Associated with low level of economic growth, Nepal is characterized as a country with a large portion of rural population, high poverty rate and subsistence agriculture. On various levels, all of these factors are interconnected. About eighty percent of the country’s population lives in rural areas and agriculture is their primary livelihood where the rural poverty rate is over three times that of urban areas, 35 percent compared to 10 percent (NARC, 2010). This poverty rate can be associated with the subsistence nature of the major means of livelihood in these areas, agriculture. Hence, the involvement of the majority of the population in agriculture is very important to analyze in context of social and economic development of Nepal. Agriculture, which employs two third of the country’s labor force and contributes to more than one third of Gross Domestic Product (GDP), is the main source of food, income and employment for the majority, especially for the rural population. Hence, agricultural sector is key in issues of economic growth, poverty alleviation, better living standard of the Nepalese people and overall Human Development.
In this context, Commercialization of agriculture has been proposed as a feasible option for economic growth and poverty alleviation. Since the formulation of the Fifth Five-Year Plan (1975–80), agriculture has been the highest priority because economic growth was dependent on both increasing the productivity of existing crops and diversifying the agricultural base for use as industrial inputs (Savada , M. A. , 1991). The adoption of the 20- year Agriculture Perspective Plan (APP) in 1997 reflects the emphasis the government has given on the agricultural sector and its commercialization.
However, despite all efforts to bring about revolutionary changes and growth in the agriculture sector of Nepal, the attempt has not fully translated into reality. Hence, from policy issues to institutional challenges to practical bottlenecks, this paper attempts to analyze various aspects of commercialization of Agriculture in Nepal.