From Support to Stability: How Group-Based Agriculture Programs Helped Nepal Face COVID-19

The study finds that group-based agricultural support in Nepal, especially when it includes training, assets, and credit, significantly increased farm productivity, sales, and incomes, with benefits lasting well beyond the program period. Crucially, both earlier and pandemic-era support helped farmers withstand COVID-19 market disruptions, with the strongest income gains accruing to poorer households.

Produced by researchers from the Asian Development Bank (ADB), with field data collected by New ERA–Nepal and implemented in close coordination with Nepal’s Ministry of Agriculture and Livestock Development, a working paper examines whether group-based agricultural support can deliver lasting gains for smallholder farmers, and whether those gains endure during a systemic shock like COVID-19. Focusing on western Nepal, the study follows farming households over eight years to assess how training, input subsidies, productive assets, and credit, all delivered through farmer groups and cooperatives, shaped productivity, income, and resilience before and during the pandemic.

From Subsistence to Markets: Nepal’s Agricultural Challenge

Nepal’s rural economy remains heavily dependent on agriculture, yet farming is constrained by small and fragmented landholdings, rugged terrain, limited irrigation, and weak market connectivity. Most households rely on low-value cereal production for food security, while migration and remittances fill income gaps. To break this low-productivity trap, the government and development partners have promoted agricultural commercialization since the early 2010s, encouraging farmers to adopt higher-value crops, invest in technology, and engage more actively with markets. A defining feature of this strategy is the exclusive use of registered farmer groups and cooperatives to channel support, both to reduce costs and to promote collective learning, access to finance, and market linkages.

How Support Was Delivered, and Studied

Between 2014 and 2022, farmers in the study districts received varied combinations of support. Some received subsidized fertilizer and seed, others participated in training on crop production, pest management, or new technologies, while a smaller share received productive assets, such as irrigation equipment or machinery, through matching grants. Credit, typically offered via cooperatives, complemented these interventions by easing liquidity constraints. Most beneficiaries received more than one type of support, reflecting the multi-dimensional nature of agricultural development programs in Nepal.

To evaluate impacts, the authors draw on a rare three-round household panel survey conducted in 2014, 2018, and 2022. Using household and time fixed effects alongside inverse probability weighting, the analysis controls for observable differences between beneficiaries and non-beneficiaries. Crucially, the study exploits geographic variation in COVID-19-related market disruptions: some areas experienced prolonged closures, while others did not, allowing the authors to test whether agricultural support strengthened resilience to shocks.

What the Evidence Shows: Productivity, Income, and Resilience

The results show clear and substantial benefits from agricultural support delivered through groups. Households receiving any form of support experienced significant increases in crop productivity, crop value, and crop sales, signaling a shift toward more intensive and commercial farming. Support received up to 2018 continued to generate benefits years later, indicating persistence beyond the immediate program period. Assistance delivered between 2018 and 2022 produced strong gains in productivity and income in areas where markets remained relatively open.

COVID-19 sharply disrupted agricultural markets, particularly for commercially oriented farmers. In affected areas, households without support suffered large declines in crop value and sales. By contrast, households receiving support during the pandemic saw many of these losses offset. Even more striking, farmers who had received support only before 2018 still performed significantly better during COVID-19 than those who had never been supported. This suggests that earlier investments had strengthened farmers’ capacity to cope with market shocks, not merely boosted output temporarily.

Which Interventions Mattered Most, and for Whom

Not all support was equally effective. Packages that included training consistently delivered large gains in productivity, crop value, and sales, and were especially powerful in mitigating COVID-19 impacts. Productive asset support, though less widespread, showed particularly strong long-term resilience effects, with pre-2018 recipients recording higher crop values and incomes during the pandemic. Credit support also exhibited persistence, helping households stabilize production and sales when markets faltered. Input subsidies, while effective in the short run, showed weaker long-term effects and limited evidence of lasting resilience once subsidies ended.

Distributional analysis reveals that these programs were broadly inclusive. While gains in crop value were concentrated among middle-range producers, income effects were clearly progressive. Lower-income households, more dependent on agriculture than on wages or remittances, experienced the largest proportional income gains from support, indicating that group-based interventions did not simply favor better-off farmers.

Lessons for Policy After COVID-19

The study demonstrates that group-based agricultural support in Nepal has delivered durable improvements in productivity, commercialization, and income, while also strengthening resilience to an unprecedented shock. The findings underscore that the type of support matters: training, assets, and credit generate more persistent benefits than recurring input subsidies. By showing that agricultural assistance can both raise incomes and protect livelihoods during crises, the paper makes a strong case for sustained, multi-dimensional support strategies as part of Nepal’s long-term rural development and resilience agenda.