Agribusiness in Nepal survey: Survivors and victims of COVID-19 pandemic
A survey by the Southasian Institute of Advanced Studies revealed the personality traits, managerial skills, and business attributes of entrepreneurs who survived or fell victim to the Covid-19 pandemic. The survey, carried out among farmers in Arghakhanchi and Ramechhap districts, suggests larger farms with higher start-up capital are more likely to survive longer.
This article first appeared in The Farsight and is reproduced with permission.
In June 2022, a survey of 422 micro, small and medium enterprises (MSMEs) in Arghakhanchi and Ramechhap districts revealed that 34 % of respondents (hereinafter called victims) were affected by the Covid-19 pandemic. Subsequently, some reduced agribusiness activities while others halted them altogether and opted for alternative sources of income. The remaining 66 % (hereinafter called survivors) carried on with their agribusiness despite the pandemic (see Figure 1).
The impact of the pandemic was particularly evident among vegetable farmers in Arghakhanchi as they had to sell vegetables at reduced prices owing to the short shelf life span of their produce. In contrast, the pandemic had less of an impact on the legume farmers of Ramechhap due to the longer shelf life of legume grains.
Success attributes of agribusinesses
According to theoretical and empirical literature(s), a number of factors at the farm level contribute to agribusiness success. Most research focuses on the characteristics of entrepreneurs (such as age, gender, education, prior work, and managerial experience) as well as business attributes (such as start-up capital, market structure, and access to extension services and financial capital). The intention of the farmers to embrace agribusiness will also affect their survival in risky environments, such as the COVID pandemic. For instance, farming as a career option in peri-urban areas may be more resilient than farming as a default choice or escape route from less convenient work in rural areas.
In our survey, 44 % of farmers — out of which the majority were survivors — found agribusiness appealing because of the successful farming experiences of their neighbours and other success stories. Furthermore, while agriculture and associated activities are a default subsistence option for rural households, about 37 % of the respondents revealed that they chose agriculture as their field of employment (see Figure 2). Many farmers in Ramechhap continue the family tradition of growing legumes because it was their default choice.
The operational timeline, education level, and household income were also paramount in determining the survival of agribusinesses amidst the pandemic. In our study, a small percentage of respondents, i.e. 13 %, were new to agribusiness, while the remaining participants acquired their businesses from their families. Most young and educated farmers new to growing vegetables were still able to run their farms during the pandemic. About 40 % of farmers in Arghakhanchi who were able to stay in agribusiness by growing vegetables had less than five years of experience. Only about 20 % of farmers whose agribusinesses made it through the pandemic had been growing vegetables for more than 15 years.
In Arghakhanchi, the study found that lower pressure of family responsibilities among young and educated entrepreneurs provided them leeway to transition toward other career options (see Figure 3). Also, small farmers had relatively more space to opt for other income-generating activities due to their modest start-up capital. However, it was revealed through the survey sample that larger farms with higher start-up capital are more likely to survive longer. This can be attributed to the diversity in agricultural products produced by large farms such as fruits, vegetables, cereals, and livestock.
Finally, the study also revealed the dependence on household income sources and survival rate. About 40 % of survivors rely on multiple sources of income, in particular vegetables, livestock, and non-farm activities. Such varying income sources led to longer survival of MSMEs (see Figure 4). In the survey samples, the majority of Covid-19 victims mainly relied on agricultural income and had fewer sources of other income. This could leave households vulnerable in risky situations.
The survivors usually complained about unfavourable market conditions and price distortion, while the victims were primarily worried about agronomical methods, such as improved cultivars, crop management practices, and timely delivery of fertilisers and seeds. The victims also suffered severe damage from the spread of insects and other pests, while survivors were anxious about the lack of availability of sufficient financial aid. It should be noted that just a small percentage of survivors (about 5 %) received monetary aid and technical assistance from governmental and non-governmental organisations to help them cope with the pandemic.
It would be beneficial to characterise victims and survivors according to their personal traits, managerial skills, and business attributes to increase the effectiveness of policy interventions. This would make it easier for policy-makers to address the diverse population in different ways.
For instance, educated young entrepreneurs may diversify their sources of income to lower risk activities, whereas a small farm may scale down operations entirely, in a risky environment. We anticipate that our study could prompt decision-makers to rethink how to improve the efficiency of subsidy schemes.
This blog presents ongoing research for the project entitled: Co-producing a shock Resilient Ecosystem for Women-led enterprise in Nepal (CREW) led by the South Asia Institute of Advanced Studies (SIAS), Kathmandu, Nepal.