Nepal’s fruit imports have increased by seven-fold in terms of volume and 31-fold in terms of value over the past 15 years. Nepal imported fruits worth Rs 16.16 billion in fiscal year 2022/23 compared to Rs 520 million in 2008/09.
The average price of fruits increased nearly five times to Rs 61.08 per kg in 2022/23, compared to Rs 13.68 in 2008/09. This substantial increase in the average import price can be attributed to a rise in international fruit prices, the devaluation of the Nepali currency, and more effective customs administration over the period.
According to the Department of Customs, Nepal imported 43 types of fruits in FY 2022/23. Apples dominated the import market with a 43.89% share in total fruit imports. Grapes, bananas, pomegranates and oranges accounted for 14.65%, 10.07%, 5.78%, and 5.47%, respectively, of total fruit imports in the review period. Collectively, these five fruits accounted for 79.86% of Nepal's total fruit imports.
Lemon (4.69%), mango (4.33%) and watermelon (4.27%) were Nepal's other major fruit imports during the review period. Likewise, the country also imported fruits like papaya (1.91%), pineapple (0.84%), pear (0.76%), avocado (0.59%), lychee (0.47%) and kiwi (0.14%) in considerable volume. Furthermore, there has been a noticeable increase in the import of different types of cherries and berries.
The exponential rise in fruit imports means structural and policy issues in the agriculture sector still despite the government's efforts and investments for import substitution. The surge in imports also signals that vast opportunities in the market are waiting to be tapped. The substantial import volume suggests that Nepal is a lucrative market for fruits.
Based on the import figures, Nepal would need to cultivate an additional 9,763 hectares of land to meet the domestic demand for apples alone.
Nepal boasts three distinct and diverse ecological zones capable of producing a variety of fruits. Moreover, abundant land is available due to emigration and outmigration trends. Access to seasonal labour from India is readily available and this is cost-effective as well. Additionally, the majority of remote villages are now connected by road infrastructure which facilitates easy transportation to nearby markets.
Based on the import figures, Nepal would need to cultivate an additional 9,763 hectares of land to meet the domestic demand for apples alone. Similarly, to achieve self-sufficiency in grapes, bananas, pomegranates and oranges, it needs to expand cultivation areas by 1,586 hectares, 3,421 hectares, 1,298 hectares and 1,436 hectares, respectively. By increasing lemon cultivation by 1,303 hectares, Nepal can attain self-sufficiency in this citrus fruit. Furthermore, adopting a strategy to expand mango cultivation by 1,457 hectares could lead to self-sufficiency in mangoes in a relatively short time frame. These objectives are feasible given the abundance of available land in rural areas and the presence of lucrative markets.
The horticulture sector, which has been prioritised since the inception of the first five-year plan and fiscal budget, is increasingly facing dependency issues. Several factors contribute to this trend. Primarily, the commercialisation of fruit production demands huge investment. This includes challenges associated with acquiring ownership of extensive land parcels, mobilising a large workforce, investing significant capital, navigating challenging terrain and demonstrating patience for long-term returns. Investors typically seek assurances of wealth, respect and market stability. However, in the Nepali context, major agricultural investors often lack all three of these safeguards. The trend of labelling prominent farmers as exploiters and feudal lords has been deeply ingrained in both society and politics. Consequently, large-scale investors are hesitant to enter an environment marked by such uncertainty, particularly when considering investment in the agricultural sector. Moreover, major investors are reluctant to engage in Nepali agriculture which is perceived as one of the least protected sectors and must compete with highly subsidised agricultural products from around the globe.
Certain large corporations are showing interest in investing in the agricultural sector. However, their enthusiasm is restricted to aggregating products from small-scale farmers and branding them under their own labels.
It is, therefore, necessary to establish a broad political consensus on key issues such as the elimination of land delimitation, fostering political and social esteem for large-scale farmers and ensuring representation of such farmers in parliament. Additionally, Nepali agricultural products must be safeguarded against import surges through the implementation of both tariff and non-tariff measures. Tariff rates for agricultural goods should be determined based on the recommendations of farmers themselves. These measures constitute the fundamental framework for promoting commercial farming within Nepal's horticultural sector.
Similarly, a concerted effort is a must to involve key institutions such as the Department of Agriculture, the National Agricultural Research Council and agriculture-based educational institutions in commercial fruit farming endeavours.
(Bajgain is a Senior Officer with the Trade & Export Promotion Center. The views expressed here are his personal.)
