A bumper harvest?

SANGAM PRASAIN
DEC 18 - First, the good news. This year, the production of our major food crops—rice and maize—grew by a whopping 11 percent, overcoming the food shortfall we had faced due to below-average monsoons. This growth comes on the back of a 4.33 percent fall in agricultural output last year, and economists agree that the rise in output means the Nepali economy will certainly grow this year.

Now, the bad news. This increase in output, and the subsequent food self-sufficiency, is not thanks to any government support. Instead, an above-average monsoon resulted in the growth. Government support to agriculture—in the form of subsidies and irrigational projects—may have risen, but only marginally. And farmers continue to move out of the sector because of low returns, high debts, and low productivity.

Because agriculture contributes nearly 32 percent to our Gross Domestic Product (GDP), the current rise in output of food crops will definitely have an impact on Nepal’s growth, giving rise to hopes that the country can achieve the 4.5 percent GDP growth rate projected for this year. However, the state’s focus has slowly been shifting away from agriculture, and this is highlighted by the meager increase in budgetary support to the sector: From 2.4 percent of the total budget in 2008-09, it increased to 3.1 percent in 2010-11. “The agricultural sector is seriously disadvantaged due to a lack of government attention,” says Hari Dahal, spokesperson at the Ministry of Agriculture and Cooperatives.

How did Nepal go from being one of the highest producers of rice in the region in the early 60s to becoming a net importer of food grains today? The answer, most experts agree, lies in the neglect the state showed the sector after donors stopped funding agriculture in the mid 90s. “Agriculture has been neglected for the last 10 years after donor agencies pulled out. The government, instead of increasing its support, withdrew its fertiliser subsidies in 1996-97,” says Devendra Chapagain, former member of the National Planning Commission.

The withdrawal of subsidies came as the state started adopting more neo-liberal policies. It opened the doors to private players for importing fertilisers. “Consumption of fertilisers grew heavily when the private sectors started import. However, these imports lasted only for a short time as the Indian government started a heavy subsidy programme for its farmers,” says Dahal, adding that the price of imported fertilisers rose heavily forcing private players to stop their imports. At the same time, government subsidy to shallow tubewells also stopped.

The government’s withdrawal of state support meant that agriculture today is wholly dependent on the state of the monsoons. “Agricultural growth depends according to nature. If it rains, we have a good harvest. If it doesn’t, we have a bad year,” says Chapagain.

The rise in production of paddy and maize this year—courtesy good rains—means the country will produce an additional 436,000 and 200,000 tonnes of the two grains respectively. This increase comes on the back of a shortfall of 316,465 tonnes of grains last year, because of which at least 1.6 million people had to face a severe food shortage. As major food grain production also has a direct impact on the country’s GDP, planners and analysts say that the targeted 4.5 percent economic growth could be realised this year because of the increased production, despite the other economic indicators not doing too well. “Increased food grain production will raise the country’s GDP by 0.5 percent at least,” says economist Bishwamber Pyakurel.

However, this rise in production is a sweetener only for the short term. For, more and more farmers are leaving the sector for good as they suffer a vicious cycle of low returns on production, and rising debts and following bankruptcy. “Rice farmers in Nepal have never been adequately compensated. Low returns from the sector have forced the younger generation to abandon the profession altogether,” says Dahal.

Though the government initiated the distribution of fertilisers at subsidised rates from last year, the 81,598 tonnes of fertilisers distributed only fulfill the requirement of 5 percent of total demand. The state also distributed 826 tonnes of improved seeds, and allocated Rs. 3 billion to agricultural subsidies in the form of lower fertiliser prices and small irrigation

projects. Conversion to hybrid, higher-yielding, variety of seeds is also very slow, and like last year’s protests by Tarai maize farmers showed, not all hybrid seeds are achieving the results promised.

The state has also not delivered irrigation projects as required by the sector. Of the total cultivated area in Nepal, only 15 percent of the land can be irrigated all year round. But irrigation projects are themselves underutilised. Only about 1.1 million hectares of the total of about 3 million hectares of arable land have irrigation facilities. For example, the Koshi Pump Irrigation Project has a capacity to irrigate 4,100 hectares of land, but its coverage is limited to only 40 percent of that capacity.

A simple analysis of the numbers of paddy, which is our major crop, puts this into perspective. While production and yield has risen, the area under cultivation has remained nearly the same. For example, in 1999-2000, the area under paddy cultivation was 1.55 million hectares, which actually declined to 1.43 million hectares in 2006-07 before rising to 1.55 million hectares again in 2008-09. Analysts point towards the massive decline in the expenditure on the agricultural sector since the 1980s as being a major reason why agriculture today is suffering this state of dichotomy. From as much as a third of the expenditure being spent on agriculture in the 1980s, the share fell to as little as 5 percent in the 1990s. This trend is continuing even now, revealing a drastic shift in economic policy.

Agriculture still employs 66 percent of the total workforce in Nepal, which means that the livelihood of two-thirds of Nepalis depends on the sector. A shift in the economic outlook of the state towards manufacturing and services in the early 90s meant that the sector continued to witness neglect, and inevitably, decline. Though the increase in food production this year comes as a glimmer of hope, most analysts agree that not enough is being done to sustain the sector, which continues to depend on one single source of irrigation—the monsoons—till now. As witnessed last year, a drop in rainfall led to a severe food shortage, and although that has been corrected, what will Nepal do if a season of drought comes up?