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Rural Market, Labour Supply and Agricultural Diversification in Nepal
Sridhar Thapa
Motivation
Increasing in the
productivity of agriculture through agricultural diversification and increased
market access is growing concern in Nepal to raise the living standard of rural
people. There has been strong tendency to view rural market imperfections that
lead to ration out farmers from credit and labour markets as one of the major
causes of reducing farm productivity. Then the question arises: is reduction in
rural market imperfections through increased market access as one of the
solutions to increase farm productivity? The impact of increased market access
and agricultural diversification may be positive. These may lead to reduce
rural market imperfections by softening the credit and labour constraints and
thereby enhancing the commercialisation and modernization of agriculture
sector. The impact of rural market imperfections may have taken into
consideration to increase productivity of agriculture sector when analysing the
impact of agricultural diversification and increased market access.
Objectives
- To examine labour supply decisions under agricultural diversification and increased market access in rural Nepal
- To analyse the factors determining in labour force participation in different rural settings and agricultural diversification
- To access the impact of market integration and agricultural diversification on farm productivity
- To find out the impact of market access and agricultural diversification on wage rate.
Justification
Labour supply
decision under agricultural diversification and increased market access is
growing concern for the reduction of sever poverty through increasing
agricultural productivity, which is single most objective of the current Tenth five-year
plan. The decision of farm household labour supply depends not only on wage
rate but also on productivity when rural market is partially or totally absent,
and large portion of labour force is self-employed.
The use of
econometric models such as farm households and binary choice variables has its
own significance. In Nepal, few studies are done using such models especially
at micro level. So this study will fill up such gap and will help to formulate
effective policies at micro and macro levels to reduce poverty by increasing
farm productivity through agricultural diversification
Methods
The study will
mainly depend on primary data collected from the intensive field survey in
three different agro climatic zones like mountain, hill and Terai (low
land i.e. southern part of Nepal). Household data will be obtained from those
zones through stratified random sample. Data from secondary sources will also
be collected from various publications.
Econometric
estimation methods will be used to analyse the data collected from household
survey. Two-stage and binary choice variable models will be used for
econometric analysis. Models will analyse the labour supply decision under
agricultural diversification and increased market access, factors determining
labour force participation, impact of market access and agricultural
diversification on productivity and wage rate.
