Unit 5 Chapter 1 Agriculture: Class 10 Economics Notes | Unit 5 Chapter 1

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Unit 5: Economy of Nepal

Class 10 Economics

Unit 5 Chapter 1 Agriculture

For SEE Board Exam Preparation: Complete Theoretical Notes and Full Exercise Solutions

Welcome to the complete study guide on Agriculture under Nepal’s Economy. This is Chapter 1 of Unit 5 for Class 10 Economics students in Nepal preparing for their SEE board exams.

Here you will find structured theoretical notes on the characteristics, modernization and commercialization, financial sources, and problems of agriculture in Nepal, along with fully solved textbook exercises.

Explore our complete study list here: Class 10 Economics Notes.

1. Theoretical Notes

(A) Introduction to Agriculture

Agriculture encompasses all types of crop cultivation carried out on land as well as animal and poultry farming. This includes food crops, cash crops, dairy and livestock farming, fisheries, beekeeping, fruit cultivation, and horticulture. Agriculture is not only a means of livelihood but also the foundation of prosperity. It provides employment opportunities for ordinary people and also serves as the basis for operating industries that depend on agricultural raw materials.

Nepal has geographical features ranging from lowland plains at sea level all the way up to the world’s highest mountain ranges. This gives Nepal remarkable geographical diversity. Such diversity makes Nepal a country rich in climate, soil, biodiversity, and cultural variety. This diversity means there is great potential for agricultural production here. There is abundant potential to cultivate various kinds of food crops, fruits, and medicinal herbs, and to run livestock farming and forest-resource-based businesses.

The National Agriculture Census 2078 (2021) shows that 3,999,000 families engage in crop farming and 132,000 families raise only livestock in Nepal. Combining both crop farming and livestock-raising households, the census reveals a total of 4,121,000 farming families in Nepal.

(B) Features of Agriculture in Nepal

Considering the population dependent on the agricultural sector and the contribution of agriculture to the Gross Domestic Product, there is ample basis for regarding Nepal as an agriculture-based country. Nevertheless, in recent years it has become necessary to import agricultural goods such as grains, fruits, vegetables, seeds, fish, and fruits to make up for shortfalls. In this context, some of the main features of Nepal’s agriculture are described below:

i. Subsistence Farming: Farming done solely to sustain one’s life is called subsistence farming. In Nepal, the majority of farming families are small farmers. Only a negligible number of farmers practise commercial farming. The common tendency is to grow small quantities of food grains, vegetables, fruits, and spices needed for oneself and one’s family, and to keep a small number of livestock and poultry. The commercialization of vegetable and fruit farming has started only on a very limited scale. Since the practice of specializing in certain crops on a large scale and engaging in commercial farming is minimal, agriculture has remained purely subsistence-oriented.

ii. Labour-Intensive Farming: Agriculture has not been mechanized. All activities including digging, ploughing, harvesting, and bringing in the crop are still carried out by human labour. Although agriculture in the Terai region is gradually becoming more mechanized, the mechanization of farming in the hilly and Himalayan regions is not so easy due to difficult and rugged terrain. On one hand, this has prevented the expected growth in agricultural output, and on the other, it has also increased the cost of production.

iii. Disguised Unemployment: Disguised unemployment is also one of the features of agriculture. About two-thirds of the country’s population is dependent on agriculture. Since more manpower than necessary is engaged in this sector, although many appear to be employed from the outside, this has not been able to increase agricultural output and productivity. For example, if four members of a family farm throughout the year and produce 40 mauri (units) of grain, and a fifth member joins them, the same land still produces only 40 mauri of grain. In this situation, the extra person engaged in farming represents disguised unemployment because the additional workforce has made no visible contribution to total output.

iv. Decreasing Agricultural Land Holding: Agricultural land holding refers to the area of land a farmer uses for cultivation. This area is continuously shrinking due to land fragmentation, urbanization, and infrastructure development. In the first Agriculture Census of 2018, the average land per farming family was 1.11 hectares. According to the most recent Agriculture Census of 2078, the average land ownership per farming family has declined to 0.55 hectares. Due to urbanization, industry, road construction, and population growth, the land that farming families have been using for agriculture has continued to decrease.

