Agricultural Entrepreneurship:

Opportunities for Nepali Youth

Prepared for Daayitwa

By
Omer Arain
Mitch Arvidson
Jake Griffith
Casey Hutchison
Kevin Lee

Workshop in International Public Affairs

Spring 2018
 ©2018 Board of Regents of the University of Wisconsin System
All rights reserved.

For an online copy, see

www.lafollette.wisc.edu/outreach-public-service/workshops-in-public-affairs
publications@lafollette.wisc.edu

The Robert M. La Follette School of Public Affairs is a teaching and research department
of the University of Wisconsin–Madison. The school takes no stand on policy issues;
opinions expressed in these pages reflect the views of the authors.

The University of Wisconsin–Madison is an equal opportunity and affirmative-action educator and employer.
We promote excellence through diversity in all programs.

ii
Table of Contents

Contents
List of Abbreviations ..........................................................................................................................v
Foreword .......................................................................................................................................... vi
Acknowledgements .......................................................................................................................... vii
Executive Summary ......................................................................................................................... viii
Introduction ...................................................................................................................................... 1
Background....................................................................................................................................... 3
Agriculture .................................................................................................................................... 3
Migration ...................................................................................................................................... 3
Trade ............................................................................................................................................ 4
Methodology ................................................................................................................................. 5
Import Substitution ............................................................................................................................ 7
Cauliflower ................................................................................................................................... 7
Cabbage ........................................................................................................................................ 7
Onion ............................................................................................................................................ 8
Jute ............................................................................................................................................... 9
Export Potential................................................................................................................................. 9
Large Cardamom ......................................................................................................................... 10
Garlic .......................................................................................................................................... 11
Tea ............................................................................................................................................. 11
Kiwifruit ..................................................................................................................................... 13
Ginger ......................................................................................................................................... 13
Coffee ......................................................................................................................................... 14
High-Level Barriers to Entrepreneurship ........................................................................................... 16
Trade with India .......................................................................................................................... 16
Inadequate Data ........................................................................................................................... 17
Market Fragmentation .................................................................................................................. 17
Individual-Level Barriers to Entrepreneurship ................................................................................... 19
Risk ............................................................................................................................................ 19
Stigma and Awareness ................................................................................................................. 19
Access to Inputs........................................................................................................................... 20

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Conclusion and Recommendations ................................................................................................... 24
Advocacy for High-Level Change ................................................................................................. 24
Value Chain Development ............................................................................................................ 24
Knowledge Transfer..................................................................................................................... 25
Input Access ................................................................................................................................ 25
Information Campaign and Leadership Training ............................................................................ 25
Research ..................................................................................................................................... 25
Summary..................................................................................................................................... 26
References ...................................................................................................................................... 27
Appendices ..................................................................................................................................... 34
Appendix 1: Recommended Crops Factsheets ................................................................................ 34
Appendix 2: Revealed Comparative Advantage Graphs for India, China, and Nepal ......................... 37

iv
List of Abbreviations
NPR Nepalese Rupee

BCR Benefit-Cost Ratio

RCA Revealed Comparative Advantage

MoAD Ministry of Agricultural Development

NGO Nongovernmental organization

SPS Sanitary and phytosanitary standards

IPM Invasive pest management

v
Foreword
This report is the result of collaboration between the La Follette School of Public Affairs at the University
of Wisconsin–Madison, and Daayitwa, a Kathmandu-based nonprofit. The objective of our program is to
provide graduate students at La Follette the opportunity to improve their policy analysis skills while
providing the client an overview of policies to stop the cycle of repeated labor migration through the
development of a youth-focused agricultural supply chain. This report presents entrepreneurship
opportunities, crops, and careers with the highest earning potential for Nepali youth.

The La Follette School offers a two-year graduate program leading to a Master’s degree in International
Public Affairs (MIPA). Students study policy analysis and public management, and they can choose to
pursue a concentration in a policy focus area. They spend the first year and a half of the program taking
courses in which they develop the expertise needed to analyze public policies. The authors of this report
are all in their final semester of their degree program and are enrolled in Public Affairs 860, Workshop in
International Public Affairs. Although acquiring a set of policy analysis skills is important, there is no
substitute for actually doing policy analysis as a means of experiential learning. Public Affairs 860 gives
graduate students that opportunity.

This year, workshop students in the MIPA program were divided into three teams. The other teams
performed analyses of the financing of early childhood development programs in middle income countries
for UNICEF, and an analysis of the sustainability of a rural health clinic in Honduras.

This team first analyzed all major agricultural commodities produced in Nepal to capture profitability and
export competitiveness. During a site visit to Kathmandu, the team discussed their findings with various
stakeholders and found several supply chain complexities which affected both crop profitability and
exportability. The second half of their report considers these issues in depth and makes recommendations
to Daayitwa on how they can work through them to make agribusiness accessible for returning migrants.

The team found three primary activities Daayitwa can undertake to maximize their impact on young
agricultural entrepreneurs: continued research, high-level advocacy for national reforms, and market
development along the agricultural supply chain. Daayitwa has a diverse network and efforts toward youth
empowerment, allowing them to play an innovative and facilitating role in Nepal’s agricultural system. But
until transportation and irrigation infrastructure improves, certificate of origin requirements are tightened,
and trade relationships outside of India are developed, even high-quality products might not be exportable.
Creating a network of communication along the supply chain that connects farmers, traders, and exporters,
reducing transaction costs and price volatility, will allow retuning migrants to recognize and take advantage
of opportunities in agricultural entrepreneurship.

Timothy M. Smeeding
Lee Rainwater Distinguished Professor of Public Affairs and Economics
May 2018
Madison, Wisconsin

vi
Acknowledgements
We would like to thank Kaubin Neupane, Shalini Gupta, and the rest of the Daayitwa staff for the
opportunity to contribute to Nepal’s agricultural future. We are grateful to Kaubin and the rest of the
Neupane family, Sristi Gurung, and Sanjay Pokharel of Daayitwa for welcoming us into their homes and
sharing their hospitality during our visit. Thank you to the government of Nepal, in particular the Ministry
of Agricultural Development, the Trade and Export Promotion Center, and the Ministry of Women,
Children, and Social Welfare, for sharing their data and allowing us to visit their offices. Several other
organizations and individuals were also very generous with their time and advice: Winrock International,
the Asian Development Bank, Adventist Development and Relief Agency, International Centre for
Integrated Mountain Development, Mr. Purushottam Ojha, ForestAction Nepal, ICCO Cooperation,
Nepal Economic Forum, AYON, Mr. Asesh Karki, Mr. Deepak Ratna Tuladhar, International
Development Enterprise, R&D Innovative Solution, Dr. Biswo Poudel, and the numerous Daayitwa staff,
young entrepreneurs, and other stakeholders who participated in interviews. Finally, we are incredibly
grateful to Professor Tim Smeeding and the rest of the La Follette School faculty for their support and
guidance.

vii
Executive Summary
Daayitwa is a Kathmandu-based nonprofit organization working to develop Nepal’s economic self-
sufficiency by fostering entrepreneurship and leadership development. The World Bank estimates that in
2016, Nepal received $6.6 billion in remittances from migrant labor abroad, accounting for more than
30% of the country’s gross domestic product (GDP). Daayitwa sees opportunities to stop the cycle of
repeated migration through the development of youth-focused agricultural entrepreneurship opportunities.

Because migration is largely driven by a perceived lack of profitable jobs in Nepal, this report explores
the agricultural supply chain to find the crops and careers with the highest earning potential. We first
analyzed every agricultural commodity produced in Nepal on two metrics: benefit-cost ratio, which
captures profitability, and revealed comparative advantage, a measure of each crop’s export
competitiveness. After narrowing our list to approximately 20 crops based on these measures, we used a
more holistic approach to find the final 10, considering input requirements, maturation rates, trade
barriers, and competition and demand in nearby countries. The first half of our report is an analysis of
these high-profit potential crops, which can be divided into two categories: import substitution (onion,
cabbage, cauliflower, jute) and export potential (garlic, ginger, cardamom, coffee, tea, kiwifruit).

During a week-long visit to Kathmandu, we discussed our findings with various stakeholders, including
the Ministry of Agricultural Development, the Asian Development Bank, a focus group of young
agricultural entrepreneurs, and other nonprofit and nongovernmental organizations working in
development. This trip revealed complexity beyond what our initial data analysis reflected. Middlemen,
nontariff barriers magnified by trade reliance on India, underdeveloped commercial markets, and a lack of
domestic value addition capacity remove profit from various stages in the supply chain. The second half
of our report considers these issues in depth and makes recommendations to Daayitwa on how it can work
through them to make agribusiness accessible for returning migrants.

We found two primary functions Daayitwa can undertake to maximize the impact on young agricultural
entrepreneurs: high-level advocacy for national reforms and network development along the agricultural
supply chain. Although Daayitwa is relatively small, its diverse network and efforts toward youth
empowerment mean they can play a crucial facilitative role in Nepal’s agricultural innovation.
Furthermore, Daayitwa’s renowned fellowship programs have developed deep, far-reaching relationships
within Nepal’s government. Until transportation and irrigation infrastructure improve, certificate of origin
requirements are tightened, and trade relationships outside of India are developed, even high-quality
products might not be exportable. Creating a network of communication along the supply chain that
connects farmers, traders, and exporters reduces transaction costs and price volatility, allowing people to
recognize and take advantage of opportunities.

In conclusion, while significant profit potential exists in Nepali agriculture, trade issues and inefficiencies
along the supply chain must be addressed before returning migrants have a good chance of earning a
living in agricultural entrepreneurship. Daayitwa can contribute by advocating for national change and
fostering efficient communication at all stages.

viii
Introduction
Our client, the Kathmandu-based nonprofit organization Daayitwa, works to address youth migration
away from Nepal by fostering entrepreneurship and leadership development (“About Daayitwa”). In
2009, 4 million Nepalis lived abroad for work and an additional 735,000 reported migrating for work at
some point in the past. More than 29% of Nepal’s GDP comes from these workers’ remittances, a
percentage three times greater than that of the next most remittance-reliant South Asian country - Sri
Lanka at 8.9% of GDP (Ratha, Plaza and Dervisevic 2016). Half of Nepali remittances come from
workers in the Persian Gulf , but destination and foreign employment category vary significantly
depending on province of origin, ethnic background, and age (Shishido 2011, iii). Many workers are
caught in a revolving door where they alternate between time at home in Nepal and abroad (Shishido
2011, iv). Daayitwa believes that this cycle of migration is creating a leadership crisis and seeks to
develop opportunities for youth to earn a living at home.

