A study has showed that production cost for food grains, livestock, vegetables and fruits all is higher in Nepal than that in neighboring India. Merchants are also selling imported goods due to high production cost in Nepal. This has been affecting the country’s trade balance for a long time, and the study concludes that this is the main reason for import of food grains worth over Rs 100 billion in the last fiscal year.
Production cost of paddy, maize, wheat, lentils, cow/buffalo milk, broiler chicken, banana, mango, watermelon, cauliflower, tomato, onion and potato is lower in India than that in Nepal, according to the research by the Central Department of Economics at the Tribhuvan University (TU) with financial assistance from the Nepal Rastra Bank (NRB). The study titled Difference in Agricultural Production Cost between Nepal and India was conducted in Biratnagar, Bhairahawa and Dhangadi cluster in Nepal and the adjoining Araria, Maharajgunj and Khiri areas across the border.
Chief of the Economics Department Dr Ram Prasad Gyawali says production cost of banana, milk, cauliflower and masuro (red lentil) is comparatively low in Nepal. “We can reduce cost of those products further by producing in large farms by providing subsidized loans, and also increase production,” he states. He attributes lower cost in India to agricultural subsidy by the government there. Almost all the items produced in Nepal are expensive due to high wages, and high cost of agricultural equipment, feeds, fertilizers, and minimum availability of social infrastructure. The study compared production cost of 14 products including four each from serial crops and vegetables, and three each from livestock and fruits.
Wages for labors used in animal husbandry, and cost of feeds, husk, molasses, calcium, liver tonic, salt, paddy, wheat and others is higher in Nepal. Wage for taking care of animals is Rs 192 (IRs 120) in India and Rs 300 in Nepal. Grazing wage is Rs 160 (IRs 100) in India and Rs 250 in Nepal. Only price of oil-cake and metabolite used in feeds is equal in Nepal and India. Cost of tractors, power tillers, zinc, DAP fertilizer, urea, potash and fluoride used in farming is also cheaper in India. One has to pay Rs 800 per hour to use a tractor in India while that costs Rs 1,200 in Nepal.
The study included capacity of different strains of cows and buffaloes, vegetables and food grains, and cost/wages of raw materials used in their production. Researcher Gyawali says cost has been found to be higher in smaller farms than larger farms. He states that milk production is more beneficial for Nepal than broiler chicken. Banana is most beneficial among fruits. “Producing banana is beneficial for farmers on both sides of the border as one can earn over Rs 200,000 per bigha,” he says. But production cost of banana is also higher in Nepal. Banana is 28 percent expensive and mango 49 percent in Nepal. He advises production of banana in Nepal from the comparative benefit point of view. He also suggests production of cauliflower and onion in Nepal, and to import potato and tomato from India. “We must open factories to manufacture urea, DAP, potash and zinc to reduce cost, and there must be complete tax waiver on import of tractors, power tillers and other equipment used in farming,” he opines.
The study also stresses on establishing feed industry, and training for farmers on using fertilizers and seeds, and opening big agricultural farms. It has also recommended to take help from regional and district level research centers of India to produce items of comparative benefits.
Comparative cost of items
|Items||Cost in Nepal (in Rs)||Cost in India (in Rs)||Difference in percent|
– LOK BAHADUR CHAPAGAI