The role of the state and the private sector in promoting sustainable mechanization drawing experience from Nepal


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"The role of the state and the private sector in promoting sustainable mechanization drawing experience from Nepal", presented by Devendra Gauchan Shreemat Shrestha, at at NSD/IFPRI workshop on "Mechanization and Agricultural Transformation in Asia and Africa", June 18-19, 2014, Beijing, China

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The role of the state and the private sector in promoting sustainable mechanization drawing experience from Nepal

  1. 1. The role of the state and the private sector in promoting sustainable mechanization drawing experience from Nepal Devendra Gauchan Shreemat Shrestha Nepal Agricultural Research Council Kathmandu, Nepal Email: A paper presented in “Workshop on Mechanization and Agricultural Transformation in Asia and Africa, Sharing Development Experiences”, June, 18-19, 2014, Beijing, China
  2. 2. Outline of Paper  Country background: Agriculture and agroecological regions  Context of rural mechanization: past neglect of policies and recent demand for Ag mechanization  Role of state and current initiatives on Ag mechanization: public research, extension, education and new policy on Ag mechanization  Role and initiatives of private sector in rural mechanization  Challenges and Issues in Rural /Ag Mechanization  Suggested Actions on Rural /Ag Mechanization  Strategic partnership of public (state) and private in rural mechanization
  3. 3. Agriculture in Nepal  Population 26.66 million (CBS, 2011)  Poverty rate 25% ;  GDP Per Capita (Current Price): US $ 735 (in 2012)  Contribution of Agriculture to GDP: 35%  Population dependent on Agriculture: 65 % Cultivated land 21% Cultiviable land 7% Forest 39% Pasture 12% Water 3% Others 18%
  4. 4. Agro-eco-zones in Nepal  Area:1,47,181 sq km (EW-885 km, NS-193 km)  Only 23% of the total area is flat plain (Tarai), Mid Hill covers 42% and Mountain 35% of the total area  Farming systems: Rice-wheat in Tarai, Maize based in mid Hills and potato and livestock based in Mountains Tarai Mid Hill Mountain Asia China
  5. 5. Agro eco zones and Agro diversity TERAI SIWALIK MIDDLE MOUNTAIN HIMALAYA ALPINE SUB ALPINE COOL TEMP- ERATE SUB TROPICAL Upper Limit of Grazing Upper Limit of minor Cereal Based Cropping Upper Limit of Maize Based Cropping Upper Limit of Rice Based Cropping Upper Limit of Double Rice 5000 4000 3000 1000 2000 HIGH MOUNTAIN WARM TEMP- ERATE ARCTIC
  6. 6. Performance of Agricultural Sector • Agricultural GDP has grown at average of 3% per annum in last 10 years • In the last 28 years total food production has doubled from about 4 million tons in 1984-85 to 88 million tons in 2012-13. • Food production has grown at the average rate of 33 kg/year during the period.The average yield of food crops (cereals) is about 2.5 MT/ha which is low as compared to many developing and developed countries. • Among food crops, production and yield of wheat grew with the faster rate of (2.5%) as compared to rice (1.5% per annum) • In the last 5 decades (1961/62-2012/13), production of wheat has increased by 11 times and that of rice production has doubled, despite their relative low yield.
  7. 7. Trend in food production and Productivity in Nepal (1984/85- 2012/13) y = 1.561 + 0.033x R² = 0.923 0.000 0.500 1.000 1.500 2.000 2.500 3.000 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Prod Yield Linear (Yield) Prod (MT) Yield (kg/ha) DGauchan, NARC, March 20, 2014
  8. 8. Context of Rural Mechanization in Nepal  Past policies ignored mechanization due to fear of labor displacement by the use of larger power operated machines (mainly tractor). Agricultural Policies and Plans such as APP(1995- 2015) and other policies did not have any policy statement on agricultural mechanization  Past policies such Land Act (1964), National Civil Code (1853;1962) have encouraged land fragmentation with the provisions of land inheritance & land ceiling resulting in disincentives for mechanizations  Mechanization is often misunderstood in the past as use of large 4- wheel tractors rather than encompassing whole sets of manually operated, animal drawn equipments and smaller machines (2-wheel tractors, pumpsets etc.).  Subsistence farming, small farm size, fragmented land holding and physical constraints of rugged and steep topography, narrow terraces in Hills and Mountains discouraged use of machineries
  9. 9. Context: Demand for Farm Mechanization  In recent years, however, demand for mechanization is increasing with acute labor scarcity and high cost of production (as a result of increased wage rate) in farming resulting in from youth migration and feminization  Wage rate in agriculture has doubled in the last 10 years and households receiving remittance income has more than doubled in the last one and half decade from 23% in 1995 to 56% in 2010.(CBS, 2011)  Female headed households have also doubled in last 15 years from 13% in 1995 to 26 % in 2010 (CBS, 2011).
