Commercialisation of agro sector emphasised

YADAV RAJ JOSHI KATHMANDU: The budget for 2013-14 has given importance to commercialisation of the traditional agriculture system, allocating billions of rupees for the promotion of improved seeds and technology, subsidy in chemical fertilisers and irrigation facilities. The budget has allocated Rs 21.40 billion in the agriculture sector. The allocation is about 81.50 per cent more than the current fiscal years Rs 11.79 billion. Similarly, the budget has increased government expenditure in irrigation by 36.07 per cent compared to the previous allocation of Rs 9.23 billion. The total budget for the Ministry for Irrigation is about Rs 12.56 billion. According to finance minister Shankar Koirala, the country will move ahead in the agriculture sector with two new plans 20-year Agriculture Development Strategy and decade-long Food and Nutrition Security Plan. The plans will increase productivity in the agriculture sector and promote commercialisation and entrepreneurship among farmers, he said. The budget has increased subsidy on chemical fertilisers to Rs 6.07 billion from the current Rs three billion. It has also offered 50 per cent grant for establishing organic fertiliser firms. The finance minister has repeated the old promise of conducting a feasibility study on setting up a chemical fertiliser factory in the country. About Rs 1.75 billion has been allocated for research in the agriculture sector for next fiscal. The increase from last years Rs 1.12 billion will help research and development in the sector. Minister Koirala has also proposed the Comprehensive Maize Programme in 16 hil l districts. It will be launched through agriculture cooperatives. About 300 subsidised power tillers will be distributed through the programme. The budget has allocated cash incentives for farmers engaged in orange and apple farming. About Rs 100 cash incentive will be given to farmers for planting and raising one apple sapling every year. Similarly, the budget has envisioned to make the country self-reliant in meat and milk. Fodder plantation has been proposed in 7,600 hectares of land in 25 districts. The finance minister has planned dozens of skill trainings for youths to attract them to the agriculture sector. The budget has allocated Rs 1.45 billion to the Project for Agriculture Commercialisation and Trade. Similarly, the government will disburse the budget to 500 other projects to promote commercialisation in the sector. In the irrigation sector, the budget has introduced over hundred small and medium scale irrigation projects. About Rs 200 million has been allocated for the construction of a canal in Mahakali Irrigation Project, followed by Rs 880 million for 35 medium projects, and Rs 500 million for deep and shallow tube wells. The Bagmati Irrigation Project has been allocated Rs 440 million and Rs 1.36 billion has been allocated for irrigation management across the country.

Boost Investment In Agriculture

Arhan Sthapit In sharp contrast to the conventionally practised policy at the national level as well as to the general publics belief, Nepals agriculture sector has witnessed a decrease in investment over the years. There is much to worry about the trend, as a consolidated agricultural base is not only the key to Ne pals economic development, but also indispensable for averting a food crisis.