v. Dominance of Food Crops: The dominance of food crops is another characteristic of agriculture in Nepal. Although Nepal’s geographical diversity creates the potential to grow various types of crops, most farmers grow food grain crops such as rice, maize, and wheat. Since food grain crops are directly used for daily consumption and have been traditionally cultivated for subsistence since ancient times, the cultivation of cash and industrial crops is very limited. According to the Economic Survey 2080/81, food grain crops account for approximately 45 percent of the total agricultural output in Nepal.

vi. Inadequate Investment: Due to inadequate investment in agriculture, agricultural productivity and quality are also weak. Although both the government and private sector have been increasing investment in the agricultural sector in recent years, it is still insufficient relative to the demand. Investment in the agricultural sector from the national budget is only about three percent in Nepal. Due to low investment in agriculture, the use of modern machinery and equipment, improved seeds, fertilizers, pesticides, and advanced crop cultivation technologies remains limited.

vii. Dependence on Monsoon: Irrigation is considered crucial for agriculture. According to the National Agriculture Census 2078, only about 65 percent of the total cultivable land has access to irrigation facilities. The remaining cultivable land depends entirely on rainfall for farming. Due to climate change, there is an imbalance in the timing and amount of rainfall. This has created problems in agricultural livelihoods and businesses.

viii. Lack of Agricultural Infrastructure and Market: There is a shortage of agricultural infrastructure necessary for the development of agriculture — such as agricultural roads, processing centres, warehouses and cold storage facilities, and agricultural markets. In the Himalayan and hilly regions, there is no reliable road network to transport agricultural products to the market. There is a lack of processing centres needed to process and sell agricultural produce at higher prices. The pricing of agricultural commodities is not effective. Middlemen (intermediaries) dominate the agricultural market more than the farmers themselves. In some situations, the price of agricultural produce does not even cover the farmer’s production costs.

(C) Modernization and Commercialization of Agriculture

The process of using advanced and scientific technology, equipment, and management practices in traditional farming systems to increase production, productivity, and income is called the modernization of agriculture. Agriculture can be modernized through the use of improved seeds, improved irrigation technology, and the mechanization of agriculture. This approach prioritizes research-based farming practices suited to the local climate and soil. The modernization of agriculture, on one hand, increases agricultural productivity and, on the other, helps reduce production costs and increase farmers’ income.

The process of transforming a traditional or subsistence-oriented farming system into a market-oriented and profit-based farming system is called the commercialization of agriculture. The practice of farming for commercial purposes rather than being limited to meeting daily household needs is the commercialization of agriculture. In the context of Nepal, the following measures can be adopted for the modernization and commercialization of agriculture:

(a) Selection of Crops According to Geographical Location: Due to the diversity of Nepal’s geographical structure, the climate, soil, fertility, and rainfall conditions vary from region to region. Different types of crops can be grown in different geographical areas. In Nepal, since mostly only food crops are grown in areas ranging from the Terai to the Himalayas, not much benefit has been derived from agriculture. If crops, fruits, vegetables, and medicinal herbs suited to the geographical structure, soil, and climate are selected and cultivated, there is potential to increase production and raise income.

(b) Agricultural Education, Training, Research, and Development: To modernize and commercialize the farming system, farmers must be provided with agricultural education, training, and technical knowledge regarding advanced technology, seeds, cultivation methods, harvesting techniques, and storage methods. Similarly, investment in agricultural research and development must be increased to identify high-yielding varieties of seeds and crops, and farmers should be advised to grow such varieties.

(c) Use of Modern Technology: The time and cost of crop cultivation can be reduced through the mechanization and modernization of agriculture. For this, the government must provide farmers with training, loans, or grant assistance to use modern technology in farming. The use of machinery such as tractors, harvesters, and threshers increases farmer productivity, which in turn makes farmers more attracted to agriculture. This also helps bring fallow land that has been increasing year after year back into cultivation.

