In the long run, policies to support strategic alliances between organised large agribusinesses and farmers will help expand contract farming, tied up with input supply and product buy-back guarantees and market certainty
Nepal's geography spans an extraordinary range of climates – tropical, temperate, semi-temperate, and alpine – into a remarkably small territory. This natural diversity gives the country an exceptional advantage in agriculture, allowing it to cultivate crops that normally require very different environmental conditions. Few nations can grow staple cereals like rice, maize, and millet alongside soybeans and pulses; produce high-altitude and semi-temperate crops such as potatoes, large cardamom, tea, coffee, ginger, turmeric, walnuts, and avocados; and at the same time harvest tropical fruits like oranges, lemons, mangoes, and bananas, temperate fruits like apples and pears, and cold-climate grains such as barley and buckwheat. Abundant water resources and fertile soils further enhance this unique agricultural potential.
Despite these potentials and endowments, this sector is grappling with chronic problems like shortage and timely availability of fertilisers and seeds, overdependency on rain-fed irrigation, difficulty to access bank loans, marketing, and shortage of manpower. It is deeply concerning that in a country where agriculture contributes 26% to GDP with a livelihood dependency of more than 60% population and about 20% below the poverty line, vast areas of farmland remain untilled and neglected, while a large number of productive workers migrate for work. This development paradox has led the country to become import dependent even for staple foods such as rice, maize, pulses, oilseeds, cereals, and fruits.
The new government must fix this agrarian paradox and structural inconsistency by implementing short and long-term agricultural policies and measures to address hardships faced by the farmers.
Most importantly, the government should pursue policies to assist marketability of rural farm products which focus on market access, value chain integration, and quality assurance. Next, Nepal's agricultural transformation requires a coordinated push that motivates retention of farm workers, empowers returnee migrants, and builds strong alliances across the value chain. Government should adhere to policies focusing on an enabling environment where farmers feel supported and confident to invest and indulge in modern agriculture practice. Together, availability of onsite subsidised extension support, easy credit, land pooling and leasing arrangements, information and training in contemporary farming methods will motivate farmers to adopt productive new technologies and high value crops.
Also, strengthening input systems for timely access of seeds and fertilisers and boosting productivity and high-value cash crops, especially climate-resilient varieties, should be given priority. Irrigation and subsidies should be tied to high-value crops, and livestock to encourage diversification. To stabilise farmers' livelihood and job, small farmers and returnee migrants should be motivated with hassle-free access to agri-entrepreneurship grants for polyhouses, modern tools, vegetable production, high-priced crops, livestock, dairy, sugarcane, and fish farms. Digital applications that provide market information, price trends, advisories, and success stories should be expanded to reshape perceptions of agriculture as a viable business. Last but not the least, farmers and entrepreneurs should be encouraged and motivated to cover crop and livestock insurance to safeguard investment.
In the long run, policies to support strategic alliances between organised large agribusinesses and farmers will help expand contract farming, tied up with input supply and product buy-back guarantees and market certainty. Policies to implement Public-Private-Producer Partnerships (4Ps) can deliver technology, inputs, and market access. Tax incentives for out-grower's schemes and cold chain development can strengthen supply chains and reduce post-harvest losses.
Grains and vegetables, a sector with high import dependence and quick returns, offer immediate opportunities. Contract farming for tomatoes, potatoes, cabbage, cauliflower, and off-season greenhouse crops can link farmers with agribusinesses that provide advisories, seeds, and assured buy-back. Private marketing institutions, cooperative-led practices can augment supply reach to urban supermarkets and even exporting. The poultry (broiler) value chain already operates through informal contract arrangements where suppliers provide chicks, feed, and medicines in exchange for buy-back. Formalising these relationships with written contracts, quality standards, and integrated feed mills and hatcheries can reduce import dependence and stabilize production. Paddy, wheat, lentils, pulses, and soybeans – well suited to mechanisation in the Tarai belt – can benefit from improved varieties and contract farming models and strategic alliances with organized processing units and businesses. High-value crops and fruits such as tea, cardamom, coffee, apple, kiwi, avocado, and herbs can be strengthened through alliances focused on organic production, processing, and traceability. Agri-industries and exporters should be encouraged to provide support to smallholders for plucking and processing . Staples such as rice, wheat, and maize, soyabeans have great potential when linked to hybrid seeds, mechanised harvesting, and feed or processing industries, particularly modern rice and flour mills, maize for poultry feed and soyabeans processing units.
Long-term policies must anchor modernisation efforts implementing the Agriculture Development Strategy (ADS) through large irrigation projects and dams, land pooling, soil health programmes, initiating agri-tech hubs, agri-industry parks, expanding rural road networks, including drones and mechanisation will create a solid foundation. Diversifying into high-value agricultural value chains, combined with strong promotion of agri-processing industries and comprehensive crop and product insurance, can serve as a powerful catalyst for rural industrialisation.
Given the sector's transformative potential, the effective implementation of these policies will be crucial for revitalising our agriculture sector, hence their execution warrants immediate and coordinated action. Such interventions will trigger a paradigm shift in the agriculture sector, enabling it to fully leverage its inherent strengths and create substantial, long-term employment opportunities and sustainable livelihoods, and significantly curb the current trend of outmigration. At the same time, it can harness indigenous resources, reduce the import burden, and reinforce long-term economic sustainability.
Pandey is senior consultant, Enterprise Development