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4.1 The Agriculture Development Strategy (ADS) will guide the agricultural sector of Nepal over the next 20 years. The structure of the agricultural sector is expected to change considerably with agribusiness to grow faster. Strong linkages between agriculture and other sectors in the economy will be critical to the reduction of poverty particularly in rural areas where the development of non-farm activities based on agriculture will be fundamental for the growth of an overall robust economy, a more balanced rural economy, and employment generation. 4.4.1 Food and Nutrition Security: All outcomes and activities of the ADS will contribute to improve food and nutrition security directly or indirectly. The ADS will address the food and nutrition security needs of the most disadvantaged rural population including lactating and pregnant women. One output under the Governance Component is entirely dedicated to the improved food and nutrition security of disadvantaged groups. Section 8 deals with Food and Nutrition Security: One of impacts of the ADS is to ensure food and nutrition security (FNS). The FNS dimension is underlying the overall strategy and is present in all components and many of the activities of the ADS. The ADS is also aligned with the Multi-Sectoral Nutritional Plan (prepared with support of UNICEF and already approved by GON) and the Food and Nutrition Plan of Action (prepared with support of FAO).4.3 In order to achieve the vision the ADS will accelerate agricultural growth through 4 strategic components including: governance, productivity, profitable commercialization, and competitiveness while promoting inclusiveness (both social and geographic), sustainability (both natural resources and economic), development of private and cooperative sector, and connectivity to market and information infrastructure and ICT, etc. The acceleration of inclusive, sustainable, multi-sector growth is expected to result in increased food and nutrition security, poverty reduction, agricultural trade competitiveness, higher and more equitable income of rural households, and strengthened farmers’ rights. 4.5.2 Higher Productivity: Improved productivity of land and labor is at the cornerstone of the ADS. Agricultural productivity requires the adoption of appropriate technologies and know-how to increase efficiency and sustainability of agricultural production consistently with market demand. The measures to raise agricultural productivity include those related to (i) effective agricultural research and extension; (ii) efficient use of agricultural inputs; (iii) efficient and sustainable practices and use of natural resources (land, water, soils, and forests); and (iv) increased resilience to climate change and disasters.The strategy is formulated taking into account the conceptual framework of agricultural transformation of Nepal from a society based on agriculture to one on services and industry. This process will have profound implications for food production and distribution systems, the development of rural areas including the rural non-farm sector, labor and land productivity, trade balance, employment and outmigration of the youth, the role of women in agriculture, and management of natural resources. The ADS will ensure that the process of agricultural transformation is accelerated according to the aspirations of Nepali society. The ADS aims at increasing prosperity of farmers and agro-entrepreneurs through higher incomes, improved livelihoods, and food and nutrition security. The relation between poverty and growth (section 4.2) highlighted the importance of a more equal income distribution which will impact on poverty reduction. The ADS promotes inclusion of disadvantaged groups and regions and an approach to value chain development based on Markets for the Poor that emphasizes the need of more equal benefits distribution along the value chain. Similarly, the ADS promotes the growth of agroenteprises led by traditionally excluded groups such as women, youth, and other disadvantated groups.33. The ADS activities will have impact on three groups of farmers (commercial, subsistence and landless). Commercial farmers are directly affected by most of the ADS measures and in some cases, the impact is direct and very strong, for example in the case of irrigation, mechanization, value chain development, and exports. Subsistence farmers are also directly affected by most ADS measures. The direct effect is very strong in the case of the ADS measures related to gender, social, and geographical inclusion; land (eg addressing the issues of tenancy, land leasing, cooperative farming, reversing the trend towards degraded land); access to quality and timely inputs (eg vouchers targeted to subsistence farmers, improved resilience); and access to microfinance and agricultural insurance. Landless or near landless will benefit from the ADS measures related to targeted food and nutrition programs; gender and social/geographic inclusion; access to forestry products; and growth of small and medium enterprises.3.2 Agricultural Transformation: a) Total Factor Productivity (TFP) growth is the main source of future agricultural growth. TFP requires not only land, labor and capital, but also such things as technology, innovation, efficiency, human resource capacity, and governance. TFP growth contributed between 40% and 70% of agricultural output growth in Asia over the last 50 years. b) At early stage of development, agricultural growth is the main engine of poverty reduction because most of the poor are in rural areas. Lower inequality enhances the impact of growth on poverty reduction. c) Increasing urbanization presents challenges that traditional food systems are not well prepared for. Integration of smallholder farmers with modern value chains is a feasible response to these urbanization challenges. d) As the economy moves closer to middle income status, the development of the rural non-farm sector (including agri-food manufacturing, services, marketing and logistics), becomes increasingly important in closing the gap between rural and urban areas.
