Is Public Financial Resource Allocation to Agriculture Enough to Ensure Sustained Supply of Subsidized Chemical Fertilizer? Evidence from Nepal

Abstract

This study investigates whether public financial resource allocation to agriculture is sufficient to ensure sustained supply of Subsidized Chemical Fertilizer (SCF) in Nepal between 2014 and 2024. Despite a consistent annual average growth (AAGR) of 9.41% in budget allocation to agriculture (BAA), SCF supply exhibited significantly lower growth (3.95% AAGR) and high volatility (Coefficient of Variation = 8.38), indicating a weak coupling between fiscal commitments and actual fertilizer availability. The analysis reveals substantial mismatches, as evidenced by 20.45% budget increase in 2021 coinciding with a 39.91 % decline in SCF supply in the same year, which reflects inefficiencies of government in procurement and distribution of chemical fertilizer. Correlation and elasticity analyses further demonstrate differential responsiveness across the different types of fertilizer. Urea showed a moderate positive correlation (r = 0.50) and potash exhibited a negligible negative correlation (r = -0.03) with BAA. These results suggest that increased public spendings alone does not guarantee a reliable supply of SCF. Hence, policy makers should shift from budget-based targets to quantity-based targets to ensure a sustainable supply of SCF.

Int. J. Soc. Sc. Manage. Vol. 13, Issue-1: 8-20.