee Development Board NTFPs Non-timber Forest Products NTP National Transport Policy NVRC Nepal Veterinary Research Council ODA Official Development Assistance OT Operate and Transfer OVOP One Village One Product PDDP Periodic District Development Plan PPP Public Private Partnership PPS Pocket Package Strategy PRSP Poverty Reduction Strategy Paper RAs Road Agencies RBN Road Board Nepal SAARC South Asian Association for Regional Cooperation SAE Small Area Estimation SCCs Saving and Credit Cooperatives SCs/SSCs Service Centres/Sub-service Centres SDC Swiss Agency for Development and Cooperation SDEP Sericulture Development and Extension Project SINA Statistical Information on Nepalese Agriculture SLC School Leaving Certificate SPA Seven Party Alliances SQCC Seed Quality Control Centre SR Sindhuli Road SRC Sindhuli Road Corridor SRN Strategic Road Network SSMP Sustainable Soil Management Project TA&DA Travel Allowance & Daily Allowance TCN Timber Corporation of Nepal TYIP Three Year Interim Plans UN United Nations UNDP United Nations Development Program USD United State Dollars VDC Village Development Committee WB World Bank WDO Women Development Office WDR Western Development Region WFP World Food Program WRS Water Resources Strategy WTO World Trade Organization WUAs Water Users’ Associations
- xvi -
Nepalese Terms
Anicut: A diversion weir to take water from a natural channel Bhani: One unit of package Chhurpi A dried smoked cheese made from the milk of a yak or chauri (a hybrid of yak and cattle) Doko: Bamboo Basket Dori: Rope Haat: Market periodically opened in villages and in towns Khuwa Sweets made from milk of a buffalo or cow in home by cooking it to remove all water contents, mixed with sugar. Kharpan: Traditional bamboo basket which looks like a balance with two baskets joined by a bamboo beam. This is used by Jyapoos of Kathmandu valley to transport vegetables from one place to other. Jyapoos are said to be the original Newar inhabitants of Kathmandu valley who are renowned for vegetable farming. Tokaris: A type of bamboo basket often used by Madhise caste people in Terai. These days, people have started to make Tokari from polythene too.
Measurement Unit
Area Volume cm2 = Square-centimetres (1.0 cm x 1.0 cm) cm3 = Cubic-centimetres(1.0 m-lit.) m2 = Square-meters (1.0 m x 1.0 m) m3 = Cubic-meters (1.0 K-lit.) Km2 = Square-kilometres (1.0 Km x 1.0 Km) lit. = Litre (1,000 cm3) ha. = Hectares (10,000 m2) Mana = 0.568 lit. Ropani = 1/20 Hectares (500 m2) Muri = 90.92 Lit. Bigha= 0.677 ha.
Length Weight mm = Millimetres gr. = Grams cm = Centimetres (cm = 10 mm) Kg = Kilograms (1,000 gr.) m = Meters (m= 100 cm) MT & Mt, = Metric ton (1,000 Kg) Km = Kilometres (Km = 1,000 m) MCM = 1,000,000 cu-m = 810.68 acre-ft Kosh = 4 Km Quintel = 100 Kg Maund = 37.32 Kg
Currency Time and Others US$ = United State Dollars sec. = Seconds J¥ = Japanese Yen min. = Minutes (60 sec.) Rs. = Nepal Rupees hr. = Hours (60 min.)
Exchange Rate
As of May, 2009 US $ 1.00 = ¥ 96.87 NRs. 1.00= ¥ 1.227
- xvii - Final Report on Program Formulation Study for Agriculture and Rural Development in Sindhuli Road Corridor
CHAP. 1 INTRODUCTION
1.1 Background
After a long period of political chaos and civil unrest in Nepal, peace talks commenced in 2006 between the Seven Party Alliance (SPA) and the Maoist party. In 2007, the interim constitution, incorporating the concepts of “Abolishing the Kingdom” and “Introduction of the Federal Republic” was officially proclaimed and an Interim Congress was established in 2008 after a new constitution was formed. Since 1996 throughout these changing circumstances Japan has been providing assistance to Nepal in the construction of the Sindhuli Road with funding from Japan’s Grant Aid program, overcoming various difficulties encountered during the conflict.
The Sindhuli Road Corridor (SRC) area is one of the poorest regions in Nepal and was badly affected by the conflict. Accordingly, it is anticipated that economic development of the region would contribute to the correction of disparities among regions and serve as a determent to the conflict. This would inevitably lead to increased production of high value agricultural products and resulting market expansion.
In this circumstance, JICA decided to a formulate cooperation program for the SRC area to improve the lives of the area’ residents. A temporary access road was completed last year, and feeder roads to the Sindhuli Road are currently being constructed, with more planned for expansion. The Road construction will be completed within the next few years.
1.2 Objectives of the Study
In February 2009 JICA prepared a position paper to assist agricultural and rural development in Nepal that focused on the following aspects:
(1) Strengthening food security (2) Increasing farmers’ agricultural income (3) Strengthening technical extension activities and farmers’ organizations
In the Study, (2) and (3) above would be the focus in the SRC area to materialize impacts by the road constructed under Japan’s grant aid program, since it is not profitable to produce food grains in hill and mountain areas and major food grain production areas are located in the Tarai plain.
The objectives of this study are therefore to identify the constraints on agricultural development, other than the production of cereal crops, including fruits, HVC, livestock and so on; to assess the potential of agriculture and related industries in the SRC; and to formulate tangible cooperation programs for agricultural development in the area.
1.3 Strategy of the Study
1.3.1 Organization of the Study
JICA has entrusted the Study to two institutions: NARMA Consultancy Pvt. Ltd., in Nepal (hereinafter called NARMA) and M&Y Consultants Co. Ltd., in association with the KRI
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International Corp. in Japan (hereinafter called the Study Team).
The JICA Nepal office entrusted the initial stage of the Study to NARMA to collect data and information, define the objective districts for the Study and conduct field surveys on farmers’ households, marketing and so on. NARMA started work in the beginning of February 2009.
The Study Team prepared the Inception Report in early March 2009 in Japan. The Study Team coordinated with NARMA to finalize the questionnaires for the household (HH) survey, market survey and other surveys.
Accordingly, it was essential that the Study Team coordinate with NARMA to carry out the Study. The Inception Report prepared by NARMA provided enough data and information through the available literature collected to help the Study Team understand the country’s present conditions in agriculture, feeder road construction policies, agricultural policies, practices and agricultural production and the objective area. As soon as the Study Team mobilized in Kathmandu on March 22 the Study meetings were held with NARMA and it was agreed that a joint survey and study would be carried out.
1.3.2 Basic Strategies for Conducting the Study
The following aspects are taken into consideration as basic strategies in carrying out the study:
(1) Formulation of tangible programs that are feasible to implement (2) Maximization of synergy effects among institution/policy, production/processing, marketing and social and economic infrastructure (3) Formulation of ownership and leadership among stakeholders
1.3.3 Selection of Study Districts
The study districts are selected among districts in which the Sindhuli Road (SR) directly passes through as well as neighboring districts. The SR passes through the Kavre, Sindhuli and Mahottari Districts, and its neighboring districts are (clockwise from north) Sindhupalchok, Dolakha, Ramechhap, Okhaldhunga, Udayapur, Dhanusa, Sarlahi, Makwanpur, Lalitpur and Bhaktapur. Out of those neighboring districts, the Ramechhap and Dolakha districts were selected for the Study by the preliminary study by NARMA as Ramechhap is divided by the Sun Koshi River with the Sindhuli District and the SR passes along the Sun Koshi River in the Sindhuli District. Further, bridge construction crossing the Sun Koshi River connecting the Sindhuli and Ramechhap districts will be completed before the Section III of the SR will be completed, while Dolakha Districts is located to the north of Ramechhap and connected to the strategic road linked to the bridge connected to the SR. Accordingly, the Ramechhap and Dolakha Districts were selected as study districts. Other neighboring districts are not connected to any strategic road linked to the SR. Accordingly, five districts, the Kavre, Sindhuli, Mahottari, Ramechhap and Dolakha Districts were selected for the Study. This was confirmed by the JICA Head office and the Kathmandu office.
1.4 Methodology
1.4.1 Work Flow of the Study
The Study has been implemented for the 6-month period from March to August 2009 as shown in Figure 1.1. This Final Report designates in the end of the Study period.
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Year 2009
Month Feb. Mar. Apr. May Jun. Jul. Aug.
Reports Ic/R Ｐ/R Df/R F/R
[1st Work in Japan] [2nd Work in Japan] [3rd Work in Japan] -Collection, Compilation and Analysis of the Available Data and Information -Preparation of P/R Works in Japan -Consideration of Surveying Technique and -Preparation of Study Implementation -Explanation of Df/R and Discussion Preparation of Study Implementation Plan Plan on the 2nd Stage Study -Preparation of F/R -Preparation of Ic/R and Review
[1st Work in Nepal]
Kick off Kick Explanation and Discussion on Ic/R
Exchange of View with other Donors Collection and Analysis of Data and Information
Review and Analysis of Survey Result by NARMA Defining of Objective Areas as Sindhuli Road Corridor
Identification of Development Potential and Disincentive Elements Work Items andFlow Development of Cooperation Program Works in Nepal [2nd Work in Nepal] and Livestock Operation Livestock and
Supplementary Survey of Farmers' Economy, Agriculture and Livestock Operation and Marketing
Information; Survey on Marketing and Agriculture and on Marketing Survey Information; Workshop Collection, Compilation andAnalysis of the Dataand Selection of Districts for Implementation of Cooperation Program Proposal of Concrete Cooperation Projects Program
Formulation Preparation of Df/R
Field Surveys on Farmers' Sample Surveys on Farmer's Economy, Agriculture and Livestock Operation household and marketing by Ic/R P/R Df/R F/R and Marketing (1st Stage) NARMA Consultancy Remarks: Ic/R; Inception Report, P/R; Progress Report, Df/R; Draft Final Report, F/R; Final Report
Figure 1.1 Work Flow of the Study
1.4.2 Activities Conducted by the Study Team in the 1st Stage Study
(1) Meeting with Relevant Government Agencies
The Study Team explained the Study to the relevant government offices including the Ministry of Agriculture and Cooperatives (MOAC), the Ministry of Local Development (MLD), the National Planning Commission (NPC), the respective District Development Committees (DDCs) and selected Village Development Committees (VDCs) by submitting the Inception Report as soon as mobilizing in Nepal on March 22, 2009.
The initial meetings in Kathmandu were held with all concerned ministries and agencies individually. Objectives and expected outcomes of the Study were shared by all stakeholders and commitment of full cooperation of the agencies throughout the Study was obtained.
(2) Field Trips and Meetings with Stakeholders
After the meetings with the government agencies, the Study Team carried out the first field trip throughout the Sindhuli Road, namely the Kavrepalanchok, Sindhuli and Mahottari Districts. The trip was accompanied by Mr. H. Kanamori, Senior Advisor (Agricultural Development/Irrigation), JICA Tokyo; Mr. T. Miki, Project Formulation Advisor (Rural Development and Local Governance), JICA Nepal Office; Mr. N.K. Gurung, JICA Nepal Office; and Mr. Bijendra Basnyat, a NARMA representative. Meetings were held with officers of the DDC and VDC, District Agriculture Development Office (DADO), District Livestock Service Office (DLSO), Cooperatives, farmers and nongovernmental organizations (NGOs) during the period of March 24-28 to confirm the actual situations of the fields and farmers. The itinerary of the first field trip is shown in Table 1.1.
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Table 1.1 Itinerary of the 1st Field Trip & Meetings
No. Date Description Meeting with Chief Resident of JICA Nepal Meeting with NARMA Meeting with MoLD 13/23Mon Meeting with NPC Meeting with MoAD Meeting with Mr. Hirashima, SV (Cooperative) and JOCVs Bhaktapur to pick up Mr. Tosaka and proseed to Nagarkot Meeting at Kavre DDC with Officers and some VDC Secretaries 23/24TueMeeting with Kavre DADO & DLSO Officers Field visit near Dhulikhel but failed due to trafic accident Stay at Dhulikhel Field visit to Love Green Nepal (LGN) 3 3/25 Wed Move to Sindhuli On the way to Sindhuli, stop at Bakundebeshi, Milk Cooperative Stay at JV Sindhuli Camp Visit Junar Association Meeting with Sindhuli DDC Officers 43/26Thu Meeting with Sindhuli DADO & DLSO Officers Field visit to Junar Cooperative Stay at JV Sindhuli Camp Observation of Junar Cold Storage operated by Junar Association Leave Sindhuli for Jaleshwor (Mahottari) Observation of Pinnaple Farming at Baghamara Village, Kamula Minicipality, Pass Bardibas (Junction of E-W Highway and Sindhuli road) 3/27 Fri 5 Meeting with Mahottari DDC Officers at Jaleshwor Meeting with Mahottari DADO & DLO Officers Visiting two VDCs to interview farmers Stay at Janakpur Hotel Visit Dabkebar Collection and Transit Market Visit Bardibus Collection and Transit Market 63/28Sat Interview of a farmer cum businessman Fly to Kathmandu [BHA508] 7 3/29 Sun Data Compilation Internal Meeting 8 3/30 Mon Visits to WB, ADB & IFAD (Only Sano attended) Visit to LGN Satellite Shop (Only Sano attended) Field Trip to Dhading ATEIP Office and Villages (Only Sano attended) 9 3/31 Tue Meeting at DADO Office Dhadingbesi (Only Sano attended) Visiting 3 ADCs, an E/M farmer and a Micro Irrigation Site (Only Sano attended) 10 4/1 Wed Visit Kiritpur Horticulture Development Centre Meeting with NFCCI-AEC Officer
On March 30 Mr. Sano of the Study Team together with Mr. H. Kanamori, Mr. Y. Momita, Representative of the JICA Nepal office, and Mr. N.K. Gurung visited the Dhading District, where the JICA technical cooperation “Agriculture Training and Extension Improvement Project (ATEIP)” had been implemented for five years and completed in January 2009. During the visit, they had meetings with the DADO officers, the Junior Technician/Junior Technical Assistant (JT/JTA), ADC members and an E/M farmer to learn about the activities and results of the ATEIP.
Further, the Study Team and a NARMA staff member, Mr. Amil Poudel, carried out the second field trip to the Dolakha and Ramechhap Districts from April 5 to 8. The itinerary of the second field trip is shown in Table 1.2.
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Table 1.2 Itinerary of the 2nd Field Trip & Meetings
No. Date Description 1 4/5 Sun to Jiri & Stay at Jiri Meeting with Dolakha DDC Officers （LDO, DTO, DADO, JT, DLSO, at DDC Office) Travelling to Jiri & Stay at Jiri 2 4/6 Mon Interviews at Jiri Market Visit Patital Village (Ward 8 of Jiri VDC) 6 Interview a Farmer Walk to a Tea Farm and observe access Hearing on Jiri seed potato to Tarai & India Visiting DoLS Livestock Farm Visit Agricultural Service Centre & interview from JT Interview from a private entrepreneur for Tea Company Stay at Jiri 34/7Wed Visit Alpaca Farm Travel to Manthali, Ramechap Meeting at DDC with P. Officer, DADO, V. Doctor Interview a farmer at Kilpon village, Katare VDC ward 9 Stay at Charikot 4 4/8 Thu Interview at Charikoto Market Visit NGO, Rural Development Tuki Association Visit Kodari China Border to observe import & export Return to Kathmandu
The Study Team visited the Agro Expo 2009 on April 12 and inspected all stalls of the exhibition to learn about the commodities displayed at the function and to understand the present level of manufacturing of the agro-products in Nepal. The Team found that the technologies of packing and presentation are quite varied and that those who may attract consumers to their produce mostly have collaborated with foreign technologies.
Government officers and stakeholders met by the Study Team during the first stage field trips are listed in Annex 1.1. The brief reports of the field trips are presented in Annex 1.2.
(3) Collection and Compilation of Available Data and Information and Analysis
The Study Team collected reports and data mainly on past JICA projects in addition to data and information collected and compiled by NARMA. The Team studied them to understand the present situation of agriculture and rural development in Nepal, specifically in the target areas. These reports and data collected by NARMA and by the Study Team are listed in Annex 1.3.
The details of the data and information collected and their analysis are reported in Chapters 2, 3 and 6 of this report.
(4) Household Survey and Other Surveys
In order to grasp the present condition of the objective area, NARMA, along with the Study Team, has carried out a sample HH survey and other interview surveys on government policy and implementation, agriculture support, institutional organization of farmers, marketing and so on, in accordance with the following procedure: a. Determination of Target Areas for the Household Survey
NARMA carried out a study to determine the target areas by collecting various data and information and analyzing them.
Three districts where the Sindhuli Road passes through, namely Kavrepalanchok, Sindhuli and Mahottari, and two neighboring districts, Dolakha and Ramechhap, were selected for the HH survey, taking into account the present and future road connectivity with the Sindhuli Road, the
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presence of High Value Commodities (HVCs) production areas, market connection with urban or growth centers, and so on. b. Household Survey
The HH survey was carried out in the five districts as selected above. The survey was conducted in four VDCs in each district: two VDCs each connected with the Sindhuli Road and the strategic road network, and two VDCs connected with a local road network or no road connection at present. Forty samples were selected in each VDC, thus 800 HH surveys were planned in order to grasp the present condition of the farmers in the area.
The survey was conducted by NARMA using a questionnaire, which was initially prepared by NARMA and finalized by taking into consideration comments provided by the Study Team. The Study Team provided assistance in analyzing the results of the survey. The questionnaire is shown in Annex 1.5.
Taking into account the possibility that some samples might be rejected, the actual number of samples surveyed was 966.
It is anticipated that the extent of the presence and the present conditions of conflict affected people (CAP) could also be identified in the surveyed households.
The Study Team visited the survey villages during the field trip and interviewed a few farmers to understand the general situation in the villages.
The HH Survey Report was submitted by NARMA to JICA on May 27 and the Study Team reviewed and discussed the survey results in detail with NARMA and reported them in Chap. 4 of this report.
(5) Exchange of Views with Other Donors
There are many agencies and organizations such as the World Bank (WB), the Asian Development Bank (ADB), United Nations (UN) agencies, bilateral Official Development Assistance (ODA) organizations and international nongovernment organizations (INGOs) working in Nepal to assist in the improvement of people’s livelihoods. The Study Team together with Mr. H. Kanamori and Mr. T. Miki visited WB, ADB, the International Fund for Agriculture Development (IFAD) and the Agriculture Enterprise Centre of the Federation of Nepalese Chambers of Commerce and Industries (AEC -FNCCI) on March 30 and April 1 to obtain their assistance policies and projects being implemented and planned on March 30 and April 1 and visited the Japanese Embassy to report initial findings.
The Team carried out interviews with traders, retailers and consumers at markets in Kathmandu to get some idea of other donors’ assistance for the marketing of agricultural produce in addition to the interviews carried out during the field trips. Results are reported in Section 2.10 of this report.
At the last stage of the Study, the Study Team visited the Poverty Alleviation Fund Project office as the Project carried out intensive activities in the SRC areas and helped the poor organize into groups.
1.4.3 Activities Conducted by the Study Team in the 2nd Stage Study
(1) Field Trips and Meetings with Stakeholders
In the second stage of the assignment from the middle of May, the Study Team together with Dr. B.B. Basnyat, NARMA’s Managing Director, carried out the third field trip to the eastern part of
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Nepal including the Jhapa, Sunsari, Moran and Dhankuta districts. The Team visited Kakarbhitta and Jogbani on the Indian border, Biltamod, Dharan and Biratnagar markets, a Kuwapani tea garden and a factory in Hile in the Dhankuta district and Tarahara Agriculture Research Station in the Sunsari district. The third field trip itinerary is shown in Table 1.3.
Table 1.3 Itinerary of the 3rd Field Trip & Meetings
No. Date Description 1 5/22 Fri Leave to Biratnagar Visit Kakarbitta Custom office Visit Birtamod Wholesale Market and interview potato & onion trader Visit Kankai Irrigation Project Meeting with Entrepreneurs in Biratnagar 2 5/23 Sat Visit Dharan Wholesale M arket Visit Kuwapani Tea Factory at Hile 3 5/24 Sun Visit Biratnagar Wholesale Market and interview garlic trader Visit Tarahara Regional Agriculture Research Station Inspection on Urlanbari - Biratnagar Road Visit Jogbani quarantine office and interview an officer Leave Biratnagar and arrive in Kathmandu
The fourth field trip was conducted together with Mr. Amil Poudel of NARMA to Hetauda in Makwanpur and Narayangart in Chitwan for a market survey on potential competitive markets and Malekhu in Dhading for a cooperative survey. The fourth field trip itinerary is shown in Table 1.4.
