Investment in Agriculture Industry of Nepal

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Investment in Agriculture Industry Business

Agriculture is known as the backbone of the Nepalese economy. As it utilizes one-third of the total land resources that are available in the country. Investment in agriculture industry Business has always been in developing phase in Nepal. It is also a significant contributor to the country’s GDP with 34% and employs more than 68% of the total population. From both a social and economic perspective, agriculture is regarded as an essential sector for Nepal. This sector also has a growing demand from both national and international market. Of course, it is strongly driven by the support of Government of Nepal (GoN). Nowadays, due to the advancement in linkages from farm to market channels, this sector can also be seen as emerging agro-based processing industries.

The demand for Agricultural Products in Nepal

In the agricultural sector of Nepal, there is a considerable demand-supply disparity as domestic production and processing industries are not able to fulfill the demand for food of the Nepalese population. Despite the large number of populations involved in the agricultural sector. Nepal still imports goods from other countries to meet the requirement of daily consumption. Previously, Nepal used to export agricultural goods such as paddy, lentil, and legumes to other countries whereas, now the situation is completely opposite.

The country has imported agricultural goods worth NRs. 224 billion in the last fiscal year 2018/19 and that represents 16% of the total imports. Due to the economic progress and growing income of the Nepalese middle class, the food consumption patterns have been changed, therefore, now Nepalese demand more for the higher value and processed food products. Due to these changing factors, farmer engage in their production of crops by adopting revise agricultural methods and techniques. On the other hand, there is still demand for Nepalese agricultural commodities such as Medicinal and Aromatic Plants (MAPs), spices, and tea in international market and are also considerably increasing in exporting into the international market.

Supply of Agriculture Industry Products in Nepal

The production of food crops is not increasing as rapidly as the population of Nepal. The production of crops such as paddy, lentil, spices, and even fruits are in decreasing trend. More than 75% of overall farmers are still involve in subsistence farming. While only 25% of them are on commercial farming. However, to improve the productivity and supply of agricultural products in Nepal. The GoN has started providing support to farmers and agro-based entrepreneurs. This has led to a steady change in the production from subsistence to commercial farming with enhanced farm-to-market connections.

Opportunities in the Agriculture Industry Business

Nepalese agricultural goods have a good growth rate of demand in both domestic and international markets. It seems to be a good opportunity in agricultural goods sub-sectors. Such as, improved seeds and processing industry related to fruit , tea , dairy , MAPs pr, and spices . To decrease the amount of import-dependence on foreign goods, a considerable opportunity exists for domestic businesses and entrepreneurs. They can leverage this growing demand as an opportunity to catalyze the development of the agricultural industry. By making stage-specific access to financial and non-financial support accessible.

Challenges in the Investment in Agriculture Industry Business

The major challenges faced in the Nepalese agricultural and investment in agriculture industry are the less implementation of the latest farming technologies and agricultural inputs that have caused a negative impact on productivity. Only 25% of the farmers have implemented mechanized technology in the Terai region of Nepal. (Insert source pls.)Most of the technological inputs are not available in the country and import from overseas with additional business operation costs. The industry also faces the challenge to find the right skilled manpower, infrastructures, and terrain-related challenges. In addition, most skilled manpower has migrated to gulf countries which have become a challenge for both entrepreneurs and farmers.

There is no access to proper infrastructure in the country. That has resulted in poor road networks, irrigation, power, warehousing for storage, and transport for logistics. Apart from that, lack of capital and early stage of capital risk in the business cause a significant obstacle. To the development and enhancement of agriculture.


As the import of agricultural goods is increasing rapidly. Remittance is the only factor that has assisted the country in keeping its economy afloat, too enhance the economy and make Nepal as a prosperous country. Firstly, the import must be in reduction phase, and export should be in increment by encouraging agro-based entrepreneurs and farmers to invest their time in the agricultural industry.