  10. 10. Context: Demand for Mechanization…  Increased attraction of returned migrant youth in commercial agriculture and use of modern machineries  Increasing road connectivity in rural hills and mountains resulting in use of tractors and other machineries  Increasing realization of agricultural mechanization among planners and policy makers resulting in development of new policy on Agri Mechanization  Very liberal import policy with tax exemption for Agricultural Machinery particularly on Tractors  50-75% subsidy for renewable energy technologies (solar dryer, solar pump, Micro hydro, biogas)
  11. 11. 36% 41% 23% Farm Power (%) Human power Animal Power Machine Power Status of Farm Power in Nepal (Shrestha, 2012;AED, 2011) 92% Mechanical power is concentrated in Terai Animal and Human Power are still major sources of power used in Agriculture
  12. 12. Status of Agricultural Mechanization ( Source: National Sample Census of Agriculture, CBS, 2012) Machinery/Equipments used No of Households % Households Iron ploughs 1,073,441 28.02 Tractor & Power tillers 920,371 24.03 Thresher 803,154 20.96 Pumping sets 548,203 14.31 Sprayers 574,014 14.98 Shallow tubewells 367,744 9.56 Deep tubewells 159,725 4.17 Treadle pump (Dhiki) 79,145 2.06 Animal drawn cart 334,978 8.74 Other Equipments 290,084 7.57
  13. 13. Status of Ag Mechanization  About 76 thousand tractors are registered and more than 20 thousands Power tillers are estimated to be in used in Nepal (AED, 2011). Out of these 30 % of Tractors and above 80% of power tillers are estimated to be used for agriculture.  Over 50 combined harvesters operating in Terai (mainly western and central Terai), Nepal  About 200 thousands Biogas plants being operated in Nepal  Most of the wheat threshing in terai is performed by mechanical thresher.
  14. 14. Projected trend of 4Wheel and 2Wheel tractors (both power and mini tillers) Source: MoAD (2012) Projected trend of 4 Wheel and 2 Wheel tractors (both power and mini tillers)
  15. 15. Role of Public Sectors in Ag Mechanization  Research support: Technology development and validation. Technology transfer  Extension: technology demonstration, training & promotion  Education: human resource development in mechanization  Institutional development: Development/ Strengthening & coordination of Ag Mechanization related institution  Promotion of business development services (BDS) to farmers and private sectors  Regulation of machinery- for quality and safe use for operators, environment and consumers  Policy- Formulation and implementation of enabling policies- manufacturing, import, export, trading, custom hiring, credit/financing, rebate, tax, subsidies
  16. 16. Key Features of Ag Mechanization Policy  Upcoming new Ag Mechanization Policy has envisioned facilitating, supporting and regulating role of the state and active participation and role of private sector in mechanization  Focus and support to small scale mechanization and commercialization of agriculture in the context of geographical, social and small-scale farming context  Institutional Development for rural mechanization (cooperatives for collective use, business development services, R &D Institutions, Testing and Quality control etc).  Differentiated and targeted import duty for tractors, other machineries and spare parts  Promoting / Strengthening local level production, service related to agri machinery  Promotion of environment friendly for women and youth farmer focused agricultural mechanization.
