1 Rural Urban Agriculture Market System: Challenges and Opportunities A Case Study: Eastern Nepal Masters Project for the partial fulfilment of Masters degree, Yale School of Forestry and Environmental Studies Submitted by: Raji Dhital May, 2004 Candidate for Masters of environmental Science, 2004 Submitted to: Colleen Murphy-Dunning Director, Hixon Center for Urban Ecology2 Acknowledgement: I am grateful to my advisor Dr. William Burch, Yale School of Forestry and Environmental Science for being patient with me and guiding me through my confusions. I am indebted to the Hixon Center for Urban Ecology and Tropical Resource Initiative for providing me the funds for this research and an opportunity to explore my own country better. I offer my sincere gratitude to the respondents of my research area: Rangeli, Katahari and Britannia who made this research an enjoyable learning experience for me with their generosity. I also highly appreciate the help of the staffs of Rural Urban Partnership Project, Nepal, especially Dr. Ramesh Munankami, Ms Indira Rai and Mr. Arjun Thapaliya, for guiding me in this research and introducing me to the farmers and businessmen. Last, but not the least, I thank from my heart Mr. Sumit Pokhrel for being with me whenever and wherever I needed him. Thank you all, for making this research possible.3 Abstract : For Nepal, still surviving on agrarian economy, agriculture market between rural and urban areas serves as the main linkage that shapes socio economic and ecological dynamics of the nation. Addressing the rural urban linkages is necessary because the phenomenon of urbanization in the third world like Nepal has been inevitable but unplanned. Since 80% of people in Nepal are farmers, it is impossible to analyze the nature of socioeconomic processes of Nepal without linking these processes to the rural –urban interactions between these farmers and the urban population. Detailed analysis of rural urban market mechanisms showed that urban markets show the potentials for the development of rural areas in Nepal. Agriculture market is the main source of agriculture income for the farmers and provides a resort even to the marginal farmers when they need cash. However local, national and transnational forces like unequal landholding distribution, governmental policies that do not provide any economic incentives and competition with subsidized products from India do not support the benefit for small farmers. Due to high investment and low returns, the agriculture market with the urban areas alone is not able to sustain farmers and compels them to look for the non-farm jobs and migrate in the urban areas, changing the ecological and sociological dynamics of both rural and urban areas. The phenomenon like migration exerts a pressure on the natural resource of the urban areas and the villages become dependent on the remittance economy of the migrants. These rural urban mechanisms are accelerated by adverse state policies and transnational trade agreements.4 Chapter: 1 ......................................................................... Error! Bookmark not defined. Introduction and Background.......................................... Error! Bookmark not defined. 1.1 STUDY AREA ................................................... ERROR! BOOKMARK NOT DEFINED. 1.2 OBJECTIVES ..................................................... ERROR! BOOKMARK NOT DEFINED. Chapter 2........................................................................... Error! Bookmark not defined. Literature Review ............................................................. Error! Bookmark not defined. 2.1 RURAL URBAN INTERACTIONS.......................... ERROR! BOOKMARK NOT DEFINED. 2.1 THE NATURE OF MARKET SYSTEMS: MICRO LEVEL GEOPOLITICS AND CULTURE............................................................................. ERROR! BOOKMARK NOT DEFINED. 2.2 TREND OF URBANIZATION IN NEPAL ................. ERROR! BOOKMARK NOT DEFINED. 2.3 FARMERS IN NEPAL AND THEIR INVOLVEMENT IN AGRICULTURE MARKET SYSTEM............................................................................. ERROR! BOOKMARK NOT DEFINED. 2.4 TRADE RELATIONS INSIDE AND OUTSIDE THE BORDER ...... ERROR! BOOKMARK NOT DEFINED. 2.5 THE RURAL FARMERS AND URBAN NOBLEMAN: HISTORY OF URBAN RURAL RELATIONS ............................................................ ERROR! BOOKMARK NOT DEFINED. Methodology...................................................................... Error! Bookmark not defined. 3.1 INTERVIEWS ..................................................... ERROR! BOOKMARK NOT DEFINED. 3.2 RESPONDENTS PROFILE FOR FARMERS .............. ERROR! BOOKMARK NOT DEFINED. 3.3 SECONDARY DATA SOURCES ............................ ERROR! BOOKMARK NOT DEFINED. 3.4. SOURCES OF ERROR: ....................................... ERROR! BOOKMARK NOT DEFINED. Results and Discussions .................................................... Error! Bookmark not defined. 4.1 EXISTING SOCIO-ECONOMIC CONDITIONS AND DETERMINING FACTORS AT LOCAL LEVEL:................................................................... ERROR! BOOKMARK NOT DEFINED. 4.1.1. Landholding .................................................... Error! Bookmark not defined. Source: Field study (2003) ............................................... Error! Bookmark not defined. 4.1.2. Production modes............................................ Error! Bookmark not defined. 4.1.3. Income vs Expenditure..................................... Error! Bookmark not defined. 4.2 MARKET MECHANISMS ..................................... ERROR! BOOKMARK NOT DEFINED. 4.2.1. Primary markets or haats ................................ Error! Bookmark not defined. 4.2.2. Intermediate markets / Secondary markets....... Error! Bookmark not defined. 4.2.3. Tertiary market system..................................... Error! Bookmark not defined. 4.2.4. The urban players............................................ Error! Bookmark not defined. 4.3. RURAL URBAN INTERACTIONS AND THEIR IMPLICATIONS .ERROR! BOOKMARK NOT DEFINED. 4.3.1. Investment for production................................ Error! Bookmark not defined. 4.3.2. Product and Capital Flow................................