Climate-Smart Agriculture in Nepal: Champion technologies and their pathways for scaling up

This policy brief synthesises key findings and recommendations for decision-making under uncertainty in the agriculture sector in Nepal. This brief highlights the methodologies used for selection of champion climate-smart agriculture (CSA) practices for different agro-ecological regions of Nepal and recommendations for scaling up the champion CSA technologies and practices in Nepal. Adaptation to climate change in the agricultural sector and allied sectors is a major current and future challenge for Nepal. The majority of the population is still dependent on highly climate-sensitive agriculture. In recent years, long drought spells during the monsoon season and increased temperatures and unseasonal heavy rains during winter have caused serious distress to agriculture-dependent communities in many locations. If the Sustainable Development Goals (SDGs) of ending poverty, achieving food security and promoting sustainable agriculture are to be realised, climate change adaptation interventions need to be implemented in earnest

Profitability and Sustainability of the Emerging Poultry Business in Developing Countries: A Case of a Poultry Grower of Nepal

Poultry is an important part of rural life in several developing countries. Commercialization of this business appears more beneficial but has not obtained the expected momentum, mainly due to lack of information and perception of high cash requirements and thus risky nature. Although the technical knowhow may also be one of the barriers, it is not assumed to be restricting, as found from previous researches as well as pre-survey data of this research. Hence, we study the most frequently admitted problematic side of the business, that is, financial aspect. Discussion with the farmers of Chitwan district in Nepal formed the basis of this research, followed by a detailed business analysis of a commercial poultry grower. Analysis revealed the business to be profitable, sustainable, and less sensitive to adverse conditions. The positive and high value of net worth shows that the business is in a strong position. Again, the financial ratio, liquidity ratio, and solvency ratio showed that the business is on a strong foundation, is capable of repaying its loans anytime if demanded, has sufficient liquid balance, and is financially viable. Net cash earnings are also positive, along with considerable profits as shown by the profit margins. Simple rate of return on investments is also high, hence the business could be said to be earning high profits. A business analysis over a period of ten years showed that the net present value of the business is greater than zero. The internal rate of return is also higher than the market interest rates as well as the required rate of return for both total investment and the debt portion of investment. The benefit-cost ratio is higher than unity, an indicator of significant profits, hence showing that the business is acceptable. Sensitivity analysis of the business to adverse conditions like inflation or changes in the cost of input as well as price of output showed that the business is also viable under these unfavorable conditions. These analytical results, taken together, give sufficient evidence in favor of the profitability and sustainability of the commercial poultry business. Our analysis also showed that large-scale production is highly cash demanding, although the short business cycle of two months reduces the risks as well as possibly overcoming the difficulties of frequent cash requirements. Also, the high cash requirements may be substituted by integration with the local feed industries that are usually willing to provide poultry feed on credit. It is important since poultry feed shares around 70% of the cash requirements. Moreover, by use of contracts and for a small share of the profits, these industries may help the farmer find markets. These provisions may also help the establishment of new farmers, since assured marketing reduces risk during the initial phase of establishment. This unique relationship seen in the poultry market may explain the popularity of flourishing poultry enterprises in the selected area as well as showing scope for further growth. Hence, we also recommend farmers to integrate with these local industries to reap the benefits of their contacts, at least in the initial stages of business establishment. Also, for newcomers, appropriate policies for facilitating credit may again be required to break the entry barrier due to the considerable initial investment required for poultry houses and other outlays needed for commercial farming. From the analysis of the selected grower, there appears to be some slackness in management practice on the part of Nepalese growers and hence it is recommended to increase the volume of the business and reduce liquidity in hand. This means that with the same level of investment, profits can be increased by increasing the scale of the business. It is also recommended, since local feed industries are willing to provide their products on credit and growers may not need much cash. In other words, to maintain the same level of business, less capital investment might have sufficed and again this shows that capital may not be a barrier to entry. Since the business seems quite profitable, further research is recommended to identify the optimum levels of production and other factors for maximization of profits. Although this study is vital since there is a lack of information but it is only a preliminary one and assumed to be the first step that highlights a success story. However, we would like to recommend further research to verify our findings as this research is based on a single business as well as on a single year

Technical Efficiency of Rural Nepalese Farmers as Affected by Farm Family Education and Extension Services

