National 6 (Spotlight Weekly)

Agricultural Stagnation: Challenges For Food Security

Dr. Hari K. Upadhyaya

For Nepal, the theme of the 6th South-Asia HDR is simply the most appropriate one. Rural areas are what Nepal is and agriculture is what governs rural lives. 85% of the Nepalese people live in rural areas; 86% of households own some land, 80 percent raise some livestock, and 74 percent of the labor force are engaged in agriculture.

Notwithstanding the importance of agriculture to the people and the economy of Nepal, the performance of this sector has been disappointingly weak. During the past three decades, while many countries of Asia, including South Asia, were experiencing rapid gains in agricultural productivity and food production, Nepal was struggling to maintain its previous productivity levels. Consequently, Nepal's crop yield levels, which were the highest in South-Asia during the early 1960s, are now among the lowest in the region.

In general, there is a strong causal relationship between agricultural stagnation and severity of the poverty and food insecurity problems.

A number of factors may be associated with the poor performance of agriculture in Nepal. Crop production, which dominates agriculture, has remained largely traditional, rain fed and subsistence-oriented. Production pockets are small and exhibit low economies of scale in processing and marketing. Agricultural research and extension systems are weak and unresponsive to the needs of the poor farmers for generating incomes from their farmlands, the size of which is small and becoming smaller. Due to high cost of production and marketing, domestic farm products are loosing their competitiveness to imported products even in the domestic market. As a result, the linkage between agricultural production and processing sectors is weak and becoming
weaker. While, on the one hand, most of the major agro-industries are forced to rely on imported raw materials, the same raw materials, on the other hand, produced domestically are deprived of access to market.

In 1995, the Government adopted a long-term Agricultural Perspective Plan (APP) as an agriculture-led growth strategy for poverty reduction and economic development. The goal of APP is to achieve an agricultural growth rate of 5 percent and to reduce poverty level from the 42% in the base year to 14% by 2017.

The progress in APP implementation has been at best slow, and there are hardly any signs as yet of significant improvement in the condition of priority input sectors. In most of the these sectors, the past trends have continued; while in a few others, the condition appears to have even deteriorated.

Within the APP's framework, the extension system has now adopted a 'Pocket-Package' approach to service delivery, and a large portion of the budget has been allocated to it. However, this covers less than 1 percent of the total households and 3 percent of the irrigated area of the country. Lack of reliable extension services remains a bigconstraint. According to a study, only 3 percent of the households have ever been visited by an extension worker, and 2 out of 3 households have rated the present agricultural and† livestock services of the agency as 'bad'.

Most of the irrigation schemes developed in the past are large and complex, and have hardly benefited the small landholders, who constitute the majority farming community in Nepal. Moreover, besides having the 'Government-owned' image, most of these schemes suffer from high cost of implementation and poor operation and maintenance, and have become unsustainable.

Rural infrastructure development has shown little progress. As a result, the delivery of technical and material inputs is costly and the markets for agricultural products are inaccessible. Ecologically, Nepal has great potential to produce a wide range of high-value agricultural commodities for both domestic and export markets. But this potential remains largely untapped. Poor physical infrastructure, weak and subsistence production-focused extension system, and unreliable input supply are among the most important constraints.

A critical assessment of the past trends leads to three general conclusions. First, the service delivery system, which was predominantly governed by the Government, was costly and unsustainable. Due to little or no beneficiary participation, the system consisted of rigid and bureaucratic procedures, low level of accountability and transparency, and unwholesome institutional arrangements. Second, alternative institutional channels, even where available, were not been given due recognition and space in development service delivery. Third, the various development interventions and projects implemented in the past had little pro-poor orientation and focus.

There are two key issues relating to agricultural development in Nepal.? How to package the development program such that it helps to reduce poverty and increase food security of the poorest? Past experience is that, despite good intentions, agricultural development programs have failed to benefit the small landholders, who constitute the majority of the rural poor. Practical evidence are that a uniform package of assistance does not work for the poor and the non-poor families alike. How to treat these two groups in designing a development package so that both share the benefits?

How to bring synergies between development programs in agricultural and non-agricultural sectors? Agricultural development is a crosscutting issue and is subjected to the condition of development in many other sectors (e.g., roads, energy, forestry, environment, etc). A proper match and mix of development programs in all these sectors is essential to achieve a sustainable development of the agricultural sector.

The developed countries have vocally expressed their concerns for and commitments to help reduce poverty in developing countries. But similar commitments made in the past have not been translated into practice. An example is the reduction in per capita official development assistance flown to the low-income countries in the 90s, from $9 to $7. The corresponding figures for South-Asia are even lower and declining, from $5 to $4.

There are some big challenges to the developed countries with respect to fulfilling their expressed commitments to fighting world's poverty, particularly with respect to opening their markets for developing country products and making globalization work for the poor. The high-income countries are presently operating in a high-subsidy regime, with their expenditures on subsidy amounting to about 60% of their total expenditures. As such, whether and how their markets will actually be open for the developing country products in the process of globalization are questions that can only be answered in the future. But there are no strong reasons for being optimistic about it. n

(Excerpts of address, by Dr. Upadhyaya, President of Nepal Agriculture Association, made at the launching of 6th South Asia Human Development Report in Kathmandu)