Diagnosing Nepal's Fertilizer Crisis: Governance Failures and Systemic Bottlenecks in the Fertilizer Supply Chain

Abstract

Chemical fertilizer is a critical input for enhancing agricultural productivity and ensuring food security in Nepal. However, the sector is plagued by chronic supply insecurity, characterized by persistent demand–supply gaps, untimely delivery, and inequitable distribution. This study employs a mixed-methods institutional analysis, guided by Ostrom's Institutional Analysis and Development (IAD) framework, to diagnose systemic bottlenecks in Nepal's fertilizer supply chain and assess their impact on end-user farmers. Primary data were collected from February to August 2022 from key institutional actors (n=20), 15 agricultural cooperatives, and 60 farmers in the Kathmandu Valley the central hub for fertilizer import and distribution. Secondary data from government reports and policy documents were analyzed to contextualize the findings. Results reveal a profound disconnection between policy intent and field-level reality. An estimated national demand of 600,000 metric tons (MT) is met with less than half through official channels, with procurement delays averaging 8–11 months. The state-controlled duopoly of the Agricultural Inputs Company Limited (AICL) and the Salt Trading Corporation Limited (STCL) have marginalized private sector participation, creating a rigid and inefficient supply system. At the farmer level, 86% reported untimely access, 74% found subsidized fertilizers unaffordable, and 28% were unaware of the subsidy program itself. Distribution is highly inequitable, favoring the Terai region over remote hills (p < 0.001). Qualitative findings reveal four core themes: bureaucratic procurement paralysis, political interference, cooperative-level failures, and farmer coping strategies. The study concludes that the fertilizer crisis is fundamentally a governance failure, stemming from institutional monopolies, flawed procurement logistics, weak distribution networks, and poor policy communication. To achieve a resilient fertilizer supply system, policy reforms must prioritize decentralized distribution, strategic buffer stocks, revitalized public–private partnerships, and enhanced farmer-centric extension services.