Transcript of Commercialization of Agriculture: Opportunities & Challenges in Nepal Sushil Rijal Executive Board...
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- Commercialization of Agriculture: Opportunities &
Challenges in Nepal Sushil Rijal Executive Board Member and
Chairman of Agriculture Committee Chamber of Industries,
Morang
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- Major Agro Product of Nepal Paddy Maize Wheat Green Tea Jute
Big Cardamom Ginger Herbs
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- Overview of the presentation 1. Opportunities in agribusiness
2. Policies and its implications in agriculture commercialization
in Nepal 3. Constraints in agribusiness promotion in Nepal. 4.
Present status of Agriculture 5. Suggested recommendations 6. Way
forward
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- 1.Opportunities Climatic condition suitability The Country
topography and natural resources Existence and potential to grow
different agriculture crops, livestock and NTFPs. e.g Sugarcane in
Terai Kiwi in mid hills to Tulip in Jumla. Existence of more than
7000 plant species. 750 medicinal and Aromatic plants of commercial
use. Nepal a country having topography of all climatic zone from
sub- tropical zone Terai to Temperate zone, the Himalayan range. It
comprises of Tropical (up to 1000m), Subtropical (from 1000 to
2000m), Temperate (between 2000 and 3000m), Subalpine (3000-
4000m), Alpine (4000-5000m) and Nival zone (above 5000m)
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- Opportunities Market Opportunity A. Domestic market Increasing
demand for off season vegetable, meat, dairy and poultry products
because of the food habit change and increase protein intake. Food
grains, potatoes(2 billions) and onions (0.7 billions) are imported
to meet domestic demand. Government giving high priority in
addressing food security and nutrition security.
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- Opportunities B. Export Market opportunity: Demand of high
value organic and specialty product e.g organic foods and high land
coffee in international market. Nepal is being recognized as
specialty agro product producing country, e.g Ginger, Orthodox tea
and Cardamom.
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- 2. Agriculture policies/ Favorable A. National Agriculture
Policy 2061: Increase competitiveness in regional and world markets
developing foundations of commercial and competitive agriculture.
B. Agribusiness Policy 2063: Help to produce market oriented and
competitive agriculture Promotion of domestic marketing and exports
through the development of agro-industries Commercial production
area Organic production area Export area
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- 2. Agriculture policies Agri mechanization policy 2071 Subsidy
on agri mechanization/machines purchase in hills and Terai Import
duty relaxation Made provisions for supply of spare parts and
accessories in regular manner. Opened avenues to promote agri tools
manufacturing business with incentives.
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- C. National Seed Policy2056 Seed Vision 2025 Identified the
role of private, NGO and public sector for producing foundation
seeds and seed multiplication. Recommend rebate on tax and custom
of seed business. Recommend public, private and NGO for
establishing lab and certification. D. Fertilizer Policy, 2058:
Pricing of fertilizer considering market forces. Promote private,
public and cooperative sector for the production and trade of
fertilizers. Cooperative trade on fertilizer.
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- E. National Tea Policy,2057 Registration of land for tea garden
as an industry. Lease government farms to private sector for a
maximum of 50 years. Give privilege in reduced import duty in
imports of packing materials. F. National Coffee Policy, 2060
Public and private research for coffee. Privilege on Land ceiling
Rebate on custom duty on machinery.
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- G. Dairy Development Policy,2064 PPP concept Private sector in
involvement in Dairy Development Board. Support private sector on
production, processing and trade of dairy industry. Bring open
policy for developing dairy industries and pricing of the
products.
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- H. Regulatory frameworks Acts related to agribusiness
promotion/control: Industrial Enterprises Act, 2049 Contract Act,
2056 Food Act, 2023 Seed Act, 2045 Feed Act, 2033 Pesticides Act,
2048 Cooperative Act, 2048
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- 3.Constraints in Commercialization of Agriculture 3.1.