Table 1.4 Itinerary of the 4th Field Trip & Meetings
No. Date Description 1 5/28 Fri Leave to Hetauda Observe Kulakhani Dam & Reservoir, and a drive-in Visit Hetauda Market and interview wholesalers and retailers Visit Narayangart Market, and interview a fruit wholesaler and vegetable wholesalers and 25/29Sat retailers Visit Vegetable Market at Melekhu, Dhading and interview a retailer Visit Malekhu Fruit and Vegetable M ultipurpose Cooperative and interview a founder member Return to Kathmandu
Government officers and stakeholders met by the Study Team during the field trips of the second stage study are listed in Annex 1.4, and the brief reports are presented in Annex 1.2.
(2) Marketing and Other Surveys
In order to grasp the present condition of the objective area, NARMA has carried out a sample HH survey and other interview surveys on government policy and implementation, agriculture support, and institutional organization of farmers, in the first stage of the survey.
Along with the HH survey during the 1st stage study, the Study Team entrusted market and other surveys to NARMA in the second stage study through interviews of stakeholders in different aspects. Those surveys are:
i. DDC and other officers on road and agricultural policies and their implementation, ii. Present conditions of agriculture including constraints and potentials in each district, iii. Present situation of marketing of agricultural products including constraints and potential in each district, iv. Present situation of export of agricultural products and procedures.
The interview checklist for the market survey was handed out to 200 wholesalers and retailers in five district markets in Kathmandu, Hatauda and Narayangadh. The checklist is shown in Annex
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1.6 and the results are reported in Chapter 5.
(3) Workshops in Each District
After a substantial analysis of the HH survey was completed, the Study Team with NARMA conducted workshops in each district, inviting relevant Government officers, cooperative managements, NGO representatives and district CCI representatives. In the workshops, the Study Team explained the findings from the HH survey and their field trips, and obtained comments and opinions on the findings. Further, the Team collected the participants’ opinions on the focal points of the study, namely infrastructure, technical improvement, development of farmers’ organizations, post-harvest, and marketing and environmental aspects, which are identified by the Study Team as important aspects for program formulation.
In every district workshop, more than 25 stakeholders participated in a long range of discussions exceeding three hours and various comments and opinions were presented.
The list of participants and summary of comments and opinions of the workshops are compiled in the report presented in Annex 1.7.
(4) Workshops in Kathmandu
A workshop in Kathmandu requesting the participation of officers of the central Government ministries, namely, MoAC, MLD and NPC, and FNCCI members was held on June 28 based on the outcome of the HH survey and the district workshops.
The Study Team explained the findings of the HH and market surveys and of their field trips and proposed the concept and strategy of program formulation. Intensive discussions were carried out and many positive opinions expressed.
A list of the participants and opinions presented in the workshop are compiled in the report as shown in Annex 1.7.
1.5 Identification of Development Potentials and Constraints
Analysis of development potentials and disincentive elements for livelihood improvement of farmers shall be carried out based on the data collected through the surveys. Development potentials and disincentive elements will be defined by classifying area characteristics and assigning the following data and information as indicators:
(1) Governance: relevant laws and regulations, development programs, official services on agriculture and rural development (2) District level development structure: annual development budget, priority areas and sectors, manpower allocation for DDC and agriculture- and rural development- related offices (3) Social environment: ratio of caste and tribe, literacy rate of farmers, education, agriculture income, affiliate ratio on agricultural organization, motivation for livelihood improvement (4) Resources utilization: per capita farmland, irrigation ratio, farmland per cattle (goat, cow, buffalo, etc.) (5) Land suitability for vegetable production: agriculture ecology, altitude, temperature and rainfall in different seasons (6) Agriculture production/farming/extension: altitude, temperature, rainfall, soil, water resources, experience/achievement, access to inputs, research and extension, agriculture skill, cropping pattern, production value, rural credit, manpower, farmland, organic agriculture, production groups, cooperatives
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(7) Irrigation: available water resources, water users’ associations, operation and maintenance (8) Distribution and marketing of selected agricultural products: production cost, price, sorting, quality/freshness, loss, shipment timing, shipment volume, handling charge, handling route, sales method, utilization of marketing information, organization of distribution and marketing, middleman, credit (9) Road and marketing facility: road, collection point, wholesale market, storage and quality preservation facility
1.6 Formulation of Cooperation Program
Cooperation programs, which could contribute to materializing development potential and eliminating constraints in the SRC area, shall be briefly formulated by clarifying the development directions and strategies based on the above classification. The target years of the program are 2010 to 2018 since the completion of construction of the Sindhuli Road is expected in 2013.
In order to propose cooperation program, the following aspects shall be taken into consideration:
(1) Development of infrastructure relating to cultivation of crops, farming, livestock raising, irrigation, post-harvest, processing, marketing, etc. (2) Agriculture and livestock extension services by Government of Nepal (GoN) institutions, NGO, private sectors, etc. (3) Assistance in organizing agricultural cooperatives, farmers’ organizations, water management, agricultural credits and strengthening of individual farmer’s capabilities (4) Marketing of agriculture products in the SRC to the local markets, Kathmandu and other markets (5) Environmental aspects in connection with agricultural and livestock development
The following JICA technical cooperation programs relating to agriculture and rural development have been implemented in the past and at present shall be carefully studied. Experiences and achievements of those projects shall be fully taken into consideration for formulation of the program:
(1) Janakpur Zone Agriculture Development Project (1971-1984) (2) Horticulture Development Project Phase I & Phase II (1985-1990 & 1992-1999) (3) Agriculture Training and Extension Improvement Project (2004-2009) (4) Sericulture Development and Extension Project (2006-2011)
A flow of formulating cooperation program is illustrated in Figure 1.2:
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CHAP. 2 AGRICULTURE AND RURAL DEVELOPMENT IN NEPAL
This chapter is organized into 10 sections. Section 2.1 provides basic data about Nepal as a whole. Section 2.2 describes the current situation of agriculture in Nepal. Section 2.3 describes the Government policies on agriculture. Section 2.4 provides the present conditions of agricultural production in Nepal. Section 2.5 describes the existing marketing mechanism in Nepal. Section 2.6 discusses the present situation of decentralization of governance in connection with local development. Section 2.7 describes One Village One Product (OVOP) activities in Nepal. Section 2.8 describes the JICA’s position paper on agriculture cooperation in Nepal. Section 2.9 describes learning from the past projects undertaken by JICA in Nepal. Section 2.10 briefly compiles other donors’ activities in the agricultural sector in Nepal.
2.1 Basic Data About Nepal
Basic Data
The basic country data of Nepal such as area, population, literacy rate, and Gross Domestic Product (GDP) are shown in Table 2.1:
Table 2.1 Basic Data of Nepal
SN Particulars Unit Census 2001 1 Area km2 147,181 2 Total Population, 2001 Nos. 22,736,934 a Male Population, 2001 Nos. 11,563,921 b Female Population, 2001 Nos. 11,587,502 c Urban Population 2001 % 13.9 3 Total Households, 2001 Nos. 4,174,374 4 Average Household Size, 2001 Nos./Family 5.44 5 Literacy Rate, 2001 % 53.74 6 Population Density, 2001 Nos./ km2 157 7 Per Capita GDP, 2005/06 USD 350 Source: CBS Year Book, 2007
Comparison
A comparison with South Asian countries and Japan is shown in Table 2.2:
Table 2.2 Comparison with South Asian Countries and Japan
Description Unit Nepal India Pakistan Bangladesh Sri Lanka Japan Area 1000 km2 147.2 3,287.0 796.0 144.0 66.0 378.0 Population, 2005 M Nos. 27.0 1,095.0 156.0 142.0 20.0 128.0 GDP/Capita, 2005 USD 350.0 730.0 690.0 470.0 1,160.0 38,950.0 Source: CBS Year Book, 2007
Nepal’s economy is currently the poorest among South Asian countries.
Poverty
In Nepal, poverty is defined on the basis of the cost-of-basic-need approach (CBN) in which poverty lines are calculated to represent the level of per capita expenditure required to meet the basic needs of the members of a household, including an allowance for non-food consumption. (Source: CBS/WFP, 2006)
The trend of change (decrease in poverty) in the past 10 years is shown in Table 2.3.
2 - 1 Table 2.3 Poverty Measurement in Nepal (1995/96 – 2003/04)
Head Count Rate, % Particulars 1995-96 2003-04 Percent change Whole Nepal 41.8 30.8 -26 Urban 21.5 9.5 -56 Rural 43.3 34.6 -20 Mountain 57.0 32.6 -43 Hill 40.7 34.5 -15 Tarai 40.3 27.6 -32 Source: CBS, 2005
It is generally understood that poverty in Nepal has been improved in the last 10 years. However, poverty in rural areas particularly in the mountain and hill regions is still over 30 percent. Accordingly, it is appropriate to give priority to the hill and mountain regions in development cooperation.
2.2 Position of Agriculture in Nepal
Agriculture is the mainstay of the Nepalese economy, providing a livelihood for three-fourths of the population. Although the share of agriculture in the GDP has declined from about 49 percent in 1990/91 to 33.1 percent in 2007 (MOF, 2007), it is still the largest single sector of the economy. Besides being a major source of food, this sector is vital for the growth and development of the industrial and export sectors since both of these sectors are based on agriculture.
A recent World Bank and Central Bureau of Statistics (CBS) Report, however, rated contribution of agriculture modest in reducing the incidence of poverty in Nepal for the reasons given below:
a) While most of Nepal’s poor live in rural areas and depend on agriculture for their income, food supply and livelihoods, the incidence of poverty declined in rural areas from 43 to 35 percent, or a decline of 2.7 percent per year between 1995/96 and 2003/04. On the other hand, in urban areas, it was more than halved (from 22%to 10%, or a decline of 9.7% per year) during the same period. b) Agriculture sector growth has been erratic, but it is not enough to make a major impact on poverty reduction (3.3 percent annual growth during the Ninth Plan period against 4.0 percent target). c) The incidence of poverty among households headed by agricultural wage laborers was almost 56 percent in 1995/96, and it remained high in 2003/04 at 54 percent. The second poorest group after this comprises of households run by someone who is self-employed in agriculture. d) Average returns to agricultural land, as measured by net returns per hectare or per worker between 1995/96 and 2003/04, decreased despite rising cropping intensity. e) Stagnation in crop production due to higher production costs and lower output prices. f) Despite considerable improvement in access, irrigation remains a key constraint for agricultural growth. The productivity of irrigated agriculture is low.
2.3 Government Policy
In Nepal, a 20-year Agriculture Perspective Plan (APP) has been in operation since 1997 to accelerate agricultural growth for poverty reduction in a sustainable way. Since 1997 Nepal’s agriculture sector has been directed by this long-term plan. Not only did this plan provide a framework to the Ninth Plan (1997/98–2002/03) and the just completed Tenth Plan (2002/03–2006/07), but also to the current Three Year Interim Plans (TYIP; 2007/08 – 2009/10).
The Tenth Plan (2002/03–2006/07) was Nepal’s Poverty Reduction Strategy Paper (PRSP). It identified poverty reduction as the sole goal of the country, focusing on four pillars namely, (a) broad-based economic growth, (b) social and infrastructure development, (c) good governance and
2 - 2 (d) targeted programs. It gave the highest priority on the agriculture sector. This was in accordance with earlier periodic plans, given the sector’s pivotal role in the livelihoods of the majority of the population. The TYIP (2007/08–2009/10), formulated by the interim government formed after the People’s Revolution II (Jana Andolan II), has also placed the highest priority on the agriculture sector. Following the PRSP, this plan has taken a step further, giving due considerations to the national needs of reconstruction, reintegration and reconciliation. The mission of this plan is a prosperous, modern and just Nepal. The purpose is to make the general public feel change in their lives, through reduction in the present unemployment rate, poverty and inequality directly through the establishment of sustainable peace. This section is focused on (a) government policy, acts, rules and regulations on agricultural, cooperatives and agricultural commercialization, (b) government commitment (government/donor programs and budgets, etc) and general institutional structure/arrangement of agricultural development in Nepal.
To further the APP, the GoN promulgated the National Agriculture Policy (NAP) in 2004. The NAP presents the government’s renewed support and commitment to implement the APP.
2.3.1 Agriculture Policy, Acts, Rules and Regulations
Policies
Agriculture Perspective Plan: The APP was formulated in 1995to last for 20 years by the GoN with the support of the ADB and other donors including the World Bank and the Food and Agriculture Organization of the United Nations (FAO).
The APP is designed to increase the per capita agricultural growth by six-fold from its current (1995) level of 0.5 percent to 3 percent per year. The APP assumes that this growth would stimulate nonagricultural growth in employment-intensive goods and services sectors throughout the country. If implemented in its entirety, this plan would reduce the incidence of poverty from 49 percent in 1991/92 to 14 percent in 2014/15. Without APP, the corresponding figure in 2014/15 would be 29 percent. To achieve this goal, the APP has set out the following interrelated objectives:
• To accelerate the growth rate in agriculture through increased factor productivity • To alleviate poverty and achieve significant improvement in the standard of living through accelerated growth and expanded employment opportunities • To transform subsistence-based agriculture into a commercial one through diversification and widespread realization of comparative advantage • To expand opportunities for an overall economic transformation by fulfilling the preconditions of agricultural development • To identify immediate, short-term and long-term strategies for implementation, and to provide clear guidelines for preparing periodic plans and programs in future
As stated above, the APP is the core of the sector strategy. The APP envisages diversification and commercialization of agriculture by raising cereal production in the Tarai and the output of fruits, high value crops including Non-Timber Forest Products (NTFPs) and livestock in the hill and mountain regions. These are to be achieved by managing four key inputs: (i) controlled year-round irrigation, (ii) eased fertilizer supply, (iii) need-based research and extension, and (iv) linking potential production pockets with markets through rural agricultural roads and the expansion of rural electrification. While different peoples and organizations have different perceptions of the APP, its vision and strategies are hardly contested. It is still relevant today and will remain so in the near future. Critics comment on its service delivery approaches, modalities, inadequate pro-poor orientation, inadequate support from the private sector, and the government’s failure to generate resources (particularly financial) of the plan1.
1 APP Implementation Status Report, APPSP/DFID, June 2007.
2 - 3 The APP Implementation Status Report (APPISR) recently prepared by the APP Support Program (APPSP) reported the performance of priority outputs (livestock, high value commodities, agribusiness and forestry) relatively better and that of priority inputs (fertilizers, irrigation, technology, agricultural road and rural electrification) dismally poor. Nevertheless, the current TYIP reiterated the APP to implement it effectively and adapt it to the changed situations.
National Agriculture Policy 2004 (NAP): A lack on overall national policy on agriculture and the need to adapt the APP to the changed situations and to respond to people’s increased expectations through agriculture prompted the GoN to promulgate the NAP in 2004. Central to the NAP is making agriculture dynamic and profitable to help reduce rural poverty. Focused on the effective implementation of the APP, it has set the following three objectives for the agriculture sector:
(i) To increase agricultural production and productivity (ii) To render the agricultural sector competitive in the global and regional markets through the promotion of commercial and competitive agricultural systems (iii) To conserve, enhance and effectively utilize the available natural resources, environment and bio-diversity
One of the key features of this policy is that it commits to providing subsidies and supporting the marginal and small farmers who own less than 0.5 ha of land. The policy is committed to providing tax write-off facilities to private and non-government organizations for funds to spend on agricultural research and development.
Apart from the above two umbrella policies, the GoN has promulgated the following sub-sector policies in the agricultural sector.
• National Seeds Policy 2000 • National Tea Policy 2000 • National Fertilizer Policy 2002 • National Coffee Policy 2003 • National Dairy Development Policy 2007 • Irrigation Policy 2003 • Agriculture Business Promotion Policy 2006 • Nepal Agriculture Extension Strategy
Most of these policies confirm the government’s market-oriented economic policies, promotion of public-private partnership (PPP), institutional pluralisms, withdrawal of the government’s direct support in terms of subsidies and grants, recognition of the role and the importance of NGOs and community-based organizations (CBOs) in the development processes.
National Seeds Policy 2000: Effective distribution of high quality seeds helps to achieve the target of increased agricultural production. Existing technical activities have not been able to make suitable number of seeds easily available to the farmers. Seeds Act 2045 (1988) and Seeds Rules 2054 (1998) have already been promulgated in order to avail quality seeds to make necessary arrangements for production, processing and testing of seeds. In order to institutionalize the acceptance of key contributions of seeds and to materialize the economic achievement envisaged by the APP, the GoN formulated the National Seeds Policy 2000. It was promulgated on April 3, 2000.
The objectives of the policy are:
• To ensure availability of quality seeds of different crops in required quantities • To produce quality seeds and promote export of quality seeds • To make the seed business effective in view of the demand of the present world market
2 - 4 • To protect the genetic characteristics of indigenous seeds and coordinate with concerned agencies to guarantee patent right
The policy objectives are consistent with the objectives of the APP as well as the requirements of the World Trade Organization (WTO). Specific policies envisaged in the policy include:
• Inclusion of the private sector in a variety of development and conservation efforts, registration and release of variety through a “Seed Board” • Establishment of variety rights and agro-biodiversity conservation and encouragement of joint ventures between the public and private sectors with national and international seed entrepreneurs for the development and production of seeds • Seed multiplication covering the whole gamut of nucleus, pre-basic, basic and foundation seed production; variety maintenance which protects breeders’ rights and production and promotion of export of high value seeds • Quality control with the adoption of a quality declared seed system in addition to seed certification and truthful labeling • Promotion of the private sector in the seed business including the announcement of financial support to cover a part of the cost involved in pledging seeds for loan purposes, concessions on local tax and customs duty, provision of training to private sector entrepreneurs, and provision of facilities to the seed industry in part to the facilities provided to priority industries under the Industrial Development Act, 2038 • Supply of management with the maintenance of buffer stocks to ensure a regular supply of seeds • Institutional strengthening of the National Seed Board and the establishment of a seed quality control office • Development and enhancement of national capability for biotechnology and genetic engineering
National Tea Policy 2000: In order to generate income and employment opportunities and to develop tea as a reliable source of foreign currency by increasing the involvement of the private sector in production, processing and business transactions and by enhancing the possibilities of sustainable and well-managed development available in the country, the GoN promulgated the National Tea Policy, 2057 (2000) in line with the underlying spirit of the National Tea and Coffee Development Board Act, 2049.
The objectives of the policy approved by the government on November 9, 2000 are:
• Qualitative and quantitative increase in tea production by increasing the private sector's involvement in tea cultivation • Encouragement to tea entrepreneurs and farmers • Increase in income and employment opportunities • Promotion of the tea market • Making tea industry sustainable and attractive • Expansion of tea cultivation for protecting the environment • Promotion of institutional development of the tea industry • Fulfillment of domestic demand for tea and increase of foreign exchange through export • Emphasis on study, research and development of technology and human resources for the tea industry
National Fertilizer Policy 2002: In the context of the involvement of the private sector in fertilizer trade since November 1997 and in line with the liberal, open and market-oriented economic policy, the GoN approved the National Fertilizer Policy 2002 on February 28, 2002 to support agriculture production by ensuring the supply of quality fertilizers (production, import and distribution). Effective implementation of the policy is expected to help achieve the APP target on fertilizer use
2 - 5 and contribute to the improvement and enhancement of soil fertility through efficient and balanced use of different types of plant nutrients and the promotion of an integrated plant nutrient system. The overall objective of this policy is to contribute to poverty alleviation through increased agricultural productivity by improving soil fertility. The specific objectives of the policy are:
• To bring policy-wise improvement and manage infrastructure to increase fertilizer use • To promote an integrated plant nutrient system for efficient and balanced use of fertilizers
The four strategies of the policy include (i) ensuring the availability of fertilizers, (ii) making the fertilizer distribution system transparent, competitive and effective, (iii) establishing and strengthening laboratories for effective systems of fertilizer quality testing, and (iv) implementing an integrated plant nutrient system (IPNS) for lessening the negative effects of fertilizers on soil fertility and promoting a balanced use of fertilizers.
The policy is focused on fertilizer trade liberalization and enabling market forces to set sale prices of fertilizers. Nevertheless, the policy endorses the provision of transport subsidies in selected remote districts of Nepal. Of the five survey districts proposed for this study, the Ramechhap district receives transport subsidies for fertilizers under this scheme.
National Coffee Policy 2003: In a bid to make coffee an earner foreign exchange and provider of income generation and employment opportunities by increasing the involvement of the public and private sectors in the production, processing and transaction of coffee, the government has promulgated the National Coffee Policy 2003. The specific objectives of the policy are:
• To substitute import and promote export of coffee • To generate income and employment opportunities to help poverty alleviation • To expand coffee cultivation to help protect the environment • To make coffee cultivation a sustainable and attractive business.
National Dairy Development Policy (NDDP), 2064 (2007/08): The NDDP confirms the government’s commitment to a market economy and commercialization of the agriculture sector. Key objectives of this policy are to: (a) increase the production and productivity of milk in rural areas, (b) expand milk collection, transport management and processing industries by making the production of milk and milk products more commercial and competitive, (c) substitute imports through diversification of milk products on the basis of feasibility of the internal markets and develop milk products as exportable items, and (d) make easy availability of milk and milk products to consumers by improving and regulating the quality of such products.
