Prime Minister Agriculture

Modernization Project-Maize Zone

Office, Banke

A REPORT ON SUB-SECTOR BUSINESS ANALYSIS OF MAIZE FARMING IN

BANKE, NEPAL

Submitted to:

Assistant Professor Sramika Rijal

Department of Agricultural Botany and Agricultural Ecology

Agriculture and Forestry University, Rampur, Chitwan

Submitted by:

Kabita Bhusal , B.Sc. Ag.

Eight Semester

Agriculture and Forestry University

Rampur, Chitwan

Intern, Banke

AUGUST, 2020
Table of Contents
Abstract .................................................................................................................................................. 7
1. Introduction ........................................................................................................................................ 9
1.1. Background................................................................................................................................... 9
1.2. Statement of problem ................................................................................................................... 9
1.3 Objectives .................................................................................................................................... 10
1.4 Scope and limitations of study ..................................................................................................... 10
2. Literature Review .............................................................................................................................. 11
2.1. General introduction ............................................................................................................... 11
2.2. Status of maize production in Nepal and Banke district ............................................................... 11
2.3 Value Chain Activities in Maize Farm Business.............................................................................. 12
2.4 Uses of Maize and Maize Products ............................................................................................... 13
2.5 Maize Demand and Supply Situation ............................................................................................ 13
2.6 Maize Grain Price Situation .......................................................................................................... 15
3. Methodology ..................................................................................................................................... 15
3.1. Lee site ....................................................................................................................................... 15
3.2 Instruments and Design ............................................................................................................... 17
3.3 Data & Data Types ....................................................................................................................... 17
3.4 Data Analysis & Techniques ......................................................................................................... 17
3.4.1 Cost of production ................................................................................................................ 17
3.4.2 Benefit Cost Ratio ................................................................................................................. 18
3.4.3 Cost per unit product ............................................................................................................ 18
4. Result and Discussions ....................................................................................................................... 19
4.1 Learning from farm business and Sub-sector ................................................................................ 19
4.2 Learning from the organization and concerned stakeholders ....................................................... 19
4.3 PESTIEL Analysis: ......................................................................................................................... 20
4.3.1 Political factor ....................................................................................................................... 20
4.3.2 Environmental factor ............................................................................................................ 21
4.3.3 Social factor .......................................................................................................................... 21
4.3.4 Technological factor .............................................................................................................. 21
4.3.5 Institutional factor ................................................................................................................ 22
4.3.6 Economic factor .................................................................................................................... 22
 4.3.7 Legal factor ........................................................................................................................... 22
4.4 SWOT analysis ............................................................................................................................. 22
4.4.1 From View Point Of Producer ................................................................................................ 22
4.4.2 From View Point Of Collectors/ Local traders ........................................................................ 23
4.4.3 From View point of Feed industries ....................................................................................... 24
4.5 Business plan including cost of production, B:C ratio, production cost per unit and sensitivity analysis
.......................................................................................................................................................... 25
5. Key lesson learned and learning......................................................................................................... 28
6. Conclusion ......................................................................................................................................... 28
7. Recommendation .............................................................................................................................. 29
7.1 To the farmers and proponents ................................................................................................... 29
7.2 To the other business actor .......................................................................................................... 29
7.3 To the government and other stakeholders ................................................................................. 30
7.4 To the next internee .................................................................................................................... 30
References ............................................................................................................................................ 31
Annexes ................................................................................................................................................ 32
LIST OF TABLES
Table 1. Area, Production and Productivity of maize of Banke District ................................................................. 12
Table 2. Monthly foreign trade statistics based on first eight month data of fiscal year 2073/74 ............................. 14
Table 3. Average cost of production & margin per hectare for seed production in Banke ...................................... 26