An analysis of agricultural productivity revealed that capital, that is, inputs, other than land and labor, is an important production input that is also significant. Land also has a positive and significant contribution. Family labor is positive; however, hired labor is negative, though both are insignificant. Moreover, the technical inefficiency model revealed that agricultural extension services provided by non-governmental organizations have a positive and significant contribution, and it increases technical efficiency of the farm. Therefore we recommend policy that increases the role of non-governmental organizations in providing agricultural extension services. Similarly, the share of educated persons per household is also significantly and positively related to technical efficiency, so providing educational services to these households may also be helpful. However, in contrast to our expectation, government extension is found to have a negative effect on efficiency, though it is insignificant. As we can expect, because governmental organization takes the lion's share in terms of coverage, policies should be made favorable to improve their performance in providing agricultural extension services. An analysis of technical efficiency on farms revealed that on average they are operating well below the frontier, with the average technical efficiency being 69%; obviously there is ample room for improvement. With little changes in the production process, technical efficiency of the selected farms could be increased on average by up to 30%

Profitability and Sustainability of the Emerging Poultry Business in Developing Countries: A Case of a Poultry Grower of Nepal

Poultry is an important part of rural life in several developing countries. Commercialization of this business appears more beneficial but has not obtained the expected momentum, mainly due to lack of information and perception of high cash requirements and thus risky nature. Although the technical knowhow may also be one of the barriers, it is not assumed to be restricting, as found from previous researches as well as pre-survey data of this research. Hence, we study the most frequently admitted problematic side of the business, that is, financial aspect. Discussion with the farmers of Chitwan district in Nepal formed the basis of this research, followed by a detailed business analysis of a commercial poultry grower. Analysis revealed the business to be profitable, sustainable, and less sensitive to adverse conditions. The positive and high value of net worth shows that the business is in a strong position. Again, the financial ratio, liquidity ratio, and solvency ratio showed that the business is on a strong foundation, is capable of repaying its loans anytime if demanded, has sufficient liquid balance, and is financially viable. Net cash earnings are also positive, along with considerable profits as shown by the profit margins. Simple rate of return on investments is also high, hence the business could be said to be earning high profits. A business analysis over a period of ten years showed that the net present value of the business is greater than zero. The internal rate of return is also higher than the market interest rates as well as the required rate of return for both total investment and the debt portion of investment. The benefit-cost ratio is higher than unity, an indicator of significant profits, hence showing that the business is acceptable. Sensitivity analysis of the business to adverse conditions like inflation or changes in the cost of input as well as price of output showed that the business is also viable under these unfavorable conditions. These analytical results, taken together, give sufficient evidence in favor of the profitability and sustainability of the commercial poultry business. Our analysis also showed that large-scale production is highly cash demanding, although the short business cycle of two months reduces the risks as well as possibly overcoming the difficulties of frequent cash requirements. Also, the high cash requirements may be substituted by integration with the local feed industries that are usually willing to provide poultry feed on credit. It is important since poultry feed shares around 70% of the cash requirements. Moreover, by use of contracts and for a small share of the profits, these industries may help the farmer find markets. These provisions may also help the establishment of new farmers, since assured marketing reduces risk during the initial phase of establishment. This unique relationship seen in the poultry market may explain the popularity of flourishing poultry enterprises in the selected area as well as showing scope for further growth. Hence, we also recommend farmers to integrate with these local industries to reap the benefits of their contacts, at least in the initial stages of business establishment. Also, for newcomers, appropriate policies for facilitating credit may again be required to break the entry barrier due to the considerable initial investment required for poultry houses and other outlays needed for commercial farming. From the analysis of the selected grower, there appears to be some slackness in management practice on the part of Nepalese growers and hence it is recommended to increase the volume of the business and reduce liquidity in hand. This means that with the same level of investment, profits can be increased by increasing the scale of the business. It is also recommended, since local feed industries are willing to provide their products on credit and growers may not need much cash. In other words, to maintain the same level of business, less capital investment might have sufficed and again this shows that capital may not be a barrier to entry. Since the business seems quite profitable, further research is recommended to identify the optimum levels of production and other factors for maximization of profits. Although this study is vital since there is a lack of information but it is only a preliminary one and assumed to be the first step that highlights a success story. However, we would like to recommend further research to verify our findings as this research is based on a single business as well as on a single year

Role of non-farm sector in poverty and income distribution among rural households: a case of Nepal