Production: Fragmented and small land holding High costs of
production, small scale of production poor coverage & low
quality of infrastructure inadequate public support Large
proportion of isolated farms. Poor and inadequate supply of
fertilizers 450K. Mts vs. 150K. Mts and agri inputs Agri business
became less attractive to the youth resulting out migration of the
youth. Cause and result is subsistence farming
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- 3. Constraints in Commercialization 3.2 Marketing Constraints
Highly fragmented businesses Poor export infrastructure within the
country and in transit Limited public supports in the exploration
of the export market Traders reluctant to start the export
business, Risks of trade deflections or low quality consignment.
3.2.1 Export marketing Lack of standard laboratories for
certification of exportable products; Insufficient and weak plant
and animal quarantine procedures to protect domestic products from
getting transmitted with imported disease; Weak enforcement have
resulted in large scale non-compliance of standards; and More
controlling than facilitating. Requirements for grades and
standards are ever increasing Certain products require health
certificates, safety test marks, or standards certification of the
importing country Halal Certificate Product modifications Labeling,
marking, packaging Several pesticides are banned If not, MRLs are
fixed( Maximum Residue Limit) tracking the level of pesticides
applied to the crops in the field Government is made responsible
for food and quarantine regulation
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- 3.3 Globalization WTO and Agribusiness Scale sensitivity
Standards (quality, quarantine) Technology transfer in agriculture
Plant variety Biotechnology Agro-chemicals Processing techniques
Effects of policy changes abroad Competitiveness
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- 4. Present Status of Agriculture The situation is not very
favorable and needs to give very intensive attention from the GoN
to address and correct following challenges and situation. Food
deficit Acute food deficit in Far-western 3 districts namely
Bajhang, Bajura and Dadeldhura, Mid-western zone Humla, Jumla and
Kalikot districts. 85 % of agriculture product is still for
household consumption only 15 % is for commercial purpose. Low
supply of chemical fertilizers 1,50,000 Tons vs. 400,000 Mts
demand. It is only 21 % of the total demand (MoAD data). Seed is
still sourced from informal source govt. supply is not sufficient
and registration of the new seeds is not in good progress. Hence 85
% of the seeds are supplied from informal source. Only 54 % of
agriculture land is irrigated and also mainly in Terai. rest are
still based in monsoon rain fall. Only about 1 percent of farmers
own tractors. It is almost no mechanization in Agriculture.
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- 4. Recommendations actions: Government sector 4.1. Quality
standard and regulatory aspects: Quality control regulation and
statutory law Quality control, disease-pest control and quarantine
control, certification Support private sector for quality control
and certification of agricultural products. e.g. Pest free
certificate for Citrus Export to China (Garden and pack house)
Efforts towards getting FMD free certification for livestock
product export.
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- Government 4.2. Investment and promote investment
Infrastructure: Attract investment in Agriculture by liberal tax
policies and bank interest rate: 4.2.1 Present interest subsidy 6%
minimum interest does not opened the avenues for existing and new
coming medium scale agri business because of limitation of 10
millions and 45 years age bar. 4.2.2 Agri business should be made
tax free for at least 5 years of gestation period. 4.2.3 The
bankers are still reluctant to finance agri business because of
high risk. Make agri insurance more conducive to the business by
setting up trustworthy evaluation mechanism e.g involvement of DCCI
and FNCCI/commodity associations
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- Government 4.2.3 Long-term raw material development plan a.
support measures requiring the agro-industries to plan and develop
supply of raw materials from domestic sources b. incentives to
agro-industries using the domestic raw materials. c. Encourage
private investments on local resource-based and export oriented
businesses (far reaching and predictable measures) domestic
foreign
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- Government 4. 3. Access to the market Ensure preferential
access to foreign markets including India. Lower tariffs on key
agribusiness inputs like packaging materials, farm green houses,
machineries, implements and cold chain equipment machines, etc.
Rationalizing tariff structures on import (from all the countries
)
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- Government 4.4 Technical guidelines for quality control A
reliable system of quarantine control and food testing should be
established to ensure the export market that the products
originating from Nepal does not have risk of sub- standard quality
and disease-pests. a. Bilateral agreement with Indian government
for : b. Mutual Recognition of the certificates. c. Harmonization
of local tax and bidding process for Jute bags tender in India. d.