LIST OF FIGURES
Figure 1.. Area and Production trend of maize crop in Nepal since four years (2069/70-2072/23)................. 12
Figure 2. Figure showing study site ..................................................................................................................... 16
LIST OF ANNEX
Annex 1. Area, production and productivity of maize in Nepal and Banke district (2011/12-2016/17) .................... 32
Annex 2. Calculation of Benefit Cost Ratio .......................................................................................................... 33
Annex 3. Sensitivity Analysis by increasing total cost by 10% in maize seed production........................................ 33
Annex 4. Sensitivity Analysis by decreasing revenue by 10% in maize seed production ......................................... 34
Acronyms and Abbreviation
DADO District Agriculture Development Office
PM-AMP Prime Minister Agriculture Modernization Project
MoF Ministry of Finance
ADS Agriculture Development Strategy
APP Agriculture Perspective Plan
NMRP National Maize Research Program
MoAC Ministry of Agriculture & Cooperatives
VDC Village Development Committee
Kg Kilogram
Qt Quintal
MT/t Metric Ton
MoAD Ministry of Agriculture Development
CBS Central Bureau of Statistics
FY Fiscal Year
NARC Nepal Agriculture Research Council
LEE Learning for Entrepreneurial Experience
Ha Hectare
SPSS Statistical Package for Social Sciences
NRs Nepali Rupees
MS-Excel Microsoft Excel
FGD Focus Group Discussion
KII Key Informant Interview
NSCoA National Sample Census of Agriculture
CIMMYT International Maize and Wheat Improvement Center
NFEA National Feed Establishment Association
Abstract
Maize (Zea mays L.) is one of the major food crops of Nepal ranked second after rice in terms of
area and production. Subsector business analysis survey of Maize was conducted in April to
August in Duduwa, Maize zone, Banke. The farmer's interview, Key Informant's Interview, Focus
Group Discussion and Rapid Market Appraisal were used to collect the primary data while
secondary information were collected by reviewing different publications mainly produced by
Market Development Directorate, Department of Agriculture, Ministry of Agriculture
Development, Central Bureau of Statistics, Nepal Agricultural Research Council, District
Agricultural Development Office, Banke. Progressive farmers were purposively interviewed for
the collection of primary data. Establishment of the maize as agro-enterprise in Banke district was
feasible in terms of political, social, economical, legal, environmental, technological, and
institutional aspects. The study findings revealed that the cultivation of maize was feasible in
Banke with profit amount of Rs. 24329.80 and Benefit Cost ratio of 1.35 in average. Upon doing
the sensitivity analysis of the business at cost increased by 10 percent and income decreased by 10
percent ,the business was still found feasible with BC ratio of 1.228 and 1.215 (i.e.>1) respectively.
Farmers were earning a good income through traditional farming practice but commercialization
and mechanization were still in primitive stage. Further increment of production and income can
be done through use of modern technology. The finding of research will provide clear guidelines
for policy makers and help them allocate efficient resource for NGOs and INGOs while conducting
maize related production, marketing or business activities.Furthermore, major production
constraints faced by farmers were high incidence of disease/insect/pest, scarcity of irrigation water,
lack of availability of fertilizers in required time and amount , lack of quality seed, lack of proper
mechanization, and labor shortage. Similarly, the major marketing problems faced by growers
were low marketing price, lack of market information, wholesalers/retailers dominancy over
market, lack of storage and poor linkage with market actors. This analysis explored the feasibility
of maize production, SWOT analysis, PESTIEL analysis and major problems in maize production
and marketing in Banke district.
1. Introduction
1.1. Background
Nepal is an agricultural country where 65.6% of people are engaged in agriculture and which contributes
28% to the total GDP of the country (NRB,2018). Nepal exports agricultural products of worth $ 1.14 billion
out of which cereals alone worth $ 410 million (MOALD, 2017). Nepalese economy is in the stage of
structural transformation as the share of service sector is increasing with decrease in share by
agricultural sector. As most people are adopting subsistence and traditional farming, the country’s
development is not possible without modernization, commercialization, mechanization and
industrialization in agriculture (PM-AMP, 2016/17).

Maize (zea mays) is the primary stable and widely grown cereal in the world. In Nepal, maize is second
most important crop after rice with production of 2,231,517 metric ton and productivity of 2.5 ton/ha
(Ministry of Agriculture,2017). It is staple food crop of hilly region where 86% of the total produce is used
for human consumption where as in terai only 20% is used for human consumption and rest is used to
make feed for livestock and poultry (Ransom, Paudyal, and Adhikari , 2003). With rapid increase of poultry
industry the demand of maize has been increasing rapidly and the supply is unable to fulfill the demand
of maize. Hence, there seems an utmost action to be carried immediately to increase the production of
maize.

1.2. Statement of problem

Nepal’s excellent topographical variation provides vast opportunities for growing and exporting a
variety of crops. Despite the great potential of maize farming, production is low and substantial
amount of maize is imported every year. The farm level yield of maize (2.50 t/ha) is not satisfactory
as compared to attainable yield (5.7 t/ha) in Nepal (MOAD, 2014; KC et al., 2015) Furthermore,
Nepal has been continuously importing maize/feed ingredients from India and other countries to
run the feed industry and fulfill demand of the poultry farm in the country. In the fiscal year
2073/74, 14 crore and 21 lakh kg of maize is imported from India which amounts to 2 Arab and
54 crore Nepalese currency, mainly by feed industries (Acharya, 2017). In addition, feed industry
are facing the problem of timely and quality production of domestic maize grains and our maize
failed in competition with Indian products in terms of quality, quantity and price as well. Farmers
are not aware of the right amount and time of fertilizer to be used, which is considered as a major
input of production. As a whole there is poor adoption of technology which has ultimate effect on
production and productivity of maize.

Besides human power and animal power are still the main sources of farm power. Men
engagement in other profession has lead to increased women drudgery and child labor in
agriculture. Furthermore, traditional practices being labor intensive adversely affects timeliness of
each operations, thereby reducing the yield. Thus, to overcome the gap between attainable and
potential yield, the only option is to increase the production within the constant limited land area
through the use of modern agriculture techniques and equipment. The traditional cultivation
practices, low technology adoption and poor mechanization have overall effect on production on
maize.

