Nepali Times Asian Paints
Economic Sense
Cash crops


This time round, farmers at the rice-planting ceremonies have been more enthusiastic, with more of them participating and people travelling back to their villages to ensure that their land does not remain uncultivated. The global rise in food prices has suddenly made agriculture seem like a lucrative business once more. Is that good news in a country where 80 per cent of the people depend on farming?

Food security has been a constant issue in this country's history, and even today there are pockets of Nepal that face acute food shortages. One of the traditional ways of providing food security was through the guthi (trust communes), where land was owned by trusts whose members provided the labourers who did the work, and then shared the produce that was grown. As well as the trust members, the actual tillers of the land received a share of the harvest in return for their labour.

With the increase in land prices, there has been widespread conversion of agriculture land into commercial and residential properties and the guthi members have been busy counting money. The guthi system ensured the continuity of food security through the generations and steady reinvestment in the guthi through the purchase of extra land as the population increased.

It would be interesting for economists to work out the price of rice that would be required for it to become more profitable to continue growing rice than to sell farm land for conversion to commercial or residential use.

Agriculture productivity in Nepal has been among the lowest in South Asia. Rice productivity per hectare is way behind the regional average and the cost of production per hectare is also high. With about 5 million tonnes of rice being produced, if we could augment this by even 20 per cent that would bring an additional Rs 5 billion into the economy.

However, it is also important that quality does not suffer in the quest to raise productivity. Nepali markets are flooded with vegetables that are grown using chemical additives to speed up the growing process. While it is important to increase production, this should not mean flouting the law and creating severe health risks. With 601 members sitting in the Constituent Assembly, perhaps some of them could be spared to work on laws to regulate the quality of agricultural production.

While other countries have been busy setting up task forces to examine the impact of rising food prices-whether the social costs of the rising prices or the new economic opportunities that may result-we in Nepal are still busy looking for a president.

The government needs to assess the immediate impact of the food price rises on salaries, and should be prepared for demonstrations by the labour unions, who never waste the chance to demand higher wages or shorter working hours. It should also expect protests from government employees, who find the value of their wages plummeting.

The budget is the right time for everyone to make noises. But Nepal, like some African and Central American countries, usually falls into the trap of finding short-term solutions without designing long-term policies in the agriculture sector. What Nepal needs is not heaps of documents like the Agriculture Perspective Plan that are relegated to shelves, but a prescriptive policy that will take care of production, productivity, pricing and regulation without loosing sight of the need for food security and related issues.

(11 JAN 2013 - 17 JAN 2013)