Focused on making milk production areas more competitive, commercial and qualitative within the participatory framework, this policy encourages the cooperative and private sectors to contribute to employment generation and poverty reduction. Furthermore, when the “Milk Fund” as envisaged by this policy starts operation, it will provide an opportunity for the public, private and cooperative sectors to work jointly in dairy development. The policy proposes to levy a service charge on milk sold by the industry on a per liter basis. The policy requires the dairy industries in the government, cooperative and private sectors to get registered with the National Dairy Development Board (NDDB). The policy was approved by the GoN on September 30, 2007.
Irrigation Policy 2003: Based on the Water Resources Strategy (WRS), 2002, the GoN promulgated the Irrigation Policy 2003 by replacing the previous Irrigation Policy 1997. The WRS is closely linked to the APP and focuses on water resource management. It has identified irrigation as the “largest sub-sector in terms of consumptive use of water”2. It noted that “out of a total cultivated area of 2.64 million ha, approximately 1.10 million ha have irrigation facilities of which
2 WECS, (2002). Water Resources Strategy Nepal. Kathmandu: Water and Energy Commission Secretariat, His Majesty’s Government of Nepal, p. 85.
2 - 6 0.45 million ha have year-round irrigation facilities”. The strategy sets targets for the next five, 10 and 25 years. The strategy has not only recognized the need for the integration of irrigation planning with agricultural development but it also emphasized the need for development of market access to increase the impact of the irrigation. One of the major features of the WRS is its emphasis on farmer participation in the management of irrigation projects and its strategy to gradually transfer management of irrigation projects to users’ groups. Likewise, the GoN has developed the Water Plan 2005 to facilitate WRS implementation.
The objectives of the irrigation policy 2003 are:
• To provide year-round irrigation facilities to land suitable for irrigation by effective utilization of the available and usable water resources of the country • To develop the institutional capability of water users for sustainable management of the existing systems as well as new systems to be developed in future • To enhance knowledge, skills and institutional capabilities of technical human resources, water resources and non-governmental associations/organizations relating to the development of irrigation sector
Key features of this policy are:
• Promotion of the conjunctive use of groundwater and surface water irrigation systems along with the initiation of new and non-conventional irrigation systems such as rain water harvesting, pond, sprinkler, drip, paddle pump and other irrigation systems • Formulation of projects guided by the principles of Integrated Water Resources Management to ensure water availability for all stakeholders, return of investment, investment sharing and self-insurance against natural calamities • Adoption of the participatory management system and increased involvement and investment of the organized users at all stages of project implementation as well as transfer of the responsibility of operation, maintenance and protection of the irrigation systems to the water users’ association • Increasing the roles and responsibilities of local bodies in the course of development and management of irrigation system as per the doctrine of decentralization • Strengthening of the capability of local bodies and users’ associations to ensure their effective participation in the planning, construction and management of small and medium sized irrigation systems • Involvement of the private sector in the construction, operation and management of irrigation systems • Provision for transferring the irrigation systems constructed by the GoN to the users on the basis of work plans, and the possession and ownership of the land and other infrastructures belonging to the transferred system to the users as per the prevailing law • Commitment to introducing the provisions of quantitative measurement in irrigation facilities and monitoring the irrigation effectiveness on the basis of water quantity provided for each crop, irrigated area and increase of production • Selection of projects taking into account social justice, balanced development, environmental balance, crop diversification, professionalism and higher economic output • Assuring that at least 33 percent of the mandatory of the water users’ associations (WUAs) are composed of the women representatives as well as having representatives from dalit, downtrodden and backward ethnic communities in such associations • Management of irrigation, electricity and drinking water projects in proportion to the investment and output utility for the purpose of enhancing the national experience in the construction and management of multipurpose projects • Provision for fixing a minimum irrigation service charge for each crop based on production increase due to the irrigation
2 - 7 • Establishment and operation of an Irrigation Development Fund for the self-sustainability of the development and expansion of irrigation services in the country
Agriculture Business Promotion Policy 2006: Details of the Agriculture Business Promotion Policy 2006 are explained in Section 2.5.1.
Nepal Agriculture Extension Strategy (NAES): Approved by Government of Nepal on 17th January 2007, the Nepal Agriculture Extension Strategy (NAES) envisages contributing to the overriding national poverty reduction goal by increasing the efficiency and productivity of agriculture and competitiveness in the value chain of agricultural system (from production to marketing) within the sustainable livelihoods framework. The Government is of the opinion that the implementation of the extension strategy will make agriculture extension efficient and effective as envisaged in Agriculture Perspective Plan by making it more participatory, and practical, pro-poor and farmer oriented in consistent with present changed context along with the spirit of the Poverty Reduction Strategy Paper.
The objectives of the NAES are to:
• enhance capacity of farmers and agricultural extension agencies for participatory livelihoods analyses and undertake strategic actions focused on (i) improvements in capital assets (ii) reduction of risks and (iii) transformation of structures and processes
• emphasize the following through partnership and synergistic pluralism among different partners and agencies (i) pro-poor service delivery (ii) transformation of the subsistence agriculture toward commercialization and (iii) increase of capacity for commercialized agriculture;
• enhance commercialization of agriculture by promoting the production of appropriate raw materials for agricultural and livestock based industries and the establishment and operation of environment friendly agro-based industries.
• keep the frontline extension workers active, encouraged and disciplined by constantly updating them on (i) technical knowledge and skills, and (ii) social skills
The NAES includes several innovative ideas emphasizing on participatory and decentralized extension together with institutional pluralism, cluster approach, group federation and corporatization, use of local resource persons, use of information technology, and strengthened coordination. The thrusts in the new extension strategy are on income generation, food security, environment conservation and biodiversity utilization, equity and inclusion, value addition and quality products, commercialization, and sustainable livelihoods.
Acts, Rules and Legislations
The GoN has implemented several acts and legislations in agriculture development. However, they have been promulgated to address specific problems and constraints. None are focused on the overall management of the agricultural development programs. Table 2.4 below lists them with their respective purposes.
2 - 8 Table 2.4 Major Acts, Rules and Legislations
S. N. Act/Rule/Legislation Purpose 1 Plant Protection Act 2007 Promulgated to prevent and control expansion of incoming of epidemic, infectious or communicable diseases and exporting or importing of plant and plant products. 2 Kalimati Fruits and Vegetables Issued to manage, preserve, operate and maintain physical infrastructure Market Development Committee for marketing of fruits and vegetables in Kalimati Market, Kathmandu. (Composition) Order, 2058 Promulgated under Development Committee Act 1956 (2002) 3 Chemical Fertilizer (Control) Issued to regulate the production, import and sales of chemical fertilizer in Order, 2055 (1999) the country. Promulgated under Essential Commodities Control Act 1960. 4 Slaughter House and Meat Promulgated to establish slaughter houses and make provisions for meat Inspection Act, 1999 inspection for maintaining meat quality by preventing adulteration and quality deterioration of meat and meat products in view of public health. 5 Livestock Health and Livestock Promulgated to effectively manage production, sale, export and import of Services Act, 1998 livestock, livestock products and livestock production inputs in view of the importance of livestock sector in the national economy and nutrition support to human beings. 6 National Tea and Coffee Promulgated to establish the National Tea and Coffee Development Board Development Board Act, 1993 and make provisions for its operation for a planned development of the tea and coffee industry, harmonization in the cultivation and processing of tea and coffee, production of high quality tea and coffee using modern technology, market management and framing a policy to promote export/import of tea and coffee. 7 National Dairy Development Promulgated to establish the National Dairy Development Board for Board Act 1992 maintaining public health facilities by increasing milk production in the country in a participatory way through the harmonious milk production program of the public and private sectors. 8 Cooperatives Act 1992 Promulgated to manage the formation and operation of various types of Cooperatives Rules 1993 cooperatives for the economic and social uplifting of farmers, masons, the resource poor, laborers, the landless, the unemployed and social workers. 9 National Cooperatives Promulgated to establish the National Cooperatives Development Board Development Board Act 1992 and make provision for its operation for promoting and supporting development of various types of cooperatives/associations by ameliorating the socio-economic status of low-income people by way of mutual cooperation and cooperatives. 10 Pesticides Act 1991 Promulgated to regulate the import, export, production, sale, purchase and Pesticides Rules 1994 use of pesticides against pests and diseases in seeds, plants, trees, animals, birds, etc. The pesticides Rules have made detailed provisions on the requirements for application to the pesticide registrar. 11 Seeds Act 1988 Promulgated to serve the economic interest of the general public by Seeds Rules 1998 systematizing the production, processing and testing of seeds and to avail quality seeds of different crops. 12 Food Act 1966 Promulgated to make legal provision for maintaining food quality and to prevent undesirable adulteration and/or extraction of/reduction in the inherent quality of food items in view of public health.
Although not directly related to the agriculture sector, the Local Self Governance Act (LSGA, 1999) is concerned with service delivery in the agriculture sector. While the purpose of this Act is to strengthen the decentralized governance system in Nepal and involve district people in the development of their districts through the establishment of the DDCs and VDCs, this act is specifically important to the agriculture sector. Under this act, the government has devolved agricultural extension and livestock services to the local bodies, and district level agricultural programs and budgets are now to be approved by the District Council prior to the GoN. The DDCs have been given some authority even to the extent that they can change the budget heading within certain limits. The Local Development Officer, the Member Secretary of the DDC is the immediate supervisor of the chief of the concerned DADOs and the DLSOs. The Act has gone so far that it has authorized the DDCs to establish their own Agriculture and Livestock Sections subject to the fulfillment of the conditions set by this act. However, to this date, none of the districts have established district agriculture and livestock offices of their own.
2 - 9 Development of Cooperatives and the Government’s Policy on Cooperatives
The cooperative program that follows the globally recognized cooperative principles and values was started in Nepal in 1956 through the establishment of 13 credit cooperatives in the Rapti Valley of the Chitwan district. However, it was led by the government and focused mainly on distributing agricultural inputs such as seeds and fertilizers.
Following the restoration of the multiparty democratic system in 1990, the GoN promulgated the Cooperative Act in 1992 repealing the previous Act. The Cooperatives Act provides for organization of primary cooperatives, co-operative unions, district cooperative unions, federations of similar cooperatives and national cooperative federations. The minimum number of members required to register a primary cooperative is 25. Similarly, the minimum number of primary cooperatives dealing with the same subject may form a Cooperative Union. If five primary cooperatives, Cooperative Unions or a combination thereof wish they could form a District Cooperative Union. Either 25 primary cooperatives or five Cooperative Unions dealing with the same subject could form a Central Cooperative Union. Fifteen Cooperative Unions, District Cooperative Unions, Central Cooperative Union or a combination thereof could form a National Cooperative Federation.
Although this Act is not free from criticisms and limitations, it is credited for providing a liberal and democratic framework for cooperative societies. The previous Act restricted public initiatives to promote cooperatives. The new Act shifted the status of the cooperatives from government led institutions to independent and autonomous institutions. With the increase in their number, cooperatives have diversified their involvement in enterprises in areas including dairy, tea, coffee, fruits and vegetables, herbs, agricultural product marketing, inputs supply, consumer goods, savings and credit, health, and non-timber forest products.
As a result of the adoption of the financial liberalization policy by the GoN in the 1990s, the growth of savings and credit cooperatives (SCCs) has been phenomenal. People have been so encouraged to establish and operate SCCs that some vanished within a very short period of time partly due to their internal mismanagement and partly because of the government’s failure to guide, monitor and supervise them in a timely manner due to the lack of its capacity. Yet SCCs have dominated Nepal’s cooperatives sector. Out of 7,856 cooperatives in non-agricultural sectors, 4,432 (56.4%) are SCC type. According to data provided by the Department of Cooperatives (DOC), nearly 1.8 million people (nearly 7% of the total population) are currently members of one or more cooperative societies as of April 2008. Of these, nearly one-third are women. Table 2.5 shows the status of cooperatives in Nepal by number and type. In terms of numbers, SCCs are followed by milk cooperatives (45.3%) and agricultural cooperatives (43.4%).
Table 2.5 Capital and Income of Cooperatives in Nepal
Type of No of No. of Members Capital Income S.N. Cooperatives Cooperatives Male Female Total (Rs in '000) (Rs in '000) Agricultural 3,446 (30.5) 305,559 120,075 425,634 245,263 1,126,358 1 Milk 1,561 (45.3) 67,583 26,409 93,992 49,096 425,908 2 Agriculture 1,497 (43.4) 224,684 87,190 311,874 173,803 691,474 3 Vegetables and Fruits 116 (3.4)4,458 3,301 7,759 2,673 2,734 4 Consumers 103 (3.0) 4,852 1,211 6,063 10,803 3,223 5 Coffee 69 (2.0) 1,223 721 1,944 614 1,615 6 Tea 39 (1.1) 1,016 638 1,654 5,677 256 7 Herbs 33 (1.0) 1,129 299 1,428 2,190 1,051 8 Bee-keeping 28 (0.8) 614 306 920 407 97 Non-agricultural 7,856 (69.5) 877,090 488,735 1,365,825 3,392,754 3,296,002 9 Electricity 254 (3.2) 13,344 2445 15,789 6,462 11,832 10 Other 245 (3.1) 24,468 30,404 54,872 68,855 29,406 11 Saving and credit 4,432 (56.4) 386,167 300,286 686,453 1,932,163 2,070,321
2 - 10 12 Multi-purpose 2,808 (35.7) 443,249 154,063 597,312 1,229,011 539,575 13 Transport and Communication 76 (1.0)6,145 1,139 7,284 47,442 638,663 14 Health 41 (0.5) 3,717 398 4,115 108,821 6,205 11,302 1,182,649 608,810 1,791,459 3,638,017 4,422,360 Total (100) (66.0) (34.0) (100) Note: Figures in parentheses denote percentage Source: Statistical Profile of Cooperatives in Nepal, 2008. DOC.
The MOAC has been implementing cooperative irrigation schemes for the last few years. Likewise, the GoN has recently released the following policies and programs which will be implemented through the cooperatives.
• Operation and Investment By-laws for Cooperatives, 2009 • Guidelines for the Operation of Cooperative Consumer Shops, 2009 • Guidelines for Cooperative Farming, 2009
Formulation of the aforementioned strategies suggests the government’s strong determination to further develop and strengthen the cooperative movement in Nepal. Although the government has not yet promulgated the cooperative policy, the present TYIP devotes a separate chapter for the cooperative sector to recognize its role in the national economy. Earlier periodic plans included cooperatives as a sub-sector of agriculture. It reveals the government’s plan of not confining cooperatives to within the agricultural sector only. The TYIP has emphasized that the government will strengthen the partnership between the public, private and cooperative sectors to achieve inclusive economic growth in the country. The key features of the cooperative development strategies as depicted in the TYIP are:
• Focus on creating a conducive environment for the establishment of cooperatives based on value, respect and principles of cooperatives • Formulation and implementation of the National Cooperative Policy to expedite the cooperative movement in accordance with its fundamental principles, value and respect • Development of necessary legislations and institutional arrangements for regulations, promotion and development by encouraging cooperatives • Emphasis on mobilizing cooperatives in the construction, local development, social services, and marketing of agriculture and consumer goods carried out by the government • Focus on providing a the coordinator role to the cooperatives for rural development and developing cooperatives as a powerful institution/medium for micro-enterprises, agriculture related production, processing and marketing management
Last but not least, the TYIP has even outlined the need for establishing a Ministry for Cooperatives. Although this is yet to be realized, it reveals the government’s firm commitment to and conviction in the cooperative movement.
The key highlights of the Cooperative Farming Guideline 2009 recently approved by the GoN are:
• Focus on the small scale farmers to enable them to organize into cooperative farming within the concept of “Cooperatives in Village to Village and Food Stores in House to House for Increasing Agricultural Productivity” • Target on Dalits and the socially deprived and poor such as Janajatis (ethnic castes), women, free bonded laborers and the landless poor, for them to farm in a portion of community forests, freed tenant areas, new plantation areas and barren lands under electricity lines, based on feasibilities in such a way that it will not permit encroachment of such lands • Policy defined cooperative farming carried out through cooperative societies registered under the Cooperative Act for the production of agricultural products in lands that are under the
2 - 11 ownership of the GoN, lands under the ownership or control of the local bodies or lands being used publicly or farmed for the purpose of receiving outputs (benefits) based on the proportion of labor and land • Members of the cooperative societies being permitted to pool private land voluntarily either individually or in groups and operate cooperative farming, and provision of receiving outputs based on the proportion of the land and labor contributed • Focus on the supply of agricultural inputs and production, marketing (sale and procurement), and storage of agricultural products through cooperatives • Constitution of a high level committee for the purpose of facilitating cooperative farming and inter-ministerial coordination and policy directives under the chairmanship of a State/Cabinet level minister of the MOAC with secretary level representation of other related ministries such as Land Reform and Management, Forest and Soil Conservation, Local Development etc • Provision of District Land Management Committee under the coordination of a Chief District Officer of the District Administration Office for availing land to the cooperative societies for cooperative farming • Provision of financial assistance and support to cooperative farming based on approved norms/criteria within an approved budget established by the targeted groups (the poor and socially, deprived, freed bonded laborers etc.)
2.3.2 Government Commitment
During the TYIP period (2007/08 -2009/10), the GoN has committed to investing Rs.15 billion in the agricultural sector as shown below in Table 2.6. Apart from this, it expects the private sector to invest nearly Rs.30 billion over the same period. Thus, the approximate investment in the agriculture sector is expected to reach around Rs. 45 billion over the TYIP period.
Table 2.6: Proposed Estimates of Public Sector Investment during TYIP Period (Corporate) (At fixed price of fiscal year 2006/07) (Rs. in 10 million) S. N. Program Total 1. Agriculture Research Institutional Reforms and Strengthening (Nepal Agriculture Research 151.06 Council) 2. Crops, Horticulture and Fisheries Development, Integrated Crops Management System, Market 591.69 Development and Business Promotion (Department of Agriculture) 3. Livestock Development, Strengthening of Animal Health, Market Development and Business 523.19 Promotion (Department of Livestock Services) 4. Food Health, Quality Control, Food Technology and Nutrition (Department of Food Technology 46.49 and Quality Control) 5. Ministry (including Board, Corporation, Committee, APP) 198.55 6. Establishment of Deemed University 0.70 Total 1,511.68 Source: TYIP, National Planning Commission.
Distribution of the above investment along different sub-sectors is shown below in Table2.7.
Table 2.7 Proposed Public Sector Investment by Objective during TYIP Period (At fixed price of fiscal year 2006/07) (Rs. in 10 million) S. N. Objective/Program Total 1. Increasing Production and Productivity of Agriculture and Livestock Products 1,070.19 2. Food Security 73.60 3. Commercial and Competitive Farming System 265.45 4. Increasing Employment Opportunities 22.00 5. Agriculture Bio-diversity Conservation 6.60 6. Institutional Support Services 73.14 7. Establishment of Deemed University 0.70 Total 1,511.68 Source: TYIP, NPC
Among the donors, in agriculture support, the ADB/M is the dominant donor, providing assistance
2 - 12 through both program and non-program loan which is followed by the World Bank, JICA and the Swiss Agency for Development and Cooperation (SDC). In 2007/08, the government had approved Rs.4,176,853,000 of which about 65 percent (Rs. 2,721,361,000) was provided by the Government and the remaining 35 percent (Rs 1,455,492,000) was committed through donor sources (loan and grant assistance). At present, the following projects are being implemented through external assistance in the agriculture sector as indicated in Table 2.8.
Table 2.8 Key Donor Projects in the Agriculture Sector
Amount Funding Project Title ($ million) Source Grant Loan ADB Community Livestock Development (2003-2010) - 20.0 Decentralized Rural Infrastructure and Livelihoods (2004-2011) - 35.0 Community-Managed Irrigated Agriculture Sector (2004-2012) - 20.0 Commercial Agriculture Development (2006-2013) 18.00 - Improving the Livelihoods of Poor Farmers and Disadvantaged Groups in the 1.00 - Eastern Development Region (2006-2010) Rural Reconstruction and Rehabilitation Sector Development Project (2008-11) 50.0 - IFAD Leasehold Forestry and Livestock Program - 10.49 JICA Kennedy Round 2 Grant Program NA - Improvement and Promotion of Tea Technology 10.00 - Himalayan Tea Technology and Extension Program 0.33 Production and Processing of Seed Cocoon NA SDC Sustainable Soil Management Phase 3 (2008-2010) 1.20 - Coffee Promotion Project (2003-2009) NA* - World Bank Irrigation and Water Resources Management (2007-2013) - 50.0 14.0** Nepal Food Crisis Response Program (2008-2011) 21.7 Road Access Improvement and Decentralization Project (2005-2010) 44.04 * Supplemental, ** About CHF 300,000 per year.
2.3.3 Institutional Structure / Arrangement of Agricultural Development in Nepal
The institutional framework of the agricultural sector consists of (i) public sector institutions that are responsible for agricultural policy formulation and planning, agricultural policy and plan implementation, agricultural research, and rural finance; (ii) the non-governmental sector including a large number of NGOs and CBOs that are engaged in a wide range of rural development and agriculture service delivery activities and (iii) the private sector including mainly producers, processors and marketing associations.
