What does the new budget have for Nepal's agriculture sector?

Finance Minister Yubaraj Khatiwada unveiled budget plans for the upcoming fiscal year last Thursday. The new budget has some new provisions for the agriculture sector and continued some old ones with priorities on irrigation, seeds, fertilisers, capital, technology and market to create self-reliance in certain products and enhance production level and productivity within the sector.  Here’s a list of what the budget is about:

• Run programs with a view to become self-reliant in dairy, vegetable and meat products.

• Develop additional 250 pocket areas for agriculture and livestock farming and ensure at least one pocket area in each local administrative unit.

• Encourage production of high-value agricultural products like produces with nutritional and medicinal value and also the production of rice and maize

• Launch food laboratories in Gandaki and Karnali province in the upcoming fiscal year. Mobile laboratories for soil quality testing and to provide consultancy on agriculture inputs such as seeds and fertilisers will be continued

• NRs 11 billion to ensure timely supply of chemical fertilisers. The allocation was NRs nine billion and NRs 4.5 billion in previous fiscal years respectively

• Encourage organic farming and brand Nepal’s organic produce for exports

• Provision of cash refunds for farmers buying hybrid seeds from licensed sellers and intensify seed quality test

• Develop market infrastructures across the local level: Central Fruit and Flower Market (haat bazaar) currently under-construction at Kathmandu’s Chobhar will be brought into operation next fiscal year. Ministry of Agriculture and Livestock Development (MoALD) is developing such haat bazaars in Morang, Butwal, Jhapa and Dhanusha as well

• Fiscal transfers to local levels to develop 78 agri wholesale market centres spread across seven provinces. Budget to develop province-level agriculture ‘hub market’

• Increase farmers’ access to arable land by promoting land lease, chaklaabandi and community cooperative agriculture. The government will purchase farm harvest from the government by determining appropriate reference price (samarthan mulya)

• Collective farming and farming done through local levels, cooperative and land banks will only be provided with subsidies to build cold storage from the next fiscal year onwards. Last year, it was announced that government will arrange cold storages for farmers at minimum service charge built with government subsidy

• NRs one billion as fiscal transfers to local levels to build 200 food storage centres with a view to combat food insecurity, improve supply chain and provide price security to farmers.  These centres will procure produces whose reference prices are determined by the government and also be used as processing centres

• Private and government run food storage centres will be repaired and maintained and expanded into food banks

• NRs 500 million to make provision for at least one agriculture and one livestock technical service provider in each local level. Last year, the government had arranged for at least one technician.

• Engage students in agriculture and other technical fields through internships and placement opportunities

• Increased subsidy for insurance premium to expand the use of crop and livestock insurance and minimise risks. Farmers will now be allowed to pay their crop insurance premiums after the harvest

• Develop/encourage mobile apps to simplify farmers’ access with information relating to weather, market price, seed and technology to reduce risk for farmers

• Provisioned subsidies for silk, cotton and wool cultivation and processing through cooperatives and allocated Rs. 950 million for subsidy to sugarcane farmers based on production level. Similar amount was earmarked for sugarcane farmers previous year as well

• Work scope and capacity of Nepal Agriculture Research Council will be expanded. Researches will be carried out on local traditional food, livestock and fisheries and on registry, productivity and multiuse of other harvests. Agriculture colleges will also be encouraged into research works

• Breed improvement programmes, fodder agriculture and comprehensive pasture area development will be expanded to make commercial livestock farming attractive. Quarantines, labs and other relevant infrastructures will be built at main border points

• All forms of agriculture subsidies will be revised to avoid their duplication at central, provincial and local level

• Farmer’s Credit Card will be launched to facilitate farmers’ simplified access with agriculture debt facilities

• Agriculture volunteers will be mobilised to provide fundamental agriculture and technical support at all local levels with unused arable lands

As a part of Covid financial package, the budget has arranged refinancing facility up to NRs 100 billion that will be provided through Nepal Rastra Bank as concessional loans at five percent interest rate to the MSMEs, agriculture, cottage, production-based industries, and hotel-tourism industries.

In all, the government has allocated budget of NRs 41.40 billion for agriculture and livestock sector, which was NRs 34.80 billion last year, an increment by 19%.

However, Minister Khatiwada has said that the new budget translates into around NRs 80 billion if provisions made within line sectors/ministries such as energy, water resources and irrigation, land management, cooperatives and poverty alleviation and industry, commerce and supplies, which touch upon agriculture sector directly, are also accounted. He made the remark while discussing

What was in the last year’s budget?

Last year, the government had allocated NRs. 8.10 billion for Prime Minister Agriculture Modernisation Programme with an objective to expand into additional 39 zones covering 69,000 hectares, which is still ongoing but reduced this year.

The government had also arranged for subsidies, technical support and tax-concessions on imports for projects on commercial farming, livestock farming and cultivation of medicinal herbs that employed 100 ropanis of land in the hills and 100 bighas in the Terai region to encourage, collective, cooperative and contract farming through land-pooling.

Budgets were also allocated to Agricultural Inputs Company Limited to install machinery for the production of blended fertiliser. A billion rupees was allocated to ease access of medium and small farmer-entrepreneurs to concessional loans from the Small Farmers Development Bank using their projects as collateral.

There were plans for fruit saplings production and distribution aimed at doubling the area covered by horticulture within the next five years and expansion of fruit cultivation through public-private partnerships based on climatic and topographical potential.

The budget also sought to encourage export by producing and processing, packaging and branding of high value cash and off seasonal crops.

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It had also envisioned to turn Agriculture Knowledge Centres into call centres to provide immediate, necessary consultation to farmer, develop agriculture and livestock farms into Centres of Excellence centres in partnership with provincial and local levels and establish agriculture research centres in Province 5 and the Far-western Province.

Subsidy amounting to NRs. 500 million were arranged to encourage youth in collective, cooperative, leasehold and contract farming.

For organic farming, the government had aimed at encouraging provinces to establish model organic agricultural farms with main emphasis on hill districts including the Karnali Province; planned to establish large-scale biogas plants and encourage the use of bio-slurry for production of organic fertiliser to reduce the use of LPGs.

It had also planned to encourage young migrant returnees to undertake organic farming as a business and promote roof-top organic vegetable farming in urban areas by utilising household waste.

(from the Nepal Budget Speech 2076/77 and 2077/78)

By the FarSight