(d) Hybrid Seeds and Advanced Technology: To increase agricultural production and productivity, high-yielding food crops, fruits, and vegetables must be cultivated, and livestock and poultry of productive breeds must be raised. For this, Agriculture Knowledge Centres, the Department of Agriculture, and the Ministry of Agriculture must take the lead. The distribution and sale of disease-resistant and climate-adapted seeds must be arranged.

(e) Special Provisions for Cultivable Land: Cultivable land must be classified and a system must be implemented to prevent such agricultural land from being used for other purposes. A policy of granting tax exemptions and subsidies to farmers on such land must also be implemented. For example, in some countries there is a provision that if agricultural land is left uncultivated, the farmer must pay a fine twice the amount of the potential production. This helps reduce the tendency to hold land without farming or to leave it fallow.

(f) Extension of Agricultural Infrastructure: Agriculture can be commercialized by expanding infrastructure such as irrigation, agricultural roads, warehouses and cold storage facilities, and agricultural processing centres. For this, the government, private sector, and cooperative sector must increase investment in infrastructure construction and expansion.

(g) Development of Cooperative Farming System: In Nepal, small farmers with little land far outnumber large farmers with extensive holdings. If the land of such small farmers is consolidated and cooperative or collective farming is practised, farmers can reap substantial benefits. Cooperatives supply the necessary agricultural tools, technology, fertilizers, and seeds. They arrange for the sale and marketing of farmers’ produce. They also provide skills and training on farming systems, helping to modernize and commercialize agriculture.

(h) Agricultural Finance and Insurance: For the modernization and commercialization of the agricultural sector, the government must increase investment in this sector and arrange for organized investment. Banks and financial institutions can provide subsidized and grant-based agricultural loans to those involved in agricultural business. In addition, agricultural insurance programs must be made more effective to protect investments.

(D) Sources of Agricultural Finance

From the time of planting a crop to the time of selling it, farmers need finance or capital. Not all farmers may have sufficient funds to invest. In such situations, farmers take out loans or borrow from various sources. These are called the sources of agricultural finance.

In Nepal, farmers generally arrange the necessary capital by taking loans or credit from relatives, family members, neighbours, cooperatives, banks, and financial institutions. The various financial sources available to farmers are divided into the following two main categories:

(a) Formal or Organized Sources

Financial sources obtained from legally established institutions — such as commercial banks, microfinance financial institutions, and cooperative organizations — are called formal or organized sources. The interest rate on loans taken by farmers from such sources is generally lower. Farmers are freed from the exploitation that came from traditionally borrowing from moneylenders and traders. The following sources fall under formal or organized sources of agricultural finance:

i. Government: Federal, provincial, and local governments have been providing agricultural subsidies and insurance arrangements for farmers. Rural municipalities and municipalities, in their capacity as local governments, have also been providing grants and assistance for activities such as purchasing agricultural tools, seeds, and improved seedlings required by farmers. Farmers who operate agricultural farms or businesses and meet prescribed standards have been receiving agricultural loans with interest subsidies.

ii. Commercial Banks: Currently, most local government units in Nepal have at least one branch of a commercial bank. Under instructions from Nepal Rastra Bank (the central bank), there is a mandatory provision requiring commercial banks to invest a certain percentage of their total loans as agricultural credit. If a credible project proposal based on agriculture-related business is presented, these banks provide loan assistance to farming families for the purchase of machinery, equipment, and construction activities.

iii. Microfinance Financial Institutions: Microfinance financial institutions have been providing financial services with a focus on small farmers. In areas not reached by other financial institutions, such organizations have been channelling loans to local farmers for activities like raising livestock and poultry, fish farming, growing vegetables and fruits, and purchasing tube wells, fertilizers, seeds, and other agricultural materials.

iv. Cooperatives: For farmers with limited access to banks and financial institutions, cooperatives are a reliable source of finance. Cooperatives collect savings from members and then lend to those same members. They provide loans on the basis of collective guarantee, taking into account the needs and capacity of farmers. They make loans available to members at concessional interest rates for farming, animal husbandry, agricultural tools, seeds, pesticides, agricultural machinery and equipment, storage, and processing activities.