In the public sector, the MOAC is the principal institution responsible for policymaking and planning activities for the agricultural sector. Within the MOAC the Secretary is assisted by five Joint Secretaries in-charge of Planning, Monitoring and Evaluation; Gender Equity and Environment; Agribusiness Promotion and Statistics; and Administration divisions.
The MOAC is organized into:
Four departments [Department of Agriculture (DOA), Department of Livestock Services (DLS), Department of Cooperatives (DOC) and Department of Food Technology and Quality Control (DFTQC)]; Three department level central organizations [Agriculture Information and Communication Center (AICC), National Agriculture Research and Development Fund (NARDF) and Seed Quality Control Center (SQCC)]; Two councils [Nepal Agriculture Research Council (NARC) and Nepal Veterinary Research Council (NVRC)]; Three boards [National Dairy Development Board (NDDB), National Cooperative Development Board (NCDB) and National Tea and Coffee Development Board (NTCDB)]
2 - 13 Three companies [Agricultural Inputs Company Ltd (AICL), National Seeds Company Ltd. (NSCL) and Dairy Development Corporation Nepal (DDCN)] and Five committees (Cotton Development Committee, National Seeds Committee, Kalimati Fruits and Vegetables Market Development Committee; Animal Feed Production Committee and Chandradangi Dairy Development and Seed Committee).
The aforementioned organizations are further organized into regional directorates, laboratories, centers, training centers and district offices as shown in Annex 2.1.
Regional offices generally have supervisory technical backstopping roles and the district offices are responsible for implementing programs and activities in the district. Table 2.9 below shows a list of institutions classified according to type and the roles they perform in the agricultural sector.
At the district level agriculture and livestock services are provided by government staff assigned to the DADO and DLSO. Field staffs are posted to Service Centers (SCs) and Sub-Service Centers (SSCs) from where they deliver services and some technology demonstration inputs to farmers. Services are provided free of cost. The DADO and DLSO each have –three to five SCs and a few SSCs. Annex 2.2 presents the roles and responsibilities of different agencies working under the direct command of the MOAC.
Table 2.9 Agriculture Sector Institutions by Type and Function
NGOs and Function/Type Public Sector Semi-Government Private Sector Policymaking, coordination, National National FNCCI, formulation of legislations NPC, MOAC, MWR, NDDB, NARC, Agri Enterprise Center (AEC), MLD, NTCDB, NCDB, commodity associations Local: DDC Program implementation, DOA, DLS, DOC, NDDB, National Seeds administration, DFTQC, NARDF, Committee, NCDB, regulation Local: DDC NARC Technology DOA , DLS, NARI, NASRI, IAAS INGOs, NGOs, (research & extension) DFTQC, NARDF input suppliers Training DOA, DLS IAAS, INGOs, NGOs, DOF, DOI, NCDTC CTEVT private training institutions
Irrigation DOI, DDC, DADO WUAs, agriculture cooperatives, INGOs, NGOs Rural and agricultural road DOLIDAR, DDC, - INGOs, NGOs, CBOs private VDC contractors Rural credit NRB Grameen Banks, Commercial banks, CDB Development banks, INGOs, NGOs, cooperatives, Grameen banks Input supplies DOA, DLS, AICL, NSCL, ALI, Private sector DOF AFPDB (agrovets, commercial suppliers) Production CDC Private sector (mall, medium and large scale) Processing DDCN, AFPDB, CDC, Private sector (small, medium TCN, NRTC, HPPCL and large scale) Marketing outputs NFC Private sector (small, medium and large scale) Note: For abbreviations see page on abbreviations and acronyms.
2 - 14 2.4 Agriculture Production
2.4.1 Diversity of Crops by Physiography and Agro-climatic Conditions
With an area of 147,181sq.km, Nepal is a country of enormous geographical diversity, and is situated in the southern slopes of the central Himalayas. Sandwiched between India on three sides - east, west, and south – and China to the north, Nepal is a land-locked country (CBS, 2003). Nepal is richly endowed with crop diversities. Apart from cereals and cash crops, fruits, vegetables, spices, herbs and other location specific minor crops are grown.
Physiographically, Nepal is broadly divided into five roughly parallel east-west regions (ecological belts), which from north to south are known as High Mountain, Mountain, Hill, Siwalik and Tarai. Map 2.1 shows the map of Nepal. Farming systems in these five regions vary considerably. Although Nepal has five physiographic regions, they are generally characterized into three levels namely, Mountain, Hill and Tarai where Mountain includes high Mountain and Mountain, and Tarai includes Tarai and Siwalik. Therefore, this report too has described the diversity of crops and agro-climatic regions in these three categories of Mountain, Hill and Tarai. Government planning and statistics also follow this characterization.
With altitude ranging from less than 100 m in Tarai to 8,848 m in High Mountain, there exist different climates and different types of farming systems within Nepal. As a result of these diversities, a wide variety of crops, vegetables and fruits are produced. More than 90 percent of the SRC falls in the Hilly region.
Source: Nepal Atlas and Statistics, 2008
Map 2.1 Different Physiographic Regions of Nepal with Major Cities
Cereals represent more than 75 percent of the total crops in Nepal followed by vegetables and fruits. Generally, Tarai is known as the food basket of Nepal and so it is the principal area for cereal crop production. Likewise, hill and mountainous regions are appropriate for horticulture crops (fruits and vegetables) and the mountainous region for livestock. Yet climate has so endowed to Nepal that different types of fruits and vegetables can be grown in Tarai, Hills and Mountains. Likewise, in year-round irrigated areas in Tarai and some valley and river basins of the Hill region, it is
2 - 15 possible to grow two crops of rice a year. Table 2.10 below shows major crops grown in the different physiographic regions of Nepal.
Table 2.10 Major Crops Grown in Different Physiographic Regions of Nepal
Crops/ Tarai Hill Mountain Commodities (Major) Cereals Rice, Wheat, Maize Rice, Wheat, Maize Barley Barley, Maize, Naked Barley, Fox tail millet, Hog millet, Buckwheat Pulses Arahar, Horse Gram, Lentil, Black gram, Pea Beans Chickpea Oilseeds Mustard Mustard - Cash crops Potato, Sugarcane, Jute, Potato Potato Tobacco Beverages Tea Tea, Coffee - Vegetables Cauliflower, Tomato, Cauliflower, Cabbage, Cauliflower, Cabbage, Brinjal, Lady’s Finger, Cucurbits, Tomato green leafy vegetables Cucurbits etc. Fruits Mango, Lychee, Areca Nut, Citrus (Orange and Sweet Apple, Pear, Walnut, Coconut, Lime, Orange), Grapes, Guava, Almond Watermelon, Banana, Jack Pear, Pomegranate, Pomelo, (temperate fruits) fruit, Pomegranate Persimmon, Peach etc (tropical/sub-tropical fruits) (sub-tropical and temperate fruits)
2.4.2 Tenancy and Land Holding Size
Land distribution in Nepal is highly skewed. More than two-thirds of the total land holdings have less than one ha of land and they represent only 30 percent of the total farm area. The average size of land holding in this category is only 0.42 ha. On the other hand, 1.5 percent of the holdings in the over 5 ha landholding class possesses 14 percent of the total farm area. Land tenure data indicate that farm size is larger in the Tarai (1.29 ha) than in the Hill (0.77 ha) or Mountains (0.66 ha).
Table 2.11 shows cultivated land based on the Sample Census of Agriculture conducted in 2001. The next survey will be carried out in 2011. Therefore, this is the latest available status.
Table 2.11 Status of Cultivated Land, 2001
Details 2001 Remark Arable land area 2.65 million ha 57.5% increase compared to 1961 status Number of ag. holdings 3.36 million 118.5% increase compared to 1961 status Average holding size 0.80 ha 27% decrease compared to 1961 status Source: CBS Statistical Year Book 2007
Table 2.12 shows farm size and distribution of cultivated landholdings in Nepal for the Year 2001. This reveals that more than 70 percent of the total holdings and about 40 percent of the total area are less than one ha.
2 - 16
Table 2.12 Farm Size and Distribution of Cultivated Landholdings in Nepal, 2001
Percent of Percent of Average Holding Category Total Holding Total Area Size in Hectare Less than 0.5 ha 47.7 14.7 0.24 0.5 - 1 ha 27.2 24.2 0.70 1.0 - 2.0 ha 17.5 29.8 1.61 2.0 - 3 ha 4.7 14 2.36 3 - 5 ha 2.15 10 3.69 Above 5 ha 0.75 7.3 7.64 Total 100 100 0.8 Source: CBS, 2002
The information presented in the above table reveals that land is increasingly being fragmented in Nepal. This poses significant challenges for achieving food security, improving livelihoods, commercialization of agriculture and resource sustainability.
In Nepal, the concentration index for agricultural land is 0.54, suggesting highly uneven distribution of farm land. The bottom 44 percent of agricultural households operate only 14 percent of the total agricultural land area, while the top 5 percent occupy 27 percent (Table 2.13).
Table 2.13 Size Distribution of Land Ownership by Household and Region (in percent) Region/holding Land Area 0-0.5 ha 0.5-3.0 ha >3.0 ha Mountains 39.3 (13.8) 54.5 (56.7) 8.5 (36.7) Hills 48.4 (15.9) 50.2 (68.8) 2.1 (15.3) Tarai 43.1 (21.1) 45.3 (65.9) 1.6 (13.0) Nepal 43.8 (14.3) 51.5 (59.0) 4.7 (26.5) Source: CBS, 2002 Note: Figure in parenthesis is proportion of farm land.
Land Tenancy: The dominant type of land entitlement in Nepal is owner-tiller. About 85 percent of the operated land is owner-operated and the remaining 15 percent is rented in Table 2.14.
Table 2.14 Size Distribution of Agricultural Land Ownership by Household and Region
Region/ Percent of Total Operated Land Percent of Total Owned Land Operation Owner operated Rented-in Owner operated Rented-out Mountains 89.4 10.6 97.0 3.0 Hills 89.1 10.9 95.9 4.1 Tarai 80.1 19.9 90.0 10.0 Nepal 84.7 15.3 93.2 6.8 Source: CBS, 2002
Amongst the agricultural households, 93.2 percent operate their own land, whereas 6.8 percent also rent-out part of their land. About 29 percent of the households work on rented land along with their own land. About 5 percent of the households work on rented land only.
2.4.3 Agriculture Production Situation
Cultivated land: Table 2.15 shows the distribution of cultivated land by ecological zones. Most of the cultivated land is located in the Tarai (65% of total cultivated land in Nepal) and very little in the Mountain (5.9%).
2 - 17 Table 2.15 Status of Cultivated Land in Nepal
Agro-ecological Zone (AEZ) Cultivated Land (Nepal) Total Land, Cultivated Land (ha) (sq km) as % of Total Land Mountain 304,059 51,817 5.87 Hill 1,639,196 61,345 26.72 Tarai 2,215,316 34,010 65.12 Total 4,158,571 147,181 28.25 Source: SINAS, MOAC 2008.
Area and Production of Key Crops and Commodities
Cereals: Paddy is the most important cereal crop in Nepal. It contributes nearly 20 percent to the agricultural GDP and provides more than 50 percent of the total caloric requirement of the Nepalese people. Of the total area under cereal crops, rice is the dominant crop covering more than 43 percent of the total area followed by maize (26 percent) and wheat (21 percent). This shows that the three crops represent more than 90 percent of the cereal crops area. In terms of physiographic share, rice crop dominated in Tarai with a 70 percent share and millet dominated in the Hill (70.5 percent). Share of the five key cereal crops in terms of area cropped is shown in Table 2.16.
Table 2.16 Total Area under Cereal Crops and Their Shares by Physiographic Region, 2007/083
Total Area Share in Total Area (%) Crop Total (%) (ha) Mountain Hill Tarai Paddy 1,549,262 4.33 25.54 70.13 100 Maize 870,166 10.14 70.52 19.34 100 Millet 265,496 20.05 75.50 4.45 100 Wheat 706,481 7.57 35.04 57.39 100 Barley 26,106 45.24 51.08 3.68 100 Source: SINAS, MOAC 2008.
Paddy dominated the cultivation area as well as production. Paddy crop contributed to more than 50 percent of the total cereal crop production. But it was followed by maize (24.8 percent), wheat (20.6 percent), millets (3.9 percent) and barley (0.4 percent). This reveals the importance of maize to the people living in the hilly region. Table 2.17 shows the share in the production of different food crops by physiographic regions.
Table 2.17 Production of Major Cereal Crops and their Shares by Physiographic Region, 2007/08
Crop Total Production Yield Share in Production (%) Total (MT) (kg/ha) Mountain Hill Tarai Paddy 4,299,246 2,775 3.26 25.37 71.36 100 Maize 1,878,648 2,159 8.99 69.95 21.06 100 Millets 291,098 1,096 18.75 77.09 4.16 100 Wheat 1,572,065 2,225 5.35 28.83 65.82 100 Barley 28,082 1,076 44.77 51.14 4.09 100 Source: SINAS, MOAC 2008.
Table 2.18 presents the area, production and yield of major cereal crops between 2003/04 and 2007/08. Figure 2.1 shows that the yield of all five key cereal crops was almost constant between 2003/04 and 2007/08.
3 This has been estimated based on 2006/07 production statistics and the trend presented here will remain valid and may not change in the foreseeable future.
2 - 18 Table 2.18 Area, Production and Yields of Major Cereal Crops (Area in ha, Production in MT and Yield in kg/ha) Paddy Maize Millet Year Area Production Yield Area Production Yield Area Production Yield 2003/04 1,559,436 4,455,722 2,857 834,285 1,590,097 1,906 259,597 283,378 1,096 2004/05 1,541,729 4,289,827 2,782 849,892 1,716,042 2,019 258,839 289,838 1,120 2005/06 1,549,447 4,209,279 2,717 850,947 1,734,417 2,038 261,673 290,936 1,112 2006/07 1,439,525 3,680,838 2,557 870,401 1,819,925 2,091 265,160 284,813 1,074 2007/08 1,549,262 4,299,246 2,775 870,166 1,878,648 2,159 265,496 291,098 1,096 Average 1,527,880 4,186,982 2,738 855,138 1,747,825 2,042 262,153 288,012 1,099 Growth Rate -0.8 -2.2 -1.4 1.1 3.9 2.8 0.7 0.4 -0.4 Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
Wheat Barley Total Cereal Crops Year Area Production Yield Area Production Yield Area Production Yield 2003/04 664,589 1,387,191 2,087 27,467 28,151 1,091 3,345,374 7,744,539 2,255 2004/05 675,807 1,442,442 2,134 26,428 29,341 1,110 3,352,695 7,767,490 2,317 2005/06 672,040 1,394,126 2,074 26,227 27,786 1,059 3,360,334 7,656,544 2,279 2006/07 702,664 1,515,139 2,156 26,580 28,293 1,064 3,304,330 7,329,008 2,218 2007/08 706,481 1,572,065 2,225 26,106 28,082 1,076 3,417,511 8,069,139 2,361 Average 684,316 1,462,193 2,135 26,562 28,331 1,080 3,356,049 7,713,344 2,286 Growth -1.0 -0.4 -0.7 0.3 0.3 0.4 Rate 1.6 3.0 1.4
3.0
2.5 2.0 1.5 Yield Yield 1.0 0.5 0.0 2003/04 2004/05 2005/06 2006/07 2007/08 Year Paddy Maize Millet Wheat Barley
Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
Figure 2.1 Yields of Major Cereal Crops between 2003/04 and 2007/08
Cash crops: Areas under major cash crops as percentages of total cultivated area and their yield between 2003/04 and 2007/08 are shown in Table 2.19 below. This shows that in terms of area oilseed is followed by potato but in terms of production, potato is at the top followed by sugarcane (Table 2.20).
Table 2.19 Area under Major Cash Crops as Percentage of Total Cultivated Area and Yield
% of Cultivated Land Yield (kg/ha) Year Oilseed Potato Sugarcane Jute Oilseed Potato Sugarcane Jute 2003/04 6.0 4.6 1.9 0.4 711 11,490 38,794 1,433 2004/05 6.1 4.7 1.9 0.4 756 11,846 40,217 1,452 2005/06 6.1 4.9 2.0 0.4 741 13,090 39,682 1,428 2006/07 6.0 5.0 2.1 0.4 736 12,657 40,610 1,434 2007/08 5.8 5.1 2.0 0.4 745 13,110 39,475 1,466 Growth Rate -0.1 3.1 1.9 -0.8 1.9 4.3 1.2 1.8
2 - 19 Table 2.20 Area, Production and Yields of Vegetables and Fruits
Vegetables Fruits Year Area Production Yield Productive Production Yield Area (ha) (MT) (MT/ha) Area (ha) (MT) (MT/ha) 2003/04 172,586 1,890,100 11.0 86,707 54,112 511,397 9.50 2004/05 180,823 2,065,193 11.4 89,312 55,348 552,879 9.99 2005/06 189,832 2,190,100 11.5 91,923 56,548 535,449 9.47 2006/07 191,922 2,298,689 12.0 94,901 57,595 575,095 9.47 2007/08 208,108 2,538,904 12.2 100,099 63,432 630,563 9.94 Average 188,654 2,196,597 11.6 92,588 57,407 561,077 9.77 Growth Rate 4.35 6.97 2.58 3.50 3.64 4.64 0.37 Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
The aforementioned table shows that that there has been an increase in area and production of both fruits and vegetables in Nepal over the last five years. However, this has happened mostly as a result of increase in area. Productivity has increased as shown below in Figure 2.2 but only slightly.
13.0
12.0
11.0
Yield 10.0
9.0
8.0 2003/04 2004/05 2005/06 2006/07 2007/08 Year vegetable Fruits
Source: Study Team based on Table 2.20
Figure 2.2 Yields of Vegetables and Fruits between 2003/04 and 2007/08
Vegetables and fruits: Vegetables and fruits are important parts of the APP. The APP’s priority to vegetables and fruits as high value crops together with the four priority inputs (fertilizers, irrigation, technology and agricultural roads) has contributed to significant performance of this sector. Performance of fruits and vegetables in terms of area and production has been substantial over the last five years.
Livestock products: The production of milk and meat has increased at the rate of 3 percent and 2.9 percent, respectively between 2003/04 to 2007/08 as shown in Table 2.21.
Table 2.21 Milk and Meat Production
Milk Production, MT Meat (Net) Production Year Mutton Total Cow Buffalo Total Buffalo Goat Pig Chicken Duck (Sheep) 2003/04 1,231,853 368,531 863,322 208,412 133,600 2,779 40,540 15,389 15,881 223 2004/05 1,274,228 379,637 894,591 214,817 138,953 2,744 41,698 15,724 15,461 237 2005/06 1,312,140 385,290 926,850 219,205 142,040 2,737 42,820 15,773 15,605 230 2006/07 1,351,394 392,791 958,603 227,105 147,031 2,747 44,933 16,035 16,126 233 2007/08 1,388,730 400,950 987,780 233,897 151,690 2,733 46,188 16,425 16,632 229 Average 1,311,669 385,440 926,229 220,687 142,663 2,748 43,236 15,869 15,941 230 Growth Rate 2.98 2.02 3.38 2.87 3.10 -0.32 3.36 1.50 1.36 0.35 (%) Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
2 - 20
Cost of production: Cost of production data is poorly maintained and only for a few commodities is available at the national level. Table 2.22 presents cost of production of cereals. Despite the high cost of production in paddy, the net profit is high i (Rs 32,764), followed by wheat (Rs 14,792) and maize (Rs 10,822).
Table 2.22 Average Cost of Production per Hectare of Major Cereal Crops (2007/08)
Cost (Rs/ha) Gross Income (Rs/ha) Net Profit Crop Fixed Variable Total Main Product By-Product Total (Rs) Paddy 236 24,447.79 24,683.79 53,125.10 4,322.76 57447.86 32,764.07 Wheat 229 22,526.94 22,755.94 34,093.85 3,445.00 37,538.85 14,782.91 Maize 218 17,394.66 17,612.66 27,136.20 1,299.20 28435.40 10,822.74 (Source: MOAC: Market Research and Statistics Management Program, 2065)
Table 2.23 presents the average cost of production of vegetables by commodity. Net profit is highest in garlic, followed by potato and pea.
