Case Study: Cash Cropping in Nepal

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Ashok Kumar Jha
Associate Professor Faculty of Mgmt. M.M.C., Dharan, T.U. Research scholar under LNMU

A case study of Cash Cropping in Nepal: Poverty alleviation or inequity?

Agricultural commercialization as a mechanism to alleviate rural poverty raises concerns about small land-holders, non-adopters, and inequity in the distribution of benefits within transforming economies. Farm gross margins were calculated to assess the economic status and impact of cash cropping on the economic well-being of agrarian households in the Mid-hills of Nepal. On an individual crop basis, tomatoes and potatoes were the most increasing, sensitivity analysis and scenarios suggest high variability and limited short-term impact on poverty alleviation. Profitable. On a per farm basis, 50% of the households with positive farm gross margins grew at least one vegetable crop, while only 25% of households with negative farm gross margins included vegetable crops in their rotation. Farmers have been hesitant to produce primarily for the market given the rudimentary infrastructure and high variability in prices. Farmers reported selling more crops, but when corrected for inflation, gross revenues declined over time. The costs and benefits of developing markets have been unevenly distributed with small holders unable to capitalize on market opportunities and wealthier farmers engaging in input intensive cash cropping. Farms growing vegetables had an average gross margin of US$137 per year compared to US$12 per year for farms growing only staple crops. However, the area under production is small and, while vegetable production is likely to continue Key words: Agriculture, Cash crops, Gross margin, Household economics, Market inequity, Poverty

Cash cropping has been promoted by development specialists as a mechanism to alleviate rural poverty in countries such as Nepal. Programs have capitalized on existing transportation networks, the proximity to urban centers or niche markets (Panday, 1992). But there are concerns that agricultural commercialization by-passes the poor. The cash and land quality requirements of capital intensive farming may limit the capacity of poorer farmers to invest, while the risks associated with yield and price variability may limit their willingness to participate in commercial production Both the Agricultural Perspective Plan (APROSC, 1995) and the ninth National Plan (GON, 1998) of Nepal promote the intensification of agriculture and increased cash crop production. In the Mid-hills of Nepal near Kathmandu, potato and tomato production have increased dramatically in the last 10 years (Brown and Shrestha, 2000). But, vegetable production is demanding of soil, water, and human resources. A systematic assessment of cash cropping is required to determine the impact on household well-being. The aims of this paper are five-fold:

1) to determine the relative profitability of vegetable production in the Mid- hills of Nepal; 2) to assess the economic impact of incorporating vegetables into the dominant cropping patterns;

3) to analyze the variability between households;
4) to assess the impact of fluctuations in price; and
5) to evaluate temporal changes in household well-being with the incorporation of vegetable production.

The relative profitability of agricultural production between farms provides a...
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