Importance The importance of the agriculture sector to the Nepalese economy is beyond any doubt, as Nepal is predominantly an agrarian country in terms of both socio-culture and economic structure. The total population living off the farm has dwindled from 80 per cent to 65.7 per cent in the last two decades, but still it accounts for 39.3 per cent of the Gross Domestic Product (GDP). It contributes about three-fourths of the total export earnings while it accounts for four-fifths of the industrial raw materials if the Tenth Plan review data are to be believed. In underdeveloped countries like Nepal, agriculture remains a dynamic sector in boosting the economy, based on the indicators and the structure of production and demand. With its contribution to the national income, employment, livelihood and food security, industrial development and international trade, agriculture continues to remain the backbone of the Nepalese economy. These facts are not in consonance with the current investment trend, however. There has been a steady decrease in the total national budget allocated to the agricultural sector. In the national budget of 2009/10, only 2.75 per cent of the total national outlay was earmarked for agriculture. According to the data of the Ministries of Finance, and Agriculture and Cooperatives, Rs. 7.876 billion was allocated for the sector as against the total national budget of Rs. 285.93 billion. The pie received by agriculture has, thus, dwindled considerably, as it was 3.67 per cent in FY 2000/01 and 3.94 per cent in 2001/02. Last years 2.75 per cent - though quite small in view of the contribution and importance of the agriculture sector - had slightly increased from 2.44 per cent of FY 2008/09, posting a 13 per cent rise on a year-to-year basis. The agricultural budget for the last 10 fiscal years just accounted for 2.79 per cent, one of the lowest among agro-based developing nations. Investment by our closest neighbours in agriculture is not as meagre as Nepals. Bangladesh and India have allocated 6.2 and 6 per cent of their total budget to this sector respectively. Even in conflict-hit African nations, the figure exceeds 4 per cent on average. Our northern neighbour China has also not slackened its national priority on agriculture, despite its big leap in industrialisation and global business in recent years. The meagre amount being earmarked and invested in agricultural activities in Nepal cannot bring ambitious plans to fruition. There is no denying that Nepals agriculture sector needs to be commercialised and modernised, but until there is adequate investment and vision, this will remain only a slogan. The scanty budget allocated to this sector through the Ministry of Agriculture and Cooperatives is also used to pay the salaries and allowances of the Ministrys 14,000-plus employees as well as for office overheads and administration, leaving far little money for core agro-programmes. Research and development (R&D), one of the key components of any agriculture development system, also has not received sufficient attention and investment. Despite the high rhetoric, the state has paid little heed to R&D: its testimony is the budget allocated to the Nepal Agricultural Research Council (NARC), the government agency responsible for agricultural research at the national level. In fiscal year 2009/10, the money earmarked for NARC was as little as Rs. 560 million, hardly 0.19 per cent of the total national budget. NARCs budget for FY 2000/01 and 2001/02 was 3.67 and 3.94 per cent respectively, but it started falling steadily from 2002/03 when it was just 2.52 per cent. With so little investment in agricultural research,

the goals of modernising the agrarian sector can never be achieved. Nepal as a least developed country (LDC) can still provide farm subsidies even under the multilateral trading system of the World Trade Organisation (WTO). Its shoe-string budget has, however, failed to provide the due subsidies. Even as a developing nation and having to grapple with world-wide pressure at the WTO forums, India has been providing farm subsidies. For instance, Indian farmers enjoy 100 kg of subsidised chemical fertiliser per hectare. In China it exceeds 200 kg per hectare whereas it amounts to barely 20 kg per hectare in Nepal. Except for the last two fiscal years, farmers in Nepal were deprived of such subsidies that were legitimate. The subsidies provided were less than what should have been granted. Nepals diverse micro-climates in the hills and mountains favour lucrative production of sub-topical and temperate crops and plants, whereas the Terai, as the countrys main food basket endowed with fertile plains, accounts for the major share of Nepals agro-produce. The middle hills account for excellent horticultural production and that of the high mountains for livestock production. Put all together, Nepal commands greater potential for agricultural production by virtue of the wide range of topographical conditions and eco-climatic features, enormous bio-diversity, ample water resources and a cheap labour market. All these can contribute adequately for consistent agricultural growth of the country. But this also calls for adequate investment in the agriculture sector. Farm and forest-based products also possess tremendous export potential. While Nepal boasts of being a leader in cardamom exports, it is also the worlds fourth largest producer of ginger. There are many other agro-products having great export prospect. In a recent move, Nepal identified 19 products as priority export items in the Nepal Trade Integrity Strategy (NTIS)-2010. Out of them, seven are agro-based, namely, honey, tea, large cardamom, ginger, lentils, and medicinal and essential oils. However, it is important to note that until Nepal makes a smooth shift from age-old sustenance agriculture to a commercialised and mechanised one, there is little hope for agro-exports to do big wonders. Managing the shift from a subsistence economy to a market-oriented one rests largely on the marketing management of products available to the economy. This fact equally holds true for the agricultural sector of Nepal, where most farmers do not realise the importance of markets for selling their normal and surplus production and continue to remain subsistence producers. Additionally, the governments agricultural development endeavours in the past (in the Five -year plans and 20-year Agriculture Prospective Plan, APP) focussed mainly on the production aspect of agriculture and bifurcated away from managing the farmers marketing needs. A substantial supply gap exists in the local market also. Agro-produce in many places goes simply to waste and is dumped (e.g., apples in the western hills) whereas other places of the country suffer great shortage of foodstuffs, resulting in the rise of commodity prices and in imports from India. So adequate investment must be made to make the distribution system efficient. Agro-FDIs A recent development has substantiated a need for investment. As per the report of the UN Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in agriculture tripled globally in eight years, from US$ 2 billion in 2000 to US$ 6 by 2008 despite the global recession. To facilitate FDIs globally in this sector, principles for responsible agricultural investment (RAI) have been developed under the aegis of the World Bank, International Fund for Agricultural Development (IFAD) and Food and

