10 Jul, 2020

In Nepal, agricolture is the answer to returnees at the time of Covid

by Alessandro Balduzzi

According to a recent study conducted by Nepalese authorities, around 130,000 fellow citizens are expected to return home from the Gulf and Malaysia after international travel restrictions to prevent the spread of Covid-19 are over. In the long run, the amount of Nepali migrant workers supposed to return home is expected to reach a total of 407,000 out of over 1,5 million Nepali citizens abroad. 

The main reason for this massive inflow to Nepal is the contraction of the economies of host countries due to the negative effect of the Covid-19 pandemic. The main question Kathmandu must answer now is how to employ these jobless returnees. 

Agriculture could provide a suitable solution to this dilemma. According to a new analysis based on the National Economic Census conducted in 2018 by the Central Bureau of Statistics, agriculture, forestry and fishing sectors are some of the most profitable industries of Nepal. The study adds that the annual profit ratio for 24,229 firms stood at 55.7 percent, followed by education (46.1 percent), wholesale and retail sales and repair of motor vehicles and motorcycles (43 percent), and mining and quarrying (42.2 percent).

For this reason, the government has already decided to introduce programmes to encourage self-employment for returnees in agriculture, micro, small and medium enterprises, and the service sector. And this in spite of a certain distaste for professions related to agriculture among youths. Some programmes have already been implemented, such as the Rural Enterprises and Remittance Project (Samriddhi) and Micro Enterprise Development for Poverty Alleviation – which are already operational to promote entrepreneurship.

Returnees’ job experience can be a precious asset to exploit. For instance, Nepali workers who migrated to countries whose agriculture is based on advanced technology (such as Israel) have learnt modern techniques and can apply them at home, as some already did successfully.

Nevertheless, the biggest challenge does not concern returnees but rather the Nepali agricultural structure itself. Since most of the country’s population is engaged in subsistence farming, the next step for the government is to support their evolution into commercial farmers. This could be made possible through the creation of cooperatives, large sale outlets and storage centres collecting the crops across a wide area. 

This approach would partially counterbalance several issues hindering agricultural development, such as a shortage of cold storage facilities. This pushes farmers to sell their products as quickly as possible, often at low prices, fearing deterioration and the lack of seasonal food crops even weeks after the harvest. Other issues concern long-term obstacles, such as poor infrastructure: in a country rocked by earthquakes, roads leading relatively smoothly to markets cannot be taken for granted. 

To sum up, the combination of poor infrastructure, undervaluing of agriculture among the younger generations and massive migration abroad has made Nepal’s food supply less and less self-sufficient, whilst becoming more dependent on the import of basic commodities. Over the past decade alone, the import of vegetables from neighbouring India has seen an 8-fold increase; while last year rice worth 309 million dollars was imported to feed Nepal.

The country’s GDP has therefore got addicted to external contributions such as remittances, which amounted to 28,6 percent of production in 2018. This ratio makes clear the extreme dependence on remittance inflows and the related vulnerability to external shocks. And if there were any doubts, the ongoing pandemic made it clear that Nepal’s situation can easily become critical.

Since almost 55 per cent of Nepal’s population is of working age (between 15 and 60 years-old), today’s Nepal does not have to tackle just its “habitual” unemployment rate (11 percent) but also the inflow of former expats returning home to find jobs. Whilst the country’s manufacturing sector is poorly developed and the tourism sector is going to keep suffering in the next months due to travel restrictions, agriculture could be a concrete answer.