1.3 Objectives
The broad objective of this study was to identify the current status of maize production
technology with its opportunities and constraints to make further strategies and programs.
The objectives of the study are as follows:
a. To know the socio-economic condition of maize farmers.
b. To analyze the method adopted by farmers for maize cultivation.
c. To conduct business analysis of the maize crop as farm business.
d. To know various factors that has effect on the maize production, marketing and
utilization on the study site.
1.4 Scope and limitations of study
This survey explored the existing cost of production, its opportunities,
economic feasibility, and constraints of maize production in Banke district.
Since Nepal has wide range of diverse agro-ecology and environmental
conditions, the result of the study may have limitations to make generalizations
and make them applicable to the country as a whole .However, it may be useful
for areas with similar context with the study areas. The size of the sample taken
may not be adequate. Likewise, farmer do not have knowledge about keeping
record on various cost on items, labor, inputs, etc., the exact data on those
particulars are not obtained. The relevancy of the information lies on the
 assumption that the respondents have given true information. Time and budget
constraints were also major limitation of the study.

2. Literature Review

2.1. General introduction

Maize is the second most important crop after rice in terms of area (900,288ha) and production
(2,300,121mt) with yield 2,555 kg/ha in Nepal (MoAD, 2016/17). Maize (zea mays L.) is one of the most
important cereal grains grown worldwide in a wider range of environment because of its greater adaptability
(Kogbe and Adediran, 2063). Maize crop is widely grown crop with a high rate of photosynthetic activity
because of its C4 pathway, leading to higher grain yield and biomass potential. It is pre-dominantly cross-
pollinated species, a feature that has contributed to its broad morphological variability and geographical
adaptability.

Maize has become a staple food in many parts of the world. However, little of this maize is consumed
directly by humans; most is used for ethanol, animal feed and other maize products, such as corn starch and
corn syrup. Maize is one of the earning grain crops and it perhaps the most versatile. By 2050 demand for
maize will double in the developing world, and maize is predicted to become the crop with greater
production globally, and in the developing world by 2025 (Rosegrant et al.2008)

2.2. Status of maize production in Nepal and Banke district

Maize is the second most important crop after rice in terms of area (956,447ha) and production
(2,713,635 mt) with yield 2.83 mt/ha in Nepal (MoAD, 2018/19). It is grown in all three major
ecological regions of Nepal i.e. Terai, midhills and high hills. It is reported that the demand for maize
has been growing by 5% over the last decade (sapkota &pokhrel, 2010). It is also reported that about
0.5 million ton feed has been produced annually in Nepal by 114 feed industries. However, the feed
demand is increasing at the rate 11% per annum (CDD, 2011) The trend of average cost of
production of maize was increasing i.e. Rs 10,000 per ha in 1993/94 to Rs 60,000 in 2013/14
which is six times greater (MRSMP, 2015).
 2072/73

2071/72

2070/71

2069/70

0 500000 1000000 1500000 2000000 2500000

Column1 production area

.

Figure 1.. Area and Production trend of maize crop in Nepal since four years (2069/70-2072/23)

However, analyzing the trend of production of maize, productivity of maize in Banke district is
less than that of national productivity.
Table 1. Area, Production and Productivity of maize of Banke District

Year Area (ha) Production (Mt) Productivity (Mt/ha)

2011/12 8,547 20,065 2.34
2012/13 10,697 29,760 2.78
2013/14 8,500 15,300 1.80
2014/15 8,900 19,238 2.15
2015/16 8,500 18,863 2.22
2016/17 8,500 17,300 2.03
2017/18 9,034 19,569 2.16
2018/19 9,183 20,386 2.22
Source; (MoAD)

2.3 Value Chain Activities in Maize Farm Business

In any sub-sector, proper coordination between input suppliers, producer and output suppliers
is important. There are 73 recommended varieties of maize according to available agro-zones
(krishi Diary, 2074). However, due to higher yield potentiality and assurance market of maize
grains, farmer’s attraction towards hybrids cultivar has increased radically these days (Tripathi
et.al. 2016). A huge amount of hybrid seeds are being imported from open borders between
India and Nepal (Thapa, 2013). National seed company ltd. reported 315 MT of improved
maize seed sales in the FY 2072/73.
Majority of maize farmers (>95%) are small land holders (<0.5 ha) but they produce more than
80% of total production. Small holders sell their surplus grains to the rural traders since they
are constraints by not having even very simple things like corn shelling machines, drying and
 storage facilities. The contribution of large and commercial farmers is about 20% in total maize
production. Rural traders and urban trades are playing role of output suppliers in Nepal
(Gurung et. al., 2011).
In Terai, many actors are involved in bringing out maize from farm to fork: the main are input
suppliers, producers, processors, sellers and consumers. Agro vet and seed companies are the
main input suppliers for seed production and value addition by them is 27.0 %. According to
local commercial maize farmer, Umesh yadav, green cobs are sold in NRs 5 per cob and roasted
are sold at NRs 15-20 per cob. Maize grains is purchased at NRs 17-19 per kg and grits
(recovery of 45%) are sold by adding value by 57.2% by millers and by 0.13 % by wholesaler
and retailers at NRs 45 per kg.

2.4 Uses of Maize and Maize Products

Maize contains approximately 72% starch, 10% protein and 4% fat, supplying an energy
density of 365 Kcal/100gm (FAOSTAT, 2015) and is important in human nutrition fulfillment
in hills of Nepal. It is currently the most widely grown crop in the world, and is used not only
for food/feed but also to produce ethanol, industrial starches and oils. It is now at the beginning
of a new agricultural revolution, where the grains are used as factories to synthesize high-value
molecules (Naqvi, 2011).
In Nepal, main market of maize is feed industries as substantial amount (87%) of maize is
being imported from India each year by feed industries (Timsina et.al., 2016). there is shift in
demand of maize from food to feed for livestock and poultry in Nepal (KC et.al., 2015) with
increase in consumption of protein and micro-nutrient rich food items in Nepal recently
(MOAD/CBS, 2016). Maize is now at the beginning of a new agricultural revolution, where
the grains are used as factories to synthesize high-value molecules. (Naqvi, 2011).

