Cost-Benefit Analysis of the Family Farm Model in Far-West/Mid-West Terai in Nepal paddy Cultivation

Nepal’s Flood Recovery Program (NFRP) is operating in Kailali, Bardiya, Banke, and Kanchenpur districts to increase farm productivity and family income, including rehabilitation and development of small-scale community infrastructures. The purpose of this modeling exercise is to estimate the net benefit of a USAID intervention in paddy cultivation and the impact of this intervention on the income of the family. The intended intervention on paddy cultivation is positive in terms of incremental economic and financial feasibility. For this project to be implementable, the farmers need to have access to a financial institution that will provide them with additional short-term credit. The contribution of paddy cultivation increases family income in the “with” intervention situation but is not large enough alone for the farm families to achieve poverty-line income. In summary, improving the productivity of single-crop paddy farming in Nepal is not an intervention that is likely to become a key element in raising the Nepalese rural families’ income above the poverty line in Far-West and Mid-West Terai. Paddy growing on small acreages, however, is likely to be critical in providing insurance for food self-sufficiency within the family while some family members seek off-farm employment at home and abroad.