As a country with a strong agricultural history, fertile soil, and a favorable climate, farm ownership may
offer high potential for economic growth and entrepreneurship. A policy of export promotion coupled
with increased investment in agricultural infrastructure could offer young people higher income than they
could earn through migration abroad (Paudel 2016, 53). By driving innovation and technology adoption
in the agricultural sector, Daayitwa has the opportunity to create high-potential entrepreneurial
opportunities for Nepali youth that could entice them to remain at home rather than migrating for
economic opportunity. Our research will serve as guidance for Daayitwa’s proposed change in migration
and agricultural policy.

The government of Nepal regularly compiles two reports similar to our research. The Ministry of
Commerce and Supplies writes the Nepal Trade Integration Strategy, which guides the future of Nepal’s
exports, comparing export performance with domestic supply and socioeconomic impact to identify
priority sectors. It recommends nine crops with high export potential: cardamom, ginger, tea, medicinal
and aromatic plants, fabrics, leather, footwear, Chyangra pashmina products, and knotted carpets
(Ministry of Commerce and Supplies 2016). The Ministry of Agricultural Development publishes an
Agriculture Development Strategy, which is a 10-year action plan for various agricultural stakeholders.
Its suggestions for value chain development are maize, dairy, vegetables, lentils, and tea (Ministry of
Agricultural Development 2015). Our report hopes to provide additional perspective on these valuable
studies, looking particularly through the lens of migrant reintegration and agricultural entrepreneurship.

The goal of our research is to provide a holistic view of agricultural entrepreneurship in Nepal, with a
particular focus on the barriers facing returning migrants, and the commodities through which they could
find the greatest likelihood of success. By combining this research with tangible policy recommendations,
we hope to provide a roadmap for Daayitwa to enact lasting change.

Before beginning our research, we had to determine if there was potential for economic growth through
agriculture. Conventional wisdom focuses on industrialization and technology adoption as the long-term
solutions to poverty, with agriculture often maligned as an impediment to growth. Indeed, our most
common and striking piece of feedback throughout the early research process was concern about
encouraging agricultural development; our peers’, professors’, and even our own first instincts were that
reliance on an agrarian economy should be reduced, not cultivated. This is a clear result of our collective
Western education: in the last 30 years, a bias toward urban investment at the expense of agriculture has
become prevalent among development economists, ignoring the high potential of farming to reduce
poverty (Bezemer et al. 2008). Non-industrial sectors have a negative connotation in the United States,
particularly among the college-educated, economics-trained people with whom we discussed the project.
However, our literature review indicates that Nepal’s climate, geography, and geopolitical positioning
make agribusiness an ideal venture with many opportunities.

The remainder of this report is structured as follows: first, we discuss relevant background information on
Nepal, including an overview of its agricultural sector, an introduction to the migration problem, and
background on Nepal’s trade relationships. Second, we describe our assumptions and research
methodology. Third, we recommend the 10 crops with the greatest potential to attract returning migrants
and allow farmers to earn a profit. Finally, we provide a list of barriers to entrepreneurship in these
commodities, including potential policy actions to address them.

Ultimately, we recommend examining cardamom, garlic, tea, cauliflower, cabbage, kiwifruit, jute, ginger,
coffee, and onion. These crops provide the best balance between exportability, benefits to farmers, and
potential to interest young Nepali workers. However, several systemic challenges remain. At the national
level, trade reliance on India, weak infrastructure, inefficient supply chains, and inadequate data
collection hamper profitability across the Nepali economy. While less of Daayitwa’s work is focused on
these macroeconomic obstacles, it is well positioned to enact programs that counteract individual-level
barriers such as the lack of access to optimal inputs, stigma around agriculture, and inherent risk in
entrepreneurship. Our 10 crops, coupled with Daayitwa’s assistance in supply chain development,
advocacy, and networking, can make agricultural entrepreneurship an attractive and profitable venture for
returning migrants.

2
Background
Agriculture
Although less than 20% of Nepal’s land is cultivable, agriculture makes up approximately 35% of GDP
and employs over 75% of the population (Basnett et al. 2014, 39). Water resources are abundant but poor
irrigation systems make this resource difficult to access for many farmers (Gajmer 2014). Typically,
farmers grow diversified crops to hedge against an uncertain environment, meaning that if one crop fails
due to weather or irrigation issues, the family will retain at least a portion of their income.

Nepal has a comparative advantage in farming due to a diverse climate and location between China and
India, the world’s two most populous countries (Invest Nepal 2015). A wide variety of crops can be
grown, from winter vegetables to tropical fruits. The country is divided into three contrasting climatic
zones - Terai, temperate hills, and mountains - each suited to a different variety of crops. Terai, or
lowland plains, is characterized by alluvial soil and dense forests and is particularly fertile for rice, pulses
like lentils, wheat, barley, oilseeds, tobacco, tea, and cauliflower. Kathmandu, the capital, is located in the
temperate hills. In the summer, subsistence crops like rice and maize are common, while farmers often
turn to wheat, barley, and vegetables in the winter. Finally, farmers in the mountains struggle with poor
soil and insufficient rainfall, although the mountains’ vast grasslands are good for grazing. Potatoes,
barley, and cardamom grow here, and livestock such as yaks and goats offer meat, milk, and wool (Thapa,
Kumar, and Joshi 2017, 5-7). Our analysis takes these regional differences into account by calculating
yield and profitability at the district level.

The agricultural supply chain in Nepal is a sprawling, multi-level network of middlemen and cartels who
siphon profit away from farmers. Our interviews at Kalimati Vegetable Market in Kathmandu, confirmed
by Salil Bhattari’s 2013 case study research, suggest that agricultural products pass from farmers to local
collectors, regional traders, wholesalers, and retailers before reaching the consumer (Bhattarai 2013, 57).
Our discussion with the Nepal Economic Forum revealed that in the case of cauliflower, farmers receive
prices of 60 Nepali Rupee (NPR)/kg, wholesalers sell the product to retailers for 130 NPR/kg, and
consumers ultimately pay 150 NPR/kg. The Nepal Economic Forum believes this level of price inflation
is common in every product sold in the wholesale market, with slight variations depending on product and
season.

In addition to the irrigation and stability issues outlined above, researchers have identified several
problem areas in need of structural change. Unreliable transportation infrastructure, low productivity, and
uncertainty due to climate change limit sector-wide growth (Basnett et al. 2014, v-ix). We explore these
issues in the second half of this report.

Migration
Migration is one of the most promising opportunities for young Nepalis. While out-migration has been
common for the country’s entire history, numbers have surged in recent years due to high wages in India,
Malaysia, and the Middle East. Foreign labor permit acquisition peaked in 2013-2014 at more than
500,000 (Ministry of Labour and Employment 2016, 7). Although researchers have published no
comprehensive studies on the motivations of migrants, the general consensus is that young workers in
particular seek profit. Theoretical models of migration take wage differentials as a given, assuming that
movement will not occur without an income gain (Hagen-Zanker 2008, 20). Empirical data supports the
application of this theoretical approach to the Nepali context. While unskilled laborers can expect to make
6,000 NPR per month at a factory job in Nepal, they could make 20,000 NPR per month in Qatar. Even

3
after paying off the investment costs of migration, a worker can expect to send about 300,000 NPR home
after two to three years of working abroad (Hatlebakk 2015, 95). With thousands of Nepalis leaving daily
and at least one-fifth of households having a family member working abroad, these remittances have huge
economic impacts at home. Research shows that 40% of actual poverty reduction between 2001 and 2011
can be attributed to migration rates to Persian Gulf countries and Malaysia (Shrestha 2017, 2).

Although profit is the first priority for migrants, this cannot entirely explain labor migration by Nepali
youth. Our interviews conducted in Nepal indicate that migrant work has become a rite of passage for
some Nepali youth, especially young men, reducing the availability of farm labor. The chance to work
abroad is also seen as an adventure and a way to expand one’s horizons. This suggests it may be very
difficult to dissuade first-time migrants. However, it is important to provide economic opportunities when
these migrants return to Nepal so they do not become trapped in a revolving door of constant migrant
work.

Familial land ownership has a positive relationship to overseas migration. This is likely because families
with land more capable raise the capital necessary to finance the journey abroad (Hatlebakk 2015, 105).
Regardless, the land holdings of returning migrants indicate the potential for agribusiness success with the
right training and inputs.

Trade
Another general consensus is that Nepal’s agricultural exports will be limited mostly to India in the near
term. From 2012-2016, more than 63% of Nepal’s total exports were to India, largely due to Nepal’s
landlocked nature and open border with India to the west, south, and east (World Integrated Trade
Solution 2017). Any trend reversal would be both unwise and take years to complete. This leaves Nepali
agriculture extremely vulnerable to price shocks originating from changes in Indian agriculture and
policy.

Trade diversification could expand economic opportunities and reduce price-shock risk. China is a natural
candidate given that it is the only other country Nepal shares a land border with. Additionally, China is a
massive economic power with ever-increasing agricultural demand that Nepal can help supply.
Unfortunately, geography is a significant barrier to accessing the Chinese market. The 2015 earthquake
shut down the Kodari highway, through which most bilateral trade passed, leaving only one crossing
between Nepal and China (Poudel 2018). Nepal’s northern border with southwestern China encompasses
some of the roughest mountain terrain in the world. This extreme geography and sparse mountain
infrastructure makes large-scale land trade very difficult.

