The impact of COVID-19 on agricultural markets in Nepal

In late April 2020, CASA worked with key market actors to assess the impact of the COVID-19 pandemic on the functioning of agricultural markets in the vegetable and dairy sectors of Nepal. Partners engaged for the rapid market assessments (RMAs) included the Federation of Fruits and Vegetable Entrepreneurs Nepal (FEFVEN) for vegetables, and the Central Dairy Cooperative Association Nepal (CDCAN) and the Dairy Industry Association (DIA) for dairy. These actors have extensive networks in their respective industries and they also play an important role in both delivering and coordinating efforts for early recovery.  The CASA programme works with CDCAN and DIA and it was envisaged that this exercise would further contribute to relationship building and overall understanding of the sector’s transformation.

The RMA covered all provinces of Nepal with the partners using random sampling to interview a diverse range of milk and vegetable aggregators. The study therefore provides a general picture of the economic hardships experienced by small businesses involved in both sectors in the country.

The RMAs findings reveal that both the dairy and vegetable sectors have been hit hard by the COVID-19 pandemic. This is the case with both sectors facing an imminent crisis due to significant decreases in demand for milk and vegetable products. Major losses in sale and revenue have been reported by different actors across the value chain including farmers, aggregators and processors.

Overall demand for dairy products has decreased by 70–80% and the demand for processed milk has decreased by almost 50%, leading to huge losses in sales and revenue among dairy processors. At the aggregation level, almost one third of the sampled milk cooperatives reported decline in revenue of over 50%. Moreover, almost 90% of sampled cooperatives reported that they could only sustain operations for another three months if the current situation persisted. Similarly, almost 70% of the vegetable markets/cooperatives that were surveyed reported sales decreases of over 50%. Vegetable farmers have been hit the hardest with more than two thirds of the collection centres reporting a decrease in collection volumes of over 50%.

The closure of local markets and institutional buyers such as those in the food and beverage industry due to the pandemic is cited as the primary factor that has negatively impacted both sectors.  Other secondary factors include reduced mobility among farmers and traders, and low supply of inputs which is further hampering local trade and production, respectively. 

For more information about the findings of the survey, read the full rapid market assessment report

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