CV duty on Pashmina Products in India Bring conducive laws in:
food, quarantine, contract farming, land contract)
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- Government 4. Technical backups and marketing Technical backups
for enhancement of productivity and the quality Technical teams
managed by the commodity associations Encourage private sector to
supply technology Marketing systems that can aggregate and link
small produce to traders and larger markets while maintaining the
traceability of the products. Training and interaction among
agribusiness operators, traders and exporters Data base on
agriculture production and enterprise, analysis, projection and
dissemination
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- Government 5. Knowledge generation Technology generation,
verification Linking the livelihood concerns of small farmers to
the export market Market exploration Technical and managerial means
of reducing the cost of production and handling Post-harvest
technology, preserving and storing Machinery and equipment
Encourage private sector in research
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- Recommended activity from the Private Sector Give priority in
the investment in agro business giving more focus on area expansion
in cultivation, crop production and processing. Bring new
technologies and inputs from foreign partners for mass production
Commercialization of the research Larger scale investment for the
agro processing business Market exploration and linkage development
Buy back guarantee and contract farming for the mass production.
Quality and quantity production at the larger extent Establishment
and operation of Commercial farms Advise government for the
revision of policies and act to bring conducive environment for FDI
Larger scale and aggregated farming of the crops Bring joint
venture investment with foreign partners and collaborate with
international buyers Promotion of Nepalese niche agri products,like
specialty tea, coffee, vegetables and food grains in the
international market. Collaborate with GoN in creating branding for
Nepalese products.
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- Private sector: Producers & processors 2. Quality control
Adherence to technical guidelines for quality control. Testing and
certification as business register and operate under the government
testing and certification system Get educated and follow the
SPS/TBT requirements of export market.
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- Producers and Processors 3. Technical specifications Visualize
all the problems and prospects of production including the input
use, variety requirements, pesticides and MRLs, inspection and
quality control, farm households involved in the production process
including their consumption requirements during the crop season.
Packaging & labeling should be as required by the export
markets
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- Private sector : Exporters 1. Market explorations Explore the
niche products Have information about the tariffs and non-tariff
barriers in importing country Know the pre-shipment inspection
requirements of the importing country Find quality, testing,
treatments and certification requirements and pass on these
information to the producers and processors Know if the product is
eligible for entry to the country of export treatments and
conditions required health certificates, safety test marks, or
standards certification Get information of the product quality,
quantity, production conditions of your export
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- Exporters 2. Meeting the requirements Inform to the government
about the problem in export market. Give inputs to the government
for trade negotiations
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- The Way forward Enabling Environment GoN is implementing
Agriculture Development strategies for 20 years incorporating all
the issues of commercialization of Agriculture and enhance the role
of private sector. New directives for commercial banks investment
at least 10 percent of their loan portfolio in Agriculture. Set
priority to invest at least 2,00,000. Nrs at the VDC level from
Local Dev fund.
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- Way forward enabling environment (contd) Government investment
in the Agriculture is increasing. Increasing liberalization in tax
regimes, waver of agri development tax in imports of agriculture
inputs New fertilizer policy is underway to incorporate more
private sector in the supply of fertilizers. Subsidy in organic
fertilizer production in the country.
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- Way forward Enabling Environment: Subsidy in Organic
Certification for export promotion. SEED Vision 2025 is formulated
and, which includes role of private sector as pivotal for the seed
production and supply.
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- Recommended priority areas for development under the
collaboration with private sector. 1. Increase productivity and
value addition through commercialization and irrigation
investments. 2. Improve the functioning of factors of production
and marketing. 3. Reach out to the poor and increase investment in
basic infrastructure 4.Insure the supply of fertilizers, seeds and
agricultural equipment for all.
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- Way forward Government of Nepal has been increasing annual
budget for the Agriculture Development. Expected increasing
investment from the private sector under joint venture and
FDI.
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