(b) Informal or Unorganized Sources

Taking a loan from a bank or financial institution requires completing many bureaucratic and paper-based processes. In some situations, farmers are compelled to take loans from informal sources at high interest rates because they lack access to banks and financial institutions or lack knowledge of the financial services they offer. The informal sources of agricultural finance in the context of Nepal are as follows:

i. Neighbours: During the planting and harvesting seasons, farmers borrow the funds they need from their neighbours. Neighbours provide loan assistance with or without interest, depending on the duration and amount of the loan.

ii. Friends and Relatives: Whether for household expenses or for farming, it is a Nepali tradition to borrow money or take credit from friends and relatives. Because the facility of institutional loans has not yet reached every village and because of the complicated process of taking institutional loans, farmers have been borrowing from friends and relatives.

iii. Moneylenders and Traders: Farmers often take short-term loans from nearby traders or moneylenders. Generally, the interest rate on loans taken from moneylenders or traders is comparatively high. They may provide loans with or without collateral.

iv. Farmers’ Groups: Nowadays, farmers’ groups have been forming in villages and collecting small amounts of money. The funds so collected are divided up and used by the farmers within the group as needed. Unlike cooperatives, these groups allow members to borrow at cheap interest rates from the group’s own savings fund, so their prevalence has been growing.

(E) Problems and Measures to Solve Problems in Nepal’s Agricultural Sector

The problems of Nepal’s agricultural sector and the measures to address them are presented in the table below:

Basis	Problem	Measures to Solve the Problem
1. Production System	Because production is carried out using traditional tools and methods, agricultural output and productivity are low.	Emphasis must be placed on increasing production and productivity by using modern production technology, improved seeds, fertilizers, and irrigation.
2. Size of Cultivable Land	Cultivable land is becoming increasingly fragmented due to infrastructure development and rapid urbanization. It is problematic to use modern technology on small plots of land.	By consolidating fragmented small plots of land and adopting an integrated or cooperative farming system, modern technology can be used in agriculture and commercialization can be achieved, increasing production and productivity.
3. Irrigation Infrastructure	Not all cultivable land has access to year-round irrigation. Irrigation infrastructure such as canals, channels, ditches, boreholes, and tube wells is insufficient. This forces farmland to lie fallow outside of the monsoon season.	Large irrigation projects in the Terai should be completed on time; small irrigation projects in the hilly and Himalayan regions should be prioritized; and the irrigation system can be further extended by collecting monsoon rainwater in areas not reached by canals and supplying it during dry periods.
4. Agricultural Infrastructure and Market	Agricultural infrastructure such as roads, transportation, processing centres, cold storage, and agricultural markets is inadequate. The price farmers receive for their agricultural produce is low. The fluctuation in agricultural produce prices from time to time has increased risk.	Sustainable and reliable road networks and cold storage facilities and processing centres in convenient locations for farmers must be established. To prevent excessive price fluctuations of agricultural produce in the market, a support price for agricultural production must be set.
5. Agricultural Materials and Credit	Farmers lack the capital to purchase machinery, equipment, and tools needed for agricultural work. Financial institutions prefer to lend to larger and commercial farmers rather than small farmers. As a result, not all farmers yet have access to easy, concessional, and sufficient loan facilities.	Easy, concessional, and sufficient agricultural credit facilities for purchasing agricultural materials and other needs can be made available to farmers. Arrangements can be made for repayment of loan instalments, principal, and interest after the sale of agricultural produce.
6. Natural Disasters and Climate Change	Continuous climate change has increased the frequency of natural disasters. Heavy rainfall causes erosion and flooding of agricultural land, and the risk of floods and landslides is growing. In addition, climate change is increasing the outbreak of new diseases affecting agricultural crops.	Infrastructure construction can be organized to reduce the risk of floods, landslides, and soil erosion. Climate-adapted seeds can be used to minimize the effects of climate change. Crop varieties with disease-resistant properties can be developed.
7. Research and Human Resources	Investment in study and research in the agricultural sector is inadequate. There is a shortage of skilled human resources needed for this sector. Young people in the country have not been attracted to farming as a profession. Those who have come back after acquiring skills abroad have not been motivated to take up agriculture either.	Attention must be paid to building the capacity of institutions working on agricultural study and research. Continuous study and research must be conducted to develop new varieties of seeds to increase agricultural productivity. The human resources needed in the agricultural sector must be estimated and a human resource plan prepared accordingly. Young people must be linked to agricultural entrepreneurship by making farming an attractive and dignified profession.

