Econ-ity » September 24, 2013

Daily Archives: September 24, 2013

‘Liberalization’ and yet ‘no materialization’

agriculture in Nepal

any other day in the field (photo by Govinda Siwakoti)

The whole deal of liberalization in Nepal came with its own set of signing these and those multilateral, bilateral and regional trade agreements and the same applies in the case of agriculture. Like many countries around the world, it was quite some decades ago that Nepal realized that there existed this global village where the best way to go about was to ensure better facilitation of the exchanges between the countries across the globe. While the world was (and has been, needless to say) benefiting from the facilitation of international trade, Nepal despite having been the signatory to quite a few of these arrangements has not been able to reap the expected benefits.

Liberalization of agriculture market would ideally mean that the tariff walls would come down; the unproductive subsidies would be done away with and the government alone would not hold the food stocks. It would also mean that the ineffective farmers would not be able to compete with the rest and would eventually be torn apart from others; and those able to compete would thrive. A market based model would run as per the demands—if a particular market in one corner of the globe (let us use Europe as an example) needs seasonal fruits a competitive market in Africa, for instance, would grow the fruits and then benefit from the trade. If the African government cared enough it would deregulate its markets accordingly and the farmers would reap benefits and so would the consumers on the other side of the world who would get quality products for much cheaper prices as a result of the competition in the market. And same would be the case with other countries if the demand in one country were to be paired with the ability to supply in another.

What then, you ask, has made Nepal lag behind in this regard? While concerns over geographical limitations, technological backwardness and the inability to compete with the international prices and mechanisms plague our system, what dominantly remains true is that though the country has signed the international trade agreement, let us say, World Trade Organization (WTO) trade agreement, it has not been able to tailor the national policies accordingly—if nothing else, it has failed largely in terms of being able to implement the same as a large divide still exists in regard to policy intentions and the subsequent outputs.

Agreement on Agriculture (AOA) in the WTO deals with all the matters of tariff, domestic support and export subsidies. It identifies massive domestic subsidies as being a major problem to international trade—as it is, Nepal government’s decision to subsidize fertilizers and be a monopolistic power in this regard has been a problem much talked on. We want trade and yet we lack export friendly policies. We want to sell our products in the international market and yet we cannot keep up with meeting the demands for competitive prices that other countries are capable of providing. We say we work in a market based economy and yet our government has been known for being centralized and monopolistic in terms of its approaches—hence, no level playing field for any potential private players who would not only have incentives to innovate but also to bring in competitive edge.

Amidst all this, the gist remains that Nepal needs not only to be a signatory to international agreements but it needs to bring alongside the needed reforms in the national policies and also ensure the implementation of the same. And despite the fact that Nepal’s major source of income is agriculture as it contributes to 35% of the GDP and a lot has been said about putting the sector as a priority, it is high time that we let the ever-so-talked-about ‘liberalization’ materialize.

Anita Krishnan

About Anita Krishnan

Krishnan holds dual degrees--in law and sociology. Currently, she works as a Research Associate at Samriddhi, The Prosperity Foundation.

Published by: