The role of access to finance for smallholders' seed business growth in Nepal

ABSTRACT

Finance is vital for commercialising seed businesses and the Government of Nepal has launched a priority sector-lending plan (PSLP) for financing agriculture. This article assesses the use and role of finance and the challenges in accessing PSLP loans, using interviews with 197 farmer households and stakeholders. The results show that awareness about PSLP can increase gross margins by 46%, but farmers have yet to take on PSLP loans. Bankers lack the agribusiness knowledge to support PSLP. The study recommends that policymakers and bankers harmonise policies and PSLP implementation by aligning loans with cropping cycles, farmers’ institutions, seed value chains and effective outreach.

KEYWORDS:

• Aid – Development policies
• Civil society
• Environment (built and natural) – Agriculture
• Labour and livelihoods – Microfinance
• Economics

Acknowledgements

This study was elaborated in the framework of the Nepal Seed and Fertilizer Project, funded by the United States Agency for International Development (USAID). The authors also acknowledge support from the CGIAR Research Programs on Maize Agri-food Systems (CRP MAIZE). The views expressed in this paper are those of the authors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The exchange rate used in this paper is US$1 = NPR 110.

2 Personal communication, Bidha Sharma, Laxmi Bank, 25 November 2018.

3 Personal communication, Mihilal Choudhary, Chair, Ghodtal Agriculture Cooperative Ltd, June 2018.

Additional information

Funding

This work was supported by the United States Agency for International Development under Cooperative [Grant AID-367-IO-16-000].

Notes on contributors

Dyutiman Choudhary

Dyutiman Choudhary is the project leader of the Nepal Seed and Fertilizer (NSAF) project, being implemented by the International Wheat and Maize Improvement Centre (CIMMYT), and has 20 years of regional and international experience in market and agri-business development. He has extensive management and field experience in agribusiness value chains and enterprise development in South Asia, China and Africa, and has published extensively on smallholder-focused market development, innovations in market access and value chain upgrading, and governance.

Kamal Banskota

Kamal Banskota is an Agricultural Eonomist and has over 45 years of experience in research and project management in Nepal, South Asia and the USA. His professional contributions is spread over diverse fields such as drafting the management plan of Makalu-Barun National Park and Conservation Area in Nepal; benefit–cost analysis of rural roads in Nepal, and impact evaluation of the Arun 3 Access Road and Hydro Power Project. He was also conducted policy analysis on renewable energy and low carbon economic development.

Narayan Khanal

Narayan Prasad Khanal is an Agriculture Economist with 15 years of experience in seed sector development, agriculture financing, strategic planning, institutional and policy innovations, and value chain framework. He currently works at CIMMYT International based in Kathmandu.

Prithvi Gyawali

Prithvi Gyawali is a management and agribusiness expert. His professional experiences are in agriculture and agribusiness, project management, renewable energy, finance, business development, operations, and monitoring and evaluation. He is the owner and board member of Nepal Seed Company Private Limited and Agri Solutions Private Limited; both organisations have deep roots in agriculture and agribusinesses, endeavouring to commercialise agriculture in Nepal.