2.5 Maize Demand and Supply Situation

To run the feed industry and fulfill demand of the poultry farm in the country, Nepal has been
continuously importing maize/feed ingredients. In the fiscal year 2073/74, 14 crore and 21 lakh
kg of maize is imported from India which amounts to 2 Arab and 54 crore Nepalese currency,
mainly by feed industries (Acharya, 2017).
 In last five years, there 13% and 8.5% increase in annual demand for poultry feednd animal
feed respectively. There exists a negative correlation between domestic maize production and
feed production due to timely unavailability of maize (Timsina et.al. 2016).
Maize consumption and poultry industries both increased tremendously during the last five
year in Banke district (CDD, 2011). According to Rapti Feed industries, only 20% of maize
demand is fulfilled by local production and rest are imported from India as local maize grains
are not up to the quality for feed making.
The demand for maize is also shifting from food to feed for livestock (8.5%) and poultry (13%)
(Timsina et. al. 2016). The reason for the widespread use of maize in the diets of farmed
livestock is its high nutritional value (Cowsien et. al., 2005).
Till first eighth month of fiscal year 2073/74, Nepal has imported following maize and maize
products from various country.

Table 2. Monthly foreign trade statistics based on first eight month data of fiscal year 2073/74

(Source: MoF, 2017)

S.N. Maize products Quantity (kg) Value(‘000 Country

Rs)
1. Maize seed 50,933,353 223731 Major-India: Minor-
Argentina, Australia,
Others
2. Maize (except seed) 246862113 6933413 Major-India: Minor-
Argentina, Antigua And
Barbuda, Others
3. Sweet corn frozen 63969 5096 India
4. Maize flour 297690 12975 Major-India Minor- China
Others
5. Maize starch 1969926 1046 India
6. Grout and meal of 588319 24369 Major- India Minor-Italy
maize Korea China
7. Other worked 18500 764
grains of maize
2.6 Maize Grain Price Situation
DADO, Banke (2016) reported that the price of maize ranges just between NRs 20 to 25 in the
last FY. Nationally The Farm gate price of maize was found increasing from the base year
1993/94 to 2013/14. In 1993/94, the Farm gate price was NRs 5/Kg but the price is NRs 20/Kg
in 2013/14. The Farm gate price of maize was increased by 184 percent which is the lowest
compared to paddy and wheat (Bhandari et. al., 2015).

3. Methodology
3.1. Lee site
The study was conducted in Duduwa rural municipality and Nepalgunj ward no.16 of Banke
district. Banke is terai district that lies in Mid-western region. The site is located 10-15 km south
east from Nepalgunj town and connected with Surkhet-Nepalgunj highway and some other sub
roads. The study area was selected purposively based on area of coverage of maize production,
number of maize growing farmers, production of maize and access to road facility. Based on these,
Duduwa area was selected to fulfill the aforementioned objectives. The map of Nepal showing
study district and study site is presented in figure 2.
Figure 2. Figure showing study site
3.2 Instruments and Design
At first, sampling frame was prepared by using various sources of information such as key
informants of the study areas, and village development committee (VDC). The progressive farmer
engaged in maize cultivation were selected as sampling unit. 60 commercial maize growers, three
of the agro vets and the feed industry of the selected VDCs had been sampled for the study through
simple random sampling

3.3 Data & Data Types

Both primary and secondary data were collected and analyzed during the study. The
commercial farmer of Duduwa municipality were the major sources of primary data which
was collected through semi structured questionnaire face to conducting face to face interview
technique. Apart from this, the information obtained through observation, informal group
discussion, Focus Group discussion and key informant survey were given due consideration.
Various secondary sources of data such as articles, reports, books published by various institute
and organizations like Nepal Agriculture Research Council(NARC),Central Bureau of
Statistics (CBS), District Agriculture Development Office (DADO),publications and report
Krishi Gyan Kendra and PMAMP Maize Zone of Banke and documents relevant to maize
production and mechanization was reviewed.

3.4 Data Analysis & Techniques

The completion of survey was followed by the processing and analysis of data. The
information collected from the field were coded, tabulated and analyzed by using SPSS and
MS-Excel.
3.4.1 Cost of production
For analyzing the cost of production, variable cost items and fixed cost items were considered. The
variable cost included the farm expenditure on seed, land preparation cost, fertilizers, irrigation,
plant protection measures, micronutrients, harvesting, packaging, transportation, labor, bullock,
tractor cost, interest on variable cost etc. The fixed cost was calculated adding the depreciation
cost, land rent etc. Total cost of production was calculated by adding all the expenditures on
variable inputs and fixed cost:

Total cost = ∑ of cost incurred in all the variable items + ∑ Summation of cost
incurred in all the fixed items

3.4.2 Benefit Cost Ratio

It was taken as the ratio of present worth of incremental benefit stream (cash inflow) to
present worth of incremental cost stream (cash outflow) due to enterprise.

