Abstract
Agricultural transformation refers to the process of changing old-fashioned agricultural practices to modern types of practices using technological tools, knowledge, and finance, etc., for high productivity. T.W. Schultz recommends the adoption of agricultural technologies, agricultural financing, and farmers’ knowledge and skills upgrading for high agricultural productivity. This research was conducted to assess the use of technological adoption in agriculture and government investment in agriculture for high productivity, and to evaluate livestock production over the last 3 decades in Nepal. It collected quantitative and qualitative data from different secondary documents sourced from Nepal government agencies and journal articles. The study assessed that the use of technologies in the agricultural sector over the last 30 years in Nepal has increased that the majority of farmers use technologies in agricultural activities, which have given them high productivity. Agricultural financing from the government side has increased over the last 30 years. The capacity of farmers has increased; however, the attraction of youths towards the agricultural sector has decreased. Livestock farming has increased satisfactorily. In conclusion, the agricultural transformation process is not complete in Nepal; it has been partially achieved.
Keywords: agricultural transformation, agricultural technologies, agricultural financing
Background of the Study
Agricultural transformation is the process of agricultural development. It refers to the development of agriculture from low productivity to higher productivity, from a subsistence-oriented scope to a modernized scope.
The agriculture sector is important for the Nepalese economy. A significant portion of the population is involved in agriculture. According to the National Agricultural Census 2068 and 2078, a total of 81% of males and 19% of females, and a total of 67.6% of males and 32.4 of females were involved in agricultural activities respectively. But what kind of agriculture is this? Is this subsistence or commercial agriculture? Is this traditional patterned agriculture or modernized pattern agriculture? The answers to these questions are the main concerns in the context of Nepal. It is necessary to change farmers’ behaviors over time for high agricultural productivity.
To analyze these factors, this study adopted the Transformation Theory by Theodore W. Schultz. The theory suggests that a significant financial investment is to be made to transform the agricultural sector from traditional-type agriculture to modern-type agriculture for high productivity. The investment in human capital, technological advancement, and institutional changes is the most important aspect for high productivity. Schultz further emphasizes that the agriculture sectors give high productivity if the respective entity provides effective tools, techniques, education, and other necessary things (W. Schultz, 1964).
This study aims to examine the agricultural transformation over the last 30 years in Nepal in terms of agricultural technologies, government investments, farmers’ capacity, and to evaluate the productivity of livestock farming. By doing so, this study assessed the degree to which Schultz’s theoretical expressions are reflected in Nepal’s agricultural sector and explored the implications for future development planning.
Even if agriculture is the backbone of the Nepalese economy, it has been plagued by various problems and challenges. Various factors create problems that hinder the pace of agricultural development in Nepal, causing low productivity. Lack of agricultural technologies, migration of farmers, and youths’ attraction towards remittances have caused agricultural stagnation in Nepal (Khatri & Timsina, 2023). Agriculture contributes to the Gross Domestic Product (GDP) of a country; however, in the case of Nepal, it is not satisfactory. This sector is not able to attract young people, because of which the agriculture sector is not as productive as expected, causing more than half of the population to face food insufficiency in Nepal (Chaudhary, 2018). The investment in agriculture is insufficient, resulting in low productivity, food insecurity, and an agricultural trade deficit, which is not good for the overall development of agriculture in Nepal (Bhandari, 2024).
The production of major food crops is decreasing compared to South Asian Countries, and cereal crop production in the hilly regions of Nepal has stagnated over the last 30 years (Deshar, 2013). The spatial performance of agriculture in Nepal’s geographical location also influences agricultural productivity, as nearly 75% of the districts of Nepal have been found to have moderate productivity in 2024 (Dhakal, 2024).
The agricultural pattern in Nepal is still traditional or subsistence-patterned due to several factors that cause low productivity, and the root causes are policy gaps by the government, a high unemployment rate, etc. (Shahi, 2022). Traditional agricultural practices are less productive. It takes time to yield. It may cause environmental degradation, economic loss, and land loss as well, due to the old-fashioned style of agriculture. Agricultural activity becomes more productive through the proper use of technologies and other available modern resources (Khadka, 2023).
