The government has prioritized agriculture in the short-term for economic recovery in light of the Covid-19 pandemic. Agriculture has never really taken off in Nepal even though the sector employs around 66 percent of the total employed population, contributing 27.1 percent to the GDP. Most of the labor force engaged in agriculture doesn’t have regular basic income and other supports such as health insurance.
The government policies and programs for 2020/21 focus on boosting investment in agriculture with the goal of creating jobs. But there is little hope of the desired outcome due to the lack of technology and other prerequisites such as market access, all-weather transport connectivity, and irrigation.
Productivity and competitiveness of the agriculture sector are low, and adoption of improved technology limited, despite repeated government commitments to improve the sector over the past few decades. Most of the current Nepali migrant workers were once into agriculture in their own country. They could not generate enough income to meet their families’ basic needs such as nutritious food, health, and education for their children.
Employment in agriculture is mostly seasonal, which represents a significant loss of human resources, as the workers are idle for almost half the year. Return on investment in agriculture is much lower compared to the interest rate provided by commercial banks in fixed deposits. Most returning migrant workers would be willing to put their money in fixed deposits in commercials banks rather than make an investment in agriculture.
Nepal has completed the implementation of the Agriculture Perspective Plan 1995-2015 and is now implementing the Agriculture Development Strategy 2015-2035. The sector saw a meager 3.2 percent growth during the 1995/96-2015/16 period, which is why the country’s youth and most productive labor force looked elsewhere for jobs. The new strategy aims to develop a self-reliant, sustainable, competitive, and inclusive agricultural sector that can drive economic growth and contribute to improved livelihoods and nutrition security. Unfortunately, there is little government investment in agriculture and budget allocation in it has been consistently conservative.
There is a dearth of skilled human resources in agriculture in the absence of investment in training people to use improved technology. The government has announced an expansion of the Prime Minister Agriculture Modernization Project (PMAMP) to create jobs across the country. However, that will be insufficient to absorb the workforce that will swell with the return of migrants from different countries.
Additionally, there will be a mismatch in skills required in agriculture because most returning migrant workers won’t be trained in the sector. Hence the government should focus on skills enhancement. Moreover, the project, already tainted by financial irregularities, may not be able to generate much hope among youth and returnee migrants.
Against this backdrop, the hope of the agriculture sector driving the economy out of the crisis seems misplaced. The government’s slogan ‘Consume domestic products, promote internal production’ sounds laughable considering that Nepal imported, among many other vital stuff, fresh vegetables worth of $4.5 million in the first ten months of current fiscal.
The agriculture sector has always had low productivity. There is no possibility of it driving the economy while other sectors are down too. There is thus an urgent need for structural reform in the sector that is aimed at ensuring higher rate of return on investment. Let us hope the government policies and programs for the upcoming fiscal are well-intended and public expenditure will really attract private investment. Only then can we hope that the sector will generate enough jobs.