𝐵𝑡
∑𝑛𝑡=1
(1 + 𝑖 )𝑡
𝐵𝐶 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝑡
∑𝑛𝑡=1
(1 + 𝑖 )𝑡
Where,
Bt = incremental benefit in t th period due to farm enterprise
Ct=incremental cost in t th period due to farm enterprise
n= number of years
i=interest rate
Keeping farm enterprise by farmer will be financially feasible if the present worth of
incremental benefits is greater than the present worth of the incremental cost due to
farm enterprise or in other words B-C ratio exceeds one.

3.4.3 Cost per unit product

The cost per unit product was calculated dividing the total cost of the production by total
volume of the product in quintal.

Cost per unit product = total cost of production / total volume of product in
quintal
4. Result and Discussions
4.1 Learning from farm business and Sub-sector
Maize being the common commodity for all the commercial farmers in the area, hybrid maize
cultivation under mechanization is one of the most profitable enterprise which provides with
better returns to the farmers within short duration. This business enterprise requires scientific
and technical way of management and cultivation practices for the better yield. In order to
increase the production and to reduce cost of production, different management practices
should be performed initially from time of sowing to the harvesting of the product. Though
farmers have the problem regarding insect/pest or fertilizers supply prevailing in this year, but
the major problem they are facing since years is with selection of appropriate seeds, easy
irrigation facilities and high labor cost. Likewise, Supply of the adequate level of organic
fertilizers and right dose of chemical fertilizers in right time is the major challenge seen as they
are not aware of nutrient requirement difference for hybrid, improved and local maize varieties.
Maintenance of the quality of maize (i.e. appropriate moisture level of the grains after harvest)
is another important factor for better marketing of the maize as higher moisture level
deteriorate the feed quality. Occurrence of heavy rainfall is the major problem faced during
summer maize. Soil erosion by wind and no or less use of organic manure is major reason for
soil fertility degradation and sustainability of agriculture is in danger.
Unlike vegetables, maize do not have definite market, so, contract farming with feed industry
could encourage maize farmers to increase area and production under maize.

4.2 Learning from the organization and concerned stakeholders

The organization provided the great opportunity to understand the real situation of farmers and
major problems faced by them regarding the farming practices. Similarly, it created a platform
for us to make a good relationship with the farmers through better communication skills.
Working on this organization, we were able to discover that the farming practice in our country
is in transformation stage towards commercialization but still labor dependent and unscientific,
so, mechanization is a key. A new approach is necessary to intervene the modern technology
to turn the farming practice into commercialization. Mechanization in the farming practice is
basic approach to reduce the cost of the production with better production strategy. On the
other hand, interaction with other concerned stakeholders like value chain actors (local traders,
 urban traders and feed industry), we understand existing value chain, value chain structures
and constraints of marketing. We find that most of the farmers are aware about the marketing
system but information regarding the channels to be used, farm-gate price, market price,
demand, supply, subsidies and so on are gained and limited among local leaders only .Most of
the commercial farmers are either engaged in cooperatives or farmers group which helps them
to get subsidies on seed, fertilizer and machineries.
It was found that there is excessive involvement of the middleman in the marketing process
which finally leads to the reduced producer’s share. Local traders and rural traders are
important part of maize business. None of the farmers are directly involved to sell their maize
to feed industry. Majority of the farmers do not have their own transportation so they have to
wait for collectors to come and buy their products at home or field. Hence all such problems
regarding the marketing need to be addressed properly by the concerned agencies.
Feed industry are facing problem of quantity, quality and timely supply of maize grains and
80% of the maize along with other ingredients are supplied through import from India. Karnali
feed industry pvt..ltd.at khajura Banke,Prasansa feed industry at kohalpur Banke are selling its
feed to Banke, Dang, Salyan, Pyuthan, Rolpa ,Surkhet, Kapilbastu and other districts. For
Single MT production of feed, maize (610 kg), soya bean (256 kg), rice bran (50 kg), marbles
(7 kg), MBM (40 kg), soya bean oil (25 kg) and medicine (8.7 kg) are the raw ingredients.

4.3 PESTIEL Analysis:

4.3.1 Political factor
The commercial farming of maize in Banke is politically supported by different concerned
stakeholders. The government consider it as one of the potential area for the commercial
and mechanized maize farming linking it to industry under PMAMP. Since it is one of the
major source of the economy of this district, every political stakeholder have full attention
towards the development of the Zone of maize as industrial center of maize value addition
into various product. There is full support of the local governance and local political parties
to strengthen the subsector in Banke district.
4.3.2 Environmental factor
The diversified climate of the district is suitable for the cultivation of maize. All year round
cultivation of maize can be done here with better production. Since, the cultivation is
possible here in all season (rainy, summer and winter), the profit can be obtained all year
round. The agro-climatic diversity, established market and increased demand of the maize
has provided a comparative advantage for the practices of the maize farming as farm
business.

