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Agriculture Sector

Overview

Agriculture is the mainstay of Nepal’s economy. Nepal’s geography, topography, water resources and ample supply of labor give Nepal a comparative advantage in agricultural production. Nepal’s economy is largely dependent on agriculture, which accounted for 33% of GDP as of 2016 and absorbs about two thirds of the labor market. The Government of Nepal has put forward plans to double the agricultural production in the next 5 years through modernization, diversification, commercialization and marketing of the agriculture sector. Towards this, the government plans to make available agricultural inputs, such as irrigation, electricity, transportation and agro-credit. The Agriculture Development Strategy 2014 recommends spending NPR 502 billion in 10 years. This represents a massive opportunity for foreign investors Investment opportunities in the Nepali agriculture sector lie in input market as well as production and processing. There are good opportunities in input markets (such as for seeds, nurseries, fertilizers, agricultural infrastructure and technology, and agriculture financing). The Government of Nepal has made its intention to encourage investment into the chemical fertilizer industry as Nepal has no chemical fertilizer manufacturing facility. At this point, there are only small producers, they lack market sophistication and the technical and financial ability to take advantage of the opportunities being made available. Similarly, there are also investment opportunities in agriculture extension services (including cold storage units, collection centers laboratories, plant quarantines, etc.). Opportunities also exist in agriculture production, processing, packaging and branding (non-timber forest products, cardamom, ginger, aquaculture, vegetables, floriculture, tea, coffee and honey). Building on the Trade Policy 2015, the National Trade Integration Strategy 2016 has identified nine products (including large cardamom, ginger, tea, and medicinal and aromatic plants (MAPs)) and three services as having high export potential and has prioritized their development.

Investment Opportunities

  • Dairy Farming

Dairy farming is a class of agriculture that deals with the production of milk, either on a farm or at a dairy plant, for sale of a dairy product. According to statistics, there are 7.2 million head of cattle and 5.4 million head of buffalos in Nepal. Due to the wide range of dairy cows and buffalos in the country, dairy farming becomes a lucrative business opportunity for people who are involved in dairy farms.

The investment required for setting up a dairy business depends upon the capacity and the cost of cows/buffalos and the shed cost. Let’s say, the total investment needed for 10 cows could be NPR 15 lac (if the cost of one cow is NPR 100,000 and shed cost is NPR 5 lac).

  • Crop Farming

Nepal is landlocked between two most populous countries, India and China, and is a land of the highest peaks of the world Mount Everest. Having covered with snow in the northern Himalayan range, the southern range of Nepal is a gangetic plain of alluvial soil, which is known to be one of the most fertile soils. This soil paves the way for effective crop farming in the country. The farmers could grow crops like rice, wheat, millet, barley, coffee and others for self-sufficiency and for trading.

  • Poultry Farming

In Nepal, there is a dominance of non-vegetarians over vegetarians. Most of the people in Nepal prefer non-vegetarian food products, mainly chicken. Therefore, poultry farming becomes a favorable business idea in the field of agriculture.

A poultry farm provided with proper care, balanced diet and regularly vaccinated hens could be a good business in Nepal. All of this could cost around INR 5-7 lacs for thousand chickens (including the cost of chickens, vaccinations, feeding etc.)

  • Organic Farming

Due to the abundance of fertile land in Nepal, farming in Nepal has been focusing on sustainable agricultural practices that are environment friendly. This makes Nepal a forthcoming place to start off with organic farming business. Organic agriculture is now trending across the world, and Nepal could be one of those places that could support this trend. Organic farming could also open doors for Nepal to mark its presence worldwide because of its naturally organic agricultural land.

  • Horticulture Business

Horticulture is the area of agriculture that involves the science of growing and caring for plants to carry out various human purposes such as repairing the environment and personal aesthetics. Horticulture has become a very popular activity in the field of agriculture and Nepal becomes a breeding ground for this business due to its diverse range of flora. A horticulture business has a long way to go in Nepal.

Government Subsidies

For the aim of improving agricultural outcomes in rural Nepal, the government has been providing subsidies under the Prime Minister Agriculture Modernization Project. In the current fiscal budget 2018- 2019 the project has been expanded ((Fiscal budget 18-19, 70) and high priority have been given to the districts in Biratnagar and Morang. The following are the subsidies provided under the new provision:

  • 50% subsidy on the purchase of agricultural equipment.
  • Provide 50% subsidy in the purchase of the tractor.
  • Rupees 10 Lac subsidy while purchasing 39 types of mechanical tools.
  • 50% subsidy while purchasing seeds and fertilizers.

To be eligible for this subsidy the farmers need to have 5 hectors cultivable land for the purchase of the tractor and 1.5 hectors cultivable land in the case of power tiller. Furthermore, grants will be provided on improved seeds and plants of tea, coffee, cardamom, areca nuts, potato, banana, and lemon.

Download Reports

  1. Agriculture Sector Profile published by Investment Board of Nepal: https://ibn.gov.np/wp-content/uploads/2020/04/Agriculture-Sector-Profile.pdf

Related Useful Links

  1. Ministry of Agriculture & Livestock: https://www.moald.gov.np
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