Supply Chain Management System of Agriculture in Nepal
66 percent of its people work in the sector of agriculture in Nepal directly. About 30% of Nepal’s land is used for agricultural purposes. Though the economic structure of Nepal has shifted from agriculture to service and industry over the past few decades, agriculture in Nepal and the market for cash crops have mixed performance. The supply chain management process plays a major role in the growth of the agricultural sector. Reports suggest a good supply chain management process brings in reduced expenses and increases productivity.
Simply, supply chain management is the coordination of planning, executing, and controlling all agriculture processes and activities necessary to produce and deliver items that satisfy customers’ preferences and needs. A farming supply network is created up of businesses or cooperatives that are in charge of manufacturing and distributing goods manufactured from grains, plants, or animals. On the whole, there are two main categories: The first category is the networks in agriculture in Nepal that offer fresh produce (i.e., fresh fruit, flowers, and vegetables).
Growers, marketplaces, distributors, importers, dealers, exports, supermarkets, and the businesses that provide their raw materials and services are frequently part of these categories. Any of these techniques effectively leaves the farmed or produced product’s natural qualities untouched. These items need to be handled, packed, transported, stored in a climate-controlled environment, and most importantly, sold. The second category is food supply networks for processed foods in agriculture in Nepal (i.e., meats that are portioned, snacks, drinks, desserts, and canned goods). Agricultural products are leveraged in these networks as raw materials to generate consumer products with higher added values. Technologies for conservation and conditioning frequently contribute to increasing the shelf life of products.
Nepal imports a great number of fruits and vegetables from the neighboring country, India, which is causing the local product to decay or go to waste. As is observed, Nepal’s main problem has been a fragmented supply network. Agriculture’s contribution to Nepal’s GDP dropped from 49 percent in 1999 to 27 percent in 2017. There are just 42,120 square kilometers in Nepal that may be used for agriculture, the majority of which is in the Terai region. Youth involvement in agriculture is extremely low.
The decline of agriculture in Nepal can be attributed to a variety of factors, including the size of the land, a lack of education and training, a lack of government support, labor shortage, traditional technology, job security, income instability, etc. The majority of Nepalese people agree that jobs outside of agriculture will be much more advantageous than actual farming. Smallholder farmers are most affected as they typically bear the cost of the majority of harvesting, shipping, weighing, and other expenses.
It is impossible to analyze and describe every component of the supply chain of agriculture in Nepal, therefore, an overview of the difficulties and future prospects of Nepal’s current agricultural supply chain procedures is discussed below:
Multiple Intermediaries: Intermediaries are the most successful, even if they don’t considerably improve the product. In Nepal, buyers might spend up to four times the actual price, while farmers only receive a fourth of that value. What happens to the money after that? In contrast to the farmers, the intermediaries who bring little value to the process profit greatly.
The development of agriculture in Nepal and the welfare of farmers appear to be insurmountable goals without regulating or eliminating intermediaries who bring no value. Farmers are unable to negotiate a cheaper price for their commodities due to handling, quality loss, extensive supply chains, or several intermediaries.
Production: The level of productivity is shockingly low when compared to other nations. For instance, Nepal was a big source of cardamom up until 2012. However, Nepal has lost its position in the market as a result of its inability to increase output and adherence to a conventional strategy without conducting market research. There is yet a potential for a comeback because Nepal produces great cardamom.
The low-quality products that result from the limited output and ineffective post-harvest management have harmed both farmers and consumers. In addition, most agricultural products are not graded, packaged, washed, or sorted in any way.
Transportation: This industry, like others, has been severely hampered by transportation. Even though certain regions lack adequate transportation infrastructure, they produce high-value goods. Wastage and price increases are now common in Nepal as a result of the poorly maintained transportation infrastructure.
The difficulty of the road network, particularly in the steep terrain, deters people from pursuing careers in agriculture in Nepal since any obstacle on the road can result in significant financial losses for farmers who must bear the majority of the damage.
Cold Chain: In Nepal, there are not many cold stores. This has hurt the country’s revenue as well as farmers’ income. Farmers will be able to sell their goods all year long, earning a high and steady income, and there will not be price increases for consumers if the quantity and quality of cold storage facilities increase.
Hence, for sector of the agriculture in Nepal to expand, good supply chain management is required. The free way of supply and demand ought to be the primary consideration. To achieve stability, influence during negotiations, and the ability to trade, which provides farmers more control over the supply chain, farmers’ market positions should be strengthened. Since these provide farmers with a sense of security, the significance of long-term agreements and services should be emphasized. Additionally, attention should be paid to cold storage and financial flexibility, which allow farmers to sell their goods at opportune times and profit more from their labor.