Agriculture Association (FAO). In light of the global scenario, Nepal should take up measures to bring in more agro-FDI into the country. It all lies in economic management that could address the need of the agricultural sector and structural reforms in Nepal.

As the Finance Ministry Shanker P. Koirala announced the details of Nepals new budget 2013/14 (2070/71 B.S.), I tried to take a few notes. Here, from the section on Agriculture and Food Security:

Government will implement the new 20 year Agriculture Development Strategy (ADS) and the 10 year Food Security plan and help the modernization and commercialization of Nepals agro sector. Read about the ADS here. Subsidies have been set aside for seeds and fertilizers. Budget allocated to establish chemical fertilizer plants. Note: I had spoken to the World Bank about this in 2011 while the Agriculture Development Startegy was still being developed. At the time, they had said this about building a Chemaical Feritilzer plant in Nepal: If you build a factory here, you will have to bring in all the raw materials. There is a cost associated with that, and Nepal has to know what the impact will be on its budget. Is it going to be private, or public? How will it be financed, how will it be sustainable? Acharya pointed out. Its just a fact that Nepal doesnt have petroleum or the other necessities that go into fertilizer production. If the costs of those inputs grow globally, the cost of production in Nepal will increase too. You can read the entire report here. 26 Food Insecure districts (out of Nepals total 75 districts) will continue to get additional subsidy for fertilizers and seeds so they can plant and harvest on time. Compost programs will be introduced to 40 out of Nepals 75 districts. 16 mid-hill districts will get maize programs. 8 districts will get Orange farming improvement programs. Kalikot, Mugu, Humla, Dolpa and four other western districts will receive Rs.100 subsidy /1 Apple sapling. Cinnamon farmers will receive subsidy. Honey farmers will receive subsidy. 7,800 hectares more will get irrigation. 1 Village 1 Production Program to be scaled up by 15 districts. A compensation trust of Rs. 5 crore (Approx. US$522,739) has been set aside for poultry farmers who have had losses due to bird flu. Read about the ongoing outbreak here.

The Minster also said something about building a Nitrogen Plant in the country, but I missed that part. As I wrote above, this are notes I jotted down during the speech. Looking forward to more details myself. Nothing very new in this list, and I did not hear the Minister mention climate change or extreme weather. Should crops fail due to extreme weather, is there a budget set aside? There was news over the weekend that even the nascent crop-insurance program has hit a snag. Can any countrys agriculture budget, particularly those with a significant agriculture dependent economy like Nepals, afford to not emphasize and plan for climate and weather related crop-failures at this point?

Kathmandu, July 14: The total budget for the Fiscal Year 2070/71 has been announced to be Rs 517.24 billion. This is am increment of 5.5 pc from last fiscal year . Finance Minister Shanker Prasad Koirala presented the budget of the fiscal year 2070/7 at the Harka Gurung Hall of National Planning Commission (NPC) in Singha Durbar this evening. The budget was devoid of any new programmes after concerns against bringing an ambitious budget. NPC had set the budget ceiling of 506 billion rupees.

