Growing Fertilizer Market in Nepal

Landlocked Nepal faces the challenge of low crop productivity due to climate change, depletion of soil fertility, and low fertilizer use. Over the years, there has been a significant shift in the use of inorganic fertilizer in the Terai agro-ecological belt, while use has stagnated in the hill and mountain regions. The low fertilizer use may be partly due to insufficient demand, the shortage of fertilizer-responsive varieties that suit Nepali production environments, limited access to irrigation facilities, or limited market access aggravated by rugged terrain in many parts of the country.

The government is concerned about high prices and the dubious quality of fertilizers sold in the country. It is unclear why the demand for and sale of chemical fertilizer supplied through private, informal channels remain high despite the poor quality of chemical fertilizers.

Divya Pandey/IFPRI

To support the government of Nepal, USAID Nepal, through IFPRI, carried out a study to identify what determines the quantity of chemical fertilizer farmers’ use. The project also studied how variation in chemical fertilizer prices across regions between 2003 and 2010 contributed to variation in chemical fertilizer use and other economic outcomes of farm households during the same period.

Key Findings and Policy Recommendations

Analysis of past policies and panel data from the Nepal Living Standard Survey for 2003 and 2010 show that in Nepal's Terai region, lowering the price of chemical fertilizer is more advantageous for larger farms than smallholder farms. The growth in fertilizer demand has been met by private markets, despite the knowledge that chemical fertilizer from private markets is often inferior and impure compared with the chemical fertilizer supplied by the government, nongovernmental organizations, and cooperatives.

The study outlines the following policy options:

  • increasing the use of chemical fertilizer in Nepal, particularly in the hill and mountain regions, which may require the government to focus on raising returns from the use of chemical fertilizer rather than on reducing the price of chemical fertilizer through subsidies
  • conducting further research on the variation in use of chemical fertilizer between medium- to large-size farms in Terai and those in the hill region, as well as on the interactions between chemical and organic fertilizer and the long-term environmental sustainability of increased chemical fertilizer use
  • enhancing investment in agricultural research and development on production technologies

Read more: Determinants of Chemical Fertilizer Use in Nepal

Farm Size and Effects of Chemical Fertilizer Price on Farm Households

Agricultural Mechanization in Nepal

Agricultural mechanization is one of the key processes that will affect the future of smallholder farming systems in Asian countries, including Nepal, where just 8 percent of farmers use tractors, 26 percent use iron plows, and more than 60 percent of intercultural operations are managed by women. Poor infrastructure is a major constraint on the mechanization of agriculture in Nepal. But providing easy credit and raising awareness of financial intermediaries can help to mitigate those constraints and facilitate mechanization.

Divya Pandey/IFPRI

USAID Nepal, through IFPRI, aims to support the Government of Nepal in improving the policy and regulatory environment by reforming the country’s business regulations and supporting the enactment of farmer- and business-friendly input policies and procedures under the Policy Reform Initiative Project (PRIP). As part of this effort, IFPRI conducted several empirical assessments of the issues affecting the promotion of agricultural mechanization (or agri-mechanization) in Nepal.

One assessment addressed the problems and challenges faced by stakeholders—farmers, agrimachinery providers, producers and fabricators, researchers, and traders—and assessed how the adoption of custom-hired services affects farm households across farms of all size. The main objective of this empirical assessment was to identify policy solutions for the strategic implementation of the agri-mechanization promotion policy passed in 2014.


To understand the policy questions in depth, the team conducted a literature review, collected primary and secondary data for analysis of mechanization in Nepal, interacted frequently with a variety of stakeholders, and reviewed the policy environment.

Key Findings and Policy Recommendations

The study on agri-mechanization in Nepal found that smallholder farmers are likely to benefit from the adoption of tractors through custom-hiring services. But they may also have incentives to exit farming and specialize in nonfarm income-earning activities. IFPRI researchers found that operators providing machine services lacked training, which contributed to poor demonstrations and low adoption of machine use among farmers. Because the government had not made mechanization a priority in the past, the sector is currently in a developmental state, and mechanization is not widely recognized as a substantial tool for better crop productivity.

IFPRI researchers also analyzed the policies and provisions governing the agri-mechanization sector, and recommended strengthening Nepal’s agri-mechanization promotion policy and focusing on implementation. Issues surrounding taxation (that is, the custom tariff and VAT) also need to be resolved. Finally, the establishment of networks and coordination with other sectoral and cross-sectoral policies and an agricultural mechanization credit policy are needed.

Read more: Effects of Agricultural Mechanization on Smallholders and Their Self-Selection into Farming: An Insight from the Nepal Terai

IFPRI South Asia Regional Office

Katrin Park/IFPRI
Katrin Park/IFPRI

The International Food Policy Research Institute (IFPRI) launched its South Asia Initiative in 2002 and established its South Asia office in New Delhi in 2005. The South Asia office engages in evidence-based research and capacity strengthening related to food and nutrition security in the region. This research engages in evidence-based policy research and capacity-building activities related to food and nutrition security in the region. This research focuses on agricultural diversification, climate change, markets and trade, nutrition and health, science and technology, and governance. Go here to know more about the new South Asia brochure.

