Political Economic Analysis of Dairy Sector in Nepal: Power and Structural Diagnosis

Abstract

Nepal’s annual milk production is growing by 4–5%, but domestic market demand is increasing by 9–10% over the last decade, creating a potential demand–supply gap in the dairy sector. This study adopts a qualitative Political Economy Analysis framework to examine the structural and political economy factors that determine how power relations, institutional arrangements, and stakeholder interests interact to shape policy outcomes and sectoral governance. The Constitution of Nepal 2015 along with relevant policy documents, legislative instruments, and regulatory frameworks governing the dairy sector were analysed. The study reveals that constitutional authority over food safety, technology, and nutrition has been distributed among federal, provincial, and local governments, leading to complex governance challenges. The dairy sector is struggling with institutional ambiguities, overlapping mandates, coordination gaps, and weak implementation. Federalization has diluted accountability, with local and provincial governments lacking adequate technical manpower to fulfil their mandated roles. The study recommends redefining the roles and responsibilities of government agencies at all levels, enacting a unified dairy governance framework, and fostering policy dialogue to create a business-friendly environment that ensures every citizen benefits from the dairy sector’s potential and contributes to national prosperity.