Quality and processing issues with Nepali agricultural products constitute additional nontariff barriers.
High-price, low-volume products like cardamom that could find profitable markets in Europe can
sometimes be blocked from entering these markets because of strict European quality standards. Spices
dried using traditional methods often fail to meet these benchmarks, closing off potentially lucrative trade
channels (International Trade Centre 2017, 20). Similar nontariff barriers are not only a problem in
accessing distant, Western markets; Indian authorities regularly cite sanitary and phytosanitary standards
(SPS) to reject shipments of Nepali ginger (Khanal 2018). Several of our interviewees in Nepal expressed
belief that these standards were arbitrarily enforced during Indian growing seasons to keep prices high for
Indian farmers and removed during shortages to smooth consumption. India also imposes countervailing
duties on clothing, anti-dumping restrictions on jute, excessively long quarantine requirements on
produce, and quotas on ghee, yarn, and certain metal products (Khanal 2018).

4
Methodology
To begin our analysis, we employ two quantitative measures, a benefit-cost ratio (BCR) in representative
districts and average revealed comparative advantage (RCA) from 2009 to 2015. The Ministry of
Agricultural Development (MoAD), Nepal’s central agriculture body, manages agricultural policy with
the aim of transforming the country’s reliance on subsistence farming into internationally competitive
commercial production (Government of Nepal 2010). To this end, they maintain agricultural information,
including land area, yield, and production for each crop by district, in an annual “Statistic Agriculture
Book” (Ministry of Agricultural Development 2016). We also use a series of government reports on
production costs and marketing margin for various agricultural products (Bhandari 2014; Bhandari and
Aryal 2016; Bhandari, Kunwar, and Parajuli 2016). This data is used to calculate BCRs, a ratio of the
price a farmer receives (farmgate price) to the input costs, including material, labor, capital, land lease,
depreciation, and repairs. BCR is a rough measure of profitability; any crop with a BCR above one has
higher average profits than costs. It is important to note that the government reports indicate production
costs for only selected, representative districts.

We compare the production information from the Statistic Agriculture Book to the profitability data to
examine crops appearing in both samples. The limitation to this method is that it eliminates agricultural
products not for their potential, but for their scarce data, excluding commodities like honey, livestock, and
fisheries from the analysis. The upside of this method is that we can accurately compare commodities for
their profitability potential. We ultimately analyzed 114 of the products in the Statistic Agriculture Book.

In addition to exploring profitability through BCRs, we obtain trade flow data from the United Nations
Comtrade Database to calculate RCAs for India, China, and Nepal on a range of agricultural commodities
(Comtrade). Trade flow data is available from only 2009 to 2015 for Nepal. We calculate five-year RCA
averages for Nepal’s agricultural commodities using the Balassa Index formula (see below) to measure
Nepal’s export potential in each product.

RCA is common in the international economics literature, and the World Bank uses it as a trade indicator.
The ratio measures a country’s trade position relative to the world in a particular commodity, indicating if
a country is better at producing the given good than the rest of the world. Values greater than one are
considered to have a competitive advantage, and a higher RCA indicates higher exportability.

We took the 114 crops from the profitability list, reviewed their RCAs, and eliminated low-performing
commodities, usually with a BCR or RCA below one. We made exceptions for some crops with strong
qualitative advantages (kiwifruit and jute) and when high BCRs outweighed low RCAs (coffee and
onion). After collecting approximately 20 crops with particularly high values on both measures, we
considered each holistically to find the 10 best options. Our criteria included farmer-level concerns - soil,
fertilizer, and water use, machinery needs, and maturation rate - and broader export-level benchmarks like
trade barriers, exportability, and competition and demand in nearby countries, particularly China and
India.

5
Our research included a visit to Nepal, in which we discussed our list with stakeholders, including
Daayitwa, government agencies, NGOs, and a focus group of young entrepreneurs, to learn their
perspective and hear about barriers to widespread development of these products. We discovered
complexity beyond what the data can reflect. Middlemen, nontariff barriers with India, and a lack of
domestic value addition capacity all remove profit from various stages in the supply chain. After
discovering these issues, we chose to expand our paper beyond a report on the 10 crops into a discussion
of the national- and entrepreneur-level barriers to profitable entrepreneurship in tose products.

Data Concerns
One major assumption within this analysis is the accuracy of the little hard data available. Stakeholders
across sectors expressed surprise at our use of and dependence on existing data in lieu of primary data
collection. Data collection methodologies as documented seem moderately reasonable, but even the
organizations who collected that data were skeptical of the veracity of our sources.

Traditional responses to incomplete, inaccurate, or non-existent data often rely on imputation from
alternate sources, case study analysis, or, when possible, primary data collection, although our ability to
use these methods was limited by the timeframe and scope of this project. While we found some data on
wholesale and retail prices from interviews at Kalimati Vegetable Market in Kathmandu, these numbers
only crudely reflect the farmgate prices that these producers receive. Input market prices are much less
formalized, especially in rural areas, making profit estimations difficult to calculate or generalize. Several
potential case studies were brought up through the course of our interviews, but entrepreneurship is at its
core atypical: similar processes may be used between businesses, but in general, the success of those
businesses is itself highly differentiated

6
Import Substitution
Because of their perishability and high domestic demand, the crops below could be developed to
substitute away from current high Indian imports.

Cauliflower
Nepal is geographically surrounded by the world’s two largest cauliflower producers. In 2016, China
produced 10.18 million tons of cauliflower and broccoli (which are counted together in most databases
due to their biological similarity) while India produced 8.20 million tons, far ahead of the third largest
producer, the United States with 1.32 million tons (FAO 2016). These countries are also the three largest
consumers, so a great deal of this production goes to domestic consumption. Our data shows that
cauliflower production in Nepal has higher than average levels of revealed comparative advantage, 2.963,
and benefit-cost ratio, 2.64. The combined average of offseason and main season gross income according
to farmgate prices received in Parsa, Lalitpur, Repandehi, Chitwan, and Lamjung is 367961.73 NPR
(Bhandari 2014, xxxiii-xxxiv).

Cauliflower is a staple vegetable in Nepali and Indian cuisines, especially in takaris and curries. It grows
best in climates with daytime temperatures between 21° and 29° Celsius with damp, rich soils, with much
sun. Cauliflower does not grow well in very acidic soils, which also increase the chances of disease such
as whiptail and club root (Fritz et al. 2018). For this reason, lime application is very important for Nepali
cauliflower farmers with highly acidic soils. In Nepal, the Sarlahi and Jhapa regions produce the most
cauliflower, though these districts do not have the highest yields per hectare. The Parsa and Bhaktapur
regions hold that distinction with 26 and 25 metric tons per hectare respectively. According to United
Nations Comtrade data, nearly 100% of Nepali cauliflower exports go to India.

Cauliflower is an annual plant typically planted in summer and harvested autumn. The time period
between planting and harvesting can range anywhere from 75 days to 90 days. Mature cauliflower heads
need to be shielded from sunlight to avoid discoloration before harvesting. Harvested heads, called curds,
are highly perishable and need to be quickly cooled to avoid spoilage, necessitating access to cold storage
facilities (Gautam et al. 2015, 207). Nepali cauliflower is often transported to market with stalks and
leaves still attached to reduce damage to the delicate curd. Unfortunately, stalks and leaves account for
about 35% of the total weight, increasing transportation costs. These stalks and leaves could be removed
to reduce high transportation costs. In order to abate the possible damage to the unprotected curd, studies
show that newspaper wrapping of the curd in plastic crates can substitute for the natural leaves (Gautam
et al. 2015, 211).

Farmers, wholesalers, and retailers face several barriers to further developing in Nepal. Some constraints
faced by farmers include the low availability of quality seed, high input costs, and lack of irrigation.
Retailers and wholesalers often lack price information, run poorly managed marketing systems, and
overestimate the demand for cauliflower (Singh et al. 2013, 144). These barriers can be overcome through
certain policy interventions. Farmers need to be trained in proper grading, cleaning, storage, and
transportation of cauliflower. Agriculture supply stores need access to reliable seed dealers and
companies must increase input quality (Singh et al. 2013, 146). While multiple barriers remain,
cauliflower farming has high potential due to low input costs and high regional demand.

Cabbage
Cabbage is a vegetable in the Brassica oleracea species, which also includes broccoli, brussels sprouts,
and cauliflower. For this reason, cabbage has very similar features to those of cauliflower. The data,

7
however, indicates some key differences. Cabbage has a slightly lower BCR with 2.564 and a
significantly higher RCA of 5.077 than cauliflower. This means that it is slightly more expensive to grow
cabbage, but there are notable opportunities for export. The average gross income of cabbage farmers in
five selected districts in 2014 was approximately 300,000 NPR/Ha (Bhandari 2014, xxxiv).

Cabbage is a highly versatile crop that can be grown in a variety of conditions, provided there is extensive
sunlight and well-drained soil. Globally, China is the world’s foremost producer of cabbage. Locally,
Dhankuta is both the most productive and efficient Nepali cabbage producer with 38234 Mt. produced
and 26.2 Mt. produced per hectare. At nearly 99% of cabbage exports, the data indicates that Nepali
cabbage exports are essentially limited to India (Comtrade).

Nepal’s vast range of climates allow certain crops like cabbage can be grown throughout the year - in the
rainy hills during the summer or in the sub-tropical valleys and Terai regions during the winter off-
season. Time from planting to harvest varies depending on the cultivar of the cabbage. Generally, green
cabbage can be harvested about 71 days after planting, while Savoy cabbage takes about 86 days to
mature, and red cabbage takes about 73 (University of Illinois Extension 2018).

The similarity of cabbage to cauliflower means that the two face similar processing requirements, supply
chains, and barriers to expansion. Policy recommendations to overcome these difficulties are also very
similar. Increased farmer training and strengthened product quality can considerably increase Nepali
cabbage production. While diseases linked to pests are still a major concern for vegetable growers, there
is some evidence that pesticide usage is too rampant in Nepal. Farmers in Bhaktapur have been shown to
use four times the recommended level of pesticides on Brassica oleracea plants such as cabbage and
cauliflower (Jha and Regmi 2009, 11).

Onion
Onion production in Nepal could profitably expand to meet growing domestic and international demand.
Currently, onion production in Nepal yields an average profit of NPR 8,450 per ropani, representing an
average cost-benefit ratio of 3.57. Its RCA is near zero, suggesting strong disadvantages in trading onions
on the world market. Nonetheless, its high domestic profitability, in part due to currently large imports,
led us to include onions in our recommendations. Onion production is most prevalent in the Terai regions,
with additional cultivation in the mid-hills.