  17. 17. Public Research (e.g. NARC) in Ag Mechanization  R & D on conservation agriculture technologies and its validation mainly for rice, wheat & maize  Introduction of successful Ag mechanization technologies: Plant establishment in maize (seed drill precision), rice mechanical transplanting technology, sugarcane planter, potato planter & digger, milking machines, fish pond aerator, mini tillers & its 2-wheel tractors  Promising Ag mechanization technologies developed in NARC; e.g Jab seeder, corn sheller, coffee pulper, millet thresher, seed cleaner, ginger washer, solar dryer, improved iron plough etc.  Technical support and technology testing, validation training and technical backstopping to private sectors:-handover of piloted technologies and Facilitated in the formation “Agri Machinery Entrepreneurs’ Association”. Blacksmith’s Skill upgrading training
  18. 18. Introduction of Laser Land leveler 18 Introduction of Maize Planter in farmer’s field Intercultural Operation in Maize Introduction of Rice Planter Introduction of Technologies in Farm Mechanization
  19. 19. NARC Developed in Farm Mechanization Technologies Corn Sheller Roller type coffee pulper Millet Thresher cum Pearler Tunnel Solar Dryer
  20. 20. Public Extension (e.g.DoA) in Ag Mechanization  Extension of Ag Machineris: Technology demonstration, training and promotion, Training of mechanics and artisans (blacksmiths) in technology promotion and business development  Implementation of subsidy schemes on agri machinery mainly on attachments (through suppliers) and interest subsidy on machinery  Establishments of community level processing centers in 5 Terai regions (processing machines, equipment, seed store)  Organization of national Ag Machinery exhibitions and fairs in collaboration with NARC and Private Sectors: First national Ag Mechanization Exhibition organized in Chitwan, on Feb 9-11, 2014
  21. 21. Public Role (Education & Others) in Ag Mechanization  Academic Program: Ag Engineering Graduates in Purbanchal Campus, Dharan –under Institute of Engineering (IOE), Tribhuwan University (48 graduates each year)  Training of technicians: Some initiatives have been made by CTEVT to train mechanics  Provision of business development service  Formulation of new Ag Mechanization Policy in partnership with diverse private sector organizations and other stakeholders
  22. 22. Private Sectors in Ag Mechanization  Importers, Manufacturers, Retailers & Whole Sellers and Farmers are four important private sectors engaged in Ag Mechanization in Nepal  Recently private sectors are emerging in Ag machinery business, particularly in import, marketing and supply. But they have concentrated mainly in urban centres.  Recently some innovative private sectors /importers are importing and supplying hand tools to combined harvesters (e.g. Krishi sansar,). Similarly NIMBUS-a business house is promoting agrimachieries along with other inputs through its one window shop outlets (n=200) across Nepal.  Very limited private sectors are involved in custom hiring services. Some private sectors are providing custom hiring services e.g. Multipurpose (Bhaumukhi) Agri Farm, Dangihat, Morang.  Recently donor funded project mainly CSISA , KISAN etc. have been focusing promotion of mechanization through technology promotion, and business development in their project districts
  23. 23. Private Sectors in Ag Mechanization..  Very limited number of small-scale private sectors are involved in manufacturing & marketing of farm machinery and equipments (including raw materials). Medium and large scale manufacturers are almost absent.  At present 80% of the hand tools are made by local black smiths but their professions is in the verge of extinction  Dealers and outlets are limited in number and mainly located in urban centres of Terai and in limited hill areas (e.g. Kathmandu & Pokhara valley)  Repair and maintenance services and facilities are limited mainly in urban centres in Terai and Kathmandu  Private sectors engaged in market R&D & its assessment of commercial viability of Ag machinery is limited.