Table 2.23 Average Cost of Production per Hectare of Major Vegetable Crops (2007/08)
Total Cost (Rs/ha) Gross Income (Rs/ha) Net Profit Crop Fixed Variable Total Main Product By-Product Total (Rs/ha) Tomato 256 69,132.8 69,388.8 183,073.8 - 183,073.8 113,685.0 Potato 247 119,848.7 120,095.7 310,319.2 - 310,319.2 190,223.5 Onion 286 42,968.0 43,254.0 178,776.0 546.2 179,322.2 136,068.3 Cauliflower 245 59,329.1 59,574.1 175,511.7 - 175,511.7 115,937.7 Garlic 320 93,408.3 93,728.3 660,066.0 1970 662,036.0 568,307.8 Pea 256 36,701.4 36,957.4 191,981.9 - 191,981.8 155,024.5 (Source: MOAC: Market Research and Statistics Management Program, 2065)
2.4.4 Identification of Pocket Production Area of Horticulture Crops and Dairy/Meat Farming
Pocket package strategy (PPS) guidelines approved by the GoN as a part of packages of strategies for the implementation of APP provide mechanisms and processes for the identification of production pocket areas. As such the GoN has given high priority to horticultural crops and livestock as both of these are two priority outputs of the APP. The criteria for the identification of production pocket areas are given below (Table 2.24).
Table 2.24 Criteria for the Identification of Pocket Areas
S. N. Type Criteria 1 Crop production including Areas with road access, availability of irrigation, and electricity (all horticulture hree elements); Areas with road access and availability of irrigation (two elements except electricity) Area with irrigation facilities only Areas with road access only Other feasible sites (traditional agricultural areas) 2 Livestock and livestock Areas with road access and availability of electricity and feed / fodder; originated products Areas with road access Other feasible sites (traditional agricultural areas) Source: PPS 1998.
MOAC has characterized pockets into four types as shown below in Table 2.25.
2 - 21 Table 2.25 Characterization of Pocket Area by MOAC
Package type Key elements Objectives Basic Agricultural inputs, agricultural technology To strengthen food security situations in and institutional structure production pockets in the Hills and the Mountains Commercial Agricultural inputs, agricultural technology, To enhance production for generating oriented institutional structure, technology, marketable surplus and increase to attain certain agricultural loan and storage facilities economy of scale. Commercial Agricultural loan, agriculture stores, market To ensure agricultural commercialization, development and agro-based industries; motivating farmers on investment in technology irrigation, electricity and agricultural roads. and value addition.
Infrastructure Irrigation, road and electricity To focus on ensuring supply of constrained infrastructure such as irrigation, road and electricity. Source: PPS, 1998 pp. 4
2.4.5 Agriculture Inputs and Finance
Agricultural Inputs: Seeds, fertilizer and water are the three key agricultural inputs. In the past there were acute shortages of fertilizers during the key crop seasons due to the prevailing government price subsidy and the government’s inability to bear the subsidy In 1999, the government deregulated the fertilizer trade with the Second Agriculture Program Loan, available from the ADB.
The complete deregulation of the fertilizer sector is hailed for improving the timeliness and availability of fertilizers, and increasing the use of fertilizers in the initial years by about 20 percent a year on average. However, as a result of removing subsidy in Nepal and its persistent continuation in India, the differences in the prices of fertilizers between India and Nepal have increased to such an extent (Table 2.26) that the fertilizer distribution system in Nepal almost collapsed. Farmers have been getting fertilizers mostly through the informal, unrecorded cross-border trade between the two countries. While official statistics indicate that the use of fertilizers in terms of nutrients have been less than 20 kg/ha after the deregulation, independent surveys carried out by different sources show figures of more than three times as high as that of the MOAC figures. The Fertilizer (Control) Order 1999 (FCO) discourages importing of fertilizers through cross-border trade for quality reasons. On the other, the government has neither been able to improve the supply of fertilizers through official means at prices which will discourage the cross-border trade nor to ensure the quality of fertilizers through effective implementation of the Fertilizer (Control) Order. As long as prices of fertilizers in India remain lower than in Nepal, there will be incentives for the flow of fertilizers from India to Nepal, but the quality of fertilizer is an issue which will need to be addressed.
Table 2.26 Fertilizer Price Differentials between India and Nepal (Rs/MT) Country Urea DAP MOP 1997 2007 1997 2007 1997 2007 Nepal (Tarai) * 7,400 25,000 18,570 26,000 9,350 14,000 India 5,856 8,112 13,280 14,960 5,920 7,128 Price difference, % 20.9 67.6 28.5 42.5 36.7 49.1 * Retail prices vary by location. Source: Various Issues of Statistical Information on Nepalese Agriculture, MOAC.
To ensure the supply of these inputs to the farmers, the GoN has made institutional arrangements as presented in Table 2.27 below:
2 - 22 Table 2.27 Institutional Arrangements for the Provision of Agricultural Inputs
Inputs Supply of Inputs Quality Control Remarks and Regulation Seeds • National Seeds Central Seeds • Share of National Seeds Corporation in the cereal crop Corporation Limited Quality Control seeds market is less than 10% of the country’s seeds. • Agro-vets Center • Private seeds companies • Agricultural cooperatives • Seeds Entrepreneurial Association of Nepal Fertilizer • Agriculture Inputs • Fertilizer • Share of the Agriculture Inputs Company in the fertilizer Company Limited Unit/MOAC market is less than 5% and most of the fertilizers have • Private importers • Fertilizer been entering Nepal through informal cross-border trade. • Fertilizer dealers inspectors However, this is discouraged by the Fertilizer Control • Agriculture cooperatives appointed in all Order due to uncertainties in the quality of such 75 DADOs as fertilizers. Most of the fertilizers imported through such per the FCO. mechanisms were found to be of low quality. While government sources data do not record the use of fertilizers imported through informal sources, studies carried out by independent sources use such figures. Therefore, the exact figure of fertilizer use is not available. The fertilizer distribution system has become uncertain after the deregulation. Water • Department of Irrigation • DOI • According to the Ministry of Water Resources sources, • Department of of the total cultivated area of the country (2,642,000 Agriculture hectares [ha]), about 1,766 ha (67%) is irrigable. Most • Water Users Associations of this (76%) lies in Tarai. At the end of the Tenth Plan (2006/2007), the total irrigated area was reported at 1,194,628 (67%). But year round irrigation was available to less than 40% of the total irrigated areas. Source: prepared by NARMA
Finance: The government has been giving due priority to providing agricultural credit and finance to farmers. The Agriculture Development Bank was specifically established by the GoN to provide credit to farmers, although this bank has now been upgraded to the status of commercial bank and transformed into a public company. Yet its role in providing agricultural credit has not diminished. Table 2.28 below presents the flow of agricultural credit to Nepalese farmers through this bank over the last five years.
Table 2.28 Distribution of Agricultural Credit through Agricultural Development Bank
Credit Disbursement (Rs in million) Annual Year 2002/03 2003/04 2004/05 2005/06 2006/07 Growth Rate (%) Cereal crops 752.2 640.3 594.2 417.9 481.7 -13.22 Cash crops 1,304.4 1,201.8 1,362.0 1,364.3 1,569.0 5.08 Marketing 2,869.1 3,147.44,026.2 5,021.2 5,664.1 18.00 Agri. tools 743.8 582.2 516.7 365.6 434.3 -15.81 Irrigation 36.8 12.518.4 14.6 16.7 -19.24 Bio-gas 78.0 64.971.4 39.7 45.2 -15.17 Godown & cold storage 49.1 62.3 3.4 38.7 44.1 -8.50 Agri. industry 1,843.6 1,689.7 1,484.6 1,550.1 1,802.2 -1.33 Livestock 1,621.0 1,606.31,842.8 1,847.0 2,134.2 7.00 Horticulture 39.9 32.638.6 31.8 36.4 -2.18 Tea/coffee 72.8 40.836.5 23.6 26.8 -27.23 Non-agriculture 433.5 807.41,320.7 1,729.7 2,385.80 36.15 Housing and land devt. 125.1 5.2 7.5 42.5 9.7 -50.92 Small Farmer Cooperative Limited 0 218.8115 108.2 16.65 Small Farmer Bank 37.4 235.3 212.9 54.21 Total 9969.3 10149.6 11673.3 12807.8 14650.2 10.14 Source: Statistical Information on Nepalese Agriculture, 2006/07 (2063/64), MOAC.
2 - 23
Microfinance and credit to the destitute class: In 1974, the GoN had initiated, for the first time, the process of institutionally supplying credit to the destitute class through commercial banks with the provision of the Small Sectors Credit Program (Priority Sector Credit Program). Under this scheme, the Nepal Rastra Bank (NRB) directed commercial banks to invest on a mandatory basis 5 percent of their total deposits in such priority sectors as agriculture, cottage industries, service enterprises and the destitute class. The flow of credit to the destitute class began thereafter. From the Fifth Plan Period (1975/76 – 1979/80), the Agricultural Development Bank started providing financial services to this class by supplying them with micro-credit through the Small Farmer Development Program. Since then, the institutional credit program has moved ahead. Various models of microfinance such as Grameen replication, financial intermediary NGO model and cooperative societies focusing on poor and micro-finance are being operated.
Microfinance became widespread and turned into one of the most popular programs in rural Nepal4. Efforts to transform itself from a directed regime to a market led private effort led the GoN terminate the priority sector credit system which went into effect on July 15, 2007. However, the GoN has maintained the provision of investing 3 percent of the total credit in the destitute class as a part of the Deprived Sector Lending (DSL)5. The DSL program has been continued and expanded even to the development banks and finance companies as well.
As of mid-July 2007, there are total of 11 microfinance development banks including four wholesale microfinance banks, five regional rural development banks. There are 47 financial intermediary NGOs (FINGOs) and 4,432 SCCs. Despite these situations, financial outreach to the rural poor is still weak, reaching only about half of the needy target groups6. Available statistics show more than 1 million poor to have benefited from the microfinance services. While this number appears substantial, evidences show the inadequacy of micro-finance services in terms of both service coverage and loan amounts. Microfinance service is reported to have suffered due to the following reasons:
• Lack of quality services from micro-finance institutions (MFIs) due to weak regulatory framework, • Uneven distribution of rural credits7, • Limited capacity of NRB to supervise banks and financial institutions both in the commercial and microfinance sectors, • NRB’s policy which discouraged the emergence of microfinance institutions in rural areas, • Lack of an efficient institutional mechanism to channel credit funds and technical support to rural banks and financial intermediaries, and regulate their use and recovery.
2.5 Marketing of Agriculture Produce
2.5.1 Agriculture Business Promotion Policy
The agriculture business promotion policy was promulgated by the GoN on November 27, 2006. The overall objective of this policy is to enhance the participation of the private sector in the infrastructure development of the agricultural market, trade and agro-based industries. This policy aims at diversification, commercialization and promotion of the agricultural sector, partnering with
4 In Nepal, the establishment of credit co-operative societies in 1953 in the Chitwan district is considered as the first step towards the initiation of microfinance. 5 Deprived sector lending (DSL) policy is NRB’s directive to commercial banks under which they will need to invest at least 3 percent of their portfolio to the deprived sector (micro- finance) either by themselves or in partnership with microfinance institutions (MFIs). 7 Basyal, Rama. Commercial Banks and Rural Financing in Nepal. Vikas: A Journal of Development, Vol. 26, 2007 January to July 2007. National Planning Commission Secretariat, Kathmandu, Nepal. 7 According to the World Bank (2006), 47.3% of the bottom quintile of the population exclusively relies on informal loans, while the percentage goes down to 24.7% in the case of the top quintile.
2 - 24 the private sector. Promulgation of this policy reveals the government’s conviction that poverty can be reduced through a policy that encourages production of market-oriented and competitive agro-products.
This policy has been formulated in the spirit of NAP 2004 and envisages to establish business promotion centers based on geographical diversities and business potentials to provide quality agricultural inputs and services. It also seeks partnership between the private sector and the government in exporting quality goods and developing market networks to tackle challenges due to Nepal's membership in WTO.
The policy stresses the need to establish infrastructure development as a cornerstone for the commercialization of agriculture in the country where traditional subsistence farming has predominated.
Key features of this policy are:
• Promotion of partnership between the government, cooperatives and non-governmental organizations to promote agricultural businesses and their capacity enhancement activities • Focus on development of the market infrastructure system in lands owned by the private, cooperative, non-governmental and governmental organizations in the PPP modality • Emphasis on the development of collection centers near production sites, development of wholesale and retail markets in urban centers with the participation of the private and cooperative sectors for financial and management cooperation • Focus on the development, expansion and dissemination of agricultural market information through the participation of the private sector, cooperatives and local bodies • Commitment to making the information system transparent, up-to-date, cost effective and useful for wider sections of the society (domestic and external) • Emphasis on making all contractual arrangements between farmers, businesspersons, entrepreneurs and concerned stakeholders systematically and scientifically • Provision for the inclusion of the private sector in the regional and district level agricultural development committees for identifying and solving problems effectively • Provision for the establishment of an agriculture promotion fund to promote a partnership approach in the agribusiness sector • Constitution of a high level agribusiness promotion committee under the chairmanship of the Hon. Minister for Agriculture and Cooperatives to facilitate the implementation of this policy and decide on policy matters
2.5.2 Import and Export of Major Agricultural Produce
A review of the imports and exports of major agricultural products/commodities in 2006/07 (latest data available) shows that the volume of imports exceeded exports for all commodities/products except in pulses (Table 2.29). This applies to both imports and exports from India and other countries.
The increased proportion of agricultural products exported vis-à-vis total exports is indicative of the country’s commercialization, competitiveness of the agriculture production system and level of agricultural development. When the agricultural sector’s performance is measured by comparing the proportion of agricultural exports to the total exports over the last three years, it showed decline, which is not a good indication. One of the key reasons for the decline in the exports is conflicts. Table 2.29 presents key commodities exported from Nepal to India and other countries.
2 - 25 Table 2.2 Key Commodities Exported to India and Other Countries
Commodities Exported to India Commodities Exported to Other Countries • Vegetable Ghee • Hide and Skins • Pulses • Pulses • Cardamom • Herbs • Rice Bran Oil • Cardamom • Ginger • Tea • Cattle Feed • Coffee • Hide and Skins • Dried Ginger • Herbs Source: Marketing Development Directorate, DOA, 2007.
Import: Nepal is an importer of all major cereal crops. Other leading imports of Nepal are vegetables, spices, chemical fertilizers and insecticides (Table 2.30 and Table 2.31). Crude palm oil and crude soybean oil, the major import from Indonesia, Malaysia and Thailand are the main raw materials for the production of vegetable ghee, a major export to India. Country-wise, India is the leading food exporter to Nepal followed by Indonesia, Singapore, Malaysia and Australia. See Annex 2.3 for the import of major agricultural and related commodities from India and other countries.
Export: Nepal’s leading agricultural exports are vegetable ghee and pulses followed by live animals, cardamom tea, sugar and ginger. Vegetable ghee and live animals are major exports to India. Ginger has become one of the major food exports to India in recent years, due to a sound marketing channels between Nepalese traders and Indian businesses in Delhi. Pulses and Cardamom are also major food exports to India as well as Pakistan and Bangladesh. Tea appears to be a major export item to overseas countries outside the South Asia region (Table 2.31). See Annex 2.4 for the exports of major agricultural and related commodities from India and other countries.
Table 2.30 Import and Export of Major Agricultural and Related Commodities from and to India, 2006/07 (Rs in ‘000) Trade S. N. Commodity Import Export Balance 1 Spices (Cumin Seed and Peppers) 157,200 1,464,100 1,306,900 2 Pulses 58,400 330,200 271,800 3 Fruits 493,900 100 -493,800 4 Vegetables 834,500 11,000 -823,500 5 Livestock (Live Animals) 187,600 464,500 276,900 6 Cereals 1,612,100 -1,612,100 7 Agri inputs 1,076,800 -1,076,800 8 Beverage 77,000 -7,7000 9 Processed products 388,900 738,700 349,800 10 Seeds 600 600 11 Other 1,342,400 2,259,100 916,700 Total 6,228,800 5,268,300 -960,500 Source: Agricultural Marketing Information Bulletin, Special Issue, 2008 (2065).
2 - 26
Table 2.31 Import and Export of Major Agricultural and Related Commodities from and to Countries Other than India, 2006/07 (Rs in ‘000) Trade S. N. Commodity Import Export Balance 1 Cereal (Rice) 31,700 -31,700 2 Livestock (Raw Wool) 1,184,500 275,500 -909,000 3 Beverage (Soft Drink Concentrate) 312,500 114,700 -197,800 4 Agri inputs 636,400 -636,400 5 Spices 432,200 129,800 -302,400 6 Processed products 834,700 -834,700 7 Pulses 488,100 488,100 8 Other 1,752,300 40,300 -1,712,000 Total 5,184,300 1,048,400 -4,135,900 Source: Agricultural Marketing Information Bulletin, Special Issue, 2008 (2065).
2.5.3 Identification of Surface Routes and Points of Major Agricultural Produce
Market Networks
Four types of market networks are identified in Nepal: regional market networks; wholesale market networks; urban consumption market networks; and rural market networks8.
Regional Market Networks in Tarai: Though there are no designated regional markets in Nepal, the following have been identified based on their location and transportation connectivity with production/importation and consumption areas. From east to west, regional market networks include:
Jhapa Regional Market Network (JRMN): JRMN, based in a major agricultural surplus area, includes the Birtamod, Damak, Bhadrapur, Gaurigunj, Budhabare and Surunga markets. JRMN primarily supplies produce to the Mechi Zone (Ilam Taplejung, Panchthar) and to more distant markets in Kathmandu, Pokhara, Kailali and Surkhet). JRMN is connected by road with the national transportation network at Damak and connected with West Bengal, India at Kakadbhitta. This regional market area is gaining prominence as a major agricultural center.
Biratnagar Regional Market Network (BRMN): Biratnagar Regional Market Cluster (BRMC) 9 , including the Katahari, Siswani, Rangeli, Dangihat, Letang, Madhumalla, Duhabi, Itahari and Dharan markets in the Morang and Sunsari districts, is located in an important central production and food surplus area(in addition to including a major industrial center and agricultural processing facilities). As a major trading center of the country, Biratnagar is the source of many large traders and importers from India and third countries.
Lahan Regional Market Network (LRMN): LRMN includes the Rajbiraj, Siraha, Saptari, Mahottari, Dhanusha and Udayapur production areas of central Nepal. This cluster is connected with various border cities in India, and as one of the major grain trading sources in Nepal. LRMN sends grains to markets all over Nepal, notably Narayanghat, Kathmandu, Kabhre, Kaski, Tanahun, Sarlahi and Sindhuli and the mountain areas of the Janakpur and Sagarmatha zones.
8 Food and Agricultural Markets in Nepal, United Nations World Food Program, Nepal and Food and Agriculture Organization of the United Nations, Nepal, February 2007. 9 It is possible that the Jhapa Regional Market Cluster (JRMC) and Biratnagar Regional Market Cluster (BNRMC) could merge and become one market cluster in the coming year.
2 - 27 Birgunj Regional Market Network (BJRMN): BJRMN includes the Kalaiya, Hetauda, Birgunj, and Gaur markets and the grain producing areas of the Bara, Makwanpur, Parsa and Rautahat districts. This cluster includes the dry port of Birgunj and connected to the East West Highway (EWH), Bettia, Motihari and Muzaffarpur in India, and Kolkata by direct railway access. The majority of rice moving through BJRMN is from India, though once it enters Nepal it is incorporated with domestic production for forwarding to other markets.
Narayanghat Regional Market Network (NGRMN): NGRMN210, which includes the Ratnanagar, Birendranagar, Parsa, Bhandara, Sukranagar and Gunjanagar markets in the Chitwan district, is emerging as a major trading post and terminal market in the country for domestic or imported products. Located in the center of Nepal, NGRMN is equally well connected with major production and consumption areas. It is also well linked to the transportation network, with access to the EWH, the north-south highway to Tibet via Kathmandu and to India.
Bhairahawa/Butwal Regional Market Network (BBRMN): BBRMN directly serves the people living in the five municipalities of Butwal, Bhairahawa, Kapilvastu, Ramgram and Tansen. This network has two major markets, one for vegetables in Butwal and the other for cereals in Bhairahawa. The latter is well connected to India and is a major gateway for Indian rice entering the Nepal markets (both officially and unofficially). Linked to Butwal by Mahendra Highway, and to Pokhara through Palpa, BBRMN service area includes the mountain areas of the Lumbini and Dhaulagiri zones.
Nepalgunj Regional Market Network (NRMN): Nepalgunj is the gateway to the mid-western Development Region, the largest and least developed region in the country. Linked to the transportation network and EWH at Kohalpur and Surkhet in the north, NRMN serves the Karnali, Bheri and Rapti zones. It also feeds into other markets in the Far-west, including Baitadi and Sanfebagar. The NRMN sources food items from the adjoining districts, such as Dang, Banke, Bardiya, Kailali and Kanchanpur, and from the production areas around Dhangadhi and Mahendranagar. It can be noted that Dhangadhi/Attariya has the potential to develop into a major market center in the near future, especially given the connectivity to several Indian border cities.
Transit Markets on the Road Head in the Hills and Mountain: Transit markets, those importing and forwarding produce to other areas in the hills and mountains, play an important role in the supply of foods, vegetables and fruits to remote districts. Most of the transit markets are strategically located at arterial road heads. As a result, forward movement of food beyond the market center or road head generally occurs in two ways: purchase by migrants returning to their homes in surrounding areas from employment elsewhere or purchase by households froMThe surrounding areas that travel to the road head to gather supplies and then return home. From east to west, the transit markets identified are Mechinagar, Dhankuta, Banepa, Okhaldhunga, Dang, Surkhet, Dadeldhura and Sanfebagar.
