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By Shambhu Prasad Deo

Across South Asia, agriculture employs 40 to 60 percent of workers but contributes only 7 to 23 percent of GDP. Households now favor gold over reinvesting in farms—a rational pivot from structural woes, not culture. In Nepal, 100 quintals of paddy, at Rs 3,628 per quintal minimum support price (MSP) barely buys one tola of gold costing Rs 307,000.

Agriculture’s Declining Returns:

Smallholders grapple with 30 percent input cost hikes and shocks like 2024 floods halving eastern yields. Nepal’s rice production hit 5.7 million tons, 2025/26 forecast, yet a 1 million-ton deficit persists, driving Rs 38.94 billion imports July-May 2025.

Procurement is spotty: Food Management and Trading Company Limited (FMTC) began buying at MSP in October 2025, but coverage lags.​ Households bear the risks, with real farm incomes stagnant or falling 1–2percent annually (FAO, 2025).

Gold’s Rational Appeal:

South Asia holds 30,000 tonnes of private gold, India alone at 25,000 (World Gold Council, 2025). Imports surge in crises, offering liquidity and inflation hedges—9 prcent average annual returns in local currencies (2015–2025), versus rice’s 4  percent nominal growth eroded by costs. It’s not speculation; it’s survival when fields falter. Nepal’s gold hoarding spikes in distress, mirroring India’s 25,000-tonne holdings. It secures inflation and policy risks better than volatile farm gate prices.​

Market Signals and Consequences:

Prices scream: preserve, don’t produce. Youth are fleeing farms and land remain idles. This spurs food imports, Nepal’s rice deficit hit 500,000 tons in 2025, added with debt traps, and vulnerability to global shocks. Growth turns asset-fueled, not productivity-led.Critics note gold’s crisis illiquidity, yet it outperforms amid policy gaps.

Policy Pivot Needed:

There is need to treat agriculture as economic engine, not as only a welfare. Prioritizeing: universal crop insurance, integrating fiscal tools, Reach Effectiveness Adoption Implementation Maintenance (RE-AIM) framework for scaling, Prime Minister Agriculture Modernizing funds, other federal procurement hubs in Nepal, and processing investments are urgent. Policies, programs and successful implementation mechanisms should be in place. Subsidize storage, processing to cut 1M-ton deficit; tie to equity frameworks as policy favors.  Improvements in crop insurance—mandatory for grants—stalled in 2024 over Rs 3 billion subsidy delays; 2025 trainings signal revival, but insurers halt sales without funds. Make farming rival gold: secure incomes via guarantees, not gestures.

Federalism’s Procurement Pitfalls:

Post-2015 federalism promised decentralized agriculture, but silos hinder procurement: provinces like Madhesh struggle with storage/rain delays, 80 percent transplant completion. Minimum Support Price announcements, pre-sowing in FY 2025/26, and advance contracts aim to fix this, yet fiscal transfers fall short.

Broadly whole spectrum can be concluded as, gold’s edge indicts failed incentives—from federal procurement gaps to subsidy snarls. Nepal must leverage federalism for credible buffers, restoring agriculture’s legitimacy. Or fields empty as vaults fill—a market verdict policymakers ignore at peril.