2. Exercise — With Solutions
Very Short Answer Questions [1 Mark]

a. What is Agriculture?

Answer: All types of crop cultivation carried out on land (such as food crops, cash crops, and fruit) and the business of raising livestock and poultry, collectively, is called Agriculture.

b. What kinds of agricultural activities have potential in Nepal?

Answer: Due to the diversity of Nepal’s climate, soil, and geography, there is abundant potential here for the cultivation of various types of food crops, fruits, and medicinal herbs, for livestock and poultry farming, and for forest-resource-based agricultural businesses.

c. According to the National Agriculture Census 2078, what is the number of farming households in Nepal?

Answer: According to the National Agriculture Census 2078 (2021), there are a total of 4,121,000 farming households in Nepal (3,999,000 engaged in crop farming and 132,000 raising only livestock).

d. What is the contribution of the agricultural sector to the Gross Domestic Product?

Answer: The contribution of the agricultural sector to Nepal’s GDP is approximately 24 percent (according to the Economic Survey 2080/81 data), while food grain crops account for approximately 45 percent of the total agricultural output.

e. Which method of production is most commonly used in agricultural work in Nepal?

Answer: Due to the lack of mechanization, most agricultural work in Nepal uses the traditional and ‘Labour-Intensive’ method.

f. Write any two reasons why agricultural land holdings are decreasing in Nepal.

Answer: Two reasons for the decreasing agricultural land holdings in Nepal are: 1. Rapid urbanization and population growth. 2. Fragmentation of cultivable land and infrastructure development.

g. Why are food grain crops grown in almost all geographical regions of Nepal?

Answer: Since food grain crops are directly used for daily consumption and have been cultivated since ancient times for subsistence, they are grown in almost all regions.

h. Write any two problems visible in agricultural infrastructure in Nepal.

Answer: Two problems visible in agricultural infrastructure are: 1. Lack of reliable agricultural roads and transportation networks. 2. Shortage of processing centres and cold storage (cold stores) facilities.

i. What is the Modernization of Agriculture?

Answer: The process of replacing traditional farming systems with advanced and scientific technology, modern equipment, and management practices to increase agricultural production and productivity is called the Modernization of Agriculture.

j. Mention any two formal sources of Agricultural Finance.

Answer: Two formal sources of agricultural finance (credit) are: 1. Commercial Banks, and 2. Cooperative organizations (and microfinance institutions).

k. What kind of impact does climate change have on the agricultural sector?

Answer: Climate change creates an imbalance in the timing and amount of rainfall, increasing the risk of floods, landslides, and drought, while also causing the outbreak of new diseases and pests in crops, leading to a decline in production.

l. Write one problem visible in Nepal’s agricultural market.

Answer: The main problem visible in Nepal’s agricultural market is that farmers do not receive a fair price for their produce, and middlemen (intermediaries) have greater dominance in the market than the farmers themselves.

3. Exercise: Short Answer Questions [5 Marks]

a. Give an introduction to Agriculture. Describe any four features of agriculture. 5 Marks

Introduction to Agriculture: The collective term for all types of crop cultivation (food grains, fruits, vegetables, and cash crops) on land, as well as livestock farming, fish farming, and beekeeping, is Agriculture. It is the primary means of livelihood and the foundation of national prosperity.

Four Features of Nepali Agriculture:

1. Subsistence Farming: The majority of farmers do not farm for commercial or business purposes but only to meet the needs of themselves and their family (to sustain their livelihood).

