Despite the government’s policy to discourage non-utilisation of arable land, lands used for plantation for major crops have been shrinking across the country. According to Economic Survey 2019/20, agricultural land has shrunken by 0.9 percent in the current fiscal year compared to the last fiscal year. “Fragmentation of land and flight of young workforce from to work abroad have been the major reasons for shrinkage of arable land,” reads the report. According to the survey, land used for paddy plantation has decreased by 2.2 percent in FY2019/20 compared to last fiscal year. Similarly, the government has estimated decline in production of paddy by 1.1 percent which was 8.1 percent in FY2018/19. The survey has cited inadequate rainfall this year for the decline of paddy production. Nevertheless, the area of maize and wheat plantation has increased by 0.2 percent and 0.3 percent, respectively.
Meanwhile, share of agriculture sector in the country’s GDP has also decreased. The contribution of the sector to GDP, which was 37.1 percent in FY2010/11, is expected to decline to 27.7 percent in the current fiscal year. The agriculture sector productivity, which grew by 5.1 percent in FY2018/19 is estimated to shrink to 2.6 percent in the current fiscal year. According to Economic Survey, the decrease in paddy production and the lockdown imposed by the government to stop the spread of coronavirus have affected production of vegetables, meat and dairy items. The government has estimated that production of vegetables, which had increased by 4 percent in FY2018/19, will dip by 4.3 percent to 40,089 metric tonnes in the current fiscal year.
Despite decreasing contribution to the country’s GDP, agriculture sector’s contribution to the economic growth has been seen fluctuating. According to Economic Survey, the contribution of agriculture sector to Nepal’s overall economic growth is estimated to be 32.7 percent in the current fiscal year which was 21.2 percent in FY2018/19.