Assessment on Impact of Agricultural Subsidies on Potato Production: Evidence from Syangja, Nepal

This study examines the impact of agricultural subsidies on potato production in the Syangja District of Nepal, where the current productivity is not sufficient to meet the increasing demand despite favorable policies by the government. The study analyses data from 103 potato farmers across four municipalities of Syangja, using a mixed-methods approach to assess the changes in yield, profitability, and farming practices- after the implementation of agricultural subsidies. Major findings of this study reveal substantial improvements: yield increased by 37%, gross margin increased by 85%, and the benefit-cost ratio increased by 72%, following subsidy. Agricultural subsidies also promoted the rapid adoption of modern farming techniques like the use of quality seeds, fertilizers, modern machineries, and improved farming techniques. Regardless, the study unravels critical challenges of such support, including a 15% decline in potato market price, reflecting marketing saturation, and disproportionate benefits to large-scale farmers due to unbalanced subsidy allocation. Although the result demonstrates the efficacy of agricultural subsidies in enhancing short-term productivity and farm income, it also highlights structural challenges in program design regarding equitable access to such programs and market linkages of farm produce. These findings contribute to ongoing policy discussions by providing empirical evidence that while agricultural subsidies help to intensify agriculture, their long-term sustainability requires fair distribution, enhanced extension services, and improved market infrastructures. The study provides valuable policy recommendations for policymakers to improve subsidy schemes towards sustainable agriculture development in Nepal and similar contexts.