"The role of the state and the private sector in promoting sustainable mechanization drawing experience from Nepal", presented by Devendra Gauchan Shreemat Shrestha, at at NSD/IFPRI workshop on "Mechanization and Agricultural Transformation in Asia and Africa", June 18-19, 2014, Beijing, China

1. The role of the state and
the private sector
in promoting sustainable mechanization
drawing experience from Nepal
Devendra Gauchan
Shreemat Shrestha
Nepal Agricultural Research Council
Kathmandu, 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

2. Outline of Paper
 Country background: Agriculture and agroecological
regions
 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

3. 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%

4. 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

5. 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

6. 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 rice
production has doubled, despite their relative low yield.

7. Trend in food production and Productivity in Nepal
(1984/85- 2012/13)
y = 1.561 + 0.033x
R² = 0.923
0.000
0.500
1.000
1.500
2.000
2.500
3.000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Prod
Yield
Linear
(Yield)
Prod
(MT)
Yield
(kg/ha)
DGauchan, NARC, March 20, 2014

8. 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

9. 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).

10. 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)

11. 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

12. 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

13. 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.

14. Projected trend of 4Wheel and 2Wheel tractors
(both power and mini tillers) Source: MoAD (2012)
Projected trend of 4 Wheel and 2 Wheel tractors (both power and mini tillers)

15. 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

16. Key Features of Ag Mechanization Policy
 Upcoming new Ag Mechanization Policy has envisioned
facilitating, supporting and regulating role of the state
and 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.

17. 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

18. 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

19. NARC Developed in Farm Mechanization
Technologies
Corn Sheller
Roller type coffee pulper
Millet Thresher cum Pearler
Tunnel Solar Dryer

20. 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

22. 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

23. 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

24. 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.

25. Private Sector

26. 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

28. 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

29. 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.

30. 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

31. Strategic Partnership of Public-Private Sector in
Mechanization and AgriculturalTransformation
Public Sector
(Technology
development,
accreditation,
Regulation, Policy)
Private
Entrepreneurs
(Production, Distributi
on, Marketing)
Joint Role
(Technology
Piloting,
Training,
Business
development)
Joint Role of Public and Private
Sectors

32. References
 ADS, 2013.Agricultural Development Strategy (ADS),Ministry of Agriculture
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 EffectiveTheories 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 PoliticalWeekly,Vol. XLVI, No. 9, pp. 78-82.
 CBS, 2011.Nepal Living Standard Survey (1996/97.2003/2004;2010/11).Central Buraeu of
Statistics (CBS), National Planning Commission,Kathmandu,Nepal.
 CBS, 2013.Nepal Sample Census in Agriculture (2011/12),Central Buraeu of Statistics
(CBS),National Planning Commission,Kathmandu,Nepal.
 Gauchan,D. 2013.Rural Mechanisation in Nepal:Technology Options and Policy Issues.A paper
presented in “Workshop on Rural Mechanization:Policy andTechnology Lessons from Bangladesh
and other Asian Countries”,March, 7-8,2013,BRAC, Centre, Dhaka, Bangladesh
 MoAD, 2014.Agricultural Mechanization Policy, Ministry of Agricultural Development
(MoAD),Government of Nepal, Singhdarbar,Kathmandu.
 Shrestha,S. 2012.Status of Agriculture Mechanization in Nepal.Agricultural Engineering Division
(AED),NARC, Khumaltar,Nepal.
 TEPC, 2010.Statistical Presentation-2009/2010,Ministry of Commerce and SuppliesTrade and
Export Promotion Centre (TEPC), Pulchowk,Lalitpur,Nepal

33. Namaste!
wGoafb
Thank you