Understanding constraints to increased agricultural outputs

Nepal has been experiencing increasing food deficits for the past three decades. Inadequate irrigation facilities, labor shortages, conversion of agricultural lands to other land uses, land degradation, poor agricultural marketing, lack of necessary infrastructures, and poor agricultural productivity are commonly cited constraints to increased agricultural outputs.

Cooperatives are one of the three pillars for the economic development of Nepal (public, private, and cooperative). Currently, there are a total of 34,512 cooperatives (13,578 savings and credit, 4,371 multipurpose, 10,921 agriculture, 1,658 milk, 1,423 consumer, 193 fruits and vegetables, 108 tea, 155 coffee, 184 Jadibuti, 93 beekeeping, 143 communication, 128 health, 48 sugarcane, 45 Junar, and 999 other), with a total membership number of 6,305,581 in Nepal. Despite these initiatives, Nepal’s agriculture is experiencing a serious downward spiral. Therefore, it is necessary to immediately identify and implement a theoretically grounded agricultural development framework in order to reverse the downward spiral of agriculture, accelerate economic growth, and achieve fast-paced socio-economic transformation.

Agricultural programs and policies need to be formulated so that they would focus locally on Asta-Ja resources and globally on international trade and treaties, global demand and supply, global climate change, the emerging concept of the fourth wave of industrialization, and other pertinent issues within the global context.

In this regard, I suggest strengthening cooperatives at the grassroots level for agricultural production within the framework of Asta-Ja (referring to eight Nepali “Ja”- Jal, Jamin, Jungle, Jadibuti, Janashakti, Janawar, Jarajuri, and Jalabayu) and integrating them vertically with public and private businesses at the regional and national level. Agricultural programs and policies need to be formulated so that they would focus locally on Asta-Ja resources and globally on international trade and treaties, global demand and supply, global climate change, the emerging concept of the fourth wave of industrialization, and other pertinent issues within the global context.

Introduction

Cooperatives are considered one of the major vehicles for agricultural commercialization, increased food production, and socio-economic development of a nation by various schools of thought from the European to the California and Chicago schools (Torgerson et. al., 1997). Cooperatives are appropriate responses, especially to resource-limited smallholder farmers, in order to produce goods, add value, empower local communities, and develop national and global market competitiveness. The cooperative movement has basically become a social movement of small farmers for agricultural commercialization, resource conservation, income generation, and rural community economic development.

The US Agricultural cooperatives had 138,635 full-time employees and a total gross business volume of $197.1 billion in 2017.

India began its cooperative movement as early as 1904 with the enactment of the Cooperative Credit Societies Act (Verma, 2005), and currently, there are over 230 million members in over half a million cooperative societies, extending to almost every village in the country. The establishment of the All India Cooperative Institute Association in 1929, the National Cooperative Union of India in 1961, and the Indian Farmers Fertilizer Cooperative in 1967 can be taken as some of the major milestones in the Indian cooperative movement.

Indian cooperatives provide services to rural communities through various activities such as providing agricultural credits, marketing agricultural commodities, producing sugar and clothing, and distributing fertilizers. Indian cooperatives are quite diverse covering various enterprises including dairy, textiles, sugar, handlooms, and urban banking. Although cooperatives in India are generally taken as success stories and have been able to contribute to socio-economic transformation of the country, there are many cooperatives which are not successful mainly due to their bureaucratic control, lack of professionalism, political interference, poor administration and management, and overdependence on governmental assistance (Mayoux, 1995; Press Information Bureau, 2007).

Cooperatives are also quite successful in developed countries like the USA. In 2017, there were  1,871  agricultural cooperatives (1,010 marketing, 777 farm supply, and 84 services) in the US, with a total of 1.8 million voting members. Agricultural cooperatives in the US are categorized as marketing, farm supply, and service coops (USDA, 2018). Major agricultural products marketed by the US agricultural coops included beans, cotton, dairy, fish, fruits and vegetables, grain and oilseed, livestock, poultry, rice, and sugar. Similarly, the farm supply coops supplied crop protectants, feed, fertilizers, petroleum products, and seeds. The service coops provided services by shipping livestock, crop storage, crop drying, and grinding. The US Agricultural cooperatives had 138,635 full-time employees and a total gross business volume of $197.1 billion in 2017.

The cooperative movement has become the top national agenda of the Government of Nepal since the 1950s. Nepal began its cooperative movement through the establishment of 13 credit cooperatives in 1956 in Chitwan district to assist flood victims, a Cooperative Bank in 1963, and the Land Reform Savings Corporation in 1966 (NCFN, 2007). The Cooperative Bank was later converted to the Agricultural Development Bank in 1968. Government-affiliated credit and finance cooperatives dominated until 1990, then the enactment of the Cooperative Act of 1992 provided opportunities for farmers and other individuals to establish cooperatives at the local level.

Despite relentless government efforts to develop cooperatives and cater services to local producers, consumers, and other stakeholders, the results are far from satisfactory. Since most cooperatives are urban-based and are limited to finance and credit, most rural areas have not felt any cooperative movement in Nepal

The National Cooperative Federation (NCF, 2019) lists the historical events of the cooperative movement in Nepal.  As a result of continued emphasis on the cooperative movement in Nepal, there were a total of 7,598 cooperatives (2,979 multipurpose cooperatives, 2,345 credit unions, 1,410 milk producer cooperatives, 154 consumer cooperatives, and 710 other types of cooperatives) by 2004 in the country (Mali, 2005). This number has increased to a total number of 34,512, with a total membership number of 6,305,581 at present (DOEC, 2019).

Various cooperatives in Nepal include: savings and credit (13,578), multipurpose (4,371), agriculture (10,921), milk (1,658), consumer (1,423), fruits and vegetables (193), tea (108), coffee (155), Jadibuti (184), beekeeping (93), communication (143), health (128), sugarcane (48), Junar (45), and other coops (999). According to FAO (2017), the umbrella organization of the agricultural cooperatives in Nepal, the Nepal Agriculture Cooperative Central Federation Ltd (NACCFL), had 750 agricultural cooperatives with a total number of 815,000 member cooperatives in 2017. The NACCFL provides non-financial support to its members, especially in relation to capacity-building, marketing management, and policy advocacy.

Despite relentless government efforts to develop cooperatives and cater services to local producers, consumers, and other stakeholders, the results are far from satisfactory. Since most cooperatives are urban-based and are limited to finance and credit, most rural areas have not felt any cooperative movement in Nepal. The Dairy Coops, however, can be taken as an exception and have been relatively successful in reaching out to rural communities. According to Mali (2005), the major reasons for the failure of the cooperative movement in Nepal include lack of monitoring and evaluation of cooperatives, lack of national vision on cooperative development, lack of managerial skills for running cooperatives, and lack of working capital as well as support systems.

(To be continued…)