Mechanizing Agriculture in Nepal: Challenges and Opportunities

Agriculture plays a central role in livelihoods and sustenance, particularly in developing nations like Nepal, where it employs over 60% of the working population and contributes more than 24% of the country’s gross domestic product (GDP). However, limited access to modern machinery, small and fragmented landholdings, inadequate irrigation, and poor market connectivity along with financial constraints are the major challenges faced by farmers in Nepal. In particular, small-scale farmers, who heavily rely on manual labour, rain-fed irrigation, and traditional farming tools and techniques, are struggling with low productivity, increased vulnerability due to climate change and unpredictable rainfall. Despite being a top policy priority with subsidies, government efforts have not brought meaningful change and have failed to attract youth to pursue agriculture. In this context, there is an urgent need to mechanize agricultural sector through the adoption of advanced tools, machinery, precision farming techniques, improved irrigation system such as drip irrigation, and integration of renewable energy in farming practices for both production and storage.

Efforts through policy and subsidies

The government of Nepal (GoN) has prioritized nutritious and sufficient food throughout the year as one of its citizen essential rights in the constitution. The recent developments include National Agricultural Policy, 2004, Agricultural Development Strategy, 2015-2035, Prime Minister Agriculture Modernization Project with Guideline to provide price subsidy to seed, 2017, and Right to Food and Food Sovereignty Act, 2019. Through these efforts, the GoN has tried to promote the agricultural sector, which includes promoting agricultural cooperatives, subsidies for agricultural inputs like fertilizers, seeds, tools, and machines, credit guarantee schemes, and price policies and strategies.

Since the inspection of Agriculture Perspective Plan (APP) in 1995, Nepal has made a noticeable progress in several indicators such as per capita income, productivity, poverty reduction, access to infrastructure, including roads, markets, banks, irrigation, and agricultural centres. However, significant challenges remain for the GoN, particularly in increasing productivity, reducing excessive reliance on chemical fertilizers, achieving food self-sufficiency, and decreasing agricultural imports. Additionally, substantial improvements are needed in areas such as labour and agricultural productivity, trade, and competitiveness, subsidies distribution mechanisms, harvesting and storage infrastructure, and supply chain systems. The effectiveness of existing policies could be further enhanced to promote agriculture and attract youth in this sector, helping to address persistent issues in agricultural sector in Nepal.

Challenges in agriculture sector

Despite tremendous potential of the agriculture sector for growth and development, it faces multiple challenges such as land fragmentation, inadequate infrastructure, limited access to modern technology and markets, and the impact of climate change. In addition, the main challenge lies in effective implementation of government policies. Although ambitious goals for agricultural development and mechanization are outlined in various policies, strategies, and white papers, their execution and regulatory mechanism remain weak, which continues to impede overall progress in the agriculture sector.

Although over 60% of active population is engaged in agriculture, Nepal still struggles to ensure sufficient agricultural supply as Nepal imports between 3% and in the range of 3%-35% of total demand, depending on produces. This is due to low productivity, seasonal production, traditional practices, limited adoption of mechanized equipment, precision farming, and improved irrigation. It remains a major challenge for the government to reach out small farming groups, foster collaboration among them for collective farming, and empower them with modern practices. Despite having such programs and policies, these efforts often fail in effective implementation, monitoring, and follow-up.

Population migration is another major challenge faced by the agricultural sector. People are migrating from rural areas to major cities and foreign countries in search of better jobs, leaving agriculture behind. The young population tends to prefer service-oriented businesses over agriculture due to its labour-intensive nature, lower productivity, and limited market potential. Reducing the migration rate and linking agriculture with entrepreneurship by integrating modern practices and energy systems is a key challenge for improving earnings in the sector.

Unlocking agricultural potential

Problems and challenges in the agriculture sector provide an opportunity to unlock its tremendous potential and transform it into a more productive, sustainable, and profitable industry. The increasing policy focus from the government, growing private sector interest in investment, and favourable conditions for fostering agricultural production offer a significant opportunity to link agriculture with entrepreneurship through modernization and mechanization.

Mechanization through advanced tools, machinery, and precision farming helps enhance productivity and reduce labour intensity. Incorporating such equipment can accelerate farm operations, increase efficiency, and maximize yields. Additionally, integrating renewable energy into agriculture provides power to operate machinery, irrigation pumps, cold storage facilities, and processing units—making farming a more profitable business.

The existing framework of subsidies, policies, and credit guarantee schemes offers opportunities for informed and educated citizens to apply for grants and develop a solid business platform. Moreover, private sector investment interests and the government’s motivation to improve policies to reach more citizens provide a platform for youth and new entrants to engage in agriculture. This opens opportunities not only in farming but also along the agricultural value chain, such as storage and processing businesses.

Through farmer cooperatives and collective farming efforts, individual farmers can lower their risk of failure by sharing risks among stakeholders, collectively investing in pooled resources, and sharing machinery. This approach helps reduce machinery operation and investment costs, making technology more accessible to all farmers. Collective farming also facilitates the integration of agriculture with agribusiness, offering viable income opportunities beyond traditional farming. Training in modern technologies and improved access to finance can empower traditional farmers, reduce rural migration, and ultimately strengthen rural economies.