4.3.3 Social factor

Maize farming is the major source of income to most of the farmers of Banke through which
they can sustain their livelihood. Most of the households have been including maize as mono-
crop in their crop rotation at least for one season as there is better production and market from
where they can get the good price. Both male and female members of the family equally
contribute in their farm. There is no any social obligation for the production of the maize as
maize is grown since time immemorial. Most of it is grown for feed for animals and selling.
The farmers are well educated enough and have realized that it would be the best source of
their economy. The demand of quality maize is increasing day by day which have created a
huge scope of maize in market.

4.3.4 Technological factor

Since, zone area have been situated at border area various facilities and technology have
been imported here for modern and scientific cultivation of the maize from India due to
open border. There is better access of the modern inputs like hybrid seeds, chemical
fertilizers, tractor driven machineries and other various inputs which have encouraged the
farmers to adopt the new technology for reducing cost with higher production. Different
post-harvest centre and collection centres have been established in various places for post-
harvest management of maize grains. Farmers have easy access of communication through
use of mobile phone to contact with the agents. Access to agro advisory services has been
made easier with formulation of new constitution.
4.3.5 Institutional factor
Different institution have been supporting the area for the promotion of commercial
farming in Banke. Maize zone Implementation Unit is one of the major institution of the
government which has been working for the overall development of maize sub-sector.
Different organizations like Raising Income For Small and Middle Farmer Project
(RISMFP), Project for Agriculture Commercialization and Trade (PACT), Cereal System
Initiatives for South Asia (CSISA)/CIMMYT, etc. have been providing different subsidies
and capacity building trainings for empowering the livelihood of the farmers through
promotion in agriculture. Different co-operatives and Farmers Group have been established
for supporting the farmers. Similarly, Gorkha Polytechnic College and Research Center at
Baijanath ,Nepalgunj Technical College at Nepalgunj are providing education and
producing agricultural manpower in Banke.

4.3.6 Economic factor

Being a good source of income to the farmers and less price fluctuation, maize farming
have been adopted by most of the farmers. Well established market, increasing demand of
the product and purchasing capacity of the ultimate users (feed industry) has supported the
maize farming of this area. Likewise Agriculture Development Bank (ADB) other banks
also provide loan to the farmers at appropriate rate and the farmers are encouraged to invest
on the farming. But the practice of loan taking from bank is very rare as the farmers find
the process lengthy and boring. As cost of cultivation of maize is lowered compared to rice,
they prefer growing maize to rice in spring season.

4.3.7 Legal factor

There is no any legal restriction for the maize cultivation in Banke area. Maize is the second
important commodity after rice in terms of food, feed and industrial use.

4.4 SWOT analysis

4.4.1 From View Point Of Producer
Strength Weakness
  fertile land ownership  lack of knowledge on scientific
 long time maize farming practices/ no trainings
knowledge and experience  little knowledge on optimum
 ability to buy inputs(seeds, utilization of inputs
fertilizers)  poor post-harvesting handling
 willingness to do get involved in practices
maize farming  no idea of value addition and
grading
 No idea of evaluation of cost of
production per kg of product

Opportunities Threats
 suitable climate and soil  Changing Rainfall Pattern
 increasing demand of maize  Insect and Disease incidence
(nationally and internationally)  Increasing Transportation cost
 increasing access to road and  High Labor Cost
transportation  Continuous load shedding
 establishment of Zone of maize
in Banke

 Establishment of post-harvest
Centre
 Establishment of Large feed
industries

4.4.2 From View Point Of Collectors/ Local traders

Strength Weakness
  Access to the roads and  low amount of collection
transportation  Door to Door collection is
 GroupWise Collection From difficult to carry out.
Cooperatives/ farmers group  Inability of grading for quality
 Ability to pay Cash for maize  Lack of access to PAN no.
 Nice coordination between local  Lack of own storage house.
traders and urban traders
Opportunities Threats
 All year-round maize production  Constant Price Since long time
 Increasing number of maize  Quality maintenance for
farmers competition with Indian maize
 Feed industry Establishment in  Increasing Transportation Cost
zone area  Strike/pandemic

4.4.3 From View point of Feed industries

Strength Weakness
 Availability of huge feed plant  Lack of Technical Knowledge on
with capacity 2400 MT per year maintainace and repairing of feed
 ability to invest money plant
 Good marketing network for raw  Dependency on India for
material and final products technical part of the industry
transmission  Dependency on India for
 Access to road and fulfillment of raw materials
transportations  Lack of labor supply
 Well Equipped and scientifically
designed working area
  Good coordination with staffs and
other projects regarding maize
 provision of employment
opportunities for employment
 Contribution to economic
development of nations

Opportunities Threats
 Few large feed industry in zone  low quantity of maize production
area locally
 increasing poultry industries  lack of timely and quality supply
number and demand for poultry of ingredients from local sources
feed  import duties on ingredients very
 potential for winter maize high
expansion in zone area  Due to open border, indian prices
 dominate the local maarket
prices.