Zero Tillage: A Climate Smart Solution to Downside Risk of Agriculture

Damaged wheat crop. Source: Md. Tajuddin Khan/IFPRI
Damaged wheat crop.
Source: Md. Tajuddin Khan/IFPRI

In March 2015, unseasonal rainfall and hailstorms caused tremendous losses to the standing rabi crops right when they were ready to be harvested. The weather anomaly affected 6 million ha of wheat, 1.7 million ha of mustard and 2.6 million ha of horticultural crops. Agriculture in India is vulnerable to a range of weather shocks like droughts, floods, heat waves, cyclones and storms. Short-duration weather episodes like unseasonal rains and hailstorms pose a special challenge for farmers because few coping strategies are available to farmers even if there are reliable forecasts. Unfortunately, climate models suggest that such erratic and extreme weather events are likely to occur more frequently in years to come. Therefore, it is important to identify different ways to mitigate the impact of such weather events on agriculture.

Agronomists suggest that conservation agriculture practices like zero tillage (ZT) make crops less vulnerable to weather shocks in addition to their other benefits like lower production costs and carbon emissions and conservation of soil nutrients and water. This additional benefit of ZT offers an added incentive to farmers to adopt the technology and to governments to promote its adoption. However, there are few empirical studies using data from farmers’ fields (as opposed to experimental plots or farm field experiments) that estimate the extent of loss reduction due to ZT. An IFPRI discussion paper titled Using zero-tillage to ameliorate of wheat yield losses from weather shocks: evidence from panel data in Haryana, India tries to fill this gap by rigorously estimating the reduction in loss to wheat crop in Haryana due to zero tillage. Authors, Tajuddin Khan, Avinash Kishore, PK Joshi and Divya Pandey find that crop loss due to unseasonal rains was nearly 25 percent less in the ZT plots than the conventionally tilled ones. Farmers, on an average, suffered yield loss ranging between 3.73 and 4.53 quintals per hectare in 2015 due to unseasonal rains. The loss was lower by 1.05-1.1 quintals/hectare in ZT plots. The adoption of ZT helped in reducing crop loss in wheat by 24-28 percent valued at Rs. 1523-1595/ha (approximately, $ 22.5/ha). The loss avoided due to ZT is nearly equal to the prevailing rental rate of the zero-till machine (Rs. 1500/ha) in Haryana.

Zero-till wheat is one of the most widely adopted resource conserving technologies in the rice-wheat systems in Northern India. In rice-wheat growing areas of Haryana, 36.5 percent of all farmers practice ZT in 35 percent of their wheat area. This IFPRI study provides an additional reason for promoting conservation technologies like ZT and rationalizing insurance premiums for crops. Authors argue that if ZT (or other similar practices) help reduce crop damage due to weather shocks, then the adopters of such practices should pay less premium for crop insurance. Reduced premiums will incentivize the adoption of resource conservation technologies. However, rationalizing premium rates requires reliable estimates of potential loss reduction due to different conservation technologies. We need to replicate these studies across different regions, crops and agricultural practices to design better insurance products and to inform policies on promoting conservation agriculture.

Empowering women in Bangladesh by strengthening the agriculture-nutrition-gender nexus


Cross-posted from written by Akhter Ahmed, Julie Ghostlaw, and Nusrat Hossain

This week's International Women’s Day 2017 celebrates the social, economic, cultural, and political achievements of women. Despite significant strides toward gender equality in Bangladesh, there are still many barriers to women’s participation in the agriculture sector. Evidence from IFPRI’s research in Bangladesh shows that an increase in women’s empowerment in agriculture helps to move people out of poverty; improve household, child, and maternal dietary diversity; and increase agricultural diversity.

Ministry pilot project links agriculture, nutrition, and gender
Motivated by this research-based evidence, IFPRI designed the Agriculture, Nutrition, and Gender Linkages (ANGeL) project, a two-year effort piloted by the Bangladesh Ministry of Agriculture through its Department of Agricultural Extension. ANGeL is evaluating the impact of three types of interventions for promoting nutrition and gender-sensitive agriculture:

  • Agriculture Production—Facilitating the production of the high-value food commodities rich in essential nutrients through the diversification of crops, livestock, and the like.
  • Nutrition Knowledge—Conducting high-quality training in behavior-change communication to improve people’s knowledge of nutrition.
  • Gender Sensitization—Undertaking activities to empower women and raise their status while encouraging gender parity.

Results highlight women’s persistent disempowerment
Before launching ANGeL’s field-level activities, empowerment data were collected from 4,000 households across 16 districts in rural Bangladesh.
ANGeL baseline results (graph at upper right) show that 69 percent of women are disempowered. In other words, only 31 percent of women are empowered—10 percent less than the share of men who are empowered (41.5 percent).

Read more here

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