2. Labour-Intensive Farming: Since agriculture has not been fully mechanized, most activities such as digging, ploughing, and harvesting rely on human labour rather than machines.

3. Disguised Unemployment: More manpower than necessary is dependent on the agricultural sector. Even if more people work, total production does not increase — this is called disguised unemployment.

4. Dependence on Monsoon: Only about 65% of Nepal’s cultivable land has access to irrigation. The remaining areas have no choice but to rely entirely on rainfall (the monsoon) for cultivation.

b. What problems must farmers face when there is a lack of agricultural infrastructure and market? Present them. 5 Marks

When agricultural infrastructure (roads, irrigation, cold storage) and an organized market are lacking, farmers face the following problems:

– Produce Going to Waste: Without cold storage and processing centres, perishable items such as vegetables, fruits, and milk cannot be stored and spoil and go to waste.

– Transportation Problems: In the absence of reliable roads to bring agricultural produce from villages to the market, transportation costs become extremely high.

– Exploitation by Middlemen: Without an organized market, middlemen dominate the space between farmers and consumers. As a result, farmers are forced to sell cheaply while consumers are forced to buy at high prices.

– Failure to Recover Costs: Due to constant price fluctuations in the market and the absence of support prices, farmers are often unable to recover even their production costs (seeds, fertilizer, labour).

c. In your view, what kind of support and assistance should the government provide to farmers for the commercialization of agriculture? 5 Marks

For the commercialization of agriculture (profit-oriented and commercial farming), the government must provide the following assistance to farmers:

1. Modern Technology and Subsidies: The government must provide heavy subsidies on the purchase of agricultural equipment such as tractors and threshers, and on improved seeds and fertilizers.

2. Concessional Loans and Insurance: Easy access to agricultural loans at very low interest rates through banks, and simple arrangements for crop and livestock insurance, must be made available.

3. Infrastructure Development: The irrigation system must be expanded, agricultural roads must be built, and cold storage facilities and collection centres must be established in every village.

4. Support Price and Market Guarantee: To prevent farmers from incurring losses because their produce cannot be sold, the government must set a ‘Minimum Support Price’ before crops are planted and thereby guarantee the market.

d. Mention and describe the informal sources of Agricultural Finance. 5 Marks

The sources from which farmers borrow locally — either because they do not have access to banks and financial institutions or because they cannot complete the cumbersome paper-based processes — are called informal or unorganized sources of agricultural finance. These sources are as follows:

1. Neighbours and Friends/Relatives: During the farming season, farmers borrow the small amounts they urgently need from their neighbours or relatives, either with interest or interest-free. It is a traditional Nepali practice to borrow from friends and relatives for household or farming needs.

2. Moneylenders and Traders: Farmers take short-term loans from wealthy local moneylenders or traders. Although such loans are easy to obtain, their interest rate is comparatively very high and exploitative in nature.

3. Farmers’ Groups: In villages, farmers form groups themselves, collect small savings, and lend to members who are in need at cheap interest rates.

4. Long Answer Questions [8 Marks]

a. What measures can be adopted for the modernization and commercialization of agriculture in Nepal? Present and explain the measures. 8 Marks

To transform traditional or subsistence-oriented agriculture into a market-oriented, profit-based business through the use of modern technology, the following measures can be adopted in Nepal:

1. Use of Modern Technology and Mechanization: Instead of traditional ploughs and hoes, modern equipment such as tractors, harvesters, threshers, and drip irrigation systems must be used. This produces more output in less time and at lower cost.

2. Improved Seeds and Technology: Agricultural scientists must conduct research to develop disease-resistant and high-yielding hybrid seeds and deliver them to farmers.

3. Crop Selection According to Geographical Location: Whatever grows best in a given area should be cultivated there. Medicinal herbs and apples in the Himalayas, coffee, cardamom, and oranges in the hills, and food grains and cash crops in the Terai should be cultivated in a specialized manner.

4. Development of Cooperative Farming System: Nepali farmers have small plots of land. By consolidating these small plots (land consolidation) and carrying out collective farming through cooperatives, costs are reduced and commercial production becomes possible.

