Economics: Agriculture

Agriculture

Agriculture is the backbone of Nepalese economy, means of livelihood for the majority of the population and the main source of income and employment generation. Therefore, it rightly deserves the topmost priority because the economy is still caught up in the initial stage of its development where the income generated through industrial sector as well as internal market expansion from non-agriculture sector depends upon development of agriculture sector.

The agriculture sector in Nepal contributes approximately 33 percent of the GDP and employees an estimated 78% of total labour force. Therefore, agriculture plays a very important role in Nepalese economy.

Importance of Agriculture

The importance of agriculture in the economic development of Nepal is very high. It is the primary sector of the economy, providing the basic necessities for the existence of people. It is also a way of life, which has shaped up thoughts and outlooks of millions of Nepalese people. Some of the major roles of agriculture are as follows:

1. Major source of food
   The agriculture sector fulfills the basic food requirements of the growing population. It provides various kinds of staple food crops, cash crop, fruits products, vegetables, etc which are essential consumptions for human life.
   
   
2. Source of industrial raw materials
   Various types of industries are based on agricultural inputs such as furniture, paper and paper product, textiles, handicrafts, medicine, etc. Agriculture sector provides raw materials such as raw jute, timber, grass, herbs, cotton, sugarcane, tobacco etc as inputs to these production systems.
   
   
3. Source of employment
   Agriculture sector provides employment opportunities to about 78% of the total working population of the country. Since agriculture is highly labour intensive occupation, it generates direct and indirect employment opportunities to unskilled, semi-skilled and highly skilled manpower.
   
   
4. Major source of national income
   Agriculture is the major source of national income, which contributes more than 34% of the total product of the country. Agriculture, which significantly contributed in the past, declined due to the gradual development in the industrial and tertiary sectors. These sectors have substantially increased their contribution to the national income in the recent years.
   
   
5. Major sources of export
   The agricultural products are crucial to the development of foreign export based on agricultural products including animal and forests products. The major exports are food grains, timber, livestock, etc. Exports constitute a source of foreign exchange earning. Without a substantial increase in the export of agricultural products, the country cannot correct the trade deficit.
   
   
6. Major source of government revenue
   Agriculture is the major source of government revenue. Land tax, registration and other payments from part of the government revenue. Modernized agriculture can contribute a large share to the national income.
   
   
7. Increase in living standard of the rural people
   Other sectors of the economy i.e., industry, trade and commerce develop with the development of agriculture sector. As a consequence, it helps to increase employment and income opportunities for the people. The more income means the increase in the demand for consumer goods which, in turn, increases living standard of the people.
   
   

Characteristics of Nepalese Agriculture

Nepal is an agricultural country. It is the main occupation of Nepalese people. It has an overall impact on the economy. Around 76 percent people are engaged in this sector. According to the census 2002 AD, 66% of an active population is engaged in agriculture. It occupies 33% share of total gross domestic product (GDP). Similarly, it has a great contribution to the internal and external economy.

Hence, Nepalese economy is the agro-based economy. It has its own special characteristics. Some of the main characteristics of Nepalese agriculture are as follows:

1. Subsistence farming
   Nepalese people are engaged in agriculture for their livelihood. They are producing different crops for the shake of their life. They do not have a profit motive. The sector has not been commercialized and modernized. The practice of subsistence farming is very limited that also only in fruit and vegetables.
   
   
2. Monsoon based agriculture
   The agriculture of Nepal is characterized by monsoon based agriculture. It has also been taken as the lifeblood of agriculture. It supports the modernization and commercialization of this sector but still only around 50% arable land has irrigation facility. Rest of the cultivable land is depending on Monsoon.
   
   
3. Traditional farming system
   The farming in Nepal is still very traditional. Still, the Nepalese farmer depends upon the traditional technology and primitive tools of farming. Modern agricultural tools, equipment, improved seeds, fertilizers etc are rarely used which result in low productivity.
   
   
4. Fragmentation of land
   The average size of land holding is 1.23 hectares. About 75% of the total land holding in the country is below 1 hectare. It limits in the modernization of agriculture. It is the result of our social custom i.e. legal ownership of son is parent's property.
   
   
5. Dual ownership of land
   There is joint ownership of land by landlord and tenant. It reflects dual ownership which creates a problem in the development of agriculture. The landlord doesn't have any effort in production but takes a substantial portion of the agricultural output. It discourages the tenants for their agriculture activities.
   
   
6. Dominated by food crops
   Nepalese farming system is predominated by food crops. It occupies 89.2 percent of the total arable land. In total production food crops like paddy, maize, barley, millet, wheat etc cover 65% and remaining 35% by cash crops like sugarcane, tobacco, oilseeds, jute etc.
   
   
7. Low productivity
   Agro-productivity of Nepal is far below as compared to develop an economy. Per hector, the output is less than 2 metric tons. It is the result of inferior seeds, the traditional method of farming, lack of irrigation, etc.

Problems of Nepalese Agriculture

Agriculture regarded as the backbone of Nepalese economy, is still in an underdeveloped state. Its operation is yet in subsistence level. The yield per unit of land is very low and single cropping prevails in most parts of the country. Agriculture in Nepal has been facing a number of problems as given below:

1. Lack of agricultural credit
   Nepalese farmers generally suffer from acute poverty. More than 25% of the Nepalese people live below the poverty and most of them are farmers. Agricultural Development Bank, Nepal (ADB/N) does not reach out to the majority of the poor people. Hence, the agricultural credit has been the most serious problem in Nepal.
   
   
2. Lack of irrigation facilities
   Agriculture in Nepal is heavily dependent on monsoon. Only 64% of land are found to be irrigated and of it, only 38% of the arable is estimated to come under irrigation round the year. Thus, agriculture is not possible due to the lack of adequate irrigation facility.
   
   
3. Lack of marketing facilities
   The agricultural marketing system in Nepal is unorganized. Most of the farmers sell their product at local market or to the middleman. Farmers receive cheaper prices for their produce than in the market.
   
   
4. Lack of infrastructure
   Development of agriculture is highly dependent on the availability of physical infrastructure for modernization of the agricultural sector. Roads, irrigation facilities, equipment, warehouse, market centers are the necessary facilities for exchange of agri-products to increase the income of farmers.
   
   
5. Lack of agricultural research
   Adequate research activities are needed to be conducted for the improvement in agricultural practices and increasing agricultural productivity. But research activities conducted in Nepal are not adequate and not farm-based. Lacking research on agriculture has been the problem for farmers in Nepal for the cultivation of product.
   
   
6. Lack of advance technology
   Lack of education and widespread poverty has disabled Nepalese peasants from being able to increase production and productivity. Farmers are still unable to use appropriate agricultural inputs such as new techniques, improved seeds, fertilizers, insecticides, etc.
   
   
7. Defective land tenure system
   Dual ownership of land is another problem of the Nepalese agriculture. One class of people cultivates the land and the other class reaps the benefits without any labour. So the poor always get discouraged to work hard and increase production.