Impact of Crop Diversification on Rural Poverty in Nepal

Abstract

Crop diversification into high‐value crops (HVCs) can be an important strategy to augment income, generate employment, and reduce poverty in developing countries. We study the impact of crop diversification (share of production value obtained from the HVCs) on household (HH) welfare measures in Nepal. We use three rounds of the nationally representative Nepal Living Standard Surveys: NLSS I (1994/95), NLSS II (2004/05), and NLSS III (2010/11). The dose–response function, propensity score matching, and instrumental variable techniques are used to estimate the impact of crop diversification. Results show the positive impact of HVCs on the monthly per capita consumption expenditure and poverty outcomes. Among HVCs growers, HHs growing vegetables have the better welfare outcomes. While establishing the relationship between degree of agricultural diversity and poverty measures, we find that the marginal farmers need to at least derive 35% of the share of revenue from HVCs to escape from poverty.

A review on the contribution of crop diversification to Sustainable Development Goal 1 “No poverty” in different world regions

“…Von Braun et al () analysed the diversification into vegetable production (snow peas, broccoli, cauliflower, parsley) for the export market by traditional small‐scale farmers in the Western Highlands of Guatemala and discovered that household expenditure, a proxy for income, increased by 33%, moving the poorest upward on the income scale. Thapa, Kumar, Roy, and Josh () estimated that in Nepal, households growing high‐value crops such as vegetables, fruits, and spices or condiments had a mean monthly per capita expenditure 28% higher, on average, than non‐growing farming households, and that high‐value crop growers had a headcount ratio 9% lower than nongrowers. Mukherjee (), however, found that the aggregate per capita net earnings from cultivation of high‐value crops in West Bengal in India was lower in the more diversified villages and that farmers in these villages ended up with considerably less income compared with farmers in the less diversified villages.…”

“…This author also observed that in areas with difficult conditions to build irrigation infrastructure, small farmers (<0.5 ha and 0.5–1 ha) were more likely to produce fruits, oilseeds, jute, and fibres, compared with those from districts endowed with irrigation facilities, in order to meet their cash needs. Thapa et al () estimated a positive correlation between household access to irrigation and the adoption of high‐value crops in Nepal.…”

“…For example, Birthal et al () found that, in India, incentives to support the price of cereals indirectly contributed to the implementation of taxes on high‐value crops, and consequently, to the establishment of an anti‐high‐value crop bias. In Nepal, Thapa et al () mentions that although the government promotes diversification into high‐value crops, the primal policy focus on cereals continues. These authors urge the Nepalese government to embed the provision of inputs such as irrigation, fertilisers, and improved seeds in the current projects supporting the production and commercialisation of high‐value crops, especially in the remote parts of the country where poorer farmers are located.…”

Impact of contract farming of paddy seed on smallholder farm profits: evidence from Nepal

“…Paddy is the most important crop in Nepal, accounting for 35% of gross cropped area (GCA) and 42% of the value of output of the crop sector (Thapa et al 2017). Yet only about 15% of farmers use improved seed (CBS 2011).…”

Crops pattern change and agricultural diversification: A case study of Domar Upazila, Nilphamari

“…Thapa et al, [13], indicated the impact of crop diversifi cation on the measurement of household welfare regarding highvalue crops (HVCs) based on the production assessment. In addition HVCs has better impact on the reduction of poverty and signifi cant increase of per capita income.…”