4.5 Business plan including cost of production, B:C ratio, production cost per unit and
sensitivity analysis
Seed is basic and the most critical input for sustainable agriculture. A seed enterprise involves
producing and selling quality seed to farmers. The use of hybrids is common in maize in Nepal.
It is due to the commercialization, and easy availability of hybrid seeds in agro-vets (though
costlier). Unavailability and poor quality source seeds of national open pollinated varieties
(OPVs) is also forcing farmers to use hybrid seeds.
Here is the business plan for production of improved seeds of maize. The business plan is
prepared by using the data collected from the survey. It includes the cost of the production
which was the summation of variable cost like cost of seeds, fertilizers, pesticides, land
preparation, management cost, maintenance and repair cost etc. while the fixed cost includes
 land rent , interest for the loan and depreciation cost. The seed production can be done in 3
season for a year. The cost of production is found to be Rs. 54970.40 with net profit of Rs.
24329.80 per season (4 months periods) and production cost per is Rs 39.25. Similarly, the
benefit cost ratio is found to be 1.35 (refers to Annex 2.). A sensitivity analysis is done by
increasing the variable cost by 10 % and decreasing gross revenue by 10% in which B/C ratio
was found still greater than means the maize seed enterprise is feasible in such adverse
condition also (refers to Annex 3. & Annex 4. ).

Table 3. Average cost of production & margin per hectare for seed production in Banke

Crop: Maize Year: 2018/19

Variety: Rampur Composite Condition: Irrigated

S.N. Particulars unit quantity price value in RS.

A. Average Cost Of Production
1 Variable Cost Rs 54740.40
a. Human labour Day 97 375 36375
b. Bullock labour Day 15 600 9000
c. Power Tiller Use Hour 0
 d. Pumpset use Hour 0
e. Thresher use Hour 0
f. Sprayer use Hour 0
G Seed kg 25 75 1875
h. Fertilizer
i) Manure kg 1465 1 1465
ii) Urea kg 40 25 1000
iii) D.A.P. kg 20 50 1000
iv) Potash kg 0 0 0
i. Plant protection chemical 420
j. Management cost 1500
k. Interest on variable cost(4%) Rs. 2105.40
2 fixed cost 230
A land tax Rs 44
B water tax Rs 0
C depreciation of farm equipment Rs 92
repair and maintainance of farm
D equipment Rs 94
3 total cost 54970.40
4 Gross Income 74260
a. main product kg 3950 18.20 71890
b. by-product kg 4740 0.50 2370
5 Gross profit at Farm gate price Rs 19289.60
cost per kg Rs 13.31
B. Marketing Cost & margin
1 marketing cost Rs 474
2 value at market kg 3634 21.30 77404.20
24329.80
3 net profit Rs
5. Key lesson learned and learning
The subsector business analysis provided us the idea to learn about the feasibility of
establishment of maize-seed enterprise in the existing condition of the Banke district. By
studying the geographical structure, marketing access and different factors affecting the
farming system it become easier to plan for the development of any business strategy. It was
found that the diversity in agro-climate have offered this area a comparative advantage of all
year round(3 season) production of different varieties of maize. This has favored the farmers
to make a better source of economy through cultivation of the agricultural crops all year round.
The demand for the maize grains and green cobs have been increased with growing local and
regional markets with increasing marketing facilities. This area could be the better source of
maize seed, maize grains and maize value added products (feed, cornflakes, starch, popped
corn,etc.) for the whole district as well as for the terai and near Indian markets.

6. Conclusion
It is undoubtedly that maize cultivation has become an integral component of the Nepalese
economy as it contribute to the national GDP and have been a major source of income to rural
farmers, employment opportunity and help in poverty reduction. The agro-ecological diversity
and climatic suitability both have been boon for the people of the Banke for the commercial
cultivation of the maize. The climate supports the production of maize all year round so the
commercial farmers have been able to get a good price. Maize is rising industrial crop with
assurance of market in the area. So, most of the people are attracted towards maize farm
business as it costs lower than rice production. With establishment of custom hiring center and
post-harvest center through zone implementation unit, PMAMP, farmers are encouraged to
increase area under maize cultivation.
7. Recommendation
7.1 To the farmers and proponents
The farmers should be able to utilize the comparative advantage of the agro-climate and
produce maize all year round as it will provide the better income throughout the year. Although
they are earning a good income through traditional farming practice but the main mistake I o
was observed was in the use of doses of fertilizer in right quantity as per recommendation.
Likewise, the maize grains from domestic level cannot compete with Indian products in
quality, quantity and price. In such situation, uses of recommended hybrid varieties, farming
through mechanization, conservation farming technology adoption, uses of adequate quantity
of both organic and inorganic fertilizers at right dose and right time along with appropriate
plant population maintenance can help to increase yield per hectare and decrease production
cost. Similarly, for the use of machineries major constraints is land fragmentation and plotting,
so, farmers should be encouraged to perform land pooling through provision of more subsidies
on seed, fertilizers and farm equipment and machineries.

