Time to Harness Technology in Nepal's Agriculture and Fmcg Sectors
Nepal's economy is heavily reliant on agriculture, contributing around 25% to its gross domestic product (GDP) and employing two-thirds of its population. In parallel, the Fast-Moving Consumer Goods (FMCG) sector is a growing industry, influenced by increasing urbanisation and evolving consumer habits. The integration of technology in these sectors is rapidly transforming production, distribution and consumption patterns, paving the way for sustainable growth. As both sectors are pivotal to Nepal’s development, advancements in agri-tech and FMCG technology hold immense potential. However, several challenges need to be addressed to fully capitalise on these opportunities.
The incorporation of smart agricultural technologies, including precision farming, Internet of Things (IoT) solutions and drones is reshaping traditional farming methods in Nepal. For instance, precision farming enables farmers to monitor crop health, soil conditions and water needs through sensors resulting in optimised resource use. Studies have shown that farmers using precision farming in countries like India and China have experienced up to 20-30% increase in yield. In Nepal, pilot projects like the deployment of drone technology for irrigation in Terai region are already producing promising results, increasing water-use efficiency and reducing labour cost.
While these technologies offer considerable benefits, their adoption in Nepal has been slow due to several factors. The country’s rugged terrain, lack of infrastructure, and limited access to technology in rural areas pose significant challenges. Small-scale farmers who make up the majority of Nepal's agricultural sector often lack the capital to invest in these solutions. Moreover, with over 25% of the population living below the poverty line, affordability becomes a critical issue. Government subsidies and international assistance programmes, such as those led by the World Bank and Asian Development Bank, have been crucial in driving initial adoption, but more effort is needed for large-scale implementation.
The FMCG sector in Nepal has experienced rapid growth due to digitalisation and the rise of e-commerce platforms. The Covid 19 pandemic accelerated the shift towards online shopping with platforms like Daraz, SastoDeal and Foodmandu witnessing exponential growth. Daraz, Nepal’s leading e-commerce platform, reported a 100% increase in its customer base in 2020 alone. This shift has forced traditional FMCG companies to adopt digital supply chains, improve logistics and invest in technology for customer engagement and data analytics to stay competitive.
Supply chain optimisation is another area where technology is making a significant impact. Technologies such as blockchain, artificial intelligence (AI), and big data are being explored to enhance traceability, reduce wastage and improve inventory management. In Nepal’s FMCG sector, several multinational companies like Unilever and Nestlé are testing AI-driven demand forecasting tools to better manage inventory and reduce stock-outs. A 2021 report by McKinsey shows that effective demand forecasting can reduce inventory levels by 20% while improving product availability by 5%. For landlocked Nepal, optimising supply chains is critical for reducing costs and ensuring timely product delivery, especially for perishable goods.
Supply chain optimisation is another area where technology is making a significant impact. Technologies such as blockchain, artificial intelligence (AI), and big data are being explored to enhance traceability, reduce wastage and improve inventory management.
The Nepali government has recognised the potential of technology in transforming both agriculture and FMCG sectors. In 2021, the Ministry of Agriculture launched the ‘Agriculture Development Strategy 2015-2035’, focusing on modernising farming practices and integrating technology for higher productivity. The strategy includes provisions for capacity building, access to finance, and incentives for technology adoption. Similarly, the government’s ‘Digital Nepal Framework’ aims to promote digitalisation across all sectors, including FMCG, by improving internet access and digital infrastructure, especially in rural and semi-urban areas.
The intersection of agriculture and technology has opened new opportunities for startups in Nepal. Platforms like ‘Krishi Guru’ provide farmers with real-time weather forecasts, pest control advice and best practices, improving productivity and reducing crop failures. Agri-tech startups like ‘Mero Agro’ are bridging the gap between farmers and buyers, facilitating online transactions for agricultural products. Similarly, the FMCG sector has seen an increase in local tech-driven startups that offer home delivery services, digital payment options, and subscription-based FMCG goods, further integrating the digital economy into everyday life.
Despite these advancements, Nepal continues to face significant technological barriers. Internet penetration remains low, with only about 65% of the population having access to the internet, and quality of service varies drastically between urban and rural areas. The World Bank’s Digital Development Report of 2022 indicated that Nepal ranks low in digital infrastructure quality compared to other South Asian countries. Poor infrastructure such as unpaved roads and unreliable electricity in remote areas limits the reach of agri-tech solutions and e-commerce services in the FMCG sector.
Access to finance remains a challenge for both small-scale farmers and emerging FMCG companies. In 2022, a report by the Central Bureau of Statistics noted that only 40% of farmers in Nepal had access to formal credit, often relying on informal loans with high-interest rates. Financial technology (fintech) solutions, such as digital wallets and online banking platforms, offer an opportunity to bridge this gap. Companies like eSewa and Khalti are expanding financial inclusion by providing online payment and loan services, which could help small businesses and farmers gain easier access to capital for investing in technology.
With increased awareness of sustainability, consumers in Nepal are keen to shift towards eco-friendly and organic products. Technology is playing a key role in meeting these demands. For example, organic farming technologies that reduce the use of harmful chemicals and promote sustainable practices are gaining traction. Further, FMCG companies are adopting eco-friendly packaging solutions and utilising data analytics to track consumer preferences. A survey by Nielsen in 2023 revealed that 65% of urban consumers in Nepal prefer sustainable products.
To fully realise the potential of technology in the agriculture and FMCG sectors, public-private partnerships (PPPs) can play a crucial role in addressing infrastructure gaps and facilitating the transfer of technology to rural areas. Additionally, fostering a culture of innovation through investments in research and development (R&D) can drive the growth of tech-driven solutions tailored to Nepal’s unique challenges. With the right mix of government support, private sector innovation and technological investment, Nepal can harness the power of technology to transform these vital sectors, ensuring food security, economic growth and improved living standards for its people.