In addition to profit motivations, there are two significant reasons why onion production can be good for
entrepreneurs and Nepal as a whole: domestic consumption smoothing and off-season international trade.

The first reason that onion production could be attractive to Nepali entrepreneurs is the opportunity to
balance the instability of onion trade between India and Nepal. India exports up to 80% of the onions
consumed in Nepal (Comtrade). Importing products for domestic consumption is not inherently
problematic, but the the uneven supply of onions directly impacts food security in Nepal and opens Nepal
to potential external price shocks. In November 2017, India announced a minimum export price of $850
per ton on all onions until 2018 (PTI 2017). This had drastic effects on prices in Nepal - a kilogram of
onions which previously cost 70NPR at the time the minimum export prices were announced quickly shot
up to 120 NPR (Dhungana 2017). Increased domestic production of onions, especially off-season
production as discussed below, is unlikely to fully shield Nepal from these types of shocks, but it can
reduce the impact of them on Nepali consumers and guarantee that Nepali farmers both offset and benefit
from price shocks in onion.

8
Off-season onion production as a way to generate additional profit for producers and smooth out prices
for domestic consumers, making it attractive to profit-seeking entrepreneurs. Off-season onion production
requires planting onions at the end of the monsoon season, digging them up once they have started to
form bulbs, hanging the bulbs in a cool dry place until September or October, and then replanting the
bulbs and harvesting them once they are ripe (Gautam et al. 2006). This allows farmers to sell their
produce in markets in a season where it will fetch a higher price due to scarcity. This benefits consumers
who will have more access to onions year-round, instead of substituting another crop in its place as prices
rise. Off-season onion production can complement other sources of farm income, and the only additional
input needed for production is a plot to grow the small bulbs in. For small-scale application, these can be
grown in a household garden plot during the end of the rainy season.

Trade pressures and the seasonality of onion markets provide the opportunity for entrepreneurship in
Nepal. Increased attention to this market could allow for expansion of domestic markets and increased
returns for both large-scale and small-scale farmers.

Jute
Strong RCAs in jute and hemp suggest Nepal has competitive edge in procesing vegetable fibers,
although data was unavailable to calculate associated BCRs. Jute has a long history in Nepal and is
primarily grown in the eastern Terai, specifically Jhapa, Morang, Sunsari, Siraha, Saptari, and Udaypur
(Ghimire and Thakur 2013). The average RCA for raw jute fibers is 43.843, and the RCA for processed
jute fabrics is a resounding 1625.730.

Jute is typically processed into fiber for packaging material in addition to textiles like sacks, ropes,
carpets, and mattresses. Known as “the golden fiber” for its color and shine, it is a versatile vegetable
fiber which can be used independently or blended with other materials (FAO 2018). Jute yields depending
primarily on monsoon rain levels (Ghimire and Thakur 2013). It is typically grown in 120 days from
April to August (FAO 2018). After it is cut, jute is retted in water so the non-fibrous materials can be
removed. This contributes significant organic material to the atmosphere and promotes soil fertility. Jute
products are recyclable, repurposable, and biodegradable (Ghimire and Thakur 2013).

India and Pakistan are by far the world’s largest consumers of jute products, collectively importing $88
million in 2015. Nepal is the third largest importer at $22 million, followed by China at $15 million.
About 95% of Nepal’s finished jute exports are sent to India, who also provide roughly 70% of jute raw
materials to Nepal. In 2017, India imposed and later scrapped a countervailing duty on jute imports from
Nepal (Post Report 2017). Globally, about 2.5 to 3.2 million tons of jute are produced every year, with
90% coming from Bangladesh and India. The market outlook for jute appears promising (FAO 2018).

A 2005 survey of farmers about constraints to jute production highlighted low availability of quality seed,
lacking irrigation facilities, wilt diseases like stem rot, and labor shortages during peak season as
significant barriers to expansion (Ghimire and Thakur 2013). A small 2009 study surveying jute mill
workers in Sunsari revealed negative effects of lung function resulting from jute dust in factories (Das and
Jha 2009).

Export Potential
Unlike the previous four crops, the products explored in this section are easily transportable and have
high demand in other countries. We suggest developing them for export.

9
Large Cardamom
Large cardamom is the clear winner in our analysis, earning the highest scores by a significant margin on
both RCA and BCR. For example, although the average crop in our sample had benefits 1.97 times
greater than the costs, the ratio was 6.8 for cardamom. Though only recently growing cardamom as a cash
crop, Nepal already has a significant comparative advantage in its production. Export data was
unavailable after 2012, but the four-year average RCA from 2009 to 2012 is 2754.228. Additionally, it is
one of the world’s most expensive spices per ounce and can be grown in only Nepal, northeast India, and
Bhutan (Singh and Pothula 2013, 453).

Nepal exports 68% of the world’s large (also known as black) cardamom, which is commonly used in
popular South Asian spice blends, curry powders, and garam masalas (Rajbanshi 2017) Export is
relatively easy because there are no tariffs or import duties on cardamom shipped to large importing
markets like the United States, European Union, Saudi Arabia, Egypt, and India. The United States
Agency for International Development (USAID) reports the 2008 financial crisis caused a dramatic drop
in demand, but demand has increased steadily since then and significant room for growth remains
(USAID 2011). However, since 2017, cheaper mixtures of Chinese, Guatemalan, or Vietnamese green
cardamom with authentic Nepali black cardamom have flooded markets, pushing down demand for the
pure product and damaging the global reputation of a superior Nepali product. The inferior green pods are
typically brought into Indian markets illegally, so stricter labeling requirements or a crackdown on
cardamom smuggling is needed (Post Report 2018).

Cardamom grows in the eastern hill and mountain districts and is farmed primarily using traditional
methods (Spices Board India 2015; Rijal 2013). Cardamom has the additional benefit of growing in areas
suitable for rice and maize, which our analysis shows are underproductive and suitable for replacement
with more lucrative cash crops (Rijal 2013, 36). Farmers who switch from traditional crops to large
cardamom can triple their household income (Rijal 2013, 37).

Farmers must harvest cardamom pods by hand and cure them over smoke, and traders complete the final
steps of manual cutting, grading, and packaging. Both phases are highly labor-intensive, and some of the
steps, including cutting, cannot be done mechanically (Singh and Pothula 2013, 454-455). Traders then
sell the processed spice to exporters in Birtamod and Biratnagar, where it is shipped abroad, mostly to
India (Singh and Pothula 2013, 459).

Disease and climate change have reduced cultivation of large cardamom in the last decade (Rijal 2013).
According to interviews with farmers in Ilam, production has declined more than 90% due to disease and
improper growing techniques (Sony et al. 2017, 7). A 2014 study revealed viral diseases, particularly
chhirke and foorkey, and fungal diseases, including clump rot and leaf spot, infected 35% of the
cardamom crop in Panchthar district (Rijal 2013, 37). The government must act immediately to combat
cardamom disease, or the entire crop risks destruction. Possible policies include subsidizing farmers’
transition to unaffected varieties and conducting information campaigns about effective disease control
measures, but first the government must build trust with farmers to ensure sufficient levels of program
uptake (Sony et al. 2017, 10). Finally, sustainable farming practices must be developed to reduce the
sensitivity of the cardamom crop to climate change (Murugan et al. 2000).

Aside from immediate problems with disease, unsustainable farming practices and technological issues in
post-harvest processing reduce farmer profit. In India, increased cardamom production over the last 30
years has caused fertilizer and pesticide usage to skyrocket, destroying 40% of forest canopy cover.
Intensive irrigation reduces the quantity and quality of the water supply through toxic runoff, and
monoculture puts entire farms at risk (Murugan et al. 2011).

10
The traditional drying structure, called a bhatti, can be used for only one season, requires significant fuel
and time investments, and often results in non-uniform or poor-quality drying. Engineers need to develop
better drying systems to maximize this crop’s potential benefits (Rao et al. 2001, 37). Manual grading of
cardamom capsules can also inhibit farmers’ ability to efficiently charge higher prices for better product
(Singh and Pothula 2013, 460). Mechanized grading, enhanced by computerized machine learning, has
the potential to streamline the process (Renu 2015).

Ultimately, large cardamom cultivation has incredible potential to increase farmer incomes. Nepal’s
proximity to the spice’s largest importer, India, maximizes efficiency, but problems with disease,
smuggling, climate change, and technology must be addressed for additional profit to materialize.

Garlic
Although relatively little research has been done on garlic cultivation in Nepal, our data suggests it is a
good investment. Its BCR is 2.198 and RCA increased significantly for years in which data is available,
going from 0.001 in 2013 to 12.285 in 2015. Nepali farmers are clearly getting better at producing
internationally competitive garlic. Farmers receive an average gross income of NPR 703,544 per hectare,
with more than half the costs attributable to seeds (Bhandari 2014, xxxix). The prevalence of no-till
cultivation methods keeps other costs low (Lamsal 2013).

Growing garlic requires a small amount of land and relatively little capital investment, making it a good
crop for diversification within existing farms. In some districts in the Philippines, for example, many
farmers add cultivation of garlic to their existing crops during the dry season; 90% realized consistent
positive returns from this supplementary project (Gonzales-Intal and Valera 1989, 198). However,
successful scale-up is difficult, because planting intensity, production effectiveness, and quality all tend to
decrease as production volume increases (Ware 2017).

Nepal faces steep competition from China, which is Southeast Asia’s largest garlic producer. While China
produced almost 20 million tons in 2014, Nepal only grew 45 thousand tons (FAO 2014). However,
demand for garlic is high, and it can be stored for 5 to 6 months after harvest (Sekhar et al. 2014). Nepali
garlic often has a bad reputation in India. In 2010, India banned Nepali garlic from its markets following
suspicion that Chinese garlic was being repackaged as Nepali. Indian officials regularly call for stricter
requirements for certificate-of-origin issuance to prevent this smuggling (Adhikari 2010).

Within Nepal, farmers in Kailali grow nearly 25% of the country’s garlic, but Kathmandu, Rupandehi,
Ilam, Dadeldhura, and Udayapur all tend to produce more garlic per hectare of planted land (Ministry of
Agricultural Development 2016). In general, the hills are more productive than the Terai (Post Report
2015).

