This study shows the contract farming experience in Nepal highlighting its essential elements, the Nepalese agriculture, the land use pattern and productivity. A successful story on contract farming for vegetable seeds is also included.
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this slide includes recent approaches to evaluate cropping system.
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Integarted farming is suggested for efficient utilization of resourses by small and marginal farmares to improve their income or economic status in addition to improving the nutrition status of their family. finally improves the livelihood as integration is the best approach for maximum utilisation of resourses.
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1. 1
Contract Farming and its Prospective in
Nepal.
Krishna Lal Poudel
Deputy Director (Marketing Analysis)
Agro Enterprise Center/FNCCI
P.O.Box: 7651.Kathmandu
Nepalese Agriculture
• Landlocked and agricultural,Diversified
topography and climate
• Subsistence agriculture
• Member of WTO
• Agriculture shares 38.81% on GDP
• 65% people on agriculture
• APP 1995 seeks aGDP growth rate from 2.96 to
4.8%
• Horticultural crops:14% of aGDP and Vegetable
only 7.2%
2. 2
Land Use Pattern and Productivity
• Only 21 % of total land under agriculture
• 6.99% remain agricultural land uncultivated
• Present productivity very low in all sector
• Retarding factors: Quality inputs( seeds,protection
measure,irrigation,post harvest technology)
• Poor access of agricultural finance for poor and
rural people
Contract farming: a theoretical perspective
• Existence for many years in various country
• Rational coordination between producers and
contractors
• Strong and faithful commitment to production:
Suppliers
• Remunerative and obligatory system of
purchasing: Sponsor/contractor
• System of production and supply of
agri.commodities under forward contracts.
• Advantage and disadvantage for both parties
3. 3
Essentials of Contract farming
• Willingness to organize the small farmers in the free
market and market liberalization
• Agribusiness company rely on reliable supply of
raw materials from farm
• As well small farmers to reap remunerative prices.
• Efficient and legislative contract or agreement
• Supply of inputs and the provision of technical
advise: from sponsor
• Specific commodity in quantity and quality
standards: from producers
Chronological Development of Contract
Farming in Nepal
• HMG/N at fifth five-year plan
• Then initiation of Public Private Partnership: AEC
and MOAC.Series of workshops led to conclude
the essence of Contract farming in 1999
• Legal framework also prepared and submitted
• 2003/04,AEC/FNCCI,prepared and submitted the
“Commercial Agriculture Contract Act-2060”
• Not declared yet ,but implementing the “National
agriculture Policy-2061”
• Contract framing included in this policy
4. 4
Nepalese Agri. Policy and Contract Farming
• Policy support on Commercialization in decade of
1990
• Democracy opened the door for private sector
under trade liberalization and free market
economy
• Cooperative agreement: USAID and FNCCI
• Some commodity association started to launch
contract farming model
• Policy isn't traders friendly as compared to
farmers: multi-location fees,administrative hurdles
Land act,Holding size and Contract farming
• No. of holdings increasing than size of holding
• 1.13 ha to 0.96ha to 0.80 from 1981/83,1991/92 to
2001/02(avg size of holding)
• Faster arte of land fragmentation.Difficult to lease
in the land for large scale of production
• Most of the cultivated land with few richest person
• Land reform is still in coma
• Small and marginal farmers don't access to finance
• That retards the commercialization and increased
agribusiness
5. 5
Current Situation
• Started since 8-9 years back by the private sectors
• Lack of proper legislative approach
• First introduced by AEC/FNCCI in eastern region
of Nepal in tomato,mandarin orange and banana
• Now on following
* Vegetable seed production by SEAN( effective
one)
*Honey,Non-Timber Forest Products,Tobacco
Success Story in Vegetable Seed
• SEAN,1993,a commodity association
• SEAN Seed Service Center Ltd.its business wings
has country wide link with farmers to produce and
collect seed based on the principle of contract
farming
• 300 Mt. Of vegetable seed annually,400 HHs
• Export to Bangladesh.
• Demand for vegetable seed is high
• Export market for seed has high potential
6. 6
Some Potential Sectors
• Implementation of contract farming in all agro
sectors in Nepal may not be feasible.The
physical,social,economic environment and
government support and policy framework are
sometimes act as retarding factors
• Citrus fruits in mid-hills area for processing and
export
• Off-season vegetable for export
• Livestock farming for dairy industries and meat
processing
• Tea,coffee,Jute,Honey etc
Sustainability and Agribusiness
• Worthy demand as agriculture dominated
economy
• Integrated and holistic dimension
• Ensue of benefit distribution among stakeholders
• Government support in commercialization
• Ensure of commercial and financial dimension
• Community empowerment
7. 7
Sustainability of Contract Farming
Sustainability of Contract
Farming and Increased
Competitiveness
Commercially Viable
Technically FeasibleSocio-economically acceptable
Fig: Multivariate Integration in Sustainability of Contract Farming
Conclusion and Recommendation
• Scattered and small scale farmers need to be organized
• Regularity in supply of raw material to
processor/contractor
• Permits to establish viable and reliable mechanism to
flourish agribusiness
• HMG/N should responsible to implement policy to make
this sector competitive in the regime of WTO
• Different sub-sector need different modality for work
• Road map for making long-lasting partnership between
farmers and contractors