The UN’s International Fund for Agricultural Development (IFAD) and the Government of Nepal signed a US$120 million eight-year agreement that became effective last month to help over a quarter million people living on small-scale farms transition towards commercial and agroecological farming. The Resilient High-Value Agricultural Programme (R-HVAP) will introduce new methods to increase food production for 60,000 small-scale farming families in 80 palikas (municipalities) across Lumbini, Karnali, and Sudurpashchim provinces.
“R-HVAP is a critical investment in Nepal’s future,” said Roshan Cooke, IFAD Country Director, Nepal. “By supporting the transition to sustainable and profitable agroecological agriculture, R-HVAP will not only improve food security and nutrition for vulnerable populations, but also strengthen the resilience of Nepal’s food systems and generate foreign exchange,” he added.
Agriculture remains critical to Nepal’s economy, with a large rural population dependent on it for income and food. Two-thirds of Nepal’s population are engaged in agriculture, contributing approximately a quarter of the national GDP. Nepal achieved lower-middle-income country status in 2020, and now faces potential food security and sovereignty challenges due to its increasing reliance on food imports. The food import bill is 78 times higher than 20 years ago, according to some estimates. The government’s Agriculture Development Strategy (2015–2035) recognizes this challenge and aims to create “a self-reliant, sustainable, competitive, and inclusive agricultural sector that drives economic growth, and contributes to improved livelihoods and food and nutrition security leading to food sovereignty.”
Recent shocks like COVID-19 and increasing climate change have further exposed the vulnerabilities of Nepal’s food systems. R-HVAP will help farmers to adopt market-oriented agroecological practices through five-year, locally developed plans; training in financial management and business skills (including special agroecology apprenticeships for young agricultural trainees); supporting producer organisations to graduate to professional operations; and developing an ecosystem of micro, small, and medium-sized enterprises (MSMEs).
A significant component is the construction of the estimated US$40 million state-of-the-art Semlar Agricultural Regional Wholesale Market in the city of Butwal for fruit, vegetables, cereals, and other commodities. It is strategically located within a 20-minute drive to the Gautam Buddha International Airport and about 40 km from the Indian border. The market will improve the ability of smallholders to reach both domestic and export markets efficiently and at competitive prices.
R-HVAP will also support the development of small-scale irrigation systems, water storage facilities, post-harvest processing facilities, and renewable energy technologies.
Of the total programme cost of US$120.9 million, IFAD is contributing US$70.93 million, while the Government of Nepal is contributing US$24.6 million. Provincial and local governments will contribute US$2.02 million and producer organizations and project participants will add US$20.87 million of their own funds. MSMEs will also contribute US$2.56 million.
Nepal was one of the first countries to benefit from IFAD’s financial support, beginning in 1978. IFAD’s strategy in Nepal supports the development policies and programmes of the government and as such, invests in smallholder agriculture, poverty alleviation, and redressing inequality and social marginalization. IFAD has focused its work particularly in the hill and mountain areas, where poverty levels are high and access to infrastructure, services and markets is extremely limited.
To date, IFAD has supported 22 rural development projects in Nepal worth US$854 million, of which it has contributed US$409 million, reaching nearly 1.1 million families, thus significantly reducing rural poverty.
Read more about IFAD’s work in Nepal
