--By Chittaranjan Pandey
When we, in any way, try to discuss with the younger generation of Nepal about the potentialities Nepal has regarding the development approaches- the answers are frustrating. They find nothing as potential in the country. But is that true? Well, the data show it is not. We will look into few data here which shows that Nepal has a huge potential in agricultural sector. But whether the government or the individuals are ready for it is a million dollar question. Yes, changes have started. Newspapers come up with news that people have returned back from Gulf countries with commercial agro-skills and have started practicing it here . Second, news of preparation of Agriculture Development Strategy by government provides a glimpse of hope.
The statistics provided by the Food and Agriculture Organization (FAO) show that Nepal has a whole lot of potential to produce both daily essentials and commercially tradable agricultural products but has been unable to do so. The reasons could be many ranging from lack of sufficient government initiative in agriculture promotion to lack of public interest in producing agricultural commodities commercially. Looking at the overall production pattern of Nepal, we can easily understand that Nepal needs to really work on the construction of profitable portfolio regarding the type, production and value of agricultural commodities. As per FAO, top five productions of Nepal are rice (paddy); vegetables, indigenous buffalo meat, buffalo milk and potato. Paddy and vegetables are lower-valued agricultural products which cannot generate higher revenues. Buffalo meat, fish etc. are from the animal husbandry which is not yet well-flourished in the country. Fisheries are gaining speed in the economy due to its higher revenue generation but animal husbandry has not been able to do so.
Why I have been so emphasizing in agriculture is that for the development of a Least Developed Country like Nepal, agriculture is the key. The reason being around 65% of Nepal’s labour force is in agriculture but have been contributing less than 35% to the total GDP of the country.
When we are talking so much about the agriculture in the country, we must feel proud to say that we are the largest producer of mustard seed in the world (as per the FAO) in 2011 but the problem still remains that the total value of the product is very low.
Now, I would also like to draw your attention on the popular agricultural commodities of the country these days. Time and again we read various newspaper articles reflecting the perceptions on what should have the policies been and what impacts could be expected. There are many such products but here I am going to discuss about the four major targeted and identified agricultural commodities of the country namely Ginger, Lentils, Tea and Big Cardamom. We feel proud to say we are the third largest producer and exporter of ginger in the world and we should also feel glad to know that we rank 6th in the lentil export globally. Here we will try to know why Nepal is not being able to upgrade itself in the lentil production and how much of the potential the country has to develop to attain similar positions in the trade of tea and cardamom. We would try to figure out why the import of the country is 88.7% of the total trade volume compared to a mere 11.3% of export volume. Here we encounter an important question- Are we promoting imports and not encouraging exports?
We see that we are after India and China in the production of ginger whereas we follow Canada, India, Turkey, Australia and USA in the production of lentils. Not bad, the only requirement now is that we should focus on developing a competitive edge in at least these few products where we are competing with the world.
Along with the above mentioned encouraging news, we will also find discouraging corners about our current trading scenario when our trade deficit has increased to Rs. 385.29 billion and the ratio of export to import is 1:7.8 in the first nine months of the FY 2069/70 as per the data released by Trade and Export Promotion Center (TEPC).
We already know that we have many problems that stand as hurdles to our agriculture development and ultimately economic development. But through the data provided by TEPC, we will try to analyze few more dimensions of trade imbalance in our country (See Table).
The last four columns have been added for the analysis. Let us first deal with the negative figures we see in the table. In case of lentils, we can see that the production has decreased 17.33% due to which our economy lost almost Rs. 498 billion. When lentil has been identified as one of the major exportable products of the country, why did the production go down? Here, the export price is said to be Rs. 121.13 per Kg but the retail price of the product revolves around Rs. 150 per Kg in the local market. The middle men are earning immensely in the market. We did not see any adverse natural phenomenon this year. So the farmers might be on the disadvantaged side by producing lentil, that’s why production has decreased. The data show how important lentil is to our economy, so government has to come up fast with producer-friendly policy replacing the middlemen-friendly policy. Cardamom, another much highlighted product of the country, also lost its production by 2.21% incurring the loss of almost Rs. 59.5 billion to the economy. There is a huge cartel-network in cardamom sector in the eastern part of our country, the production basket of cardamom. We might be surprised to know that due to the cross-border trade in that region, people happen to buy Nepali cardamom as Indian products. And when we look into the price difference, here the export price is Rs. 661.34 per kg but the market here in Kathmandu has the cardamom price between Rs. 1000 and Rs. 1200 per Kg. Again the same concern: see what the middlemen earn. Tea exports are okay. But look at most exciting ginger trade that we boast about these days. The ginger production has increased by 242.72%. This shows the interest we both in the government and the public regarding cultivation of this crop. Now about the prices. It is a human nature trying to create monopoly in the market for excess profit and the government has to look upon it the export price is less than Rs. 20 per Kg whereas the local market here price is around Rs. 100 per Kg. Thus, again, the government only has to ensure fair price to the ginger producers. The result will be production shift.
It’s high time government starts thinking about licensing the commodity exchanges to act as institutionalized middlemen replacing several layers of individual middlemen prevalent in the market. These price differences show vividly why farmers get so demotivated about producing efficiently. Even in the case of ginger, we hear news of farmers exploited by much lower prices than the market price, and poor farmers have no alternate to sell to the exploitatie middlemen. There must be a warehouse law to store the product value so that earnings become sure. Insurance Board has to compel the insurance companies to insure the agricultural produce too. Nepal Rastra Bank has to come up with a policy to identify the warehouse receipt as collateral similar to the shareholder’s certificate. The concept of AIS (Agricultural Information System) should start in a full-fledged way and the malpractices should be penalized. If agriculture, in a commercialized form of course, is our key to development, farmers, the key-holders, have to be nourished well.
(Pandey is Assistant Manager, Research & Development Department at MEX Nepal Ltd.)
