KATHMANDU, Jan 13: Nepal’s dependence on imported agricultural products has been rising over the past years. Despite the increased reliance on imported agricultural products in households due to insufficient domestic production, the government has distributed a heavy subsidy of Rs 107.66 billion to farmers over the past five years.
Even though the allocated subsidies have risen, the expected increase in agricultural production has not been accomplished. According to the Ministry of Agriculture and Livestock Development, a total of Rs 20.3 billion was directly distributed through projects operated in collaboration with domestic and development partners till the fiscal years 2019/20 and 2023/24, along with Rs 87.36 billion indirectly through chemical fertilizers and other measures.
The government has been providing subsidies to sugarcane farmers through various projects, funds for agriculture, livestock and fish insurance premiums, agricultural cooperatives, agricultural groups and agricultural farms under various headings.
Similarly, billions of rupees are also granted for chemical fertilizers every year. Although the government has been increasing the amount of subsidies in order to increase agricultural production, the import of agricultural products from abroad has escalated at an alarming pace. The expected increase in domestic production has not been achieved. Farmer leaders said that agricultural subsidies are not being utilized properly. Uddhav Adhikari, Founder President of Farmers Group Federation of Nepal, said that the commitment to publicize the subsidy is positive.
Take policy measures to address the misuse of agricultural subs...
“Subsidies distribution alone is not enough; it must reach the targeted group,” said the Adhikari. “It should be focused on farmers rather than commercial companies.” The subsidies should be distributed to even small farmers, not just to one large entity. It should be given on the basis of production yield.
According to the ministry, subsidies have been distributed mainly through five projects. During this period, a total of Rs 6.61 billion has been given to farmers through 141,670 agricultural cooperatives, agricultural groups and farms from the Prime Minister Agricultural Modernisation Project (PMAMP).
Similarly, a total of Rs 184.86 million has been disbursed through the Rani Jamara Kulariya Irrigation Project, Agriculture Component Implementation Unit, benefiting 21,450 individuals. Additionally, Rs 801.9 million has been distributed through 27,650 cooperatives and groups. A total of Rs 1.92 billion has been distributed under the Nepal Livestock Sector Innovation Project and Rs 1.53 million under the Food and Nutrition Security Enhancement Project.
Likewise, under the RID project, the government has provided a subsidy of Rs 164.48 million for the Startup Grant program, followed by Rs 4.7 billion for the sugarcane farmer incentive, Rs 504.8 million for agricultural insurance premium, and Rs 5.13 billion for livestock and agriculture insurance premiums.
The government has been providing subsidies for the purchase of chemical fertilizers, advanced seeds, production and procurement, fishery development, crop protection and development, agricultural mechanization, food security, crop and livestock insurance, vegetable farming, pond construction, and agricultural tools.
The Auditor General has also been suggesting that the details of goals and achievements should be updated and the subsidies should be used on the basis of priority when there is no increase in production and productivity despite increasing investment.
Ramnath Adhikari, Minister for Agriculture and Livestock Development, said that the government is working to organize the subsidies provided to farmers. “The subsidies provided by the government should be used effectively,” Adhikari said, “The government is sensitive to ensuring that subsidies reach the targeted groups.”
The PMAMP was launched to support mechanization, processing and marketing of crops and commodities with necessary infrastructure. There have been allegations of policy and regulations being violated in subsidies distribution. During the distribution of subsidies, complaints have been raised that not all sectors and groups are covered, and that the subsidies have not reached the weaker and poorer farmers.
Even though there is a need to prepare a unified procedure and clarify the subsidy policy, it has not been done. The budget allocated for farmers and grants are used by the beneficiaries. In order to manage the subsidy, the Ministry of Agriculture and Livestock Development has prepared and implemented the Subsidy Fertilizer Distribution Management Guidelines, Cold Storage House Establishment Program Implementation Procedures, Agriculture and Livestock Insurance Guidelines.
Although an integrated approach has been prepared and the subsidy policy needs to be clarified to bring uniformity, it has not been fully accomplished. The budget allocated for farmers and the subsidies are often used by beneficiaries. To manage the subsidies, the Ministry of Agriculture and Livestock Development has prepared and implemented guidelines such as the Fertilizer Distribution Management Directive, Cold Storage Establishment Program Implementation Procedure, and the Agricultural and Livestock Insurance Directive.
In the current fiscal year 2024/25, the budget of the agricultural sector has decreased. Compared to the last fiscal year, the budget was reduced by about Rs 1 billion. According to the budget of the current fiscal year 2024/24, a total of Rs 57.29 billion have been allocated for the agricultural sector. Last year, the agricultural budget was Rs 58.98 billion. Not only the federal government but also the provincial and local governments have been providing subsidies to agriculture.