  24. 24. Private Sector
  25. 25. Challenges and Issues in Agri Mechanization  Subsistence traditional farming systems with high agroecological diversity and complexity  Steep toporgraphy, slopy fields and small sized terraces (physical constraints)  Small farm size ( 0.7 ha) and fragmented land holdings with average of 3 parcels.  Poor rural roads and rural electrification ( limited electrification and frequent load shedding & high fuel prices)  Poor state of R & D to adapt and suit mechanization in the context of small farm size and difficulty topography  Poor state of repair and maintenance services for farm machineries
  26. 26. Challenges and Issues in Agri Mechanization  Inadequate and untimely availability of spare parts and high import duty on spare parts  Lack of adequate technical know how and technical services to farmers on mechanization due to absence of extension networks at the local level  Limited access to credits as well as high credit interest rates for tractors and other agriculture machineries  Poor state of rental markets for agricultural machineries  Limited trained human resources in rural mechanization  Absence of institutions for R& D, domestic manufacturing, quality control and standardization  Poor monitoring of field level of use of imported subsidized and domestically developed and promoted Ag machineries
  27. 27. Suggested Actions  Focus on small scale mechanization and promotion of custom hiring of agricultural equipments and machineries  Promote institutional and human resource development in farm mechanization at national, sub-national & local level  Capacity building of indigenous entrepreneurs (e.g. Blacksmiths) and in-country agro-related metal working industries  Promote quality standards, safe use (both operators’ safety and environmentally safe) of farm machineries  Focus on creating awareness about the mass promotion, farm level advocacy and use of machineries in agriculture  Institutional Development for commercial enterprises; business development services, strengthening R &D Institutions, accredited lab for testing & quality control etc.
  28. 28. Suggested Action  Approval and full implementation of new Ag Mechanization Policy including other policies favoring commercialization of agriculture (e.g. Contract Farming Act, Agriculture Land Use Act, Cooperative Act etc.)  Differentiated and targeted import duty for raw materials, spare parts, machineries etc. for agriculture production  Targeted subsidy for poor, women and youth friendly enterprises, activities as well energy efficient, labor saving technolgies and machineries  Financing and credit policy with soft and easy loans for Ag machineries and commercial agriculture in rural areas  Implementation of Insurance Schemes to minimize risks in farming  Strengthening National manufacturing establishments producing agricultural machinery. Capacity enhancement of local blacksmiths.  Strengthen public-private partnership in production, promotion and farm level adoption of Ag mechanization
  29. 29. Strategic Partnership of Public-Private Sector in Mechanization and AgriculturalTransformation Public Sector (Technology development, accreditation, Regulation, Policy) Private Entrepreneurs (Production, Distributi on, Marketing) Joint Role (Technology Piloting, Training, Business development) Joint Role of Public and Private Sectors
  30. 30. References  ADS, 2013.Agricultural Development Strategy (ADS),Ministry of Agriculture Development,Singhdarbar,Kathmandu,Nepal  AED,2011.Annual report, 2010/2011.Agricultural Engineering Division (AED),Nepal Agricultural Research Council, Khumaltar,Laliltpur,Nepal.  Justice,S. and S. Biggs. 2012.Diverse Patterns of Rural and Agricultural Mechanisation in Bangladesh and Nepal: Status and Emerging themes . Discussion paper prepared for an expert consultation on Innovation systems:Towards More EffectiveTheories of Change, 4-6 February,2013.CTA Headquarters.Agro Business Park 2, 6708 PW.Wageningen,The Netherlands.  Biggs,S. Justice, S. & Lewis, D. 2011.Patterns of Rural Mechanisation,Energy and Employment in South Asia: Reopening the Debate. Economic and PoliticalWeekly,Vol. XLVI, No. 9, pp. 78-82.  CBS, 2011.Nepal Living Standard Survey (1996/97.2003/2004;2010/11).Central Buraeu of Statistics (CBS), National Planning Commission,Kathmandu,Nepal.  CBS, 2013.Nepal Sample Census in Agriculture (2011/12),Central Buraeu of Statistics (CBS),National Planning Commission,Kathmandu,Nepal.  Gauchan,D. 2013.Rural Mechanisation in Nepal:Technology Options and Policy Issues.A paper presented in “Workshop on Rural Mechanization:Policy andTechnology Lessons from Bangladesh and other Asian Countries”,March, 7-8,2013,BRAC, Centre, Dhaka, Bangladesh  MoAD, 2014.Agricultural Mechanization Policy, Ministry of Agricultural Development (MoAD),Government of Nepal, Singhdarbar,Kathmandu.  Shrestha,S. 2012.Status of Agriculture Mechanization in Nepal.Agricultural Engineering Division (AED),NARC, Khumaltar,Nepal.  TEPC, 2010.Statistical Presentation-2009/2010,Ministry of Commerce and SuppliesTrade and Export Promotion Centre (TEPC), Pulchowk,Lalitpur,Nepal
  31. 31. Namaste! wGoafb Thank you