Changing Scenario of Crop Diversification in Nepal: Delineating the Role of Trade Openness, Urbanization and Rural Infrastructure

Abstract

Crop diversification in the farming sectors has been accepted to be a wise strategy for augmenting the farmers’ income level as well as for mitigating the challenges for climatic change worldwide. Considering the importance of crop diversification both from the view points of farmers and environmental aspects, this paper using the secondary data tries to find out the pattern of growth of area, production, and yield of the major crops in Nepal, and at the same time, it makes an attempt to examine the crop pattern changes in Nepal along with its determining factors including both demand and supply-side factors. The growth analysis reveals that for most of the crops the second sub-period of 1986 – 2007 was the best in terms of the growth of production as compared to the other two-subperiods (1961 – 1985 and 2008 – 2017). The crop pattern of Nepal over the years shows that though the food grain crops still dominate the crop mix of the economy, there is clear evidence of necessary intercrop substitution where the traditional food grain crops are being replaced by commercial cash crops. Tea has come up with a big way in Nepal commercial cash crop production. Also, the crop diversification indices measured by the Herfindahl index and Shannon index, show a rising trend in diversification pattern during the nineties. Urbanization, better infrastructural supports in terms of better technology, irrigation coverage has been found to provide a significant positive impact on the diversification process. However, the trade openness is not found to be beneficial for Nepal’s agricultural sector diversification process as does the policy reforms in the post-political reforms.

Keywords

• crop diversification
• trade openness
• infrastructure
• urbanization
• growth
• Beta regression

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