KATHMANDU, Sept 20: The government has prepared a draft of the new Agriculture Enterprises Promotion Act that among other, envisages to pave the way for contract or lease farming and promises incentives to insurance companies to sell farm insurance policies.
The draft prepared by the Ministry of Agriculture Development (MoAD) in association with the Agro Enterprise Center (AEC) of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) will soon be circulated among local stakeholders in the different development regions for feedback, said a senior government official.
Keeping in view the large swaths of land being left fallow by landlords, the government came up with the legal provisions to make sure that proper use of cultivable land through contract and leasing system is introduced in the country.
“Though we have large tracks of land abandoned without farming across the country by landlords, we are still dependent on imports to fulfill the domestic demands for food grains, fruits and vegetables. The proposed act will pave the way for massive use of fallow land for commercial farming by making available the unused land on lease or contracts to interested farmers,” Pradip Maharjan, Chief Executive Officer of AIC, who is also a member of the drafting committee, told Republica on Wednesday.
The act allows the government and private land owners to give their lands on lease or contract for farming. Existing laws don´t cover the contract or lease farming which has made land owners reluctant to allow others to cultivate their land fearing tenancy by tillers.
The proposed act also will make clear provision of insurance on farm products such as crops and animals with incentives to insurance companies which sell insurance policies for all kinds of farming system including contract or lease farming.
“This proposed act envisions the certain privileges to insurance companies that will sell their insurance policies for the insurance for cattle and crops. We have proposed that companies that paid compensation against loss of farm properties under such insurance scheme, can deduct the amount from their income before tax,” said Maharjan.
At a time when there is nominal market access for farm products, the the act has also attempted to encourage opening up agriculture markets in the land provided in lease and contract. “We have also suggested in the draft that the government encourage banks to issue loan to the entrepreneurs for agro-based market,” he added.
He said the proposed act will transform absent landlordism, a trend in which real land lords don´t cultivate by staying away from their own land, into commercialization of farming with the involvement of farmers other than landowners.
“As per our rough calculation around 20 percent of land in the terai of mid-Western and Far-Western region has been left fallow by land owners. The proposed act will prove to be instrumental for proper utilization of such land for farm commercialization which will ultimately resolves the problems of unemployment and food insecurity,” he added.