ADB to Help Nepal's Poorest Farmers Diversify Crops, Boost Incomes

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will help some of Nepal's poorest farmers shift production from traditional low-earning crops into high-value commodities, resulting in improved quality of life and incomes for nearly 19,000 households.

ADB's Board of Directors approved a grant of $20.1 million for the Raising Incomes of Small and Medium Farmers Project, which will support nearly 900 farmer groups in 10 districts in underdeveloped western Nepal.

"This initiative will sharply increase the production of high-value commodities in target areas, resulting in greater profitability for farmers, including many women," said Ahsan Tayyab, Head, Project Administration Unit in ADB's South Asia Department.

Agriculture's contribution to Nepal's economy has dropped in recent years but nearly three-quarters of the rural population are still reliant on the sector for a living. Small farmers struggle to make ends meet with incomes limited by low returns from traditional crops such as rice and wheat, small land plots, low levels of technology, a lack of access to credit, and weak supply chains. Men often migrate from the countryside in search of better paid work, leaving women to run farms, and surveys of small farmers show that more than 65% of such households are living below the poverty line.

"There is rising demand for higher value commodities such as fruits, vegetables and spices as urban incomes increase, the tourism sector grows, and as export opportunities open up to India and regional markets," said Mr. Tayyab.

The project will help farmers move into higher income earning crops and build up supply chain links to buyers and markets. It will include a grant facility so farmers can invest in new postharvest facilities such as processing, storage and packaging. It will also provide farmers with agribusiness training and assistance for business plans to allow them to produce and add-value to new commodities. Support for new farm technologies, including climate change adaptation measures, will be of key benefit to disadvantaged groups, including indigenous peoples and households headed by women.

"The project design will help catalyze private sector investment and establish strategic market linkages, and by 2017 the 7,500 hectares of land contracted to produce high value commodities will have estimated annual output of 64,500 tons with a projected retail value of $31 million," said Mr. Tayyab.

The grant from ADB's concessional Asian Development Fund will cover 60% of the total investment cost of almost $34 million. Beneficiary groups will extend $7.6 million equivalent, with the Government of Nepal providing $5.3 million and the Netherlands Development Organisation, SNV, supplying $490,000 to cover the project's agribusiness and value-chain backstopping package.

The Ministry of Agriculture and Cooperatives will be the executing agency for the project, which is due for completion in June 2018.