ADB’s $70 Million Support to Improve Horticulture in Nepal’s Hilly Areas

KATHMANDU: The Asian Development Bank (ADB) has approved $70 million of financing to improve the livelihood and climate resilience of horticulture farmers in the hilly areas of five provinces in Nepal.

As a part of ADB’s overall efforts to address potential risks on food insecurity, the project will boost the productivity of 30,000 farmer households in Bagmati, Gandaki, Karnali, Province 1, and Sudurpaschchim, mainly through the development of around 10,000 hectares of climate-resilient fruit and nut orchard. Partial grants will be provided to farmer groups and cooperatives to shoulder investment costs, while a credit guarantee fund will be established for farmers who lack collateral to access formal rural finance. The beneficiaries, represented by at least 30% women and 20% from disadvantaged groups, will be trained in climate change adaptation practices, including soil management, crop husbandry, and drip irrigation, among others.

Fruit and nut demand in Nepal is increasing due to urbanization, rising national wealth, improved knowledge of nutrition, and tourism, but horticulture productivity has been declining. A growing portion of cultivated land in hilly areas has been abandoned from farming as people are shifting to other employment and relying on remittances from abroad. The high climate vulnerability in lower hills and mid mountains also reduces farmers’ livelihood options.

“ADB’s loan will support the government’s push to revive horticulture farming in hilly areas of Nepal, highlighted in its declaration of 2016–2026 as the ‘Fruit Decade’,” said ADB Senior Natural Resources and Agriculture Specialist for South Asia Sunae Kim. “Aside from filling the gap between domestic supply and demand, higher profits expected from commercial fruit and nut farming could also help retain the younger population in the agriculture sector and offer income opportunities for women who are heading households after male outmigration.”

The project will also enable farmers to market their produce by preparing a business plan collectively, and promoting cooperatives and marketing associations to aggregate horticulture products and manage their quality. Other interventions include training cooperatives and associations in food safety control systems, financial management, marketing, entrepreneurship and female leadership; supporting the preparation of contracts between cooperatives and buyers; and upgrading value chain infrastructure, such as traceability systems, commodity storage and collection centers, and orchard predator fencing.

To ensure quality planting materials, the project will improve the institutional capacity for nursery and horticulture sector management. At the national level, the project will develop nursery standards, certification scheme, and an inspection system; upgrade private nurseries and horticulture facilities for testing, cleaning, and maintenance of planting materials; train staff of horticulture facilities to meet global sanitary standards; and commission research on climate-resilient varieties of fruits and nuts.

ADB’s financing comprises a $60 million concessional loan from ordinary capital resources and a $10 million grant from the Asian Development Fund. The Government of Nepal will contribute about $14.5 million for the project.

The bank will also administer a $9 million grant from the Global Agriculture and Food Security Program. The grant will support another 10,000 smallholder farmers, with less than 0.2 hectares and unable to invest in commercial orchard development, in producing irrigated vegetable during the dry season and nutritious food crops during the wet season.