Fertilizer price policy in Nepal

Although fertilizer use has dramatically increased since it was officially introduced 20 years ago, the price subsidy has not led to significant overall increases in crop production. The economic and equity effects of this price subsidy are conceptually and empirically analyzed in this study, and policy options are suggested. The scope for increasing the impact of fertilizer price policy is found, however, to be limited. Financial constraints restrict the government"s ability to transport substantial quantities of fertilizers into the hills and mountains, while political considerations ensure that Kathmandu Valley farmers receive preference. The most important factor constraining Nepal"s price policies, however, is the long open border with India, which effectively prevents Nepal from implementing an independent price policy. Included are 13 tables, 6 figures, and results of a survey of 264 farmers who used fertilizer on the 1983-84 wheat crop. (Author abstract, modified)