Earlier today, the Cabinet meeting had endorsed the budget and sent the ordinances related to the budget and national loans. The government decided to announce the budget after the ordinances were endorsed by President Ram Baran Yadav. Budget in forest resources management Kathmandu, July 14: The government has announced to launch sustainable and scientific management, commercialization, development of eco-tourism and employment generating programmes to implement the theme of forest for prosperity. According to the budget estimates for Fiscal Year 2013/14, forest development strategy and forest security planning would be formulated in the coming fiscal year to prepare a clear roadmap for conservation, promotion and sustainable utilization of forest sector. A district-level profile will be prepared clearly mentioning the types of plants and trees and Rs 370 million has been allocated for this, the Finance Minister said while presenting the budget today. Likewise, management of partnership forest areas would be expanded in 50,000 hectares, Koirala added. Similarly, 12.4 million trees and 8.2 million medicinal herbs would be planted in the coming fiscal year. The Finance Minister said that infrastructure development programme of the national parks has been given continuity. A total of 20 security posts would be built and 148 would be repaired in the coming fiscal year to reduce the poaching of wildlife and reduce conflict between human beings and wildlife. Budget on Agriculture Kathmandu, July 14: According to the budget presented Sunday for the fiscal year 2013/14, the government has decided to implement the 20-year agriculture development strategy and 10-year food and nutrition security plan. Likewise, Rs. 6.7 billion has been allocated for subsidy in the procurement of chemical fertilizer, improved seeds, and machine and technology. A feasibility study would be conducted to set up a chemical factory. The subsidy in food would be expanded to 26 districts. Similarly, Rs 1.75 billion has been allocated for the programmes on agriculture research. According to the Finance Minister, eight districts from the western region would have the garden improvement campaign to augment the production and productivity of orange. To make the apple farmers self-reliant in Kalikot, Mugu, Jumla, Humla, Dolpa, Manang and Mustang districts, every farmer would be provided Rs 100 per apple tree for growing apple for three years. The vaccination against foot-and-mouth disease for buffaloes would be extended to meet the commitment to eradicating the foot-and mouth disease from the SAARC region by 2020. With the collaboration of public, private and cooperatives, every development region would have a crossbred cow resource centre. The one-village one-production programme would be expanded to 32 districts from the current 21 districts. Similarly, the one-district one-product programme would be expanded to 15 districts. The small and cooperatives irrigation programme would be run in all 75 districts. Rs 50 million has been allocated to set up a compensation fund with the participation of farmers in order to provide relief to the poultry farmers affected with bird flu. Similarly, Rs 1.45 billion has been allocated for the commercial agriculture and sales project. Meanwhile, in the irrigation sector, Rs 50 million has been allocated for the irrigation sector development in the Karnali zone. The government has allocated Rs 1.77 billion for the river control, landslide management and watershed conservation projects. Budget on Education Kathmandu, July 14: The government has allocated Rs 1.87 billion for scholarship to all students from Grade 1 to 10 who are disabled and from the marginalized and community facing extinction and for all girl students from Grade 1-8 and 60,000 poor but talent students in the secondary level. The mid-day meal programme has been continued in different schools from 14 selected districts. As per the policy to gradually make the basic education free and compulsory, the government will implement the policy in selected 10 districts as the first phase. Rs 500,000 would be provided as incentive to two community schools in a district, considering the excellent performance in the SLC exam. To augment the quality education, 153,334 teachers would be provided training on skill development. For this, Rs 760 million has been allocated. Polytechnic institutes would be set up in Rolpa and Bhojpur districts and brought into operation. Similarly, a feasibility study would be conducted for the same in Ramechhap district. Rs one billion has been provided for the Literary Nepal Campaign in a bid to eradicate illiteracy by two years. During this programme, 1.6 million illiterate people would be made literate. Thirteen billion for local body elections

