Nepal | August 07, 2020

Agro subsidies should be made productive, predictable, sustainable and transparent

Sujan Dhungana
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Despite being an agricultural nation, Nepal imports food items worth billions of rupees every year. Farming practices in the country are still traditional and newer technologies are yet to be adopted. Moreover, people still follow subsistence type of farming rather than commercial farming. As a result, the production base of agriculture goods is still low in Nepal. Similarly, other issues, including lack of timely availability of fertilisers and seeds, are affecting the overall agriculture output every year. Against this backdrop, Sujan Dhungana of The Himalayan Times talked to Yubak Dhoj GC, secretary at the Ministry of Agriculture and Livestock Development, to know about different agricultural issues. Excerpts:

Photo: Naresh Shrestha/THT

In recent years, agriculture output has been hit due to delay in availability of quality fertilisers and seeds. How is the government dealing with this issue?

Agriculture production is directly related with a number of ministries and government agencies. The entire system of governance, allocated budget for the agriculture sector, technologies, supply mechanism of seeds and fertilisers, among others, are crucial factors that determine agricultural production. Though we often cite and promote Nepal as an agricultural country, the annual budget allocated for the sector is less than three per cent. It clearly shows the priority that the agriculture sector is receiving. Similarly, credit flow from banks and financial institutions (BFIs) in the agriculture sector has never exceeded 10 per cent of their total loan portfolio. Commercial banks willingly issue loans to purchase cars, but are reluctant to provide credit to purchase buffaloes. The government introduced the subsidised loan facility for farmers, which is a good initiative. Though the agriculture minister has been backing and promoting this initiative, we are not in a position to make the subsidised loan system mandatory in the agriculture sector as BFIs fall under the Ministry of Finance.

The government has adopted a few aggressive policies and programmes, like doubling the agriculture production and ensuring food security and food sovereignty, which are encouraging. However, we have failed to ensure necessary human resources and budget to capitalise on these policies and programmes. Likewise, effective coordination between ministries, government agencies and government employees in the new federal system of governance has been a major challenge. The chain of command and coordination between different layers of government and government agencies in the federal system is not effective at present, which directly affects plans, policies and programme implementation at the provincial and local levels. Despite these hurdles, the agriculture sector has made some progress in recent years. There was record-high production of paddy in the country last year and we have also started exporting vegetables to countries like Qatar, Dubai and Saudi Arabia. Now the need is to focus on promoting commercialisation in agriculture by assuring the availability of subsidised loans, raising resources (budget) for the agriculture sector, bringing in new technologies and initiating research in the agriculture industry.

How sustainable is the subsidy-driven agriculture industry?

Globally, agriculture has always been a subsidised sector. Even in developed countries like the United States, the agriculture industry is driven by subsidies from the government. These countries are self-sustained in agriculture and even supply to other countries, even though only a small fraction of the population is involved in the agriculture sector. In our case, even though a majority of Nepalis are into agriculture business, the country still has to rely on imports of agricultural goods. Thus, the problem is our failure to adopt technologies in the agriculture sector. It is not that involvement of more people in agriculture raises agriculture production. Agriculture production is raised through commercialisation using agro-technologies. The government started giving subsidy in the agriculture sector in a bid to encourage people towards agriculture production. However, we realised that we were wrong to provide 100 per cent subsidy for any agriculture project. The subsidy that we give has to be productive, predictable, sustainable and transparent. We have to make sure that there is investment from the farmer’s side first to make any subsidy programme fruitful. So, if someone has a business plan worth Rs 10 million, the person has to raise half of the required investment on their own through personal investment or loans from BFIs. Only then should the government provide the remaining investment as subsidy. Similarly, the government’s subsidy should be focused on production — production of seeds, construction of nurseries, adoption of technology and development of infrastructure. However, our subsidies are more based on the proposal of a project and site inspection. This practice needs to be changed and then only will production improve gradually.

The government is often criticised for ineffective implementation of some mega projects, including the Prime Minister Agriculture Modernisation Project. As MoALD is the executor of the project, what is your take on this?

PMAMP has a number of zones, superzones, pockets and blocks to promote farming and production of different crops. Some of the identified zones and superzones have been performing well, while it is also true that some of them are not performing as expected. The government will gradually remove pockets and zones that are not doing well. For example, there is a superzone of maize in Dang which is doing really well. The traditional way of tilling land using plough has been substituted completely in the zone. Farmers are using different technologies to plough and harvest crops. The problem with PMAMP is that the board has been accorded high authority, while other project executing staffers have been given less responsibility and decision-making power. Thus, I have urged some changes in the original document of the PMAMP and presented it to the agriculture minister. Meanwhile, we are also planning to increase the number of agriculture zones and superzones.

The government recently inked an agreement with China to export citrus fruits. How practical is this, as Nepal itself imports a significant volume of these fruits from China?

The fact that we inked an agreement with China to export citrus fruits to the northern neighbour does not mean that we will immediately start exporting the fruits. The pact intends to open the door for export of these fruits to China in the future. Once we are able to raise production of these fruits and address other sanitary and phytosanitary measures, we will certainly start exporting citrus fruits to China.

It has been speculated that paddy production will be low in some parts of the country due to Garima seeds, which in turn will affect the overall paddy production target of the government this year. What is your anticipation?

Even we feel that this factor will affect the entire paddy production target of almost six million metric tonnes this year. However, we cannot say for sure now whether the production target will be affected as we have been using some other good breeds of seeds in other areas which can result in high production. Currently, we are calculating the area where the Garima hybrid seeds were used. Once we complete our study, we will also make the producer and distributor of the seeds compensate the farmers for their losses.

One of the long-standing issues is the pending payments of sugarcane farmers by the sugar mills. Why are cane farmers often denied timely payments?

This is the result of anomalies by middlemen who purchase canes from farmers and sell the produce to sugar mills. Even if sugar mills release the payments, middlemen delay in making the payments to cane farmers. Thus, the solution I believe is to carry out cane farming in the cooperative modality, where farmers sell cane to cooperatives and receive payments from them.

A version of this article appears in print on November 12, 2019 of The Himalayan Times.

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