Nepal has been investing in the agricultural sector for two decades, but it is insufficient, which causes productivity gaps, food insecurity, and trade deficits related to agricultural products (Bhandari, 2024). Nepal has been investing in agricultural development through the Agriculture Cooperative for more than two decades to increase the commercialization of agricultural products, which enhances the income of farmers; however, this effort is not effective, as farmers are still disconnected from the market (Dhakal & Mueser, 2023).
Theodore W. Schultz suggests investing in nontraditional inputs or human capital, like knowledge and education of farmers, to increase agricultural productivity. The adoption of technologies, investment not only in material inputs but also in people, and incentives are the keys to higher agrarian production (W. Schultz, 1964).
The National Agriculture Policy (2004) has the goal of transforming subsistence-oriented agriculture into commercialized agriculture to improve living standards through sustainable agricultural practices and enhanced agricultural productivity. Nepal has formulated and implemented a set of policies for overall agricultural development. These policies aim to transform agriculture from subsistence to modern, sustainable, and climate change-resilient. Agriculture Development Strategy (ADS) (2015-2035) is the latest 20-year-long policy-level intervention of the Nepal government. This focuses on enhancing agricultural productivity, profitable commercialization, educating farmers with new agricultural ideas, etc. The Agricultural Mechanization Policy (2014) prioritized the use of agricultural tools and equipment to increase productivity.
Holmelin (2021) concluded that the peasants prioritize diversified subsistence agricultural production, but they do not fully depend on commercialized farm production as it would jeopardize their food security at the household and community level. Farmers are discouraged from being involved in fully commercialized production due to economic reasons related to value. It is necessary to provide technical support for adopting technologies and related education to farmers that help them engage in full production of high-value crops and their commercialization in agriculture (GC & Hull, 2020).
This research employs a descriptive research design to analyze the pattern of agriculture from traditional to modern and to evaluate the agricultural productivity of livestock farming over the last 30 years in Nepal. It adopted quantitative analysis and qualitative contextualization.
This study employed mixed-methods research. Qualitative and quantitative data on agriculture were collected and analyzed, sourced from different secondary documents.
This study employed a quantitative methodology, collecting secondary datasets sourced from Nepal governmental agencies and international development organizations, such as the Nepal government, the Ministry of Agriculture and Livestock, and the Nepal Government’s National Statistics Office.
This chapter presents the results and discussion based on the sourced data from the research reports, thesis reports, governmental documents, etc.
Technological adoption in the agricultural sector in Nepal
Nepal adopted the first machine in 1960 in agriculture, along with the establishment of the Agricultural Implementation Research Unit at Birgunj. The unit imported four-wheeler tractors for agricultural work, particularly in the Terai regions (Pudasaini, 1976).