Mechinagar Transit Market (MTM): MTM, located in the Jhapa Regional Market Network and near the Indian border, specializes in bundling produce in smaller quantities for forwarding to the Panchthar, Tehrathum and Taplejung districts and plays an important role in forwarding produce grown in the area to other markets in Nepal and India.
Dhankuta Transit Market (DTTM): DTTM311, an important traditional market center in the eastern Hills, serves as a major supplier to people living in the Bhojpur and
10 It may be noted that all produce consigned to Kathmandu and Pokhara consumption market has to pass through a road grid based in the Chitwan district. 11 There are two major markets in Dhankuta, at Hile and Sindhwa, in addition to the one in Dhankuta city.
2 - 28 Sankhuwasabha districts. DTTM receives its produce from the Biratnagar Regional Market Network and sells it to commuters and travelers in transit to/from employment in the urban areas of Nepal and India.
Banepa Transit Market (BTM): BTM, located in Kavrepalanchok – a major agricultural production district in central Nepal – is surrounded by high-quality rice producing areas. The high-quality rice grown locally is supplied to Kathmandu, while medium and coarse rice from the Birgunj and Narayangadh Regional Markets is imported for forwarding to the surrounding hill and mountain districts of Ramechhap, Dolakha, Sindhupalchok and some parts of Solukhumbu. The importance of this market has been enhanced in recent years because of potato and vegetables coming to this market froMTm the neighboring areas.
Okhaldhunga Transit Market (OTM): OTM, which receives commodities from the Lahan Regional Market Network, supplies food for consumption in the Okhaldhunga district and for forwarding by porters to parts of Ramechhap, Khotang and Solukhumbu. OTM additionally supplies to commuters traveling to/from employment in urban areas of Nepal and India.
Dang Transit Market (DTM): DTM, located in an important agricultural production area, serves as a major trading point in the Mid-western Development Region and connects to Sallyan, Rukum, Jajarkot (via Tulsipur), and Rolpa and Pyuthan (via Bhalubang). DTM draws on low quality cereals from the Nepalgunj Regional Market Network and exports high-quality grain to the same and the Narayangadh market in Chitwan. Traders in this market also export lentil and oilseed grown in the Dang Valley.
Surkhet Transit Market (STM): STM, located before the Surkhet district headquarters from Kohalpur, receives commodities from the Nepalgunj Regional Market Network. It supplies goods and food to all five districts in the Karnali zone and Dailekh and Jajarkot in the Bheri zone.
Dadeldhura Transit Market (DDTM): DDTM, a traditional market in the Far-west serving the entire Seti zone and Baitadi, was the first market to be developed in the area with the extension of the road from Dhangadhi. The importance of this market, however, is diminishing with the completion of the road to Baitadi and Sanfebagar and perhaps will further be reduced with road construction to Bajhang and market development in Deura, Bajhang.
Sanfebagar Transit Market (SBTM): SBTM receives supplies directly from the Nepalgunj Regional Market Network via Dhangadhi/Attariya. This market serves Achham, Bajura and parts of Dailekh, Bajhang and Kalikot, all food-deficit districts low on the UNDP Human Development Index. The main buyers in this market include those returning home from employment in India and other parts of Nepal. It could therefore be a monitoring site to capture the labor movement and its impact on prices and demand in Far-western food-deficit areas.
Urban Consumption Center Markets: Urban Consumption Center Markets (UCCMs), which serve urban areas such as Kathmandu and Pokhara, include many cereal wholesalers and serve as transit markets for surrounding areas. These markets are strategically located on the country's highway/transport network, though within the city, market sites are scattered.
Kathmandu Urban Consumption Center Market (KUCCM): Kathmandu, the capital city, is located in a valley with a population of about two million. The Kathmandu Valley represents a major consumption center of Nepal, with its markets serving the entire population within a 50 km radius.
2 - 29 Pokhara Urban Consumption Center Market (PUCCM): PUCCM represents the second major consumption market in Nepal. Pokhara is a major tourist destination and the city has strong demand for quality produce. Its fertile land is used to produce high-quality cereals and off-season horticultural items.
Permanent and Temporary Rural Markets: There are two types of rural markets in Nepal: permanent and temporary. Permanent markets are based in areas having relatively larger population, such as district headquarters. The nature of operation of these markets varies, though they tend to include more imported fruits and livestock, as most cereals and vegetables in rural areas are supplied through home production. Temporary markets, or haat bazaars, are periodically organized in central locations in a cluster of villages. These markets operate on a specific day of the week and are managed by the community. They provide varieties of locally grown or imported produce and play an important role in meeting household consumption needs.
It can be also noted that though markets normally exist in all rural district headquarters, these markets mostly deal with non-food items. Given the lack of connectivity and profitability of food supply (high volume, but low value), the private sector is largely not engaged in the supply of food to these areas. The major private sources of food for people living in these areas thus remain domestic production or transit markets. For import and export of agricultural products to India, traders have been using primarily the following surface routes:
1. Birgunj custom point, Parsa district 2. Jogbani custom point, Morang district 3. Bhairahawa custom point, Rupandehi district 4. Kakadbhitta custom point, Jhapa district 5. Nepalgunj custom point, Banke district
Of the above custom points, Birgunj is the largest point where the government has already established a dry port and where a railway line has been extended from Raxual (India) to Birgunj for the transportation of goods. Likewise, the government has already established dry ports in Jogbani and Bhairahawa.
Apart from land transport, some overseas import and export trading takes place in International Tribhuwan Airport too.
Market Players for Fruits and Vegetables
Figure 2.3 below presents typical market channels for fresh agricultural produce to consumers. The marketing channel from farmers to consumers indicates the various options for farmers to deliver their produce to ultimate consumers. Agricultural products pass through different channels in reaching to the consumers’ table from farmers’ fields. Farmers may sell their produce to wholesalers, retailers, commission agents institutions, (schools, restaurants, etc.), cooperatives or directly to the consumers.
2 - 30
Distant Farmer Farmers Cooperative
C
Local Farmers O N Collection Center S U
Wholesale Market Retailers M E
Traders R
S Retail Market
Indian WS Market
Figure 2.3 Marketing Channels for Fruits and Vegetables in Nepal
Farmers: Vegetable cultivation is becoming more commercial and most production is destined to urban areas. In rural areas, kitchen gardens remain a common source of supplies. Farmers grow vegetables on their farm and bring them to the collection/wholesale market, where either wholesalers or their agents purchase produce on prices prevalent in the market fixed on a private trait. Also, cooperatives established by farmers were found active in marketing vegetables and provided scope for building produce in large quantities.
Wholesalers/Wholesaling: These include organized entrepreneurs who are engaged in getting production from the farm to consumers using various linkages. The wholesalers based at Kalimati market play a dominant role in vegetables marketing as they are based in the central wholesale market of the country. They directly buy produces from the traders and the farmers or through agents.
Retailers/Hawkers: Retailers for agricultural produce comprise fixed retail shops (often multi-purpose stores selling all types of grocery items), roofed sheds, enclosed/lockable publicly owned market sheds and open street markets. Fruits and vegetables are sold by street hawkers, selling from bicycles, four-wheel carts, dokos, tokaris, kharpans, etc.
Major fruits and vegetables wholesale markets operating in urban areas: 1. Biratnager (Morang) 2. Janakpur (Dhanusha) 3. Birgunj (Parsa) 4. Narayanghat (Chitwan) 5. Kalimati (Kathmandu) 6. New Baneshwor (Kathmandu) 7. Balaju (Kathmandu) 8. Butwal (Rupandehi) 9. Pokhara (Kaski) 10. Attaria (Kailali) 11. Kohalpur (Nepalgunj)
Major fruits and vegetables collection centers based in production areas: 1. Birtamod (Jhapa)
2 - 31 2. Dharan (Sunsari) 3. Basantapur (Tehrathum) 4. Dhalkebar (Dhanusha) 5. Bardibas, Nawalpur, Lalbandi (Sarlahi) 6. Saruahatta (Rauthat) 7. Handikhola (Makwanpur) 8. Charikot and Jiri ( Dolakha) 9. Tamaghat and Tinpiple (Kavrepalanchok) 10. Dharke and Dhusa (Dhading) 11. Damauli (Tanahun) 12. Lamahi (Dang) 13. Kapurkot (Sallyan) 14. Kohalpur (Banke)
Market Players for Meat and Poultry
The meat marketing channel is quite simple. In urban areas butchers purchase live animals in designated wholesale markets (Figure 2.4). In rural areas the butchers collect animals froMThe farmers in the village or the farmers deliver animals to the butcher’s shops. In rural areas, it is common practice for groups of villagers to get together, slaughtering animals and distribute meat.
Farmers: Commercial livestock raising is limited in the country and the farmers individually or in groups bring their animals to a common selling areas, sell produce to a butcher or have butchers pick up animals from the farm gate. Farmers get active selling animals directly to consumers during the festive season. Prominent livestock growing areas in Nepal include the Lahan market network cluster, the Kathmandu urban market cluster, Pokhara market network cluster area and Nepalgunj as well.
Urban Area
Transit Market Terai (Imports) Wholesale Butcher Markets in C
Urban Areas O Farmers for Local produce N
S U
M Rural Areas E Butcher
R
Farmers S
Community Slaughtering
Figure 2.4 Marketing Channels for Live Animals in Nepal
Collector/Collection agents: These include entrepreneurs who import small ruminants from the local areas, India and Tibet and sell them in larger cities such as Kathmandu and Pokhara.
Livestock Importers: This category of trader is similar to the collectors described above but they have established contacts with Indian farmers. Based on these contacts, they
2 - 32 collect animals in India and drive them to transit markets such as the Havaldarpur livestock market in Nepalgunj and a similar market in Jitpur in the Bara district and other markets. These animals are further dispatched to major consumption centers, wholesale markets like Kathmandu or to their contacts in other consumption centers.
Retailers: Retailing of meat and poultry is often mixed and buffalo and pork are sold independently. They are scattered in different locations of urban areas. In these areas local butchers purchase live animals from wholesale markets, slaughter them in their shops, where they retail the meat.
2.5.4 Wholesale Trading of Major Agricultural Produce
Improvement in the food and agricultural marketing system is a key element for gradual commercialization of agriculture. The Agri-business Promotion and Marketing Development Directorate (ABPMDD) of the DOA has been carrying out various programs, including the development of market infrastructure (physical), management and operation of agriculture, and the development and management of markets (wholesale, collection centers and periodic markets) in partnership with the local government, private and cooperative sectors. Likewise, it carries out market research and studies of specialized commodities and promotes of agricultural business and trade. A review of the agricultural marketing system indicated that the major emphasis of the ABPMDD has been on the development and management of the physical market infrastructures. The map of Nepal shows the different types and levels of markets. Annex 2.5 presents a list of agriculture markets in Nepal and Annex 2.6 shows the agriculture markets network in Nepal.
2.5.5 Price and Price Trend of Produce at Major Wholesale Markets and Collection Hubs
Price data of agricultural commodities in general and of crops are poorly recorded and maintained. Table 2.32 briefly discusses the prices and price trends of agriculture produce at the national level, based on information available from the Agricultural Marketing Information bulletin prepared by the ABPMDD of DOA.
National level
The prices and price trends of major agricultural produce and livestock products at the national level are discussed in following section.
Cereals: The annual price of rice is only available in the case of cereals (Table 2.32). Rice is the main staple food of the country. The price of rice varies by type which ranging from Rs 25.5/kg in case of coarse rice to Rs 45.85/kg in Basmati rice. During the last five years, the price of coarse rice increased by 42.7 percent followed by Mansuli rice (32.0%), Bastati rice (27.3%) and flat rice in Tarai (26.5%).
Table 2.32 National Average Annual Price of Rice
% change during Rice Unit 2003/04 2004/05 2005/06 2006/07 2007/08 last five years Coarse Rice Rs./kg 17.88 18.13 29.90 22.63 25.51 42.7 Basmati Rice Rs./kg 36.02 34.36 40.35 43.83 45.85 27.3 Mansuli Rice Rs./kg 23.48 22.94 27.08 28.18 30.99 32.0 Flat Rice (Tarai) Rs./kg 23.99 23.11 26.86 27.15 30.34 26.5 Source: ABPMDD/DoA, 2008
Pulses: Table 2.33 presents the national average annual price of pulses during the last five years. Of the different types of pulses, the Muggi Chhanta (Rs.81.8/kg) fetched the highest price followed by black gram (Rs.75.11/kg) and pigeon pea (Rs.74.33/kg) in 2007/08. Among the different types of pulses, the price of black gram increased nearly by two-thirds (62.0%) followed by lentil and
2 - 33 pigeon pea.
Table 2.33 National Average Annual Price of the Pulses
% change during Pulse Unit 2003/04 2004/05 2005/06 2006/07 2007/08 last five years Black Gram Rs./kg 46.37 46.51 51.72 69.94 75.11 62.0 Pigeon Pea Rs./kg 52.46 55.18 56.55 63.21 74.33 41.7 Mugi Chhanta Rs./kg 57.89 56.51 61.14 76.60 81.83 41.3 Lentil Rs./kg 43.04 44.74 47.99 52.28 64.43 49.7 Soybean Rs./kg 30.99 30.89 33.01 34.66 35.40 14.2 Source: ABPMDD/DoA, 2008
Vegetables: The prices of vegetables vary by commodities, ranging from Rs.20.2/kg for potato to Rs.156.8/kg for dry chili in 2007/08 (Table 2.34). During the last five years, the prices of potato and onion have almost doubled whereas the price of tomato increased marginally (16.5 %).
Table 2.34 National Average Annual Price of Vegetables
% change Vegetable Unit 2003/04 2004/05 2005/06 2006/07 2007/08 during last five years Potato Rs./kg 8.77 11.65 15.22 17.56 20.22 130.7 Tomato Rs./kg 25.90 18.48 25.76 29.31 30.18 16.5 Onion Rs./kg 16.27 23.13 28.27 30.96 34.92 114.7 Ginger Rs./kg 28.54 56.75 49.33 38.06 37.05 29.8 Dry Chili Rs./kg 106.67 119.18 123.27 147.25 156.78 47.0 Source: ABPMDD/DoA, 2008.
Livestock products: Table 2.35 below presents the national average annual price of livestock products. The price of mutton meat in 2007/08 was Rs.239.3/kg whereas that of chicken was Rs.167.34/kg. During the last five years, the annual price of livestock produce increased from 39.8 percent in eggs and to 12.6 percent in ghee.
Table 2.35 National Average Annual Price of Livestock Products
% change during Products Unit 2003/04 2004/05 2005/06 2006/07 2007/08 last five years Mutton Rs./Kg. 194.64 201.34 209.37 222.43 239.30 22.9 Chicken Rs./Kg 135.83 142.74 146.89 156.75 167.34 23.2 Hen Egg Rs./Kg 4.66 5.02 4.98 5.17 6.51 39.8 Fish (Rohu) Rs./Kg 106.19 111.78 122.38 130.50 141.22 33.0 Milk Rs./lit 22.43 23.02 25.14 24.85 28.90 28.9 Ghee Rs/.Kg 236.47 243.08 246.62 255.51 266.34 12.6 Buff Meat Rs./Kg 82.68 83.59 84.17 88.70 98.00 18.5 Source: ABPMDD/DOA, 2008.
Wholesale Market: The price information and price trend of agricultural produce are available for only a few wholesale markets as well as for a few commodities. Of the various wholesale markets in Nepal, price information is available for three markets, namely (a) the Kalimati wholesale market (Kathmandu), (b) the Amarhat Wholesale Market, Dharan (Sunsari) and (c) the Birtamod Wholesale Market (Jhapa). Table 2.36 presents the prices of vegetables, fruits and spices by market.
2 - 34 Table 2.36 Price of Vegetables, Fruits and Spices in Wholesale Market in Nepal, 2008
Wholesale Market S. N. Commodity Unit Kalimati Amarhat Birtamod (Kathmandu) (Sunsari) (Jhapa) Vegetables 1 Potato Rs./Kg 16.58 13.30 2 Potato, Red Rs./Kg 17.41 3 Potato, White Rs./Kg 14.64 4 Tomato, Big Rs./Kg 22.69 5 Tomato, Small Rs./Kg 19.09 6 Tomato Rs./Kg 16.75 16.50 7 Cabbage Rs./Kg 11.14 6.92 8.10 8 Cauliflower, Local Rs./Kg 22.28 20.58 9 Cauliflower, Tarai Rs./Kg 12.64 18.40 10 Radish Red Rs./Kg 14.13 11 Radish White Rs./Kg 10.42 12 Radish Rs./Kg 8.75 7.10 13 Carrot Rs./Kg 28.18 11.42 24.21 14 Brinjal Long Rs./Kg 17.91 15.70 15 Brinjal Round Rs./Kg 18.51 16 Brinjal Rs./Kg 8.42 17 Bottle Gourd Rs./Kg 17.83 20.42 18 Spinach Leaf Rs./Kg 19.80 19 Cress Leaf Rs./Kg 21.67 20 Mustard Leaf Rs./Kg 17.07 12.21 21 Fenugreek Leaf Rs./Kg 20.45 22 Green Leaf Rs./Kg 19.83 23 Capsicum Rs./Kg 37.29 32.92 24 Onion Dry Rs./Kg 22.40 22.67 17.10 25 Chili Green Rs./Kg 26.54 25.17 27.50 26 Cow pea Rs./Kg 26.70 22.11 27 Green Peas Rs./Kg 40.87 30.42 28 Bitter Gourd Rs./Kg 30.01 24.54 29 Pumpkin Rs./Kg 10.72 8.55 Fruits 1 Apple Rs./Kg 61.71 60.67 56.00 2 Banana Dozen 25.94 21.58 132.30 3 Pomegranate Rs./Kg 101.75 60.42 94.20 4 Mango Rs./Kg 66.84 19.58 30.00 5 Grapes Rs./Kg 97.07 51.67 81.90 6 Orange Rs./Kg 34.56 22.83 7 Water Melon Rs./Kg 29.04 3.25 8 Sweet Orange Rs./Kg 42.84 11.67 9 Mandarin Rs./Kg 15.44 - 10 Pineapple Rs./Kg 47.44 4.50 11 Jackfruit Rs./Kg 26.94 - 12 Sweet Lime Rs./Kg 14.88 13 Pear Rs./Kg 64.17 2.75 9.10 14 Papaya Rs./Kg 27.97 16.10 15 Guava Rs./Kg 2.83 27.36 16.00 16 Mombin Rs./Kg 27.52 17 Musk Melon Rs./Kg 67.78 18 Kinnow Rs./Kg 36.19 Spices 1 Ginger Rs./Kg 31.17 21.17 23.30 2 Chili, Dry Rs./Kg 95.40 3 Chili, Green Rs./Kg 26.54 25.17 4 Capsicum Rs./Kg 37.29 5 Garlic, Green Rs./Kg 29.78 6 Garlic, Dry Rs./Kg 48.25 7 Cardamom Rs./Kg 209.20 8 Tejpat Rs./Kg 11.17 Source: ABPMDD, 2008.
