Linkages between Nepalese Agriculture and Poverty Reduction Krishna Prasad Pant, Ph. D. November 11, 2005

Consumption and income are highly skewed

Efforts in Agriculture to Reduce Poverty Agriculture Perspective Plan –High value commodities in pocket areas –AGDP growth –Poverty reduction Poverty Reduction Strategy Paper –Agriculture development –Accessibility to backward/inaccessible areas –Targeted programs - access to resources, improving infrastructures, skill generation, income generating activities, targeting –Poverty mapping and monitoring 10 th Plan –Access of poor to productive inputs and development National Agriculture Policy

Reducing rural poverty is closely linked with food security Food Availability –Depends on global agricultural productivity –International and national market and distribution systems –International and national trade policy (make sure food is available to all at a reasonable cost) Food Access –Poverty reduction (hunger is a result of poverty) –Food markets (processing and storage) Food Utilization –Nutrition education –Nutrition interventions to supplement food –Health care –Safe water provision –Sanitation Agriculture is linked both to poverty and food security

Agricultural household with land (%) Av size of agri land (ha) Irrigated area (%) 1995/ /

Capability poverty more severe than income poverty Elements that contribute to ‘capability’ –Economic power –Social power, –Political power Deprivation of basic capabilities, rather than merely as ‘lowness of incomes’ (Amartya Sen, 1999) Simultaneous equations: –income is an important means to capabilities –enhanced capabilities expand ability to be more productive and earn a higher income.

Less income elasticity of resources Short period for resource adjustment is very long Slow to catch new opportunities Can not minimize loss quickly Fluctuating markets for inputs and outputs Fluctuating production & natural factors Higher risks Lack of insurance or high premium Poverty in Agriculture Unfavorable price parity Lower productivity Lower technology Unfavorable support and trade policy Low resource mobility in agriculture

Trade liberalization enhances food security Increases rural growth and reduces rural poverty Keeps food prices affordable Improves access to imported agricultural technology, mostly embedded in inputs Provides cash to buy inputs Sustained trade reforms can double growth in agricultural sector

Attentions of international communities Reform food aid mechanisms: make them quicker and less disruptive Improve donor coordination of agriculture, nutrition, and rural development programs Pay more attention to closing technology gaps between industrial countries and low income countries Reduce industrial country agricultural subsidies Provide duty free access to LDCs’ products Simplify SPS/TBT provisions to the exports of LDCs Do not put non-tariff barriers to the products of LDCs

Then What? AGDP growth for poverty reduction –Agri intensification & enterprise diversification –Productivity enhancing –Development of secondary and tertiary sector activities linked to agriculture Agro-processing enterprises Storage and preservation Quality control and certification Marketing infrastructure and information Export Agricultural growth can reduce poverty if 1.Labor intensity does not decline 2.Marginal/small farmers can participate in such growth

Ways Forward 1.Labor employment –Employment opportunities –Productivity through productive assets financial capital education and skill training –Wage rate –Transformation of employment structure towards higher productive sectors 2.Targeting –Self targeted IG programs to poor households –Targeting IG programs to poor regions –Socio-political empowerment of the poor –Emphasize on small infrastructures suitable for the poor

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