Improving Smallholder Coffee Farmer's Production and Export Potential in Nepal

Nepal's agro-ecological diversity, spanning mountain, hill, and Terai regions, presents varying climates and agricultural systems. Agriculture, which employs 66% of the population, faces challenges like low productivity due to land fragmentation and traditional farming methods. This thesis explores Nepal's coffee industry, focusing on smallholder farmers and their challenges and opportunities. The study identifies key factors affecting coffee cultivation, pricing dynamics, and export potential using methods like the Cobb-Douglas production function and regression models. Positive national trends are contrasted with challenges in specific districts, necessitating targeted interventions.
Recommendations include expanding cultivation, providing training, and aligning strategies for sustainable growth. The assessment of the National Tea and Coffee Development Board's (NTCDB) coffee price floor implementation and factors determining the export value of coffee highlights the dynamic relationships of Nepalese coffee with international markets. Policy recommendations emphasise incentivising farmers, supporting increased production, and aligning strategies with the unique identity of Nepalese coffee in the global market. The thesis offers comprehensive insights while acknowledging the need for further research, as discussed in the limitations.
The thesis reveals that while national coffee trends are positive, Lalitpur and Sindhupalchok face declines in cultivation and productivity; significant constraints such as labour, irrigation, and disease affect production; the coffee price floor is increasingly aligned with international prices, necessitating ongoing adjustments; export value is influenced by quantity and exchange rates; and Nepalese coffee’s global competitiveness can be enhanced by improving quality, expanding production, and enhancing market access.
This study also acknowledges the limitations of the thesis, including the reliance on limited data about global coffee production, shortcomings in the production analysis at the farm level due to constraints in available information, and the need for more time-series data in the national-level studies. The thesis highlights potential areas for further research, such as a detailed analysis of the factors determining the export value of Nepalese smallholder coffee and strategies to enhance export competitiveness. It also suggests exploring the trajectory of export competitiveness over time and investigating other aspects beyond the Revealed Comparative Advantage (RCA), Comparative Export Performance (CEP), and Trade Competitiveness Index (TC). Despite these limitations, the study concludes by emphasising the need for ongoing research to refine strategies and ensure the sustainable growth and global recognition of Nepal's unique coffee industry.