Nepalese Commodity Market potential enough for Agricultural Products

Nepal is one of the largest producers of Ginger in the world itself, but one may be surprised to know that the farmers yet are not motivated to cultivate Ginger. The farmers are compelled to sell their produces in cheaper rate because India decreases its import of the product. The farmers thus do not even be able to meet their cost of production. The biggest hurdle for the country is that more than 90% of the ginger produced in the country is exported to India; this lack of trade diversification has doomed Nepal into further trouble. According to both bilateral and regional trade agreements, India cannot levy taxes on products here being a Free Trade Area but still that happens. One can get surprised how that happens, the reason being the Non-Tariff Barriers (NTB). NTBs are such mechanism which deals with the quality standards and not the quantitative standards. Because the quality standards are usually different at different places, one cannot meet the quality standards and the export problem arises.

Ginger is one of those 19 beneficiary elements that have been identified for Nepal to trade in the international market. Nepal is said to be the third largest producer of Ginger in the world but look at the contradiction, Nepal has to import more than 15% from China to fulfill its local demand. The reason behind this might sound strange- the bulk purchase of ginger from the farm itself compels farmers to sell their products in the price they get and their livelihood status forbids them to wait further for the good price for their product, which is unsure. The businessmen take advantage of the situation and make healthy money out of it but the poor farmer who produces it has to sell it in price lower than even the production cost. More than 20 districts in the country are blessed with the ginger farming practice whereas there is more than scope to widen the farming further. Dhading, Tanahu, Kailali, Syangja. Palpa, Doti, Morang, Bhojpur, Ilam are few of the places which produce most of the Ginger in the country. The geo-physical and climatic condition in Nepal is sufficiently favorable for the Ginger production, one might have a question whether we can upgrade ourselves to second largest producer. Ginger can be sold in various forms: fresh, dry and power forms. Ginger is also an ingredient to cooking and also gets used for medicinal purposes. Nepalese ginger receive lots of interest from Denmark and other European nations but we have been disappointing them since long.

Coming to the question of whether we can be second, we have been facing lots of challenges and once the challenges can be worked out, the target might get achievable. We have very weak implementation and execution of policies at the very first. Insufficient information about the quality seed suppliers, inadequate technical knowledge on plant protection measures, low productivity due to unbalanced farming, outmoded cultivation practices, etc. are some of the challenges the ginger market is facing. We even lack sufficient information on the different varieties of the same product than can be cultivated in various parts of the country. The concept of Agricultural Information System (AIS) can be a pioneer step at commercializing agriculture which can be accessed at the major collection centers of the farm produces.

Lentil is another viable agricultural product that can be traded in the Nepalese commodity market. Almost all the districts in the country are capable enough to produce Lentils except Manang and Mustang. Those two districts are trans-Himalayan districts with the most tedious topography in the country. Though most parts of Nepal can produce lentils, Terai region is dominant with the production and more than 90 % of the lentil is grown from this region because of the most favorable climatic and soil conditions. Dang, Rautahat, Bara, Sarlahi, Bardia and Kailali are the major districts producing lentil. The largest exporter of the lentil in the world is Canada; meanwhile one of the major producers of the commodity is India. United States of America (USA) and Turkey are few other nations producing lentils significantly.

Naturally also, Lentil is very tolerant and adaptive plant. Only if it can be provided with good internal drainage, it can adapt in all types of soil- may it be sandy, clayey, loamy, etc. The major obstacle with lentil production can be- the flooded or water-logged soils, lentil cannot absolutely tolerate high amount of water for itself. The best soil, however can be the sandy loam soils which is rich with phosphorous and potassium. Good drainage system is mandatory because even a short span of exposure to high amount of water can kill it. For lentil production, the best soil could be considered as the one with pH close to 7.0. Talking about the usage of lentil in the day-to-day lives of the people, they are very good for our heart and function as the major neutralizer to the muscle acids in our body. They are high in proteins enough to help rebuild our destroyed tissues in glands and blood and their mixed items with fruits and vegetables add up ingredient value of the food.

Nepal Agricultural Research Center (NARC) has been providing the improved variety of seed to the locals at different places with an objective to enhance the lentil production in the country. But the country is lacking in that place where the country, as an entity, cannot do anything, a market place. The country’s role always is to facilitate the market and then enhance the requirements for the effective and efficient market but the country or the government itself cannot work to start a market place. Rather, the government has to take steps to introduce a trade facilitation policy which can assist to seize at least some part of the international market. In the last 10 years, the lentil production has increased by 6.8 % in terms of value and 6.2 % in terms of volume. The percentage increment could be escalated by catalyzing it through the favorable policies.

There are few more products viable but here we discussed only two of them. In short, what we need to understand is that the production is good, the prices are high but farmers do not earn, who earns? The middlemen, there are various levels of middlemen in the market who share the part of farmer’s earning. Commodity exchanges can definitely replace them, but for that Nepali policy should intervene the Agro-insurance sector first. Once the produces in the field are insured, the confidence of farmers increases. Both public and private entities should be encouraged to establish standardized warehouses and the government should be keen enough to promote recognized accreditation agencies. And all of these should be addressed by the full-fledged lawful measures. Once, these pre-requisites are specified, the net public welfare would definitely increase and we could reach close to efficient market- both with pricing and trade.

Note: This article was published in the newsletter of South Asian Federation of Exchange (SAFE)