As with cardamom, smuggling and weak labeling requirements are significant barriers that harm the
worldwide reputation of Nepal’s garlic. Once these issues are addressed, garlic could become an excellent
option for farmers to diversify their crops, since it is relatively profitable compared to the minimal capital
inputs required.

Tea
Because of Nepal’s proximity to the world’s largest tea producers by volume (China and India), it is not
initially intuitive that tea could be a productive commodity for Nepali farmers (FAO 2016). Nonetheless,
tea has the second highest RCA of all commodities analyzed, with an average of 68.729. Moreover, its
relative advantages in producing both green and black tea are significantly larger than either China or

11
India. Additionally, the benefits gained from tea production outweigh the costs by a factor of 2.9. Based
on data from the Sindhupalchok and Illam districts, tea farmers can receive Rs 462057.8 per hectare by
farmgate prices (Bhandari et al. 2016, 22).

There are two types of tea that grow in Nepal; orthodox teas which includes specialty teas like white,
green, and oolong tea, and crush-tear and curl teas which account for 95% of domestic consumption
(Mishra et al. 2014, 12). Quality tea grows best in tropical and subtropical climates with acidic soil and
elevations reaching as high as 1,500 m. Nepal is rife with these conditions, especially in the eastern plains
and hills districts of Jhapa, Ilam, Panchathar, etc. In 2016, the Jhapa district alone accounted for 77.5% of
Nepal’s total tea production with 18,462 metric tons. That indicates a massive untapped potential for tea
production in these eastern regions and geographically similar regions. “It is estimated by the Association
of Himalayan Orthodox Tea Producers that Nepal has only utilized 20% of its potential lands suitable for
tea production” (Mishra et al. 2014, 12). Even though neighboring South Asian countries like India and
Bangladesh are some of the largest tea consumers in the world, they are also some of the foremost tea
producers, meaning Nepal must look afar for its tea export markets. Because of increasing name
recognition and demand, Nepali’s major tea export markets include the United States, the United
Kingdom, Germany, and other wealthy nations willing to pay premium prices (Mishra et al. 2014, 18).
This increased recognition is thanks in large part to marketing efforts by individual growers and Nepal’s
Department of Industry (Sharma 2016).

Tea cultivation and harvesting requires a large amount of upfront time and input costs. It takes three years
of growth before a tea plant can be harvested and anywhere from four to 12 years before they begin to
bear seeds (Duke 1983). Despite the long wait between initial planting to first harvest, tea crops are very
productive upon reaching maturity. Nepali tea experiences four harvesting periods per year, called
“flushes.” Each flush has unique characteristics and tea connoisseurs often seek out a preferred flush.
Nepal’s first flush occurs from late March until late April. Subsequent flushes occur in early summer, late
summer, and a final “autumn flush” from October until the end of November (Mishra et al. 2014, 12).
These multiple flushes per year allow tea farmers to obtain a steady income and not have to plan and save
for one major harvest.

There are many actors involved in the supply chain leading to the final product found in consumers’ tea
cups. Inputs by small-scale tea farmers include purchasing seeds from government nurseries and buying
fertilizer and pesticides. When the crop matures three to five years later, laborers are hired to harvest the
tea leaves, which are then transported to processing factories. There are usually only one or two
processing factories within range of the tea plots, creating a monopolistic bottleneck between farmers and
consumers. There are only a few retailers and wholesalers as well, such as Unilever and Lipton. Together,
these factory processors and bulk buyers set the prices received by farmers (Mohan 2016, 55).

The major barriers to wider adoption and expansion of tea farming in Nepal is transportation and
technology. A lack of transportation and communication infrastructures means small-scale farmers cannot
access competitive markets and buyers. Additionally, “goods are compelled to travel through India that
unexpectedly increase the transportation costs and worsens the ease of communication” (Mishra et al.
2014, 18). Due to the recent growth in demand for organically certified teas, Nepali producers and
processors have undergone a process of supply chain upgrading. Certification is given to factories and
cooperatives by agencies that monitor the use of chemicals at any point in the supply chain. However,
costs often fall to the individual farmers who have to deal with the higher labor costs associated with
organic production (Mohan 2016, 58). These costs are multiplied by acute shortages in the labor market,
due in part to out-migration.

Despite a crowded regional market, tea farming in Nepal has high potential due to its untapped arable
land, frequent harvests, and high quality. If transportation and communication infrastructure are

12
improved, while coordinating institutions, like cooperatives, diffuse the benefits of supply chain
upgrading, the barriers to tea farming expansion can be overcome.

Kiwifruit
Kiwifruit, first cultivated in Nepal in 1989, presents opportunities for land restoration and profit (Raut,
Dahal, and Khanal 2015). The United Nation’s Comtrade data did not contain kiwi export data from 2009
to 2015 - Nepal’s kiwis all were consumed domestically - so its trade competitiveness is unclear
(Comtrade). Nonetheless, its BCR is 3.369. High prices drive these benefits; farmers can receive NPR
400-800 per kilogram. In addition, the government has shown willingness to build kiwi capacity through
subsidies and technical support (Manandhar 2015).

Kiwis thrive in the mid hills at 1,000-2,200 meters above sea level (Bhandari and Aryal 2016). Currently,
only Kabhrepalanchok, Lalitpur, Dolakha, and Ilam host kiwi farms, but cultivation is expanding rapidly
as farmers realize its commercial potential. Production is relatively capital intensive but has the added
benefit of reducing soil erosion (Sherpa 2016).

In fiscal year 2015-2016, Nepal imported 1,200 kilograms of kiwifruit from India (Department of
Customs 2016). Nepal could establish itself as an exporter if the government committed to developing
domestic production, especially given its border with China. Kiwifruit is commonly used in Chinese
medicine, and the fruit’s bioactive materials have been tested in cures for cancer (Singletary 2012;
Motahashi et al. 2002). Due in part to this medical popularity, China is the world’s largest importer of
kiwifruit, spending more than $266.7 million on imports in 2015. In general, export potential is high for
kiwi. The fruit can be stored for two to six months depending on the variety as long as temperature is kept
steady at around zero degrees Celsius (National Horticulture Board n.d.) Kiwis present an excellent
combination of exportability and nearby market demand (Strik and Cahn 2002, 20).

Several pitfalls prevent farmers from successfully growing kiwi. Its soil must be well-drained, because
more than three days of root submersion can permanently damage plants. Farmers in areas vulnerable to
climate change-induced flooding risk seeing multi-year investments wash away (Strik and Cahn 2002, 6).
The entire growth process is very delicate, so deliberate and controlled pruning, watering, and fertilization
is key to success (Strik and Cahn 2002, 15). Farmers must be willing to properly manage the crop. It also
takes several years to see a payoff; the vines begin bearing fruit only after five years and can start
producing commercially at the age of seven to eight years (National Horticulture Board n.d., 4.12).
However, cost-benefit analysis suggests that rate of return is so high in the productive years that five or
more years of development and investment are outweighed (Raut, Dahal, and Khanal 2015).

With a density of 20 vines per ropani (approximately 0.05 hectares), an average yearly production of 50
to 100 kilograms per vine, and prices of NPR 400-800 per kilogram, the typical small kiwi farmer could
earn NPR 400,000-1,600,000 per ropani per year (Bhandari and Aryal 2016; National Horticulture Board
n.d., 4.12; Manandhar 2015). Kiwifruit’s recent introduction to Nepal means exports are still limited, but
government research and support into this commercially viable plant could bring an incredible boon to
farmers in the mid-hills.

Ginger
Global demand for ginger has increased in recent years. According to the International Trade Center
(2010), from 2005 to 2009, the world ginger trade increased by 22% with an annual average growth rate
of 7%. The major importers of ginger are Japan, the United States, Pakistan, the United Kingdom,

13
Netherlands, and Saudi Arabia. Ginger is a popular spice, prized for its pungent aroma and use in various
cuisines. It is also used for medicinal purposes in certain parts of Asia.
As with tea and cauliflower, Nepal is surrounded by the two largest producers and exporters of ginger.
Nepal was the third largest producer of ginger in 2013, harvesting 235,000 metric tons and exporting 12%
of the world’s total ginger trade (Comtrade). Roughly 65% of ginger exports were sent to India. Despite
being a leading ginger exporter, Nepal only made 1% of ginger trade profit in 2016, placing it ninth in the
world (Workman 2017). The average RCA of ginger production in Nepal from 2009 to 2012, as data was
unavailable for subsequent years, is very high, at 498.44, and the returns to ginger are significantly higher
than to competing crops such as maize, rice paddy, and wheat, with a BCR of 1.71. Overall farmgate
income is listed at NPR 1,114,474.
Ginger grows best in a warm and humid climate, favoring the Terai regions in southern Nepal. Ginger
requires consistent water after its initial planting, but then must be dried for a month after harvest.
(Mercy Corps 2018). In total, it takes roughly eight months for ginger to mature.
Disease, inefficient drying techniques, and diseases like soft and rhizome rot are common and can destroy
up to 30% of the harvest. Traditional drying techniques can remove most of the essential oils, greatly
reducing taste, quality, and international market desirability. Processing and market access issues are
common as most processing of Nepali ginger is done outside the country, after roots are exported to India.
Export of the roots is bottlenecked at Naxalbari, India, due to SPS (Mercy Corps 2018).
Developing a domestic industry for modern ginger processing could expand the profitability of ginger
abroad. Properly washing and packaging ginger could greatly increase profitability for subsistence
farmers. Expanding to different markets such as Japan could bolster profit margins and global
competitiveness (Adhikari 2016). By addressing these barriers, entrepreneurs could expand the potential
of Nepali ginger in the global market and earnings potential domestically.

Coffee
Coffee represents a large potential market for both small-scale and large-scale farming in Nepal. Current
coffee farming is mostly done by small-scale farmers who co-cultivate coffee with other fruit or fodder
crops to maximize land yields and provide shade to coffee plants. Coffee in Nepal is of the Arabica
variety, often marketed globally as a specialty organic coffee, due to the absence of chemical pesticides
and fertilizers during production.