Table 1: Number of households adopting machines in the agricultural sector
| Agricultural Machines/Tools | 1991/92 (2048/49) Households | 2011/12 (2068/69) Households | 2021/22 (2078/79) Households |
| Tractor | 35200 | 845000 (22%) | 1639000 (40%) |
| Threshers | 85600 | 803000 | 1175000 |
| Power tiller | 0 | 75671 | 471000 (11%) |
| Water pump | 81300 | 548000 | 691000 |
| Water sprayer use | 0 | 574000 | 1151000 |
| Milking machine | 0 | 0 | 30000 |
| Iron ploughs | 315100 | 1073441 (29%) | 703000 (17%) |
| Animal-drawn cart | 204600 | 0 | 0 |
Source: (National Statistics Office, 2025)
The table presents the number of households using agricultural machines over the last 30 years. A total of 35200 households used tractors in agriculture in 1991, 845000 in 2011, and 1639000 in 2021, respectively. It seems that the use of tractors in agricultural work has increased. Threshers were not used in 1991, whereas it has been used since 2011. A total of 803000 households used threshers in 2011, and 1175000 households used threshers in 2021. The number of households using threshers increased within 10 years, with more than 372000 more households in 2021. The power tiller was not used in 1991; it just started to be used in 2011, with a total of 75671 and 471000 households using it in 2011 and 2021, respectively. Here also, the maximum increment in the number of households using the power tiller is found, with almost 400000 more households using it in 2021. The water pump was not used in 1991; however, it was used after 2011. A total of 548000 households used it in 2011, and 691000 households used it in 2021. The water sprayer was not used in 1991, whereas it was used in 2011, with a total of 574000 households using it in 2011 and 1151000 households using it in 2021. A big increment was found in use after 10 years, with almost 600000 households using it in 2021. A total of 30000 households were found using a milking machine in 2021, whereas data on this was not found for the past. Most famously, iron ploughs were used from the beginning, with a total of 315100 households using iron ploughs in 1991, 1073441 households using it in 2011, and 703000 households using it in 2021. The number of households using it decreased after 2011. A total of 204600 households used animal carts in 1991, particularly in the Terai region, then after it was not widely used.
Table 2: Number of agricultural machines/tools in agriculture over the last 30 years
| Agricultural machine/Tools | 1991/92 (2048/49) Quantity | 2011/12 (2068/69) Quantity | 2021/22 (2078/79) Quantity |
| Iron ploughs Tractors | 354500 5500 | 856000 37000 | 509800 58500 |
| Threshers | 19932 | 52000 | 114900 |
| Power tiller | 0 | 10000 | 118000 |
| Water pump | 41300 | 150000 | 399800 |
| Water sprayer | 0 | 282000 | 770200 |
| Milking machine | 0 | n.d. | 3400 |
Source: (National sample census of agriculture, 1991/92, 2011/12, 2021/22)
The table presents the quantity of agricultural machines used in Nepal over the last 30 years, from 1992 to 2022. A total of 354500 iron ploughs were in use in 1992. It was 856000 in use after 10 years in 2012, and 509800 was in use again in 2022 after 10 years. Its use of it increased from 1992 to 2012, whereas its use of it decreased from 2012 to 2022. A total of 5500, 37000, and 58500 tractors were in use in 1992, 2012, and 2022, respectively. Likewise, A total of 19932, 52000, and 114900 threshers were in use in 1992, 2012, and 2022, respectively. The use of threshers increased by almost 63000 between 2012 and 2022. Â The power tiller was not in use in 1992. A total of 10000 and 118000 power tillers were in use in 2012 and 2022, respectively, with an increasing trend. A total of 150000 and 399800 water pumps were in use in 2012 and 2022; however, it was not in use in 1992. The use of water pumps increased by 37% from 2012 to 2022. The next machine is a water sprayer, which was not in use in 1992, but a total of 282000 and 770200 were in use in 2012 and 2022, respectively. The use of this increased heavily by almost 500000 from 2012 to 2022. The milking machine was not in use before 2012. A total of 3400 were in use in 2022.
Figure 1: Spread of agricultural mechanisation/technologies/tools over the last 60 years
Source: (Shrestha, 2022)
The figure highlights the use of agricultural technologies in Nepal. The metal plough was widely used in Nepal and is still in use in rural areas. It was in use before 1960, also, and was in regular use in 1980, 2000, and from 2020 onwards as well; however, its use is declining. The farmers introduced the four-wheel tractor by 1965, which was widely used until 2005, and the rotovator was also used from the middle of 2000. Two-wheel tractors or power tillers came into use by 1970. This is still being used in Nepal. More advanced tools like the maize, potato, sugarcane planter machine, and rice transplanter came into use by 2010. The Indian irrigation water pumping machine started in 1970. It was widely used until 1989. Chinese pumping machine is widely used nowadays. Sprinkler and drip irrigation machines have also been in use since 1985. It has been widely used to date. The sprayer has been used since 1965 for plant protection. It is being used to date. The use of the thresher started by 1970 and was used widely till 1999; now the harvester machine is in use.