5. Extension of Agricultural Infrastructure and Market Management: Year-round irrigation facilities must be provided, agricultural roads must be built, and cold storage facilities and processing centres must be constructed at each local government level to keep produce safe.

6. Agricultural Education and Concessional Credit: Farmers must be trained in modern farming systems, and easy, low-interest agricultural credit and agricultural insurance must be made readily available. Provisions for fining those who leave land uncultivated and providing subsidies to those who farm must also be made.

b. Describe the formal and informal sources of Agricultural Finance. 8 Marks

The channels through which farmers obtain the capital or loans they need for agricultural work (from planting to selling) are called the sources of agricultural finance. These are divided into two categories:

1. Formal or Organized Sources: Financial institutions established by law and regulated by the government fall under this category. Interest rates here are lower and more transparent.

– Government: Federal, provincial, and local governments provide direct financial assistance to farmers in the form of subsidies, discounts on insurance premiums, and support for tool purchases.

– Commercial Banks: Under Nepal Rastra Bank regulations, commercial banks are required to mandatorily invest a certain percentage of their total lending in concessional agricultural credit.

– Microfinance and Cooperative Institutions: These institutions, which have reached every village, provide loans at low interest rates to small farmers — without collateral or on the basis of collective guarantee — for raising livestock and poultry, growing vegetables, and purchasing fertilizers and seeds.

2. Informal or Unorganized Sources: Loans obtained on the basis of mutual trust, without any legal process, fall under this category. Farmers without banking access rely on these.

– Moneylenders and Traders: Loans taken from village moneylenders or traders. Although easy to obtain, the interest rate is extremely high, causing farmers to fall into exploitation.

– Neighbours, Friends, and Relatives: When in need, farmers arrange for seeds and fertilizers by borrowing from neighbours or relatives with or without interest.

– Farmers’ Groups: The practice of farmers forming their own groups, collecting monthly savings, and lending to needy farmers at cheap interest rates is also increasing.

c. What are the current problems in Nepal’s agricultural sector? What measures can be taken to solve those problems? Assess them. 8 Marks

Although Nepal is an agriculture-based country, its agricultural sector is going through numerous problems. The current problems and their solutions are presented below:

Current Problems:

1. Traditional Production System: In the absence of modern equipment and improved seeds, farming is still done in a traditional manner, resulting in very low productivity.

2. Lack of Irrigation: Approximately 35% of cultivable land still lacks irrigation access. Farmers have no choice but to be entirely dependent on rainfall (the monsoon).

3. Land Fragmentation and Abandonment: Due to property division among heirs and land subdivision (plotting), cultivable land has been divided into small fragments, while young people going abroad have left village farmlands uncultivated.

4. Infrastructure and Market Problems: There is a lack of agricultural roads and cold storage. With middlemen dominating the market, farmers are unable to recover even their production costs.

5. Lack of Capital and Climate Change: Farmers lack money to invest. On top of that, climate change is increasing the risk of floods, drought, and new outbreaks of diseases and pests, continuously destroying crops.

Measures to Solve the Problems:

1. Modernization and Mechanization: The use of new technology, tractors, hybrid seeds, and chemical/organic fertilizers in agriculture must be promoted along with subsidies.

2. Expansion of Irrigation Projects: Ongoing large irrigation projects must be completed quickly, and rainwater harvesting and drip irrigation must be introduced in the hills.

3. Land Consolidation and Cooperative Farming: Fragmented land must be consolidated by enacting legislation, and arrangements for collective or cooperative farming on fallow land must be made.

4. Market Guarantee and Infrastructure Development: Cold storage facilities and agricultural produce collection centres must be built at each local government level. The government must set a ‘Minimum Support Price’ for farmers’ produce.

5. Accessible Credit and Agricultural Insurance: Concessional agricultural credit must be made available to farmers, and agricultural insurance must be made compulsory and effective to reduce losses from floods and drought. Additionally, policies must be introduced to attract young people to agricultural entrepreneurship.