Nepal’s agricultural sector, long considered the backbone of the nation’s economy, is showing signs of steady revival in fiscal year 2025 (FY2025). Although not expanding as rapidly as the country’s burgeoning industrial or service sectors, agriculture is projected to grow between 3.2% and 3.8%, thanks to favorable monsoon conditions, government support programs, and a notable increase in paddy (rice) production. This performance, while moderate, reflects a resilience that is crucial to sustaining rural livelihoods and ensuring national food security.
The projected growth of the agricultural sector in Nepal aligns with a broader regional trend observed in South Asia, where strategic policy interventions and climate cooperation are increasingly important for agricultural productivity. According to a report by ICRA, steady demand from rural areas and sustained farm incomes are bolstering gross value added (GVA) in agriculture across several countries, including Nepal.
Favorable Weather and Increased Cultivation Drive Output
One of the primary drivers of growth in FY2025 is the favorable monsoon, which has led to improved crop yields, particularly in paddy cultivation—Nepal’s staple food crop. Government data shows that acreage under cultivation has increased slightly compared to previous years, enhancing both output and farmer earnings. The Ministry of Agriculture has reported positive trends in irrigation coverage, weather forecasting, and fertilizer distribution—factors critical to boosting yields.
Here’s a more detailed explanation:
1. Weather’s Impact:
- Optimal Temperature and Water Availability:Crops thrive within a specific temperature range and require adequate moisture. Extreme temperatures and drought can significantly reduce yields, while excessive rainfall can also lead to waterlogging and reduced growth.
- Sunlight:Adequate sunlight is crucial for photosynthesis, the process by which plants convert light into energy. Insufficient sunlight can hinder growth and yield.
2. Increased Cultivation Practices:
- Modern Techniques:Techniques like precision irrigation, which delivers water efficiently, and soil solarization (heating soil to kill pathogens) rely on favorable weather conditions.
- Optimized Planting Schedules:Weather forecasting helps farmers determine the best time to plant crops, aligning planting with optimal growth periods.
3. Examples of How Weather and Cultivation Work Together:
- Irrigation:Farmers use weather forecasts to predict rainfall and adjust irrigation schedules accordingly, preventing overwatering or drought stress.
- Crop Selection:Farmers choose crops that are well-suited to the local climate and weather patterns.
In an insightful analysis by Down To Earth, agriculture’s central role in the 2025-26 budget is emphasized, highlighting the government’s launch of nine new initiatives. These include seed banks, crop insurance upgrades, and a digital platform for transparent procurement—steps that are already benefiting Nepal’s farming communities.
Economic Significance Despite Modest Growth
Despite its moderate growth rate, the agriculture sector continues to be a cornerstone of Nepal’s economy. It employs more than 60% of the population and contributes a significant portion to the national GDP. In FY2025, agriculture’s share of GDP is expected to increase slightly, buoyed by better harvests and rising rural consumption.
However, experts warn that agricultural growth remains outpaced by industrial and service sector expansion. According to The Informed Gazette, “Nepal’s Rural Economy Faces Challenges Despite Growth”, the government must do more to modernize the sector and close the productivity gap between agriculture and other industries.
Government Support and Strategic Reforms
The FY2025 national budget reflects a strategic push to revamp agriculture, with increased funding for rural infrastructure, market access, and farmer support programs. Targeted investments include cold storage facilities, cooperative credit schemes, and mechanization grants to smallholder farmers.
In a press release by India’s Ministry of Finance, the emphasis on cross-border trade, agri-tech innovation, and regional food security networks highlights how interconnected Nepal’s agricultural goals are with broader South Asian trends.
Additionally, climate-resilient farming practices, digital platforms for seed distribution, and satellite-based land mapping have been launched to future-proof the sector. The integration of these systems promises long-term benefits, especially in mitigating the effects of climate change on farming.
Outlook: Resilient, But Requiring More Innovation
While the current growth trajectory is encouraging, the sector faces long-term structural challenges such as small landholdings, lack of investment in research, and inadequate rural transport. Analysts suggest that to unlock its full potential, Nepal must diversify its crop base, invest in value-added processing, and promote export-oriented farming.
Still, the resilience shown by Nepalese farmers, coupled with the government’s focus on agricultural reforms, presents a hopeful picture. With the right policy mix, agriculture can continue to be a driver of inclusive economic growth, particularly in rural areas.
For a deeper dive into the broader economic context, The Informed Gazette also recommends: “Nepal’s Economic Diversification: Can Rural Growth Keep Up?”.
For more interesting articles click here.