The market for Nepali coffee is likely to grow in the coming years. Prices for coffee beans have grown by
250% since 2011 for grade A cherries, and other forms of coffee products have seen significant, if less
spectacular increases. Production has generally risen since 2001, but the spread of the white stem borer, a
pest that destroys coffee plants, has led to declining yields since 2012 (National Tea and Coffee
Development Board 2014). Exports of coffee have declined in some years, even as production has risen,
due to increases in domestic consumption. Current yields of Nepali coffee farm show potential for
growth, as current yields (300 kg/Ha) is well below maximum yield (3000 kg/Ha) (Tiwari 2010). Unlike
other commodities in this analysis, the average RCA is below one, at 0.5396, and so characteristics
beyond historic trade drive its high potential.

Two potential barriers to entrepreneurial coffee production in Nepal exist: the time to profitability of
coffee, and the continued spread of the white stem borer. Coffee production requires trees that are three to
four years old and shading under which those trees can grow. This prevents farms that grow only coffee
from being profitable until they have been harvesting coffee cherries for at least one full year. This barrier
can be offset by co-cultivating coffee on the same plots as other crops. Co-cultivation allows farmers to
generate revenue while the coffee plants mature, and in some cases can provide shade for the coffee.

14
White stem borer is an insect that can infest coffee plants, destroying cherries and greatly reducing yields
(National Tea and Coffee Development Board 2014). It is prevalent in Nepal, and various management
techniques have been implemented to help combat it (Panthi 2014). Chemical pesticides have not been
particularly successful, so farmers rely on integrated management techniques (IPM) that combine bark-
stripping, pheromone traps, and the use of botanical agents to protect crops. These integrated pest
management techniques have been moderately effective in slowing the effects of the white stem borer, but
more work should be done to optimize techniques, distribute information about pest management, and
ensure that farmers have access to the resources needed to contain the insect.

Despite these barriers, Nepali coffee production continues to show promise for potential investment.
Increased research and investment will further develop technical capacity and expand possible innovation.

15
High-Level Barriers to Entrepreneurship
Trade with India
Nepal’s trade relationship with India is central to the profitability of agricultural products. India is the
largest source of imports and the primary export market for Nepal (Comtrade). Due to this reliance,
problems that impact the flow of goods between India and Nepal can devastate Nepali producers, as they
lose access to the inputs they need as well as the markets where they sell their goods. Inadequate
investment in processing and holding facilities, labeling capacity, and value addition activities exacerbate
these issues, causing losses due to SPS, increasing profit dilution from re-export of Nepali goods, and
opening the door for smugglers and counterfeiters.

Holding and processing facilities in Nepal are inadequate. Farmers often export primary crops without
undertaking significant value addition. These same farmers often lack access to the types of processing
facilities needed to meet sanitation guidelines for export to India. Indian customs officers often hold up
crops such as ginger at the border during times of abundance, because the crops have not been cleaned
properly (Khanal 2018). In times of shortage, these requirements are often waived by Indian officials to
better serve their domestic stakeholders. While this capriciousness on the part of the Indian officials is a
source of frustration for many, the issue could be resolved if farmers had access to proper processing
facilities and equipment. A lack of adequate quarantine facilities on the border often leads to food waste
while products undergo SPS testing. During this period exporters are forced to leave crops exposed to
high heat, accelerating decay. This is especially devastating for tea exporters, who measure the window of
peak freshness in hours instead of days. Increased investment in these types of facilities, from either the
public or private sector, could increase the stability and profitability of the agriculture sector as a whole.

Smuggling and counterfeiting of crops contribute significantly to issues with SPS and undermine world
confidence in Nepali goods. Both garlic and cardamom are common targets for counterfeiting. Smugglers
transport cheaper Chinese crops into Nepal, repackage them, and attempt to sell them in India as more
expensive Nepali varieties (Adhikari 2010). These activities significantly reduce the price of crops
because buyers are often unable to determine whether they are buying inferior goods. These activities also
lead to increased stoppages at the Indian border as trade officials are hesitant to allow the counterfeit
goods in but have few ways to test the veracity of exporters’ claims.

Low levels of agricultural value addition within Nepal contribute to lower profit levels directly, as
producers often earn less for primary goods, and indirectly, as Nepali primary goods are processed and re-
exported as Indian goods. The value-addition processes make potentially lucrative targets for
entrepreneurial expansion, particularly for migrants, because they are capital intensive and rely on the
utilization of modern and innovative techniques to meet shifting demand. By helping entrepreneurs move
up the value chain, Nepal can spur its overall development by promoting industry maturation and
knowledge acquisition.

Issues related to trade vulnerabilities with India can be addressed through a variety of policy responses.
Increased investment in processing and holding facilities at important border crossings would allow for
more consistent border transit and less instability in the transport process. Refrigerated storage facilities
are especially important for crops such as tea, cauliflower and cabbage, which often lose value due to
spoilage. Funding and support for entrepreneurs exploring processing and value-adding activities would
allow these activities to expand within Nepal and would provide ample opportunities for returning
migrants, both as entrepreneurs and as higher-skilled laborers. Finally, certification programs, for
important primary crops such as cardamom, would decrease the prevalence of counterfeiting and restore
confidence and high prices in world markets.

16
Inadequate Data
Comprehensive data collection o agricultural production and trade can support producers, traders, and
policymakers. Missing production data, an informal market for commodity trading, and insufficient
research into youth migration are critical areas in which data could play an informative role.

Our data (see Methodology) did not include cost of production for every crop, weakening our ability to
compare financial feasibilities. It is vital that the government collects exhaustive cost data for actors
across the supply chain to make informed decisions. Immediate access to historic commodity prices, by
season and region, allows producers and cooperatives to receive fair prices for their crops. With
consistent prices across Nepal, prices could be stabilized over time and farmers could have more reliable
expectations of their profit opportunities in various crops.

It is unclear why the U.N. Comtrade database carries Nepal’s trade data for only 2009 to 2015. Reliable
information on imports and exports may be used as tools, such as RCA, to determine trade
competitiveness and inform policy interventions. Particularly useful as a standardized method for
comparison with other countries like India and China, RCAs over time indicate where advantages are
developing. For example, despite being surrounded by two of most voluminous tea producers, an RCA
comparison reveals Nepal’s significant comparative advantage in cultivation.

Incomplete trade data is made worse by informal agricultural commodity trade, taking place largely with
India. A survey of Indian and Nepali traders revealed low risk to engaging informal channels, partially
resulting from substantially lower transaction costs in paperwork, procedural delays, and quicker payment
(Taneja and Pohit 2001). By capturing the scope of black-market trading with data, the government would
become better equipped to enforce existing laws and develop new trad policies. Further, Nepal may be
less vulnerable to consequences of poor product labeling, as is the case with commodities like ginger and
large cardamom.

. Although comprehensive statistical and demographic information is collected on migrants, additional

research could examine what motivates entrepreneurs into agriculture, how youth may be involved in
non-production components to the supply chain (e.g. processing, marketing, or land-leasing), and how the
government could incentivize youth engagement in agriculture (Poverty Reduction and Economic
Management Sector Unit, South Asia Region 2011). Many out-migrants are male landowners; is the land
cultivated by female members of a household or left unutilized? Is profit truly the primary driver of
migration? How feasible is increased trade with China? The answers to these questions can guide how the
government and Daayitwa targets their programs. Although some of this research must be done on a
larger scale, Daayitwa is well-positioned to strengthen visibility of opportunities across the supply chain.
Focus groups and surveys, even at smaller scale, can reveal exactly what might interest young Nepalis
away from migration and into innovative agribusinesses.

Market Fragmentation
Market fragmentation and incomplete commercial markets are a cause and consequence of still-prevalent
subsistence farming in Nepal. The current state of transportation infrastructure raises transaction costs of
agricultural production. Communication gaps mean farmers are unaware of current market prices and
their best agricultural opportunities for a given season and region. Another consequence of missing
coordination is monocropping, where repeated production of the same crop or crops becomes detrimental
to soil quality. Individually, producers lack bargaining power, strong market access, and volume to reach
commercial levels. Devkotaa and Upadhyay’s 2013 research recommends a two-pronged approach in
shifting from subsistence-oriented farming, namely effective training for farmers and improving

17
transportation infrastructure to move rural surpluses to urban areas (Devkotaa and Upadhyay 2013).
Improving transportation infrastructure and empowering small-holding farmer collectives are two
components to directly tackle market fragmentation in agriculture.

Cooperatives
Cooperatives and collectives are tools to empower local communities, offering individuals commercial
market access, technical assistance, post-harvest processing, and decision-making coordination.
Moreover, when collected at a community level, data on farming activity can be standardized and made
more reliable. In improving coordination and knowledge, collectives provide safeguards against risk for
farmers and traders. Lastly, collectives can guarantee quality and value-additions at earlier points in the
supply chain, capturing profits that are currently gained abroad. A 2011 article in the Himalayan Journal
of Development and Democracy highlighted that market-based multi-cropping systems with small-
holding farmers are successful, contingent on three conditions (Poudel 2011). First, fair returns must be
guaranteed for effort and risk-taking of the farmers. Second, research investment is needed in developing
new technologies to boost productivity. The final condition is promotion of local organizations to take
responsibility for marketing and input management.

The Commercial Pocket Approach, employed by the nonprofit iDE, seeks to form production groups of
small-holder farmers. Farmers coordinate in groups of 15 to 25 to meet the demand of a particular
commodity, sending produce to a collection center to reach commercial volumes, process crops, provide
storage, and eventually sell to traders. The collection centers are managed by a market planning
committee consisting of representatives of farmer groups. Since 2003, this strategy has worked with over
150,000 small-holding households, and iDE reports high returns on investment, a shift from subsistence
to commercial farming, improved market access, and a 158% increase in annual farmer income (iDE
Nepal 2015).

Daayitwa, itself or through its networks, can develop interventions that promote cooperative-style farming
with participatory governance by its members. Filling information gaps, providing technical farming
assistance, and enabling pricing coordination can help inexperienced farmers realize profits from their
hard work.

