Agriculture growth holds best bet to defeat poverty

Dr Devendra Gauchan

Agriculture development is a key to poverty reduction, as it is a source of livelihood for the majority of rural poor in Nepal. It is the main source of income, savings, and gainful employment of the rural poor. It is pivotal for any attempt to increase incomes, alleviate widespr-ead poverty and uplift living standards. The link between poverty and low productivity of agriculture is close. Slight changes in the agriculture production can effect significantly in the overall GDP growth and poverty reduction. The progress of the sector will determine our economic future.

However, agriculture is still subsistence oriented and its growth over the past two decades has barely kept pace with the population growth. Agriculture in Nepal is still a rural phenomenon and characterised by low productivity and low commercialisation. Despite its importance in development, it has not received adequate attention and priority in the national budget. The sector in reality is severely under-funded, although in national plans and policies, it has been stated as the priority sector.

For example, the agriculture sector, which contributes almost 40 of the GDP and supports livelihood of 80 per cent of the population, received less support than health, education and defence in current fiscal year.

Out of total budget allocation, only Rs 2.68 billion was set aside for agriculture sector and Rs 2.62 billion for irrigation as against Rs 6.8 billion for health, Rs 8 billion for education, Rs 8 billion for defence.

As many experts viewed that the budget was, silent on matters like agricultural research investment, commercialisation of agriculture, export diversification and identification of our competitive and comparative advantages. Moreover, the actual amount spent might be less than allocated.

The key policies and plans of Nepal such as 20-years Agricultural Perspective Plan (1997-2016) and Tenth plan (2003-2007) acknowledge that agriculture as centrepiece of poverty reduction strategy. The APP’s vision is reflected in the Ninth Plan and the present Tenth Plan, which recognises that a high broad-based and pro-poor growth is a necessary condition for poverty reduction.

Despite good plans and policies, implementation of agricultural development and poverty reduction programmes remain very poor due to low budget allocation, lack of clear action plans and stagnant programmes. Thus there was no perceptible improvement in agriculture and rural per capita income for a long period to make a difference in reducing rural poverty. Rather the gap between rich and poor and between urban and rural sector widened ever than before. The rural sector was highly neglected and only sector reaping the benefits of development has always been urban sector where, only about 10 per cent of the total population lives.

This uneven development, poverty and underdevelopment, existing social and economic deprivation of socially excluded and ethnic communities provided a congenial environment for the increasing violence.

In the past, agriculture development efforts mainly focused on production largely assuming that market forces would take care of farmers’ marketing needs. However, many indications showed that marketing constraints have emerged as a secondary problem in areas where farmers have achieved production gain. Poor product prices and lack of market for agricultural produces are key constraint to agricultural development and poverty reduction. Experience of many emerging new economies has shown that substantial agriculture growth cannot be achieved without agricultural diversification and commercialisation.

Although many consider Nepal’s geography as a bane for the economic development, it can turn into a boon in case existing ecological advantages of topography and climate are properly exploited to produce commercial crops, off-season vegetables, fruits and specialised high-value commodities. The focus should be to produce agricultural commodities that have comparative and competitive advantages.

(The writer is Agricultural Economist and Chief, Socioeconomics & Agri-Research Policy Division)