Nepal’s Agriculture Budget: More Money for Fertiliser, But Where Is the Long-Term Plan?
Nepal is spending billions on imported fertiliser while domestic value chains, farmer protection and alternative agricultural inputs remain underdeveloped. The bigger question is whether this budget is building a stronger agricultural economy or simply managing Nepal’s dependence on imports.
Nepal's annual budget announcement often brings a mix of anticipation and scrutiny, especially within a sector as important as agriculture. This year, however, the numbers raise a more fundamental question: what kind of agricultural system is Nepal actually building? For fiscal year 2083/84, the government has allocated Rs 46.92 billion for agriculture and livestock development, while Rs 32.46 billion has been allocated for chemical fertiliser. That means roughly 69 percent of the agriculture and livestock allocation is going toward fertiliser. [Source: Ministry of Finance, Government of Nepal; Kantipur] There is a practical reason for this priority. Nepal has struggled with fertiliser shortages for years, and farmers cannot wait for procurement systems to catch up with the planting season. This year, Nepal also turned to India for emergency fertiliser supplies after global disruptions and rising prices put pressure on its farm input system. [Source: The Kathmandu Post] But solving an immediate shortage by repeatedly increasing spending on imported inputs does not necessarily solve the larger structural problem. It may simply make the country better at managing its dependence.
The Cost of Imported Inputs: A Vulnerability We Keep Repeating
Nepal's dependence on imported fertiliser is not just an economic issue. It is also a supply chain risk. When international prices rise, shipping routes are disrupted or geopolitical tensions affect production, Nepal feels the impact almost immediately. Farmers need fertiliser at a particular time, but Nepal has limited control over the international market from which that fertiliser comes. The issue is not that chemical fertiliser should disappear. Nepal's farmers need it, and shortages can directly affect yields. The problem is that fertiliser policy has largely remained focused on securing enough imported chemical inputs for the next planting season rather than building a system that gradually reduces vulnerability.
The new budget does include some longer-term measures, including a plan to establish a green urea industry and Rs 360 million in conditional grants to local governments for the promotion of organic fertiliser and green manure. [Source: Ministry of Finance, Government of Nepal] But the difference in scale is difficult to ignore. Against Rs 32.46 billion for chemical fertiliser, only Rs 360 million is allocated for organic fertiliser and green manure promotion. The question, therefore, is not whether Nepal should stop using chemical fertiliser. It is whether enough investment is being made in the alternatives that could eventually make the country less dependent on imported inputs.
The Untapped Resource: Livestock Waste
Nepal already has a resource that is produced every day and largely remains underused: organic waste. Cattle, buffalo, poultry and other livestock generate manure continuously, while agricultural and household waste provide additional material that could potentially be processed into useful inputs. A study published by The Kathmandu Post estimated that the fertiliser value of organic waste produced in Nepal annually is equivalent to approximately 87,000 tonnes of urea and 21,000 tonnes of DAP. [Source: The Kathmandu Post, “Making Fertilisers in Nepal”] This does not mean Nepal can simply replace chemical fertiliser with manure. Organic fertiliser has different nutrient characteristics, processing requirements and transport costs, and farmers need consistent quality if they are going to rely on it.
But it does mean Nepal is producing a resource that could become part of its agricultural input system instead of remaining largely a waste-management problem. Farmers and livestock producers could sell manure, processing companies could convert it into standardised fertiliser, and biogas plants could recover energy while producing useful by-products. With the right collection systems, quality standards, processing facilities and distribution networks, some of the money currently leaving the country to purchase imported inputs could circulate within the domestic economy instead. Recent examples from Nepal also show that local alternatives are possible, with farmers in parts of Chitwan and Palpa using green manure, compost and locally produced organic inputs to reduce their dependence on chemical fertiliser. [Source: The Kathmandu Post]
Tariffs That Hold Back Local Industry: The Soybean Problem
The same question applies beyond fertiliser, particularly to animal feed. Nepal's poultry industry has developed significant domestic capacity in meat and eggs, but the wider value chain still depends heavily on imported feed ingredients, including soybean products. Soybean meal is an important source of protein for poultry feed, making the way Nepal imports and processes soybeans an important industrial question.
If Nepal can import whole soybeans and process them domestically, the same raw material can create multiple products. Crushing soybeans produces soybean oil as well as soybean meal, creating opportunities for processing, employment and value addition before the product reaches the farmer. Bangladesh provides an interesting comparison. Its soybean industry has developed around large-scale imports and domestic crushing, with imported soybeans feeding both its edible oil and animal feed industries. [Source: USDA Foreign Agricultural Service] The lesson for Nepal is not that it should copy Bangladesh. It is that tariff policy can influence whether a country imports raw materials and creates value domestically, or imports more processed products and leaves that value elsewhere.
The exact tariff rates and the claim about Nepal's soybean crushing plants should be checked against the latest official customs schedule before being presented as fact. The Department of Customs publishes the current integrated tariff schedule, and any final policy argument should be based on those rates rather than older or secondary figures. [Source: Department of Customs, Government of Nepal] The broader issue remains important: agricultural policy should not only ask how much revenue an import generates today. It should also ask what kind of domestic industry that tariff structure encourages or discourages tomorrow.
The Precarious Life of a Farmer: Beyond Bird Flu and Bureaucracy
The challenges faced by Nepali farmers extend far beyond fertiliser and tariffs. Agriculture is a business where one disease outbreak, one failed crop, one price crash or one delayed payment can wipe out years of work. The 2026 bird flu outbreak is a clear example. Since the first detection in March, the outbreak spread to 11 districts, and by July authorities had culled 658,313 chickens and destroyed more than one million eggs and 222,000 kilograms of poultry feed. [Source: Reuters; Department of Livestock Services] For a commercial poultry farmer, this is not simply a disease problem. The farmer has already invested in chicks, feed, medicine, housing, labour and electricity, and when an outbreak forces the destruction of the flock, much of that investment disappears immediately.