Table 3: Number of households with agricultural loans, insurance, and Government subsidies over the last 30 years
| Households | 1991/92 (2048/49) | 2011/12 (2068/69) | 2021/22 (2078/79) |
| Households with agricultural loans | 622000 | 836000 (22%) | 483000 (12%) |
| Households with agricultural insurance | 0 | 0 | 182000 (4%) |
| Households with government subsidies | 0 | 0 | 308000 (7%) |
Source: (National Statistics Office, 2025)
The table presents the number of households with agricultural loans, insurance, and governmental subsidies for agricultural production. A total of 622000 households had taken institutional loans in 1992 for their agriculture, but no households had taken insurance or subsidies in 1992. Likewise, a total of 836000, which is 22% of all farmers, had taken institutional loans in 2012, except for insurance and subsidies. The trends of taking agricultural insurance and subsidies increased in 2022, with a total of 182000 (4% of all farmers) and 308000 (7% of all farmers) households. However, the households taking loans decreased in 2022, with just a total of 483000 (12%) taking agricultural loans.
The Nepal government implemented an agricultural insurance program from 2069 BS to increase the attraction towards agriculture and to secure agricultural investment from natural and other hazards. The government has implemented livestock insurance from 2071/72 BS, in which 70% is discounted by the government (Nepal government Ministry of Agriculture and Livestock Development, 2023)
Table 4: Government budget allocation for agriculture development over the last 20 years
| Sn | English fiscal year | Nepali fiscal year | Allocated budget |
| 1 | 2005/2006 | 2062/63 | 3,810,000,000.00 |
| 2 | 2006/2007 | 2063/64 | 3,960,000,000.00 |
| 3 | 2007/2008 | 2064/65 | 5,820,000,000.00 |
| 4 | 2008/2009 | 2065/66 | 5,910,000,000.00 |
| 5 | 2009/2010 | 2066/67 | 8,060,000,000.00 |
| 6 | 2010/2011 | 2067/68 | 4,730,000,000.00 |
| 7 | 2011/2012 | 2068/69 | 3,000,000,000.00 |
| 8 | 2012/2013 | 2069/70 | 19,015,740.00 |
| 9 | 2013/2014 | 2070/71 | 9,320,000,000.00 |
| 10 | 2014/2015 | 2071/72 | 23,280,000,000.00 |
| 11 | 2015/2016 | 2072/73 | 26,680,000,000.00 |
| 12 | 2016/2017 | 2073/74 | 27,360,000,000.00 |
| 13 | 2017/2018 | 2074/75 | 30,400,000,000.00 |
| 14 | 2018/2019 | 2075/76 | 14,297,500,000.00 |
| 15 | 2019/2020 | 2076/77 | 34,800,000,000.00 |
| 16 | 2020/2021 | 2077/78 | 41,400,000,000.00 |
| 17 | 2021/2022 | 2078/79 | 45,090,000,000.00 |
| 18 19 20 | 2022/2023 2023/2024 2024/2025 | 2079/80 2080/81 2081/82 | 55,970,000,000.00 58,980,000,000.00 57,290,000,000.00 |
Source: (Budget speeches, 2005/6-2024/2025)
The table presents the data on how much the agricultural budget was allocated by the Nepal government from 2005/2006 to 2024/2025. The government had allocated NPR 3,810,000,000.00 in 2005/2006 for the development of the agricultural sector in Nepal. Just after 10 years, in 2014/2015, the government allocated NPR 23,280,000,000.00. Similarly, the government had allocated NPR 57,290,000,000.00 for overall agricultural development in 2024/2025 (2081/82) in the country. The trend of budget allocation for agricultural development in Nepal has increased over the last 20 years since 2005/2006.
| Fiscal year | Male | Female | Total |
| 1991/92 (2048/49) | n.d | n.d | n.d |
| 2011/12 (2068/69) | n.d | n.d | n.d |
| 2021/22 (2078/79) | 532200 | 452400 | 84600 |
Table 5: Number of farmers with formal agricultural training over the last 30 years
Note: n.d.: No data                                                 Source: (National Statistics Office, 2025)
The table presents the data about the knowledge or training received by farmers from the Nepal government agency over the last 30 years. A total of 84600 farmers had received agricultural training, but no data was found about the training of farmers before 2022.