7.2 To the other business actor

The other business actor like value chain actors have equally important role in the production
and marketing system of any agricultural commodity. There should be well managed system
of market information regarding the price of the commodity, demand, supply and agricultural
inputs. The input suppliers should provide the farmers with quality inputs like pure seeds,
fertilizers, effective pesticides and insecticides and other various infrastructure required for the
better production practice. The farmers should get the appreciable price for their commodity
so that they are encouraged to produce the commodity in large scale. Similarly, the market
should be well developed and extend its linkage to other areas for exporting. There should be
proper provision of the storage house and collection center for the post-harvest management
of the maize grains, especially for local traders. Proper market information system should be
developed. Industry related to maize should practice contract farming with maize producers
for regular and assured supply of raw materials. Not only the farmers but others chain actors
should also be provided training regarding scientific maize cultivation and post-harvest
managements for quality assurance.
7.3 To the government and other stakeholders
The government should intervene the different strategy realizing the potential of commercial
maize production in this area. Investment should not been done in the agriculture field but also
in others such as irrigation, transportation, road access, so that modern technology can be easily
adopted in agri-production and marketing activities. Implementation of the various program
for the development of the commercial maize farming along with others intercrop/cover crop
such as soybean, sunflower, legume vegetables, etc. should be encouraged to get more benefit
and increase soil organic matter. This will help to contribute in the economic development of
the country and improve the livelihood of the farmers. Likewise, it should create awareness at
every local level about the various facilities already provided such as the provision of the
subsidies in agricultural inputs and crop insurance to minimize the risk of loss. Similarly, the
other concerned stakeholders should be involved to increase the capacity of the farmers by
providing them different capacity building trainings, workshop, field exposure, low cost
technology, modern and scientific technology and different skills for successful farming. The
government should develop the well marketing system so that the farmers can get the
considerable price. Since farmers are attracted by hybrid varieties, the government should also
focus on development of good gene bank of local maize varieties before we lost much of it.

7.4 To the next internee

Theory classes in the university on subject of agronomy, extension, irrigation, farm structure
and survey, etc. were useful to understand and monitor the activities of the SIU (maize).
Similarly, Practical classes such as identification of lab equipment, soil sampling, calculation
of fertilizer requirements, plant ideotype (in agronomy), PowerPoint slide preparation (in
communication), business proposal writing and many such practical become useful while
performing given tasks. As mechanization is main basis for todays’ agriculture, it would be
better if we get to learn about machines that are used in land preparation, sowing, intercultural
operational, sprayer, harvester, thresher, etc. from production to processing by using them with
own hand in academic practical classes of university.
Other than that, The LEE programme have been a great platform for all the agriculture intern
to expose ourselves in the farmer’s field, know the real scenario of the existing farming system,
 disseminate the modern scientific technology and learn more practical knowledge which is far
behind the theoretical knowledge. It helped us to develop our communication skills through
interaction with farmers and different concerned stakeholders and understand the working
system of the agriculture in our country. The internee should fully utilize their knowledge and
capacity to learn the field knowledge and dedicate to their work because learning by doing is
considered as best type of learning. They should show their potential and performance in the
farmers’ field which they have learned during the theoretical classes in their university. It is
the best opportunity to bring our knowledge into action. Lastly, as a researcher, there are
following possible intervention I found:
 Maize responses to drought stress condition
 Multi-location varietal trial of different maize varieties
 Fertilizer trial for efficient maize production and yield
 Economic analysis of Conservation tillage vs. traditional tillage practices
among maize growers
 Dominancy of hybrid seed over improved and local seed in aspect of production
 value Chain analysis of maize : A case of Banke, zon

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Annexes
Annex 1. Area, production and productivity of maize in Nepal and Banke district (2011/12-2016/17)
 Year Nepal
Banke
Area Production Productivity Area Production Productivity
(ha) (Mt) (kg/ha) (ha) (t) (kg/ha)
2011/12 871,387 2,179,414 2.50 8,547 20,065 2.35
2012/13 849,635 1,999,010 2.35 10,697 29,760 2.78
2013/14 928761 2,283,222 2.45 8,500 15,300 1.80
2014/15 882365 2,145,291 2.43 8,900 19,238 2.15
2015/16 891583 2,231,517 2.50 8,500 18,863 2.21
2016/17 900,288 2,300,121 2.55 8,500 17,300 2.03
2017/18 954,158 2,555,847 2.67 9,034 19,569 2.16
2018/19 956,447 2,713,635 2.83 9,183 20,386 2.22

Annex 2. Calculation of Benefit Cost Ratio

Year 1 2 3

Total Cost 54970.40 54970.40 54970.40

Total Revenue 74260 74260 74260
incremental benefit 24329.80 24329.80 24329.80
Revenue @ 10% discount
rate 66834 60893.2 55695
Cost @ 10% discount rate 49473.36 45075.728 41227.8
B/C RATIO 1.35090 1.35090 1.35090

Annex 3. Sensitivity Analysis by increasing total cost by 10% in maize seed production

Year 1 2 3
Total Cost 54970.40 54970.40 54970.40
cost increased by 10% 60467.44 60467.44 60467.44
Total Revenue 74260 74260 74260
13792.56 13792.56
incremental benefit 13792.56
Revenue @ 10% discount
rate 66834 60893.2 55695
Cost @ 10% discount rate 54420.696 49583.3008 45350.58
B/C RATIO 1.22809 1.22809 1.22809
Annex 4. Sensitivity Analysis by decreasing revenue by 10% in maize seed production

Year 1 2 3
Total Cost 54970.40 54970.40 54970.40
Total Revenue 74260 74260 74260
revenue decreased by 10% 66834 66834 66834
11863.6 11863.6
incremental benefit 11863.6
Revenue @ 10% discount
rate 60150.6 54803.88 50125.5
Cost @ 10% discount rate 49473.36 45075.728 41227.8
B/C RATIO 1.215 1.215 1.215