Agriculture Incentives

The agricultural sector in Nepal is beset with numerous problems. While it is a means of livelihood for a significant portion of the population, the country spends billions of rupees annually on importing agro products from other countries. With young people leaving in droves for jobs abroad, large swathes of fertile lands have been left uncultivated. With little or no incentives, farmers find it difficult to fully engage in farming. However, here is a good news for them. The budget for the fiscal year 2026/27 aims to reform through a host of incentives. The government has announced it will invest in the whole agricultural value chain from production to distribution and marketing. Among many provisions, the most significant one is the offer of an incentive grant to any investor committing to invest at least Rs. 20 million in agriculture and livestock production. This can help promote commercial farming and convince young people to get involved in the agro sector. 

Likewise, the plan to complete farmer identification and distribute farmer identity cards could help ensure that support reaches genuine farmers. The government also deserves credit for increasing the budget for chemical fertilisers to Rs. 32.46 billion, a 12.6 per cent rise from the current fiscal year. A shortage of fertiliser has especially been affecting paddy cultivation. The timely supply of fertilisers is essential to enhance the production and productivity of rice. The recurring distribution problems should be solved by efficient and transparent mechanisms for procurement and delivery systems. The proposed establishment of land banks and promotion of agro-pooling are equally significant. It would reduce dependency on imported products if unused lands were utilised for production. Such initiatives of the government will require strong coordination among local governments, landowners and private investors.

Irrigation expansion is another positive aspect of the budget. Irrigation services for 15,800 additional hectares and increasing irrigated farmland coverage to 64 per cent could improve yields. Water management is the backbone of agricultural productivity. Investments made for large projects like Sikta, Babai, and Sunkoshi-Marin would definitely prove very useful. Nevertheless, the budget also has certain drawbacks. The decision to withdraw certain subsidies will hit small farmers. The policies should not overlook farmers with limited landholdings who constitute the majority of the agricultural workforce. It may create inequalities in rural areas, as the system seems to benefit only large investors. 

Similarly, the allocation of Rs. 46.92 billion for agriculture and livestock development appears substantial, but the real challenge lies in ensuring that funds translate into measurable outcomes. Nepal has witnessed many ambitious agricultural programmes in the past but little change in farmers’ incomes. Agriculture cannot be revitalised through budget allocations alone. Farmers need reliable markets, stable prices, accessible technology, quality inputs and protection from climate-related risks. The focus on processing industries, organic manure, and indigenous vaccine production by the government is the way forward, but it will take some dedication. Agriculture in the country requires proper utilisation of the budget. If the promises of the government are fulfilled, agriculture can prove to be an industry worth its name. Otherwise, Nepal will keep pouring millions of rupees into imports while its lands lie barren and unused.