Industrialization From the Ground Up:Small Farmers Could Be the Catalyst

Needless to mention, Nepal is richly endowed with agro-bio diversity and different types of eco-systemsfrom tropical, temperate up to the alpine in a short distance can be observed besides having adequate land and water prerequisitefor agriculture.

June 19, 2023, 8:41 a.m. Published in Magazine Issue: VOL. 16, No. 21, June.30,2023 (Ashad,15. 2080) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

Well said, Hunger and poverty are more deadly than bullets and bombs that can destabilize entire country.Realizing this fact,it is imperative to build a peaceful and prosperous society for tomorrow, to achieve development that is inclusive, sustainable, and people-centered, acountry where extreme poverty and hunger hasdisappeared, everyone has access to adequate nutritious foodand decent jobs especially for young people entering labor markets. Unfortunately,in Nepalesecontext,social anomalies like extreme poverty, discrimination, exclusion, inequality, unemployment and brain drain of youths still persist, failing to avail of demographic dividend. Industrial sector contribution to the economy has decreasedand average annual growth of agriculture sector is extremelylowresulting in import of even agricultural productsconstantly draining the treasury of the government.

Needless to mention, Nepal is richly endowed with agro-bio diversity and different types of eco-systemsfrom tropical, temperate up to the alpine in a short distance can be observed besides having adequate land and water prerequisitefor agriculture. Cereal crops, high value cash crops, medicinal and aromatic plants under agro-forestry can be grown simultaneously in different ecological regions.Nevertheless,owing to traditional farming practices adopted by small holder farmers who have mainly been responsible to feed the entire population for years, neither production nor productivity has increased to meetthe food demand of increasing populace.So, the urgent need is to replacelabor intensive agriculture by capital intensive technology-based production creating alternative opportunities to the people engagedexcessively in agriculturesector alone.Transformation of agriculture by providing support to the small farmers especially the youth in entire value chain process could be theviable optionto make the country food sovereign and shift excessive labor force engaged in subsistenceagriculture to non -agriculture sectors.

The alternative opportunity for the rural poor obviously could be formal manufacturing jobthat improves their productivity, makes the agriculture sector more efficient and raises government revenue through taxation. In 2010, Cambridge economist Ha-Joon Chang observed that development without industrialization is like Shakespeare’s Hamlet without the prince of Denmark.This observation is especially true in lower income countries like Nepal where industrialization is still a crucial driver of economic growth.

Against this backdrop, Nepalundoubtedly has to follow the path of industrialization. However, from primitive method of agriculture production to modern automobile assembly line or other big industries related to mineral and mines are least likely in the name of industrialization.Promotion of SMEs mainly based on agricultural products as raw materials is a must for sustainable and inclusive economic growth. Early and successful examples of industrialization in Europe have been closely associated with improvements in the productivity of land, labor, and capital employed in primary production. Some countries moved towards industrialization from agriculture are China,India,Singapore,Taiwan and Turkey among others. In China in 1952,83 percent of Chinese workforce were employed in agriculturewhereas in 2021 around 22.9 percent in agriculture,29 percent in industrial sector and 48 percent in service sector were employed. China’s rapid rise from backward agrarian society to industrial power house is just around four decades. Chinese government has always accorded high priority to agriculture development. In fact, agriculture and agro-processing are one of the crucial economic sectors to transform the economy through sustainable employment creation,business opportunities,investment attraction and growing export base.This sector has a firm backward linkage with the primary sectors and forward linkages with the secondary as well as tertiary sectors of the economy.

InNepal,there is ample room for raw material production of agro based industries such as sugar factory, Jutemills, teaindustries, vegetable seed production and many horticultural commodities of flowers, fruits, vegetable and agro processing and post-harvest related industries. The slaughter of livestock and poultry and the making of cheese and butter can be carried out at the farm level with little investment and know-how. There is possibility of herbs and fruits processing industries too. Agro-industries add value to, and increase demand for farmer’s products thereby reducing poverty and food insecurity stimulating economic growth. On contrary to the tremendous potentials ofrunning its own agro processing industries, Nepal supplies a number of agri produce as raw materials to Indian agro-processing industries.

The contribution of industrial sector to Nepal’s GDP of only13.5 percent and the contribution of productive sector industry of less than 6 percentstands a big challenge before the country.Considering that big challenge needs bold action to overcome them,thegovernment might have set the goal of 2100/01 that intends the contribution of agriculture, industry and service sector 9,30 and 61 percent respectively.