2 - 35 Table 2.37 presents the price trend for vegetables in the Kalimati wholesale market over the last five years. Compared to the five years or two years previous, the prices of all vegetables have increased in the recent years with a few exceptions such as Radish white, Cauli local, Sponge Gourd, Asparagus, and Mushroom. Table 2.37 Price Trends of Vegetables in Kalimati Wholesale Market, Kathmandu (Price in Rs/kg) S. N. Vegetable 2002 2005 2008 Trend 1 Tomato, Big 17.91 34.92 22.69 Increase 2 Tomato, Small 14.72 31.17 19.09 Increase 3 Potato, Red 11.87 14.50 17.41 Increase 4 Potato, White 10.24 12.25 14.64 Increase 5 Onion, Dry 13.24 17.67 22.40 Increase 6 Carrot 21.36 39.42 28.18 Increase 7 Cabbage 7.73 13.50 11.14 Increase 8 Cauliflower, Local 23.32 32.92 22.28 Decrease 9 Cauliflower, Tarai 11.58 17.60 12.64 Increase 10 Radish, Red 8.36 22.08 14.13 Increase 11 Radish, White 14.56 15.67 10.42 Decrease 12 Brinjal, Long 11.99 21.50 17.91 Increase 13 Brinjal, Round 15.00 24.83 18.51 Increase 14 Cow Pea 21.49 34.25 26.70 Increase 15 Green Pea 34.55 54.70 40.87 Increase 16 French Bean 14.69 28.58 21.86 Increase 17 Sword Bean 17.18 31.38 29.78 Increase 18 Soybean, Green 17.16 34.63 22.51 Increase 19 Bitter Gourd 24.04 39.42 30.01 Increase 20 Bottle Gourd 12.42 23.42 17.83 Increase 21 Pointed Gourd 27.64 54.50 39.44 Increase 22 Snake Gourd 19.38 29.00 21.85 Increase 23 Smooth Gourd 18.01 29.30 27.67 Increase 24 Sponge Gourd 24.55 39.40 19.78 Decrease 25 Pumpkin 7.48 16.75 10.72 Increase 26 Squash 8.36 20.67 12.26 Increase 27 Turnip 15.84 22.40 16.94 Increase 28 Okra 25.05 43.58 36.26 Increase 29 Sweet Potato 13.31 22.00 16.54 Increase 30 Barela 18.61 27.82 19.10 Increase 31 Arum 19.71 19.50 18.09 Decrease 32 Christophine 11.43 18.92 17.05 Increase 33 Broad Leaf Mustard 14.75 22.83 17.56 Increase 34 Spinach Leaf 17.66 23.17 19.80 Increase 35 Cress Leaf 18.53 26.33 21.67 Increase 36 Mustard Leaf 15.05 22.50 17.07 Increase 37 Fenugreek Leaf 19.92 24.67 20.45 Increase 38 Onion Green 23.05 25.83 25.04 Increase 39 Broad bean 19.32 36.83 28.20 Increase 40 Yam 11.53 21.11 13.47 Increase 41 Mushroom - 170.83 153.90 Decrease 42 Asparagus - 221.25 140.33 Decrease 43 Neuro - 25.17 18.85 Decrease 44 Broccoli - 68.25 38.09 Decrease 45 Sugar Beet - 66.83 41.89 Decrease 46 Drumstick - 82.00 65.35 Decrease 47 Bauhania Flower - 42.33 24.81 Decrease 48 Red Cabbage - 55.00 45.98 Decrease 49 Lettuce - 68.75 27.64 Decrease 50 Knolkhol - 37.27 29.54 Decrease 51 Celery - 100.42 73.35 Decrease 52 Parsley - 98.33 96.77 Decrease 53 Fennel Leaf - 25.50 18.35 Decrease 54 Mint - 47.83 37.16 Decrease 55 Turnip - 25.83 20.05 Decrease Source: Compiled from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
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Table 2.38 presents price trend of fruits in the Kalimati wholesale market over the last six years. Fruits price generally have increased significantly since 2002. There are some exceptions, though, with decreasing prices of a few fruits such as apple, mango, orange, water melon, sweet lime, papaya, kinnow, etc.
Table 2.38 Price Trends of Fruits in Kalimati Wholesale Market, Kathmandu (Price in Rs./kg) S. N. Fruits 2002 2005 2008 Trend 1 Apple 63.34 56.17 61.71 Decrease 2 Banana 24.56 29.00 25.94 Increase 3 Lime 111.89 230.83 204.04 Increase 4 Pomegranate 56.66 79.75 101.75 Increase 5 Mango 69.16 91.33 66.84 Decrease 6 Grapes 97.27 140.50 97.07 Decrease 7 Orange 36.70 48.50 34.56 Decrease 8 Water Melon 32.10 31.91 29.04 Decrease 9 Sweet Orange 30.40 47.75 42.84 Increase 10 Mandarin 24.17 34.67 15.44 Decrease 11 Pineapple 32.42 51.08 47.44 Increase 12 Cucumber 14.65 36.58 19.55 Increase 13 Jackfruit 21.71 32.60 26.94 Increase 14 Lemon 6.38 23.56 21.12 Increase 15 Sweet Lime 35.31 27.25 14.88 Decrease 16 Pear 47.30 56.83 64.17 Decrease 17 Papaya 28.03 41.42 27.97 Decrease 18 Guava 16.40 35.75 27.36 Increase 19 Mombin 22.20 37.91 27.52 Increase 20 Musk Melon - 54.75 67.78 Increase 21 Sugarcane - 34.00 44.04 Increase 22 Kinnow - 52.50 36.19 Decrease Source: Compiled from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
Table 2.39 presents price trend of spices in the Kalimati wholesale market over the last six years. The prices of spices such as ginger, dry chili, green chili, green garlic and green clove have increased in recent years, whereas as those of capsicum, coriander, green garlic and dry clove have decreased.
Table2.39 Price Trends of Spices in Kalimati Wholesale Market, Kathmandu (Price in Rs./kg) S. N. Spice 2002 2005 2008 Trend 1 Ginger 18.64 65.92 31.17 Increase 2 Chili, Dry 69.47 79.17 95.40 Increase 3 Chili, Green 19.70 36.42 26.54 Increase 4 Capsicum 64.75 37.29 Decrease 5 Garlic, Green 25.37 33.67 29.78 Increase 6 Coriander, Green 35.26 53.42 35.00 Decrease 7 Garlic, Dry Chinese 51.58 45.51 Decrease 8 Garlic, Dry Nepali 45.74 43.83 41.53 Decrease 9 Clove, Dry 71.08 55.50 Decrease 10 Clove, Green 34.33 54.48 Increase Source: Compiled from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
Table 2.40 presents price trends i of vegetables in the Amarhat wholesale market over the last three years. The prices of vegetables have increased for the majority of commodities except for chayote, bean, brinjal and cucumber.
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Table 2.40 Price Trends of Vegetables in Amarhat Wholesale Market, Sunsari (Price in Rs./kg) S. N. Vegetable 2005 2008 Trend 1 Potato 13.12 16.58 Increase 2 Tomato 16.25 16.75 Increase 3 Cabbage 4.94 6.92 Increase 4 Cauliflower 18.19 20.58 Increase 5 Chayote 13.88 6.46 Decrease 6 Radish 6.13 8.75 Increase 7 Green Leaf 15.75 19.83 Increase 8 Bean 32.13 19.25 Decrease 9 Brinjal 14.57 8.42 Decrease 10 Cucumber 27.40 14.08 Decrease 11 Carrot 21.29 11.42 Increase 12 Potato 13.12 16.58 Increase 13 Bitter Gourd 19.50 20.42 Increase 14 Capsicum 32.92 15 Bamboo Shoot 13.00 6.42 Increase Source: Compiled from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
Table 2.41 presents price trend of fruits in the Amarhat wholesale market over the last three years. Prices of all fruits have increased, except orange, mango and pears.
Table 2.41 Price Trends of Fruits in Amarhat Wholesale Market, Sunsari, 2005 to 2008 (Price in Rs./kg) S. N. Fruit 2005 2008 Trend 1 Banana 21.58 2 Pears 9.14 2.75 Decrease 3 Apple 52.33 60.67 Increase 4 Pineapple 4.50 5 Mango 30.00 19.58 Decrease 6 Guava 2.83 7 Lemon 26.17 8 Orange 69.90 22.83 Decrease 9 Sweet Orange 11.67 10 Pomegranate 38.50 60.42 11 Grapes 22.00 51.67 12 Watermelon 17.50 3.25 13 Other Fruits 22.17 14 Cinamon Leaf 15.29 Source: Compiled from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
Table 2.42 presents price trends of spices in Amarhat wholesale market over the last three years. Prices have increased for all commodities except for cardamom.
Table 2.42 Price Trends of Spices in Amarhat Wholesale Market, Sunsari, 2005 to 2008 (Price in Rs./kg) S. N. Spice 2005 2008 Trend 1 Ginger 25.75 21.17 Increase 2 Onion 13.44 22.67 Increase 3 Garlic 25.14 47.25 Increase 4 Green Chili 15.63 25.17 Increase 5 Akbari Pepper 75.80 134.17 Increase 6 Cardamom 162.50 79.55 Decrease 7 Tejpat NA 11.17 - Source: Complied from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
2 - 38 Collection Center: Price information and price trends in agriculture produce at collection centers were not available. Nevertheless, the Marketing Development Directorate of Nepal has provided the monthly average prices of fresh fruits and vegetables at Charaudi Dhading for 13 commodities (Table 2.43). Among the different types of agriculture produce, cabbage and bottle gourd fetch the lowest price, whereas rajma and capsicum fetch the highest price.
Table 2.43 Monthly Average Price of Fresh Fruits and Vegetables at Charaundi, Dhading
S. N. Commodity (Rs./kg) 1 Tomato 15.7 2 Bitter Gourd 24.1 3 Bottle Gourd 12.1 4 French Bean 16.0 5 Cabbage 8.7 6 Brinjal 10.5 7 Guava 18.3 8 Smooth Gourd 17.8 9 Cowpea 19.1 10 Okra 14.6 11 Rajma 33.3 12 Capsicum 35.0 13 Other 13.1 Source: Complied from various issues of Agriculture Marketing Information Bulletin of ABPMDD, DoA, (2003, 2007 and 2008).
2.5.6 Forecast of Domestic Market and Consumers Trend
To this date Nepal has not been forecasting the demands of the markets by products nor consumer trend.
To ascertain trends of consumers' preferences and to forecast market requirements it would be necessary to carry out consumer surveys.
2.6 Local Development
Based on the recommendation of the High Level Decentralization Coordination Committee formed under the Chairpersonship of the Prime Minister in 1996, the Local Self-Governance Act (LSGA) was enacted in 1999. The Act laid the foundation for a local self-governance system in the country. It has statutorily recognized the role of local self-governance and devolution to make local bodies (district development committee and village development committees) more responsive and accountable to their populace.
Following the promulgation of the LSGA in 1999, the GoN formulated a series of accompanying regulations. These legal frameworks have increased the authority and responsibilities of local bodies (LBs) and increased the devolution of administrative, judicial and fiscal powers to local elected bodies. The spirit of LSGA calls for comprehensive transferring of central decision making power and implementing authority on local level development activities to -local bodies. The important regulations in this regard are the Local Self-Governance Regulation 2000 and Financial Administration Regulations in 2000.
Based on the decentralization policy and the spirit of LSGA, the government has already devolved basic and primary education, primary health, agriculture (including livestock), and postal services to LBs in 2001. Apart from this, the Department of Local Infrastructure and Agricultural Road (DOLIDAR) of the Ministry of Local Development (MLD) has shifted its District Technical Offices established in all 75 districts of the country to DDCs to operate under the direct control of the DDCs. These offices have no separate program and budget, other than that of what is approved and allocated by the DDCs.
2 - 39
Another key role of the DDC in a district, in addition to the above, is to act as a development coordinator and facilitator.
The development priorities of the MLD are expansion, development and strengthening of local infrastructures in the district, together with strengthening of the decentralized governance system in the country. Nepal’s poverty reduction strategy paper has identified the decentralized governance system as one of its four pillars and the MLD is regarded as the custodian of this policy.
The decentralization procedures are also defined in the TYIP which shall be followed for development planning.
An organization chart of the MLD is shown in Annex 2.7.
2.7 One Village One Product (OVOP) Program
2.7.1 OVOP Concept and Policy in Nepal
Concept: OVOP is a rapidly evolving concept gradually being adopted by many countries across the world although it was pioneered by Mr. Morihiko Hiramatsu – the then Governor of Oita prefecture of Japan in 1976. It is a community development tool and a movement which encourages local communities to use their indigenous skills, local resources and know-how to create unique, outstanding products of their own, utilizing locally available materials with value addition and processing. Central to the OVOP movement is local identity, local pride and value addition. Focused on stimulating the latent energy of people in local communities, the overall purpose of the OVOP is to promote local economies by promoting indigenous skills at both national and international levels. Evidence shows that OVOP program products sell for premium prices in both local and international markets (APO, 2007). Figure 2.5 presents a conceptual model of the OVOP movement.
2 - 40
Development of Local peoples’ local products for Locally Marketing of the realization of commercialisatio Available Raw the potential n with local products in local Materials and benefits from identity and and International markets Products such products brandiing
Enabling Environment (Political will, Policies, Institutions, Infrastructures (roads), marketing, promotion, Human Resources, Awareness etc ) Figure 2.5 Conceptual Model of OVOP Program
While many countries around the world, such as Thailand, Kenya, South Korea, the Philippines and Mongolia have benefited from the improved livelihoods and rural economy of their people for more than two decades by implementing this innovative community development program, it was piloted in Nepal only in 2006 and is currently in its third pilot phase. The credit for introducing it in Nepal goes to Mr. Ono, the then economic advisor to the Ministry of Finance from JICA. In 2006, the Minister of Finance announced in his budget speech, that the government will introduce OVOP as pilot projects in some selected districts in Nepal. This led the MOAC to formulate and implement the OVOP program as pilot projects in the Bhaktapur, Sindhuli, Ramechhap and Bardiya districts in Nepal in partnership with the Federation of Nepalese Chamber of Commerce and Industries (FNCCI). The corresponding products selected for the OVOP program were Lapsi in Bhaktapur, Junar in Sindhuli and Ramechhap, trout fish in Nuwakot and Rasuwa and Bel fruit in Bardiya.
In Nepal, the OVOP concept has been borrowed but adapted to the country’s geographical situation and feasibilities. The difference is that the products have been identified by the name of the district, and not by the villages or the VDC. Within the district, the implementing agencies, particularly the DADO and the District Chambers of Commerce have identified some VDCs to the products. For example, in the Sindhuli district, Khaniyakharka and Nakajholi VDCs have been identified as Junar VDCs. However, products are branded by district name and not by the VDC. The objectives of the OVOP program are:
(a) Development and value addition of products based on demand of markets through local labor and skills with the involvement of local communities (b) Development of a competitive production systems and promotion of export by identification of exportable goods and through application of specialized production processes (c) Poverty reduction and economic development of local communities
Last but not least, it is worth mentioning here that the OVOP concept is not new to Nepalese people even though the program was only implemented recently in Nepal. It has actually been practiced by the Nepalese people for hundreds of years as evidenced by the countrywide popularity of Pharping ko Naspati (pear of Pharping), Bhojpur ko Khukri (Nepali indigenous sharp knife), Sindhuli ko Junar (Junar of Sindhuli) and so forth. There are hundreds of products in Nepal for which buyers, be they local or foreigners, pay higher than normal market prices for products when they are identified as hailing from a particular place, for example Pharping Pear.
OVOP Policy
Following the proclamation of piloting the OVOP movement in Nepal by the Honorable Finance Minister in the annual government policy and budget, the GoN approved the One Village One
2 - 41 Product Program Implementation Working Procedure, 2006 on November 27, 2006. The key features of this policy are:
(a) Implementation of the OVOP program based on direct partnership among public, private and local communities (b) Adoption of the public-private partnership modality in which the MOAC is to partner with the FNCCI, an apex body of industrialists and business houses in Nepal. (c) Active participation of all stakeholders within the concept of the Total Value Chain (d) Formation of the OVOP Program Implementation Committees at the central and district levels. (e) Implementation of the program as a three-year rolling plan (f) Identification of products and corresponding districts (g) Linking production and marketing aspects from the start of the project (h) Clear defined roles and responsibilities of all key actors and stakeholders, including the MOAC and FNCCI (i) Participatory program planning and formulation of targeted programs based on comparative benefits (j) Provision of no additional human resources for the implementation of the project, are to be adjusted from among the existing human resources of the concerned/participating agencies (k) Arrangements for regular supervision, monitoring and evaluation.
An Agri-business Promotion Committee was formed under the chairmanship of the Minister of Agriculture and Cooperatives for the purpose of facilitating the implementation of the “Agri-business Promotion Policy 2006”, approved by the GoN on November 27 2006. It has been also decided that necessary policy support to the OVOP movement would be provided through this committee. This decision indicates the government’s high level of commitment and support to the OVOP movement.
Likewise, the recently released draft of the National Industrial Policy 2009 has vowed to give priority to the OVOP program. This shows the high level of policy support and backing to the OVOP movement in Nepal.
2.7.2 Modality of OVOP Implementation
MOAC and FNCCI are the two leading agencies for implementing the OVOP program in Nepal. As stated earlier, the program follows the PPP approach. For the implementation of the program, almost 92 percent of the total cost has been shouldered by the GoN and the remaining 8 percent by FNCCI. Under this approach to service delivery, MOAC (public sector agency) and FNCCI (representative of the private sector) have been working towards achieving shared and/or common objectives of the OVOP program in which they share authority and responsibility, invest time and resources, and share risks and benefits.
According to the Working Procedure 2006, the OVOP program will be implemented as a three-year rolling -over program. However, it could be extended to five years or more as necessary.
Apart from the identification of different stakeholders for the implementation of the program the policy envisages to create a “Basket Fund” for OVOP program implementation. The basket fund is aimed at gathering the funding secured for the implementation of the the OVOP program in the country. The working procedure has depicted the mechanisms and processes for operating the fund. For dealing with the OVOP affairs and overseeing its implementation aspects, the Government has formed two committees, one at the central level and another at the district level. The central committee is coordinated by the Chairperson of the FNCCI with two joint coordinators, the Joint Secretary of the MOAC and the Executive Director of the Agriculture Enterprise Center (AEC). Established under the FNCCI, the AEC is responsible for providing technical backstopping and
2 - 42 support to it in agribusiness and commodity associations. This is a technical wing of the FNCCI. For managing the basket fund, a “Basket Fund Sub-Committee” has been formed under the coordinator-ship of the Joint Secretary of Agri-Business Promotion and Statistics Division (ABPSD) of MOAC. The main roles of this basket fund sub-committee are as follows:
• Implementation of the decisions of the OVOP Program Implementation Committee • Budgetary management of the approved programs • Conducting annual auditing of the program and submission of the audit report to the relevant agencies • Updating the basket-fund according to the additional budget received from different agencies
The program is heavily subsidized as follows:
• Free training to farmer communities • Plant saplings/fish fingerlings at highly subsidized prices (e.g. Rs.2.00/Lapsi plant) • 50 percent subsidy in agricultural tools and implements • Simplified loan procedures • Regular supervision, monitoring and technical backstopping from JTs/JTAs • Opportunities to participate in grading, processing and packaging training
2.7.3 Administration and Management Structure
For the implementation of the OVOP program the government has established coordination committees at the central and the district levels. The central level OVOP program implementation committee is coordinated by the chairman of the FNCCI. The two joint coordinators of this committee are the Joint Secretary (ABPSD) of the MOAC and the Chairman of the AEC/FNCCI. Since the Executive Director of the AEC is designated as the member-secretary of this committee, the Secretariat of this Committee has been established at the AEC. The OVOP Program Implementation Committee was established and it is responsible for approving the budget and programs according to the goals and objectives of the OVOP program. Likewise, this committee is also responsible for maintaining coordination with different agencies and stakeholders for successful implementation of the OVOP program. Roles, responsibilities and rights of this committee are mentioned in the Working Procedures approved by the GoN for implementing the OVOP program in November 2006.
Likewise, at the district level, the District Level Program Implementation Committee has been formed. The coordinator of this committee is the chairman of the district chamber of commerce and the chief of DADO is the joint coordinator. This committee is responsible for identifying the VDCs for the program, facilitating the implementation of the program in the district and coordinating with the district level stakeholders.
The aforementioned implementation arrangements reveal the government’s clear commitment to implementing the program under the joint responsibility and accountability of the MOAC and the FNCCI. However, its implementation requires the participation of several agencies and stakeholders as shown below in Table 2.4412.
12 The OVOP ‘Working Procedure, 2006. It was amended on 15 Falgun 2064 (27 February 2008).
2 - 43 Table 2.44 Key Agencies Involved in the Implementation of OVOP Program
Key roles / responsibilities S. Supervision Participation Organization Policy Impleme Coordination Credit/ N. and and General Support ntation Finance National District Monitoring Support Public 1 MOAC √ √ √ 2 DOA √ √ 3 HDD √ √ √ √ 4 FDD √ √ √ 5 DADO √ √ 6 NARC √ 7 MOI √ √ 8 MOCS √ √ 9 MLD √ 10 MOWCSC √ √ 11 DDC 12 VDC √ 13 WDO √ Private 1 FNCCI/AEC √ √ √ 2 District CCI √ √ √ 3 Banks √ Note: For Abbreviations see page on abbreviations and acronyms.
Within the MOAC, at the central level, the Fisheries Development Directorate and Fruit Development Directorate are responsible for implementing programs such as the provision of fingerlings, seedlings and training in their respective mandated areas. They also supervise and monitor programs in the districts. However, they will need to get their programs approved by the central committee and receive the fund through the OVOP Program Secretariat at the AEC.
The OVOP program envisages the support of the Ministries of Industry and Commerce and Supplies in the following areas: • Technology transfer • Quality specification and assessment • Trial and certification • Export promotion • Support for participation in international and domestic trade fairs • Emphasis through industry policy • Support in the marketing of produces • Taking initiatives in external assistance
The fund is managed jointly by the Executive Director of the AEC and the Joint Secretary (ABPSD) of the MOAC.
.At the district level, on the part of the MOAC, the DADO is responsible for the implementation of the program. Likewise, on the part of the FNCCI, respective district chambers of commerce and industry are responsible. A separate OVOP account is established in the district and the fund is spent on the joint signature of the DADO and chief officer of the District CCI. The DDC is also expected to contribute to the fund but this has not yet happened.
2.7.4 Pilot Project and its Status
This is the third year of the OVOP program implementation. Map 2.2 shows the OVOP program coverage in Nepal and Table 2.45 lists products selected in the pilot phase of the program. Of the five program formulation survey districts, the OVOP program is being implemented in Sindhuli and Ramechhap.