Transportation Infrastructure
Transportation infrastructure poses barriers to national and international market integration. Nepal’s
rugged terrain and heavy monsoon season, especially in the hill and mountain regions, often prevents the
establishment of all-season roads. Damage to roads and bridges from the 2015 earthquakes persists. In
fact, one-third of Nepalis who live in hill areas - and even more in the mountains - have to walk four
hours or more to access an all-season road (World Bank 2016). The implications of these infrastructure
inadequacies are three-fold. First, fresh produce must be sold close to where it was grown because long
transport times to distant markets can lead to spoilage. Second, narrow and winding roads limit the size of
transport trucks and thus the volume of crops that can be shipped. Finally, road infrastructure leading to
India is far better than road infrastructure leading to China, once again fortifying a market reliance on
India. Together, these three conditions severely limit market access for agribusinesses.

To circumvent these problems, many entrepreneurs have looked to low-volume, high-price commodities
that are exportable via air transportation. One entrepreneur in our focus group chooses to ship his product
exclusively through air transport to Western markets, allowing him to avoid bottlenecks and nontariff
barriers at the Indian border. Similar high-value commodities, like cardamom, also can be transported in
this manner. However, insufficient and substandard airport infrastructure and a litany of documentation
requirements must be addressed before large-scale air exportation can be achieved (Ministry of
Commerce and Supplies 2010, 54; Trade and Export Promotion Centre 2018).

18
Despite these challenges, transportation infrastructure in Nepal appears to have a bright future, especially
since 2013, when Chinese President Xi Jinping announced plans for the One belt, One Road Initiative that
would economically link South and Central Asian countries with China (Ministry of Foreign Affairs of
the People’s Republic of China 2013). Now called the Belt and Road Initiative, China continues to
expand this project throughout Eurasia, including Nepal. Aside from helping rebuild damaged border
crossings, China and Nepal have agreed to pursue a cross-border railway that would greatly increase
agribusiness’ access to China (Wong 2017). If Nepal also increases investments to improve domestic
transportation infrastructures, market barriers can be greatly reduced.

Individual-Level Barriers to Entrepreneurship

Risk
Both agriculture and entrepreneurism carry significant inherent risk. Crops and businesses both fail, and
these failures impact the entrepreneur, but also those who see the failure and choose to pursue another
career path. This inherent risk is increasingly salient in the case of businesses and commodities with long
time horizons such as kiwi or cardamom. Sinking five years of work into a kiwifruit orchard that could be
wiped out by a flood before ever producing a single fruit will always be a daunting commitment, but
developing policies and programs to help sustain these enterprises in the face of risk is important.

Policy responses to risk can aim to accomplish two goals: providing potential entrepreneurs with
information that helps them accurately judge the riskiness of a certain business plan or providing support
or insurance to those enterprises in the face of negative outcomes. Information activities such as
workshops and seminars for potential entrepreneurs can highlight the tradeoffs inherent in starting a
business while countering potential negative perceptions that inflate the actual risks of entrepreneurial
activity. Business supports such as insurance programs could be implemented through public funding,
private enterprise, or existing agricultural cooperatives. Public funding is likely to be the most stable of
these three but requires significant legislative action to bring about. Private funding of business insurance
could be a more efficient way to provide these services, but it is difficult to establish a market for these
policies. Insurance though existing collectives has several large benefits such as local knowledge of local
problems and increased community buy-in, but the risk of a large disaster upending the insurance of an
entire collective is high. Further research into the feasibility of these diverse types of support programs is
required to create a workable system that is sustainable while meeting the needs of its beneficiaries.

Stigma and Awareness

Another micro-level barrier to agricultural work is informational gaps and unawareness of potential
profits and employment, made worse by perceptions that farming is necessarily “dirty” blue-collar work.
The high-potential commodities identified in this paper sometimes face unskilled labor shortages, as in
the case of jute and tea. Skilled workers could insert themselves throughout the supply chain, if not as a
producer, then by taking responsibility for value-addition or fostering relationships with foreign
companies for export.

Marketing campaigns promoting agribusinesses and highlighting their profitability could reverse negative
perceptions about entering the industry. Indeed, a survey in Eastern India revealed that people entering
the agriculture sector were less likely to exit the industry than those who grew up into the profession. It
also indicated that profitability, more specifically the ability to support one’s family, was the largest
driver of entering the agricultural sector (Nag et al. 2018, 226). Promoting the use of advanced
technologies, for example in processing commodities like ginger or jute, can aid in portraying

19
agribusinesses as contemporary and modern, which could excite younger Nepalis. Daayitwa, with its
focus on youth empowerment and innovation, can disseminate knowledge and facilitate connections to
develop technologically advanced agribusinesses.

This stigma is tied closely to issues of market fragmentation. Poor internet and cell-phone service in rural
areas imposes challenges for farmers, such as difficulty to earn market prices or incomplete access to
information about pesticide uses. R&D Innovative Solution has created two tools to address these
information asymmetries: the magazine Krishak Ra Prabidhi and the AgriNepal mobile application. The
monthly magazine provides pricing information and agriculture-related advice, keeping farmers updated
on new technology and recommended techniques (R&D Innovative Solution Pvt. Ltd. 2016). The
application allows farmers to remotely track finances, monitor annual production, identify market prices,
and gain access to technical support on cropping practice by submitting problem reports to R&D’s staff
members (Luniva Tech Pvt. Ltd. 2018). Both tools are farmer-focused ways to make agriculture more
accessible and successful for small-holders and could be expanded.

Access to Inputs
Land ownership and rental
The most important and necessary input farmers and agricultural entrepreneurs need to grow their
products is access to land. Despite recent changes, a long history of tenant farming in Nepal has formed
an unequal distribution of land holdings. About one-third of Nepalis are landless and many more have
very small properties. Furthermore, only 5% of the population owns more than 37% of the land
(Chandran 2016). Legislation enshrined in the 2015 Constitution of Nepal seeks to ameliorate some of
these inequities. The Constitution strives to improve the land-owning status of both Dalits, a term for the
entirety of Nepal’s oppressed peoples, and women. This is very important because women and Dalits are
often the people who labor on the land. “The State shall, according to law, provide land to landless Dalits
for one time,” according to Article 40 (Constitution of Nepal 2015, Art. 40). The Right of Women section
of the Constitution says that wives have equal rights in property and family affairs. During a meeting with
the Ministry of Women, Children, and Social Welfare, we learned about other government programs,
such as tax exemptions for female landowners and stipends for land titles shared by both the husband and
the wife, that are designed to encourage female land ownership.

While a great deal has been done to provide more equitable land ownership, barriers still persist. The
bureaucratic hurdles that tenant farmers and potential land owners must go through to file a claim on their
land are immense. The people trying to gain land are often illiterate and cannot match the legal and
financial capital of the current landowners. This is where organizations working with people on the
ground like Daayitwa can help. By providing financial literacy training, assistance with paperwork, and
awareness campaigns on how land can be obtained, nongovernmental organizations can help resolve
issues farmers and entrepreneurs face in accessing land inputs.

Knowledge
Knowledge transfers to returning migrants about common agricultural practices and the foundations of
entrepreneurship enable these populations to better commercialize the skills and capital they developed
abroad. These transfers can take many forms, whether through short-term courses at formal universities,
mentoring programs with current businesspeople, or workshops and seminars aimed at developing
specific skills. Supporting these knowledge transfers empowers returning migrants to better reintegrate
into Nepali commerce and springboard their ideas and ambitions into the private sphere. Incorporating
mentorship into existing leadership development programs can allow returning migrants to share the skills
they’ve gained in a supportive and inclusive way.

20
Capital/Technology
Migrants returning to Nepal bring their earnings back with them. These earnings, either in the form of
personal savings or remittances, provide an important stock of capital for potential entrepreneurs. They
also bring new skills and ideas that make them more likely to invest in modern equipment. For example,
farmers with more years of education more readily adopt new technologies than farmers at lower
education levels. A study of farmers in the Kathmandu Valley revealed lower education levels among
producers in rural, subsistence farming opposed to urban, commercial farming (Bhatta and Doppler
2011). By embracing the new skills and techniques that returning migrants possess, Daayitwa can help
speed the transition from traditional to commercial agriculture. Further research provides additional
evidence that remittance payments and large plots of land are highly correlated with the adoption
of technology (Pandit et al. 2014). These factors imply that economies of scale are potentially
available to returning migrants who are able to generate a large enough stock of capital.

As with other types of inputs, it is important that entrepreneurs can access sufficient markets for
purchasing needed equipment. Equipment markets are twofold: equipment provision and
equipment repair. Equipment provision markets are relatively healthy in Nepal, aided by the
transportability and non-perishability of farm equipment. Equipment repair markets are
considerably less efficient. Without the support of these markets, entrepreneurs may be hesitant
to sink significant amounts of capital into a machine they will find difficult to repair. However,
these issues go both ways. There is little incentive for a mechanic to learn how to repair modern
equipment if no one in their region uses that equipment. Developing programs that include
training on machines as those machines are introduced have potential to be very successful.

Many programs aimed at the provision of equipment operate through interventions that increase
access to credit, as explored below. Programs aimed at informing entrepreneurs of the benefits of
capital accumulation and exploration may be effective in cases where the required levels of
credit are available, but there is considerably less research on these types of programs.

Fertilizer
Fertilizer use in Nepal creates some interesting tradeoffs for farmers in different subsectors. Farmers of
specialty goods such as coffee or tea can receive significant markups for organic and all-natural
certifications that prohibit the use of many new fertilizers but reward many extant and traditional
practices. On the other hand, producers of non-specialty goods that are unlikely to seek organic
certification would benefit greatly from increased fertilizer usage. Because the certification of organic
products is both time- and cost-intensive, farmers should plan their future planting schedules and
determine if the markups they would receive from certification outweigh the costs. This is one area where
additional research could be beneficial, as farmers are unlikely to have the resources needed to accurately
make this determination.

Sub-optimal seeds are pervasive throughout the Nepali agriculture sector. Instead of investing in pest-
resistant cultivars, Nepali farmers tend towards traditional Invasive Pest Management (IPM) techniques
that are of dubious efficacy (Paudel et al. 2016). As with fertilizers, trade-offs exist for farmers in specific
sub-sectors where potential mark-ups for organic certification exists. Within these specific markets,
optimal seeds that balance organic certification with pest resistance, while leading to productive crops
that suit specialized tastes, is of incredible importance.

