The role of the state and

the private sector in promoting sustainable mechanization

drawing experience from Nepal

Devendra GauchanShreemat Shrestha

Nepal Agricultural Research CouncilKathmandu, Nepal

Email: dgauchan11@gmail.com

A paper presented in “Workshop on Mechanization and Agricultural Transformation in Asia and Africa, Sharing

Development Experiences”, June, 18-19, 2014, Beijing, China

Outline of Paper

Country background: Agriculture and agroecologicalregions

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

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%

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

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

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 riceproduction has doubled, despite their relative low yield.

Trend in food production and Productivity in Nepal

(1984/85- 2012/13)

y = 1.561 + 0.033x R² = 0.923

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7,000,000

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1994

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2002

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11

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12

Prod

Yield

Linear (Yield)

Prod

(MT)

Yield

(kg/ha)

DGauchan, NARC, March 20, 2014

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

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).

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)

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

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

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.

Projected trend of 4 Wheel and 2 Wheel tractors

(both power and mini tillers) Source: MoAD (2012)

Projected trend of 4 Wheel and 2 Wheel tractors (both power and mini tillers)

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

Key Features of Ag Mechanization Policy

Upcoming new Ag Mechanization Policy has envisioned facilitating, supporting and regulating role of the stateand 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.

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

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

NARC Developed in Farm Mechanization

TechnologiesCorn Sheller

Roller type coffee pulper

Millet Thresher cum Pearler

Tunnel Solar Dryer

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

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

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

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.

Private Sector

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

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

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.

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

Strategic Partnership of Public-Private Sector in

Mechanization and Agricultural Transformation

Public Sector (Technology development,

accreditation,

Regulation, Policy)

Private Entrepreneurs

(Production, Distribution, Marketing)

Joint Role

(Technology

Piloting,

Training,

Business

development)

Joint Role of Public and Private

Sectors

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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 Effective Theories 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 Political Weekly, Vol. XLVI, No. 9, pp. 78-82.

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Statistics (CBS), National Planning Commission, Kathmandu, Nepal.

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(CBS), National Planning Commission, Kathmandu, Nepal.

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and other Asian Countries”, March, 7-8, 2013, BRAC, Centre, Dhaka, Bangladesh

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(MoAD), Government of Nepal, Singhdarbar, Kathmandu.

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(AED), NARC, Khumaltar, Nepal.

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Namaste !

wGoafb

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