Role of non-farm sector was found to be vital with high share in household income (37%). Also, lower values for poverty head count was found for the household with some form of non-farm employment (on average 5.56%) compared with those without it (on average 67.65%). Gini index for household with and without non-farm employment also revealed income-inequality to be higher among the households without non-farm employment (on average gini value was 58.72% compared to 43.05%). Similarly, both hill and terai region were found to follow this pattern. Decomposition analysis revealed that agriculture is the main source of income-inequality in the selected households (contributes 40% to overall gini and has positive elasticity). This might be due to high disparities in the size of cultivated land among the households. Again, both hill and terai region was found to hold these results. However, since agricultural sector is still dominant and contributes a large share for the rural poor, appropriate policy consideration is required to increase agricultural income, may be through increased productivity, subsidies in crucial inputs, price protection, and so forth, with especial emphasis to the poor households so as to minimize further deterioration in income-inequality. On the other hand, livestock sector was found to be negatively related with income-inequality and also with less contribution to gini. Again, it is less important in terai but is important in the hills. Livestock sector, thus, could also contribute significantly and help reduce poverty and inequality with appropriate policy recommendations, especially in the hills. Similarly, on average non-farm income was also found to be inequality-decreasing. The negative elasticity and low contribution of non-farm sector in gini showed the role it can play in the household welfare. But it has less effect in case of hills and hence for instance is of less importance there whereas it has significant and vital role in the terai with inequality-decreasing effects, hence, needs especial consideration and appropriate policy recommendation. On top of this, since the effect was different for hill and terai, different policies suitable for individual settings might be necessary. As the major focus of this research is in the non-farm sector, the major policy implication of this research could be that related with the role of non-farm sector. Since, on average non-farm incomes are found to be reducing poverty as well as income-inequality, availability of more non-farm earning opportunities may be helpful to combat poverty and inequality. This may be useful especially for the rural poor because they still have less access to non-farm economic activities and derive only a small share (around 8% of household income). Hence, policy should be directed to promote rural non-farm economic activities, with focus on poor households. Although a sudden change could not be expected, a gradual and long-term policy may be of use in this case. Moreover, in this research we found that government services are dominant in both hills and terai, but it could not be suddenly increased and hence is beyond the scope of this paper. However, commerce or business activities accounts for nearly one-fourth of the non-farm employment on average and one-third in case of terai, hence policies like availability of loan, may be in the form of micro-credits for poor households may help promote these activities. Similarly, ease in capital formation may help increase the activities of manufacturing sector. Other non-farm sector could also be promoted with appropriate policy measures. However, again a detail study is recommended to find the role of individual sectors and a suitable policy recommendation

Does Kitchen Garden and Backyard Livestock Farming Help Combat Food Insecurity?

Similar to other developing countries, food insecurity is one of the problems in Nepal. Around one-fourth of the households from the NLSS II data were found to be food poor. However, analysis of the severity and depth of poverty as well as analysis of inequality in per capita food consumption expenditures showed food-poor households to be close to the poverty line as well as these being less disparity in food consumption. Thus, we can say that food poverty is not very severe and although it may not be eradicated immediately it could be tackled with the appropriate policy measures. Food security seems to be determined by several variables. Among these we considered two variables to be of much concern. Having some livestock animals was assumed to have strong influence on household food security, which could not be supported by the insignificance of this variable in our research. Although livestock seems to have non-negative effects for urban food security, it is still insignificant here. On the other hand, having a kitchen garden seems to increase per capita food consumption expenditures and ensures security against food shortages. It may specially be important in the case of the provision of nutrient-rich foods like vegetables, which are the common product of a kitchen garden. Since the coefficient for kitchen garden variable is higher in the case of the limited model of the urban households, it could also be said to be of much value for these households. From the results of this research it could be recommended to the households to maintain a kitchen garden to the extent possible. The government should prioritize urban agriculture, maybe by providing improved seeds for kitchen garden crops within reasonable price and quality, and with other appropriate policy approaches. We recommend further research for finding the scope of urban agriculture in the developing countries like in Nepal

Role of non-farm sector in poverty and income distribution among rural households: a case of Nepal