Along with knowledge-based barriers to fertilizer and seed use, market-based barriers are prevalent in
rural areas. The Market Pocket approach that some organizations such as iDE use to allow farmers to sell

21
their goods can also serve as a mechanism for increasing access to agricultural inputs (iDE 2015).
Entrepreneurs must either seek out developed input markets to serve as a base of operations or expend
significant resources developing markets themselves. Programs aimed at linking emerging enterprises
with input producers could help bridge these market shortcomings.

Water
Water access in Nepal is becoming increasingly problematic for farmers in the Terai, mid-hill and
mountain regions of Nepal, and irrigation networks are currently unable to rectify this issue. While total
rainfall has remained moderately stable, the density of rainstorms has greatly increased, leading to wetter
monsoon seasons and drier dry seasons (National Weather Service 2018). Efforts to account for these
changes are inexorably tied up in issues of infrastructure and electrification, and no single policy is likely
to lead to a sustainable solution. This is not to say that no progress is being made. Several organizations
have overcome the limits of rural electrical grids by providing solar-powered water pumps (Winrock
2018). These pumps allow farmers in rural areas to benefit from consistent water access and increase
productivity of fields. Combining these pumps with low-use drip irrigation leads to stable and sustainable
usage levels that mitigate many of the effects of climate change.

Beyond irrigation, farmers have adapted to increasingly dire conditions by adopting cultivars better suited
to drier climates. Farmers across the mid-hills regions have begun to adopt crops traditionally grown in
the Terai. Farmers in the Terai have begun seeking alternatives that are better suited to both the drier
climates they face in the dry season and the more flood-prone conditions they see during the rainy season.
Daayitwa can assist farmers with climate adaptation through supply- and knowledge-based interventions.
Supplying farmers with access to better pumps or more optimal seeds empowers them to produce more
and increase their land’s profitability. These interventions could be done as stand-alone projects or as a
more Market Pocket-based approach. Knowledge transfers can help new entrants select the seeds and
other inputs best suited to the climate as it stands now and as it is likely to stand in the coming years.

Credit
Agricultural entrepreneurs often face limited access to credit, especially in rural areas where brick-and-
mortar banks are few and far between. Only about a quarter of households have bank accounts, and not
many more have informal outstanding loans (Joshi 2012). Microfinance institutions have picked up some
of the slack in this market, but they often offer loans that are too small with interest rates that are too high.
This lack of available credit is another motivator for migratory labor.

Daayitwa can help entrepreneurs overcome these credit constraints. For potential entrepreneurs who have
access to credit, financial literacy can pose a significant barrier. Financial literacy training for people
within Daayitwa’s network can help them better understand the terms of their loans and how to plan and
budget their repayments. Developing connections between microfinance institutions and/or traditional
banks with entrepreneurs is another action Daayitwa can take.

A somewhat unconventional form of credit we encountered in Nepal was being undertaken by R&D
Innovative Solutions. Instead of providing monetary loans to farmers, they provide direct input loans to
farmers such as seeds, fertilizers, and training. In return, R&D sells the crops themselves at a slightly
higher price than what they paid the farmers. This ensures that loans are used to entrepreneurial ends as
opposed to using business capital to pay for unexpected personal expenses. This can be viewed as
paternalistic, but by increasing and diversifying the investments of several stakeholders, the risk of failure
can be reduced.

Surveys show that more migrants work in agriculture and entrepreneurship after they return than before
they left, suggesting that their foreign earnings serve as investments at home (Poverty Reduction and

22
Economic Management Sector Unit, South Asia Region 2011, 62). Many returnees choose to invest in
land (Poverty Reduction and Economic Management Sector Unit, South Asia Region 2011, 14). For this
reason, capital access and management programs could be more effective if targeted at those who have
already migrated once.

23
Conclusion and Recommendations
While significant profit opportunities exist in agriculture, particularly for onion, cabbage, cauliflower,
jute, coffee, tea, cardamom, garlic, ginger, and kiwifruit, many institutional changes are required on the
national level if young entrepreneurs are to take advantage of these crops. We propose that Daayitwa look
deeper into the following strategies as potential ways to address these issues and promote agricultural
involvement.

Advocacy for High-Level Change

As explained previously, several national-level issues prevent the Nepali agricultural economy from
operating at maximum efficiency. Daayitwa can use its network of motivated young people to lobby the
government for solutions to these problems, in particular by mobilizing future researchers to work on the
issues described above. Fellow placement in MoAD, the Ministry of Physical Infrastructure and
Transport, or the Ministry of Water Resources and Energy could guide policy in a direction benefitting
young agricultural entrepreneurs and returning migrants.

Potential research opportunities in infrastructure are cold storage and export facilities on the border and
small-scale irrigation. Economic analysis also needs to be done on expanding trade relationships with
China through better border crossings and connections to the Belt and Road Initiative, since trade reliance
on India is the source of so many of Nepal’s trade concerns. A bureaucratic export process - one driver of
informal market trading - could be reformed to reduce the opportunity costs of exporting abroad. Finally,
Daayitwa should call for better data collection, especially on production cost, smuggling, and prices along
the supply chain. Without better data collection, effective program design is all but impossible.

Value Chain Development

Daayitwa can play a large role in advocating for opportunity across agricultural supply chains. One
method is supporting local collectives, which aggregate production to commercial levels, offer technical
assistance and farmer coordination, provide post-harvest services, and offer market access. Moreover,
with more informed production, both farmers and traders are less vulnerable to unfair prices previously
based upon a lack of market information. In these ways, we believe that cooperatives are an effective way
to make agriculture fairer, prosperous, and efficient. Beyond coordination and synergies produced at a
cooperative level, there are opportunities for post-harvest value-additions, as an alternative entry into
agricultural work that is less focused on production.

With partners, Daayitwa has capacity to facilitate the creation of new agricultural collectives. Its
interventions can also be more particular, encouraging supply chain development, improving
coordination, and disseminating knowledge on agriculture. The magazine and mobile application
designed by R&D Innovative Solution serve as good examples, providing farmers remote access to
technical farming assistance and information about new technologies that support production, yield, and
quality.

Daayitwa also can play a facilitating role in knowledge dissemination, introducing youth to opportunities
at various levels of the supply chain. Youth interested in farming could capitalize on global demand for
organic production of a commodity like tea. Others may be better suited to developing reliable market
access for disjointed rural farmers or cultivating relationships with foreign firms and exporting
agricultural products. There are many options beyond farming that avoid the agricultural stigma but still
provide high earning potential.

24
Knowledge Transfer
Daayitwa is ideally placed to connect people along the agricultural supply chain with technical expertise
and educational programs, helping farmers grow healthy crops and entrepreneurs successfully conduct
business. Lack of knowledge of SPS and reliance on outdated technology inhibit effective sale and export,
but awareness campaigns on best practices and networking between current and potential farmers and
entrepreneurs can ease these difficulties. Daayitwa can play a coordinating role, leveraging its wide
network of connections with successful small businesses to provide mentorship and advice to returning
migrants. Adding knowledge along the value chain will increase profit for all those involved.

Input Access
Farming and agricultural enterprises are inherently risky businesses. Forces of nature determine whether
investments are paid back in full or lost entirely. One of the best ways to ensure success, or avoid failure,
in agribusiness is to lower the costs of front-end inputs without lowering quality. While Daayitwa cannot
directly begin providing seeds, fertilizer, and equipment to their stakeholders, they can use their network
to foster connections between suppliers and buyers. Farmers must often rely on very few sources of
inputs, in some cases they rely entirely on collectors who buy their crops. By expanding their supplier
network, stakeholders can theoretically shop around for quality inputs at the best prices. Daayitwa can do
the same for credit providers and agricultural entrepreneurs.

Information Campaigns and Leadership Training

Our interviews told a consistent story of persistent stigma against agriculture preventing Nepali youth
from taking advantage of profitable opportunities; many people simply do not realize that there is money
in old-fashioned farming. Daayitwa needs to change this misconception and prove to potential
entrepreneurs that with the right idea, inputs, and support, they can build a successful business. On the
farming side, technology can make the work less menial and exhausting as in past generations. People
must also be made aware that they can start as traders, processors, or exporters, all of which allow for a
more modern lifestyle. Right now, a negative perception of agriculture prevents youth from seeking
careers in the sector and accessing the high returns on investment from certain crops and careers.

Daayitwa must also train people, particularly returning migrants, to lead in agriculture. Most knowledge-
sharing in Nepal seems to happen through word of mouth, so the more people who share their experiences
and successes, the wider interest in entrepreneurship can spread. Hosting workshops on the legal
requirements for starting businesses or on new product ideas could certainly help. Mentorship programs
that connect current and potential farmers or business owners has been particularly successful in South
Africa, and similar programs could be developed in Nepal (Femi and Van Schalkwyk 2006; Terblanché
2011).

Research
Data issues complicate the development of targeted, successful programs. Throughout the writing of this
paper, we encountered either missing or inadequate information, particularly on the motivations of
migrants, profit at each stage of the supply chain, and opportunities for expanded trade with China.
Daayitwa can either collect this information through focus groups, interviews, and fellowship projects, or
use its many connections to advocate for national collection of useful data.

25
Summary
There is no single solution that will lead to a thriving agricultural sector and no one policy or program to
address the broad challenges facing Nepal today. Meaningful migrant reintegration and empowerment is
not a process that will happen overnight. However, the concerted efforts of Daayitwa, the government,
and Nepal’s many NGOs can accelerate a successful transition from subsistence farming to commercially
profitable agriculture.

Each of the above policy options could allow Daayitwa to aid one-time migrants in their reintegration
back into Nepali society. Research and national-level advocacy will foster a better country-wide
atmosphere for entrepreneurs, and programs like mentorships, leadership training, and information
campaigns will ensure that young migrants can thrive within an environment of agricultural
entrepreneurship.

We hope that these recommendations support Daayitwa’s mission to address the leadership crisis facing
Nepal. By integrating our research on which agricultural commodities have the highest potential for
profitability with the recommended actions listed above, Daayitwa can develop successful agricultural
entrepreneurs who will be examples of what can be achieved when Nepali youth take advantage of
domestic opportunities

26
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Appendices
Appendix 1: Recommended Crops Factsheets

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Appendix 2: Revealed Comparative Advantage Graphs for India, China,
and Nepal

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