Despite ongoing economic challenges, there is good news from the country’s agriculture sector. The Ministry of Agriculture and Livestock Development has announced that the country is on track for a record paddy harvest this fiscal year.

The ministry stated on January 3 that paddy production is expected to grow by 4.04% compared to the past year, reaching an all-time high of 5.95 million tons. This growth comes even as the total cultivation area for paddy, the nation’s staple crop, slightly decreased from 1.44 hectares to 1.42 million hectares in the current fiscal year.

Mahanand Joshi, Senior Agricultural Economist and Information Officer at the ministry, has confirmed record-breaking projections for both production and productivity.

While farmers harvested 5.72 million tons of paddy with an average yield of 3.98 tons per hectare in the last fiscal year, productivity is expected to rise to an all-time high of 4.19 tons per hectare this year.

According to the ministry, multiple factors have contributed to this anticipated surge in production. These include favorable weather conditions, including an early and strong monsoon that arrived three days earlier than usual with above-average rainfall, improved access to chemical fertilizers, and wider adoption of high-yield seed varieties.

Madhesh Leads the Way

A provincial analysis of paddy production estimates reveal that national paddy production is primarily driven by Madhesh, Lumbini and Koshi provinces.

Madhesh Province recorded the strongest growth with production rising by 10.7% to 1,480,830 tons. In Koshi, production increased by 2.16% to 1,466,518 tons, compared to 1,435,578 tons last year. Similarly, Lumbini and Sudurpaschim provinces saw production growth of 4.06% and 6.11%, respectively.

However, other provinces experienced declines due to reduced transplantation areas and inadequate irrigation infrastructure. Karnali reported the steepest decline, with production falling by 10.25%, while Gandaki and Bagmati saw decreases of 3.22% and 1.13%, respectively. Bagmati’s paddy production was particularly affected by floods in late September, causing production to drop to 498,662 tons from 544,344 tons last year.

This record harvest marks a significant recovery from recent years. The country had achieved a record paddy harvest of 5.62 million tons in 2020/21, driven by returning migrant workers during COVID-19 lockdowns, adequate fertilizer supplies and favorable weather. However, production dropped by 8.74% in 2021/22 due to unexpected October rains, before rebounding by 7% to 5.48 million tons in 2022/23.

Decline in Cultivation Area

While paddy production has increased, the area under rice cultivation continues to shrink. Although higher productivity has boosted yields, the cultivated area has been steadily decreasing. Factors such as rapid urbanization, increased river erosion and the lack of integrated farming systems are contributing to the reduction in cultivated land. The total paddy cultivation area decreased from 1.438 million hectares in the last fiscal year to 1.420 million hectares this year—a 1.28% decline. The data also shows that the cultivation area decreased across all provinces except Koshi Province.

Crucial to Country's Economy

Paddy production plays a vital role in Nepal's economy, serving as both a source of livelihood for farmers and a backbone to the nation’s economic and food security.

An increase in paddy production has a direct impact on economic indicators. When paddy production rises, the gross domestic product (GDP) also increase, while a decline in production causes economy to fall. A 10% increase in production leads to a one percent rise in GDP. Currently, paddy contributes about 5% to the national GDP and around 15% to the agricultural gross domestic product (AGDP).

However, in recent years, the number of people engaged in agriculture has been steadily declining due to the sector's inability to attract new labor. According to the 2008 Labor Force Survey, 73.9% of the population was employed in agriculture. By 2018, this figure had dropped to 60.4%, as per the latest Labor Force Survey.

Nepal's annual demand for paddy is 6.7 million tons, including 4 million tons of milled rice. However, based on current production data, there is still a shortfall of 744,524 tons to provide two daily meals a day across the country.

With a milling ratio of 62% (every 100 kg of paddy produces 62 kg of milled rice), the current paddy production of 5.955 million tons yields approximately 3.692 million tons of milled rice. This creates a deficit of 377,65 tons of milled rice required to meet the nutritional standard of 138 kg rice per person annually set by the government.

(This report was originally published in  February 2025  issue of New Business Age Magazine.)