Role of non-farm sector was found to be vital with high share in household income (37%). Also, lower values for poverty head count was found for the household with some form of non-farm employment (on average 5.56%) compared with those without it (on average 67.65%). Gini index for household with and without non-farm employment also revealed income-inequality to be higher among the households without non-farm employment (on average gini value was 58.72% compared to 43.05%). Similarly, both hill and terai region were found to follow this pattern. Decomposition analysis revealed that agriculture is the main source of income-inequality in the selected households (contributes 40% to overall gini and has positive elasticity). This might be due to high disparities in the size of cultivated land among the households. Again, both hill and terai region was found to hold these results. However, since agricultural sector is still dominant and contributes a large share for the rural poor, appropriate policy consideration is required to increase agricultural income, may be through increased productivity, subsidies in crucial inputs, price protection, and so forth, with especial emphasis to the poor households so as to minimize further deterioration in income-inequality. On the other hand, livestock sector was found to be negatively related with income-inequality and also with less contribution to gini. Again, it is less important in terai but is important in the hills. Livestock sector, thus, could also contribute significantly and help reduce poverty and inequality with appropriate policy recommendations, especially in the hills. Similarly, on average non-farm income was also found to be inequality-decreasing. The negative elasticity and low contribution of non-farm sector in gini showed the role it can play in the household welfare. But it has less effect in case of hills and hence for instance is of less importance there whereas it has significant and vital role in the terai with inequality-decreasing effects, hence, needs especial consideration and appropriate policy recommendation. On top of this, since the effect was different for hill and terai, different policies suitable for individual settings might be necessary. As the major focus of this research is in the non-farm sector, the major policy implication of this research could be that related with the role of non-farm sector. Since, on average non-farm incomes are found to be reducing poverty as well as income-inequality, availability of more non-farm earning opportunities may be helpful to combat poverty and inequality. This may be useful especially for the rural poor because they still have less access to non-farm economic activities and derive only a small share (around 8% of household income). Hence, policy should be directed to promote rural non-farm economic activities, with focus on poor households. Although a sudden change could not be expected, a gradual and long-term policy may be of use in this case. Moreover, in this research we found that government services are dominant in both hills and terai, but it could not be suddenly increased and hence is beyond the scope of this paper. However, commerce or business activities accounts for nearly one-fourth of the non-farm employment on average and one-third in case of terai, hence policies like availability of loan, may be in the form of micro-credits for poor households may help promote these activities. Similarly, ease in capital formation may help increase the activities of manufacturing sector. Other non-farm sector could also be promoted with appropriate policy measures. However, again a detail study is recommended to find the role of individual sectors and a suitable policy recommendation

Does Kitchen Garden and Backyard Livestock Farming Help Combat Food Insecurity?

Similar to other developing countries, food insecurity is one of the problems in Nepal. Around one-fourth of the households from the NLSS II data were found to be food poor. However, analysis of the severity and depth of poverty as well as analysis of inequality in per capita food consumption expenditures showed food-poor households to be close to the poverty line as well as these being less disparity in food consumption. Thus, we can say that food poverty is not very severe and although it may not be eradicated immediately it could be tackled with the appropriate policy measures. Food security seems to be determined by several variables. Among these we considered two variables to be of much concern. Having some livestock animals was assumed to have strong influence on household food security, which could not be supported by the insignificance of this variable in our research. Although livestock seems to have non-negative effects for urban food security, it is still insignificant here. On the other hand, having a kitchen garden seems to increase per capita food consumption expenditures and ensures security against food shortages. It may specially be important in the case of the provision of nutrient-rich foods like vegetables, which are the common product of a kitchen garden. Since the coefficient for kitchen garden variable is higher in the case of the limited model of the urban households, it could also be said to be of much value for these households. From the results of this research it could be recommended to the households to maintain a kitchen garden to the extent possible. The government should prioritize urban agriculture, maybe by providing improved seeds for kitchen garden crops within reasonable price and quality, and with other appropriate policy approaches. We recommend further research for finding the scope of urban agriculture in the developing countries like in Nepal

Improving fertilizer recommendations for Nepalese farmers with the help of soil-testing mobile van

Smallholder farmers dominate agriculture in Nepal. These farmers have poor knowledge about agriculture and lack of support for soil management and integrated plant-nutrient systems. Focusing on the importance and need for soil-fertility management, a soil-testing mobile van program has recently been introduced in Nepal by Soil Management Directorate, Hariharbhawan. With the introduction of the mobile lab, famers can get their soil tested for nutrient deficiencies and fertilizer requirements at their doorsteps. Using mobile lab, spatial distributions of chemical properties, including pH, organic matter (OM), total nitrogen (N), available phosphorus (as P2O5), and available potassium (as K2O) were examined in soil samples taken from the 0 to 15 cm depth from selected agricultural fields in eight different districts in the mid-hills and Terai regions of Nepal. Tests conducted on 1,479 soil samples in the soil-testing mobile van revealed the following: the mean soil OM ranged from 0.01 to 1.77%; total N content ranged from 0.01 to 0.08%; mean available P2O5 ranged from 16.47 to 197.82 kg ha−1; and mean available K2O ranged from 84.3 to 422.57 kg ha−1. For each crop to be grown, farmers were provided with individual soil health reports and fertilizer recommendations (rate, amount, and type). This program not only allows scientists and farmers to work closely and share information but also serves as a model for the nation to successfully transfer technology for improving soil health and sustainability