This is where agricultural insurance should provide a safety net. The new budget has allocated Rs 2.19 billion for agricultural insurance premium subsidies, with the government covering up to 80 percent of premiums. [Source: Ministry of Finance, Government of Nepal] But insurance only works if farmers can actually receive compensation when they need it. Dr. Bhattarai's experience, in which he describes waiting nearly two years for an insurance payout after a significant loss, illustrates why farmers can lose confidence in the system. His experience alone cannot be used to claim that every farmer faces the same delay, but the larger concern is clear. If the process of paying the premium is straightforward while the process of receiving compensation is slow and complicated, insurance does not feel like protection to the farmer. It feels like another bureaucratic hurdle.
The problem does not end with disease or insurance. Farmers also face the uncertainty of the market. A farmer can increase production and still lose money if the price collapses at harvest. Farmers can receive low prices at the farm gate while consumers in cities pay considerably more, with transportation, collection, storage, processing, wholesaling and retailing taking a share along the way. Some of those costs are unavoidable, but a weak market system can also create unnecessary layers between the producer and the consumer. This is why Nepal needs practical collection centres, storage facilities, cold chains, local processing and stronger connections between farmers and buyers. The government has also moved toward market-linked agriculture, including plans for farmer-buyer contracts, support for agricultural storage and warehouse-receipt financing. [Source: Ministry of Finance, Government of Nepal] Technology can certainly help, but an agricultural app cannot solve a physical supply chain problem if the farmer still has nowhere to store the crop, no reliable buyer and no affordable way to transport it.
Reimagining Agriculture: From Drudgery to a Business
Attracting Nepal's youth to agriculture is often discussed as if the problem is simply that young people do not respect farming. That explanation misses the bigger issue. Farming is difficult to attract people to when it means uncertain income, unpredictable markets, expensive inputs and little protection against losses. But change those conditions and agriculture starts to look very different. A farmer who has reliable inputs, access to machinery, insurance, technical support, storage and a committed buyer is not simply doing subsistence farming. They are running a business.
This is where Dr. Bhattarai's argument about making agriculture attractive becomes important. The goal should not be to convince young people that farming is noble or glamorous. The goal should be to make it profitable enough that a young person can look at agriculture as a serious career and business opportunity. If a farmer can make a good living, invest in better equipment, educate their children and build financial security, agriculture can become a business opportunity rather than a fallback option.
One way to create that certainty is through contract farming. In a contract farming system, farmers and buyers agree in advance on conditions such as price, quantity, quality, delivery and payment. Depending on the model, the buyer can also provide seeds, fertiliser, technical support, finance or other inputs. [Source: Food and Agriculture Organization of the United Nations] For the farmer, the biggest benefit is not necessarily a higher price. It is predictability. If a farmer knows before planting what to produce, who will buy it, what quality is required, how the price will be determined and when payment will be made, farming becomes much less of a gamble.
The model is not risk-free. Buyers can have greater bargaining power, contracts can be broken and farmers can become dependent on a single buyer. FAO also recognises these risks and stresses the importance of clear contracts and appropriate institutional arrangements. [Source: Food and Agriculture Organization of the United Nations] But with transparent pricing, dispute-resolution mechanisms, farmer organisations and timely payment, contract farming can connect small farmers with reliable markets and productive resources. For Nepal, that could change the basic relationship between the farmer and the market. Instead of producing first and asking who will buy later, the market becomes part of the production decision from the beginning.
The Unshakeable Hope for a More Resilient Nepal
The conversation around Nepal's agriculture budget points to a larger truth: food security is closely tied to national security. But food security does not mean Nepal must produce everything within its borders. Nepal will continue to trade, import some inputs and participate in global markets. The real goal should be resilience. Nepal should be able to withstand a global fertiliser shock, a disease outbreak or a disruption in international trade without immediately putting its farmers and consumers at risk.
That requires more than increasing one year's subsidy. It requires stronger domestic value chains, better storage and markets, reliable insurance, more local processing and a serious effort to turn agricultural waste into productive inputs. The current budget contains some pieces of that puzzle. It increases fertiliser funding, introduces a green urea plan, provides Rs 360 million for organic fertiliser and green manure promotion, allocates Rs 2.19 billion for agricultural insurance subsidies and proposes measures to connect farmers more directly with markets. [Source: Ministry of Finance, Government of Nepal]
The challenge now is execution. Nepal has never lacked agricultural plans. What it has often lacked is consistent implementation. A budget can announce a fertiliser calendar, a green urea industry, insurance support or market infrastructure, but farmers will judge those policies by what actually reaches the field. The most important question about this year's agriculture budget is therefore not, "How much money did we allocate?" It is, "What kind of agricultural system will this money build?"
If the answer is simply more imported fertiliser, Nepal will continue solving the same problem every planting season. But if the spending helps build domestic inputs, processing industries, storage, insurance and reliable markets, then the impact can extend far beyond a single budget year. Nepal already has farmers, livestock, land, agricultural waste, entrepreneurs and a young population. What it needs is a system that connects them and allows more of the value created by agriculture to remain in Nepal. The path forward is not complete self-sufficiency. It is greater domestic value creation and greater resilience. That is the difference between simply spending money on agriculture and actually building an agricultural economy.