Kathmandu, July 14: The Government has given special emphasis in the budget for Fiscal Year 2013/14 on physical infrastructure development based on the demand of the local body concerned. The government has also allocated budget for holding local body elections in the new fiscal year. Accordingly, a budget of Rs. 12.68 billion has been allocated to be provided as grants for the local bodies. Sufficient budget for the judiciary Kathmandu, July 14: The Government has increased the annual budget for the Judiciary. According to the budget estimates for the Fiscal Year 2013/14, a policy has been adopted to increase the budget for the sector and reach it to one per cent of the total budget. The government remains committed to equipping the judiciary with resources to implement the strategic plan for consolidation of the sector, it is stated in the budget presented by the Finance Minister today. Accordingly, an integrated residential facility would be provided to the outgoing very distinguished personalities and Supreme Court judges. No change in revenue policy, minor change in tax rate Kathmandu, July 14: The government has not changed the policy related to revenue and tax rate for the fiscal year 2013/014. The budget government presented on Sunday has mentioned that the revenue would be collected as the Economic Act, 2068 BS. Continuing the existing revenue provision, the government has made minor amendment in the tax rate. The revenue policy aims to develop the private-sector friendly, transparent and equitable tax system by creating investment friendly atmosphere with maximum mobilization of the internal resources. Internalizing the role of private sectors in the national economy, the budget has stressed on voluntary tax participation, creation of atmosphere conducive to paying tax, identify the areas of economic transaction and expand the tax net and base through the adherence to the laws relating to the tax. Under the expansion of the tax net, permanent account number would be extended, and the excise duty on drinks as beer, and cigarette would be slightly increased. Similarly, the government has stressed on intensifying the control of the misuse of foreign currency and on investigation on money laundering. Rs 30 billion allocated for energy sector Kathmandu, July 14: The government has allocated Rs 30 billion for hydropower and energy sectors development and expansion and promotion. Reading out the budget, Finance Minister Shanker Prasad Koirala pledged to inject sufficient budget for the projects with national pride. The Finance Minister said that Rs 2 billion has been allocated to expedite the task of Upper Tamakoshi Hydropower Project. Likewise, Rs 1.05 billion has been allocated for the construction of the reservoir-based Tanahun Hydropower Project of 140 megawatts capacity. Similarly, Rs 4.66 billion has been allocated for timely completion of the Trishuli 3 A of 60 megawatts, Upper Modi of 42 megawatts, Rahughat Hydropower Project of 32 megawatts, Chameliyaghad Project of 30 megawatts and the 44 MW Kulekhani-II Hydropower Project. Likewise, the task of expanding electricity transmission line would be conducted as a campaign. For this, Rs 13.50 billion has allocated. Trans-national transmission line and east-west transmission line, north-south corridor transmission line would be initiated, Finance Minister Koirala said. He said Rs 1.58 billion has been allocated for the completion of Dhalkebar-Mujaffarpur 400 KV and Kataiya-Kushaha 132 KV trans-country transmission line. According to the budget, Rs 1.09 billion has been allocated for the maintenance of 12 hydel projects including Kaligandaki A and Marsyangdi Hydropower Project to run them in a full capacity. Likewise, Rs 1.11 billion has been allocated for running solar energy programme. The Finance Minister announced that the FM radios would be provided with grant for using solar energy and Rs 500 million has been allocated for this purpose. Prices of liquor, beer, cigarettes up, and Battery of Safa Tempo and Cycle down Kathmandu, July 14: The budget of this fiscal year has increased the excise duty on alcohol, beer and cigarette. However, the excise duty of lead acid battery to be used in Safa Tempo has been reduced to one percent. Likewise, the customs duty in import of cycle has been limited to one percent. Similarly, the excise duty of medicines to be given to the cancer patients has been exempted completely. - See more at: http://www.freenepal.com.np/?p=21990#sthash.a8vOzIg1.dpuf