Agricultural productivity, particularly of livestock, over the last 30 years
Table 6: The production of livestock according to holdings and heads
| Livestock | No. of holdings | No. of heads | ||||
| 1991/92 (2048/49) | 2011/12 (2068/69) | 2021/22 (2078/79) | 1991/92 (2048/49) | 2011/12 (2068/69) | 2021/22 (2078/79) | |
| Cattle | 2297100 | 2280500 | 1708400 | 7215200 | 6430400 | 4559300 |
| Buffalo | 1586800 | 1668820 | 141700 | 3477700 | 3174389 | 2923100 |
| Goat | 1686400 | 2305900 | 2451600 | 6932900 | 10990100 | 14242200 |
| Sheep | 67700 | 85500 | 72700 | 471200 | 608100 | 478200 |
| Pigs | 227800 | 381800 | 422500 | 632600 | 818500 | 1357500 |
| Chicken | 1594400 | 1808600 | 1799100 | 17631300 | 26267800 | 45118200 |
| Duck | 110100 | 108900 | 190600 | 393100 | 429900 | 1326000 |
| Pigeon | 202100 | 171800 | 113200 | 1845200 | 1498900 | 1097400 |
| Total | 7772400 | 8811820 | 6899800 | 38599200 | 50218089 | 71101900 |
Source:(National Statistics Office, 2025)
The table presents data about how livestock production increased or decreased in Nepal over the last 30 years. A total of 7772400 farmers raised 38599200 livestock in 1992, whereas 8811820 farmers raised 50218089 livestock in 2012, which is 11618889 (77%) more livestock raised in 2012 than in the last 10 years. Similarly, a total of 6899800 farmers raised around 71101900 livestock in 2022, which is 20883811 (71%) more livestock raised in 2022 than in the last 10 years. In this way, the rate of livestock farming has comparatively increased over the last 3 decades (since 1992-2022).
This study found a significant increase in the use of agricultural technologies in agricultural activities over the last 2 decades in Nepal, as compared to 30 years before 1991. It is a strength of the Nepalese agriculture sector, and it aligns with the idea of T.W. Schultz. Schultz emphasizes the technological adoption for the high production of agriculture. The findings of the study conducted in Nepal by the National Agricultural Engineering Research Centre (NAERC), Nepal Agricultural Research Council (NARC), Khumaltar, Nepal, support agricultural mechanization for sustainable agricultural development. This type of agricultural financing has helped increase agricultural productivity. The study conducted by A.K. Mishra found an increase in agricultural productivity in Nepal as the outputs of agricultural policies implemented (Mishra, 2024).
The agricultural skills of farmers were found to have been addressed in 2022, which was not found before. This is a strong aspect. Livestock farming in Nepal has increased. An increase in livestock farming is an indicator of agricultural productivity in Nepal, and it can be assured that agricultural productivity has increased in Nepal. This can be taken as the impact of government investment and technological adoption in the agricultural sector.
The use of agricultural technology in Nepal has increased, with the majority of farmers extensively using different types of agricultural machines since 2011/2012. Agricultural financing from the side of the Nepal government is commendable over the last 2 decades. The government has invested a larger amount of money in agricultural development over the last 20 years. The investment is in agricultural technology, capacity development in agriculture, agricultural loans, subsidies, and insurance that have increased the productivity of agriculture. Livestock farming has increased over the years, which is the impact of technological adoption and government financing in the agricultural sector.
The use of agricultural technologies should be continued on a larger scale for high agricultural productivity. Agricultural financing from the government of Nepal helps attract people to be attracted to agricultural practices and their productivity.
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