In addition,Industrial policy of Nepal,2067 lays special emphasis on promotion of industries utilizing local resources and raw materials, skill and technology.It is therefore the need to identify and utilize products of competitive and comparative advantage in order to ensure strong and sustainable industrial base.Agricultural processing is most important in virtually all nations.After Covid-19 economic recovery has become priority and inclusive and sustainable industrializationhas been critical to building a better future.

It is indeed heartening that over 1 million small farmer households of546 local levels of 76 districts are currently able to have access to finance for agri-business from their own co-ops called Small Farmer Agriculture Cooperatives(SFACLs).The SFACLs which are entirely community based looks unique in model from the perspective of inclusion, genderfocus, human capital development, socialcapital formation, local resource mobilization and last but not the least bottom-up development approachwhich is the need of the hour.

These co-ops through their small farmer members are doing the wonders in the area of promoting agriculture value chain and cultivating the culture of entrepreneurship development in rural areas. A large number of showcasing models of cereal crops/horticulture or livestock farmingcan be observed in different corners of the country. Involvement of youth in agriculture adopting Israeli technology in farms (an outcome of Learn and earn program supported by the Israel government) has become instrumental to change the traditional farming practices and motivate the youths in technology-based farming.In order to attract many more small farmer youths in agriculture, Sana Kisan Bikas Laghubitta Bittiya Sanstha Ltd (SKBBL) through its partner cooperatives (SFACLs) not only provides credit support but also extends technical supports and need based counselling.Of late,considering that farmers are not able to get reasonable price of theirproduce, these institutions are inspiring the small farmer producers to set up and run cottage and small agro processing industries in order to add value of their raw agriculturalproducts.As a result of constant motivation and support to the small farmers, a number of large plot farmingwith commercial production of vegetable and fruits, production of adequate milk and meat, establishment and operation of small agro -processing industries like rice, seeds, tea, turmeric,dairy, oil can be seenfrom east to far west region.

The process of planned industrialization in Nepal started with the launching of first five-year plan in 1956.It is irony that in more than six and half decades, the contribution of this sector to GDP growth, employment creation, and export promotion has not been worth mentioning. Considering the existing disappointing industrial environment,severe shortage of skilled,technical and managerial personnel, reluctance of private/foreign investors to invest in big manufacturing/processing industriesetc., small labor intensive agro-based industries need to be promoted and protected at least to create industrial base and develop entrepreneurship culture in the country. Moreover, Specialpolicy needsto be adopted to produce enough agro-products that are currently being imported from foreign countries.Made in Nepal and Make in Nepal policy of the government is undoubtedly worth appreciating. Industry friendly policies and encouragement to private sector as well as the cooperative sector mainly agricultural co-ops like SFACLs need motivation to set up and operate agro-processing industries across the country.

The budget of fiscal year 2080/81 can be presumedprogressive since it commits to attract youth in agriculture, encouragesfarmers to make big farmplots,motivates for collective farming, makesprovision of grant for youth start up program, encouragescontract farming and further commits to bring in use the uncultivated lands apart from supporting Agricultural co-ops for collection, storage, processing and marketing of agro products.Moreover, the budget mentions that SmallFarmersEnterpriseDevelopment Program would be conducted consecutively inall local levels through Small Farmer Development Microfinance Financial Institution. It is really inspiring for all small farmers who have been effortful for years to change the rural socio-economic status quo through transformation of agriculture and development of entrepreneurship in rural areas. Under the aegis of SKBBL in particular and SFACLs in general, potentials of industrializationcan be unlocked from the ground up provided that small holder farmers are duly recognized and their voice heard while devising policies and plans for development of the country.

Dr. Shiv Ram Prasad Koirala is a CEO of Sana Kisan BikasLaghuBittaBittiya Sanstha Ltd.

More on Opinion

The Latest

Latest Magazine

VOL. 17, No. 22, June.28,2024 (Ashar-14. 2081) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

VOL. 17, No. 21, June.14,2024 (Jestha-32. 2081) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

VOL. 17, No. 20, May.24,2024 (Jestha-11. 2081) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

VOL. 17, No. 19, May.10,2024 (Baishak,28. 2081) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75