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(Source: OVOP Program Secretariat, AEC)
Map 2.2 OVOP Program Coverage
Table 2.45 Products Selected in the Pilot Phase of OVOP Program
S. N. Product District VDCs and Municipality Year 1: Pilot Phase (2006/07) 1 Junar (Sweet Orange) Sindhuli Ratanchura and Basheshwar (Citrus sinensis) Ramechhap Okhreni and Sukhajor 2 Lapsi Bhaktapur Changu Narayan, Jhaukhel, Chhaling, Bageshwari, Nagarkot, (Choerospondias axillaries) Sudal, Tathali, Chitapol, Nakhel, Sipadol, Dadhikot and Gundu 3 Rainbow Trout Nuwakot Rasuwa 4 Bel (Aegle marmelos) Siraha Bardiya Banke Year 2 and 3: Additional Programs (2007/08) 1 Cymbidium Orchid Lalitpur Badhikhel and Godawari 2 Agro-tourism Kaski Lekhnath Municipality Source: OVOP Secretariate
Review of the program implementation reveals that that government has been increasing its budget every year. In the first year (2006/07), a total of Rs. 3.7 million was allocated which has been increased by nearly nine times in 2007/08 (Rs. 31.5 million). In 2008/09, the government has allocated a total of Rs. 35.37 million. Table 2.46 provides a brief account of the current status of these programs being implemented in the districts.
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Table 2.46: Implementation Status of Sweet Orange, Lapsi and Bel Under OVOP Program
Products, Activities and Achievements 1. Sweet Orange (Citrus sinensis) 1.1 Activities Improvement in the internal markets in primary stage Selection of 2 VDCs from each district as the Junar villages i.e. Okhreni and Sukahjor in Ramechhap and Baseswor and Ratnachura in Sindhuli Development of the existing Junar orchard in the selected VDCs Development of grading machine and packaging boxes for “A” grade Junar 1.2 Achievements Establishment of two Junar cooperatives in Sindhuli and Ramechhap districts A" grade Junar of both Ramechhap and Sindhuli have been marketed in Kathmandu market and other major markets. 2. Lapsi (Choerospondias axillaries) 2.1 Activities Selection of Baktapur district covering 12 potential villages for Lapsi production Distribution of 16,594 Lapsi saplings to the farmers in the village selected 2.2 Achievements High survival rate (78%) of Lapsi seedlings (13000 plants surviving out of 16,594 total saplings planted) 3. Bel (Aegle marmelos) 3.1 Activities Establishment of Bel processing unit and entrepreneurship development Marketing and promotion of Bel squash in the internal markets, Working with two Bel producers i.e. Panchang Herbal Industry, Lahan in Siraha district and "Nava Durga Samudayik Sarbat Uddyog", Woralibazar in Bardiy Alternative Herbal Ltd. Is working as market promoter between the OVOP program and the Bel processors 3.2 Achievements Farmers about to the launch improved forms of squash with new brand names such as “Saugat” along with “Marmelos”. Increased quantity of Bel and squash production Involvement of community users group in the program
Last but not least, a review of the OVOP program implementation status to date reveals that this program is a priority program of the GoN, and that the MOAC is committed to making it a success. Encouragingly, the program covers two of the 10 Sindhuli Road Corridor districts, Sindhuli and Ramechhap and focuses on a unique Nepali fruit crop, Junar (sweet orange). Indeed, the quality and taste of Junar as found in these two districts are not found elsewhere in the world. Sindhuli ko Junar (Junar of Sindhuli) has now become as popular as Phariping ko Naspati (pear of Pharping).
2.7.5 First Cymbidium Orchid Show 2009
The Cymbidium orchid has been listed as an OVOP product from the Lalitpur district. The government is promoting the product in two VDCs namely Badhikel and Godawari through the OVOP program. The Cymbidium orchid Growers’ Group (CYMOGGs) has been united under the cymbidium orchid cultivation program of the government’s OVOP movement. Given the high demand in the international market, the group has been continuously promoting the product in Nepal.
The first Cymbidium Orchid Show was organized by the Cymbidium Orchid Growers’ Group (CYMOGG) in Kathmandu from March 21 to 22, 2009. The group is hopeful of making cymbidium orchid a major exportable floriculture product within 10 years and has exported samples of the cymbidium orchid to Arab countries and Singapore. Despite the high demand the group is unable to grow the required quantity due to little cultivation at the local level. There is great demand for cymbidium orchids in the international market.
In Nepal, nine nurseries are involved in growing the orchid under the OVOP program in the Lalitpur district. The geo-climatic conditions prevalent at altitudes between 1,300 m and 1, 700 m are best suited for growing cymbidium orchid. With adequate inputs such as plant materials and technical training; the orchid can become at new primary export item from Nepal.
2 - 46 Nepal has 385 species of orchids under 102 genres and the number is increasing every year. The show had 100 varieties of cymbidium classed into four categories: Standard, priced from Rs.3,000 and up; Intermediate - priced between Rs.1,000 and Rs.2,000; Miniature, priced between Rs.800 and Rs.1,000; and Pendulous, which is the cheapest of all.
2.8 JICA Nepal Position Paper on Agriculture and Rural Development
2.8.1 Purposes
JICA prepared the Nepal Position Paper on Agriculture and Rural Development for the purposes of identifying the priority issues in agriculture and rural development and suggesting principles and programs for JICA’s cooperation on agriculture and rural development.
2.8.2 Priority Issues
The Paper identified the priority issues of the subject as follows:
・ 66 percent of total population of Nepal is engaged in agriculture. In most of the rural areas in Nepal, agriculture is the sole industry and plays an important role in sustaining the livelihoods of the people. ・ Agriculture in Nepal is characterized by its diversified geographical and climate conditions. ・ Low productivity is an issue in agriculture due to the difficult geographical conditions. Infrastructures for agricultural production are not provided sufficiently and the access to resources such as fertilizers/seeds/materials and extension services are limited. ・ There is no modernized marketing system in Nepal. It is only around the major urban areas where there are favorable conditions for bringing agro-products to markets. Therefore, it is difficult to develop pocket areas for agro-products in the genuinely rural areas. Furthermore, the opportunities for exporting agro-products are very limited since Nepal is surrounded by China and India, which have great advantages in agro-production in general. ・ The concepts of marketing of agro-products are not spreading among farmers though there are some advanced cooperatives dealing with their commodities in markets. ・ Food deficiency has been observed in the rural remote areas of Nepal every year. 55 out of 75 districts still suffer from insufficiency, as grains produced in the fertile Tarai belt do not spontaneously go up to the hilly and mountainous areas due to the high cost of transportation. ・ The GoN’s budget allocation on agriculture is limited to only around 5 percent of its total expenditure (FY 2006/07, Source: TYIP), which could be too small to cover the two thirds of the total population. ・ Human resources in agriculture and rural development are yet to be developed since there seems to be gaps between the existing policy and the implementation capability of the GoN. The economic growth rate in this sector is only around 2 percent while APP sets the growth at around 3 percent annually.
2.9 Learning from the Past JICA Projects
JICA has been implementing many agriculture-related cooperation projects in Nepal. Accordingly it is essential to review the projects’ outcomes and learn from their experiences. The following four technical cooperation projects are briefly reviewed on reports and conversations from relevant officers and stakeholders. The Study Team specifically visited the villages, where the ATEIP (Agriculture Training and Extension Improvement Project) was implemented in the Dhading District, and interviewed officers (DADO and JT/JTA) and farmers.
(1) Janakpur Zone Agriculture Development Project (1971-1984) (2) Horticulture Development Project Phase I & Phase II (1985-1990 & 1992-1999) (3) Agriculture Training and Extension Improvement Project (2004-2009)
2 - 47 (4) Sericulture Development and Extension Project (2006-2011)
(1) Janakpur Zone Agriculture Development Project (JADP)
The Project was conducted for 13 years. Initially the Project was constructing tube wells in the Janakpur area and conducting demonstration and extension works for mainly paddy and other crops cultivated in the Tarai region.
The project expanded its activities in the Sindhuli district in the late 70’s and horticulture experiments and extensions were conducted. From these activities, Junar was identified as a promising fruit in the area.
(2) Horticulture Development Project Phase I & Phase II
The Project commenced the following experiences at the JADP farm in the Sindhuli district to consider the potential of horticulture development in Nepal.
The Project introduced several Japanese fruits to the country by establishing the Central Horticultural Center with the GoN for experiment, demonstration and training.
After various trials of fruits in the Center, the Project, as well as the Center, recommended 4 crops, namely (a) citrus including Junar, (b) persimmon, (c) Japanese pear and (d) grapes. The Center has been operating with the presence of JOCV and Senior Volunteers after the Project was completed.
This Project could be referred to in promoting horticulture in the program formulation.
(3) Agriculture Training and Extension Improvement Project (ATEIP)
The Project’s purpose was to improve “agriculture extension services” of DOA, particularly introducing practical extension services in the field.
The project was comprised of the following four activities: a. Implementation of training and demonstration farms (T/D farms) for training of JT/JTA b. Fosterage of extension model farmers (E/M Farmers) c. Organizing of agricultural development committees (ADCs) in VDCs
The Project successfully completed in January 2009 in accordance with the Project Evaluation Report. It was noted that one of the reasons for the Project’s success was introduction of a micro-irrigation component utilizing the counterpart fund of Japan’s Food Production Grant.
The Study Team visited the DADO at Chadingbesi, Dhading district and a few villages to fnd out if the continuity of Project activities was secured after the Project was terminated.
The DADO is arranging micro-irrigation programs finding other financial sources such as the SSMP (Sustainable Soil Management Project) under SDC finance, which indicates the continuation of the Project’s activities.
The ADC Chair-person stated that though the members’ attendance at monthly ADC meeting has been reduced a little since the Project ceased, ADC meetings have continuously been held, attended by JT/JTA. She also stated that a visit by a Japanese mission encourage ADC activities.
Visiting the E/M farmer in Banighat VDC showed positive impacts of the Project were shown. The E/M farmer keeps records of farming budgets. He recorded daily expenses and sales of every crop with cultivation extent and ultimately income from each crop. 15 out of 20 ADC members in all
2 - 48 were keeping such records. The ADC constructed a micro-irrigation system to irrigate 4 ha for 16 farmers during the Project period. The construction cost of the system was Rs.103,000, for which Rs.50,000 were provided by the Project. The irrigation is functioning well and the E/M farmer cultivates a few gourd varieties in his farm with irrigation. He indicated that there are similar potentials of irrigation in neighboring villages and farmers in those villages could cultivate more if micro-irrigation were to be materialized.
The ADC and the E/M farmer in Banighat VDC are functioning well and show positive impacts of the Project and its sustainability.
Naubise ADC members stated that a major issue in agriculture activities is availability of quality seeds. Farmers in the area do not have any problems in marketing of vegetables because of easy access to markets owing to road availability, but due to the poor quality of seeds, products are sometimes not so good and prices must be low.
Experiences in ATEIP could be a good reference to the program formulation.
(4) Sericulture Development and Extension Project (SDEP)
Sericulture development assistance by JICA to India started in of the mid 90’s for the development of tropical sericulture and it was successful. The climate in Kathmandu Valley was favorable for sericulture and sericulture is a labor intensive industry. With this in mind, the SDEP commenced and the mulberry was grown well. Seed production, as well as cocoon and silk production were successfully established with technical inputs from JICA experts. On the other hand, as traditional silk weavers are not available in Nepal, silk produced in Nepal shall be consumed by weavers trained by the Project or by NGOs or shall be exported to India.
It may be difficult to introduce sericulture in the Sindhuli Road Corridor as there is no basis for production of silk and weaving of silk fabrics.
2.10 Assistance of Other Donors
There are many cooperation projects that have been implemented by various donor agencies for the improvement of life in rural livelihoods in Nepal. Some of the ongoing projects with a similar concept to this Study are described as follows:
2.10.1 Commercial Agriculture Development Project (CADP), ADB (2006-2012)
The overall objective of the CADP is to reduce poverty in the rural communities in the Eastern Development Region (EDR). The project aims to realize the objectives of poverty reduction by targeting poor areas and expanding the economic opportunities of the rural poor, involving the poor and other stakeholders in project activities, catalyzing private sector investment in agriculture, and strengthening the capacity of local institutions.
The outcome of the Project is improved efficiency in production, marketing and processing of high-value crops (HVCs) such as vegetables, fruits, tea, and spices within the project area. The Project intends to (i) increase employment in rural areas, (ii) add value to agriculture products, and (iii) increase rural incomes.
The Project has been implemented in Taplejung, Dhankuta, Ilam, Panchtar, Terhathum, Udayapur, Jhapa, Morang, Saptari, Siraha, and Sunsari of the EDR.
The Project’s approach is to establish a commercial agriculture fund (CAF) to be managed by Commercial Agriculture Alliance (CAA) which is a non-profit company registered at the Office of Company as per the project design. The CAA has two categories of membership; general and
2 - 49 nominated. General members include farmer groups or cooperatives, traders, and processors engaged in commercial agricultural activities within the project area. Nominated members include (i) the Ministry of Agriculture and Cooperatives, and the Ministry of Local Development, (ii) district development committees (DDCs) of the 11 project districts and (iii) the Agro Enterprise Center.
For this project the ADB has agreed to provide a grant assistance amounting to US $18.0 million (Rs.270.8 million) to the Government of Nepal over the six year period of its implementation. The project has also established a project management unit (PMU) in Biratnagar to oversee the implementation of the project.
2.10.2 Sustainable Soil Management Program (SSMP) (1998 – 2010, 3 Phases)
Implemented in collaboration with the Government of Nepal (GoN) and the Civil Society Actors of Nepal in 1999, and financed by the Swiss Agency for Development and Cooperation (SDC), the Sustainable Soil Management Program (SSMP) envisages “improved livelihood of women and men farmers from bari-dominated hill farming systems in the mid-hills of Nepal through productive and sustainable management of soil”. The program is now in its third phase (January 2008-December 2010) and the project is estimated to cost, CHF 4,600,000. 00
The SSMP has been implemented in 12 mid-Hill districts of the country, namely Baglung, Baitadi, Dadeldhura, Dhading, Dolakha, Doti, Kavre, Myagdi, Okhaldunga, Sindhupalchowk, Surkhet, and Syangja. The program has been conceived to assist farmers in the mid-hills of Nepal to respond to the rapid intensification of land use and reduced access to biomass from public land. The goal (third phase) is to contribute to improving soil fertility and productivity in bari-dominated systems in the mid-hills of Nepal. The program has been promoting SSMP techniques in rain-fed bari-dominated farming systems across the mid-hills with priority given to more poverty-affected districts.
2.10.3 Smallholder Irrigation Market Initiative (SIMI, 2003-2009)
The Nepal Smallholder Irrigation Market Initiative (SIMI) was developed by Winrock International (INGO) and its partner International Development Enterprises as part of the global SIMI Network, which promotes micro-irrigation to help smallholder farmers escape poverty. The project aims to increase the participating smallholder families’ incomes by at least 50 percent. The project is financed by USAID.
SIMI takes a value-chain or business development services (BDS) approach. Major activities include (1) Supply chain development by building the capacity of micro-irrigation equipment manufacturers, dealers, and installers, and building the capacity of agro-input suppliers to provide needed inputs with embedded knowledge, (2) Market development focused on building local committees and collection centers to aggregate smallholder produce, (3) Social mobilization and agriculture extension working with farmer groups to build awareness of new opportunities and develop linkages, (4) Water system development to build hybrid piped water systems that provide water for drinking and micro irrigation, (5) implementing a gender and disadvantaged group program providing additional training, facilitating literacy, and micro credit, and (6) Government program that is building capacity of officers to support the SIMI approach with public goods including marketing infrastructure, agricultural and price information, adaptive research, and public policy.
Project costs for the initial development of the value chain and generation of demand for micro irrigation equipment in an environment characterized by poor infrastructure and underdevelopment is less than US$100 per adopting household. Adopting households under this program are expected to increase their incomes by more than US$ 250 per year from land plots less than 500 sq. m through marketing high-value crops to large and growing South Asian markets.
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2.10.4 Coffee Promotion Project (2003-2010)
The Coffee Promotion Project (CoPP) was started in 2003 and is gradually expanding to a sector support project. Implemented with the support of Swiss Development and Cooperation, the project facilitates the development of the coffee sector. The project is now in its second phase. It strengthens the stakeholders for production, processing and marketing of quality coffee for domestic as well as international markets.
The project is implemented in eight hilly districts namely, Gulmi, Palpa, Parbat, Syangja, Kaski, Kavre, Sindhupalchowk and Lalitpur.
About CHF 300,000 per year from Helvetas and DFID have been contributed to this project. Major investments are made by farmers and the private sector.
2.10.5 Poverty Alleviation in Selected Rural Areas of Nepal (PASRA, 2005-10)
Implemented by the Ministry of Local Development, the objective of this project is to improve the prerequisites for social and economic development among the poor in selected rural districts of Nepal. This is a five year project and is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ). The project efforts are geared towards the establishment and strengthening of diversified, local systems for providing services aimed at reducing supply shortages in rural areas.
The range of advisory services provided under PASRA also includes mechanisms and instruments for promoting transparency and accountability as well as for transforming conflicts. This support is envisaged to help local service providers – especially local authorities – to offer services better tailored to the needs and demands of the populace and markets, such as for livestock and crop production.
2.10.6 Project for Agriculture Commercialization and Trade (PACT, 2009-2015)
Funded by the World Bank, the development objective of the project is to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in 25 districts. The project intends to achieve this by (i) helping farmer groups and cooperatives engage in profitable market-oriented production and improved access to markets through the provision of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders and, (iii) reducing existing obstacles to agriculture and food trade thereby increasing the ability of farmers and agribusiness to respond to sanitary, phyto-sanitary (SPS) and food-quality standards to meet domestic and international market requirements. This project has the following three components :
Component 1: Agriculture and Rural Business Development Component 2: Support for Sanitary and Phyto-sanitary Facilities and Food Quality Management Component 3: Project Management and Monitoring and Evaluation
The project will be implemented in Bara, Chitwan, Sarlahi, Dhanusha, Kavre, Parsa, Rautahat, Mahottari, Dhading, Kathmandu, Lalitpur, Rupandehi, Nawalparasi, Syangya, Palpa, Kaski, Tanahu, Kapilvastu, Lamjung, Dang, Banke, Bardiya, Surkhet, Kailali, and Kanchanpur.
The key feature of this project is that it seeks to pursue partnerships which entail cooperation between farmer and farmer groups and vertical cooperation among partners of a value chain and that value chain participants are to be the main implementers and beneficiaries of the project. The
2 - 51 total project cost is $26.55 million, of which $20 million is International Development Association (IDA) credit/grant, $5.82 million is beneficiary contribution in cash and kind and $0.73 million is GoN contribution. The World Bank has already approved this project but waiting to get GoN’s approval.
2.10.7 Community Livestock Development Project (2005-2011)
Funded by the Asian Development Project, this project is the follow-up of the Third Livestock Development Project. The objectives of this project are
(a) To improve the levels of food security, nutrition, incomes and employment through increased productivity of the livestock sub-sector in an environmentally sustainable and socially equitable manner. (b) To enhance the capacity of the people to manage by themselves the ongoing process of development.
The project is focused on (a) gender and socially inclusive development and (b) improvements in the levels of food security, nutrition, and employment from livestock production and small-scale livestock related enterprises. It has five components:
(a) Community Development and Capacity Building (b) Livestock Productivity Improvement (c) Livestock Processing and Marketing (d) Livelihoods Pilot Program for Higher Altitudes (e) Project Management Services
Project activities are based on the nature of support required. Therefore, its target areas have been categorized as follows:
(a) Intensive livestock production support in 22 Districts (b) Processing, marketing and commercialization support in 21 other districts (c) Livelihoods pilot program in 5 districts
The total project cost is $33 million, of which $20 million is ADB grant.
2.10.8 Poverty Alleviation Fund Project (2006 – not defined)
The GoN received a grant of US$15 million for the PAF pilot project in six of the least developed districts as defined by GoN's district deprivation index. Additional financing of US$25 million is committed to cover 19 additional districts, also rated among the poorest.
The PAF Project has been and is to be implemented focusing on organization of beneficiaries, among the poor in rural Nepal. The program provides funding for beneficiaries selected from the rural poor through community organizations for infrastructure, procurement of livestock and so on with contribution from participants. A partner organization selected from NGOs registered in the district assists the selection of beneficiaries, establishment of organization, provide technical assistance and so on, to implement the project in a VDC.
Four districts of the SRC, namely Kavre, Ramechhap, Sindhuli and Mahottari were selected to implement the PAF Project.
The PAF is an autonomous body created under a separate ordinance and managed by the board and PMU. The original target was 90,000 households (495,000 individuals) in six pilot districts by the end of 2010 but it is likely to be achieved before the end of 2009. Additional financing decided in 2009 for the scaling-up of the project is expected to reach an additional 150,000 households.
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