The impact of resource reallocation and credit availability on farm incomes in the Rupandehi district of Nepal : a linear programming approach

Abstract

As in many other developing countries, absolute poverty is widespread in Nepal. Attempts are being made to increase the productivity of the land by a fuller use of existing services. Another area of improvement can be increased use of modern inputs supported by additional credit. These aspects are studied in this thesis with particular reference to three size groups of farmers in the Rupandehi district in Nepal. A linear programming approach is adopted. The study shows that better use of existing resources could bring a substantial improvement in farm incomes for all size groups but that the risks and uncertainties involved are also increased. If, in addition, credit is not rationed, all the size groups would receive very high rates of return on their additional cash outlay or borrowing Therefore, if the concern is to attempt to lessen the pressure of poverty on the majority of the farmers, the extension personnel need to reach the farms of the large and small farmers alike Furthermore, available funds need to be directed towards the small farmers as recommended by the Agricultural Credit Survey.