A recently published article, titled “Behavior of Private Retailers in a Regulated Input Market: An Empirical Analysis of the Fertilizer Subsidy Policy in Nepal” has been co-authored by Shriniwas Gautam, evidence and learning associate with the University of Notre Dame’s Pulte Institute for Global Development. The article was published in Asian Development Review, a journal by the Asian Development Bank (ADB).
The article analyzed non-compliant behavior in the retail of subsidized fertilizer in Nepal and suggested a solution to increase the supply and distribution efficiency of the fertilizer.
Nepal’s private sector regulates and distributes three types of subsidized fertilizer, which are sold by agrovets—family-owned microenterprises. 55% of agrovets do not comply with regulations. Non-compliant agrovets acquire these fertilizers through leakage in the government’s distribution system or through illegal trade with India. Registered agrovets with membership in business associations and higher levels of competition were more likely to comply, while those with more diversified business profiles and covering more districts were less likely.
Researchers consulted stakeholders for their ideas on how to decrease noncompliance. While private sector stakeholders argued for the deregulation of fertilizer imports and for agrovets’ participation in its distribution, public sector stakeholders displayed skepticism about the ability and trustworthiness of the private sector to distribute the fertilizer. The study suggests a middle ground solution and a revisitation of the subsidy policy to remedy the issue of noncompliance while improving fertilizer distribution and availability.
Gautam is an expert in agricultural economics and has expertise in the planning and execution of agricultural and rural development projects. Asian Development Review is a journal that publishes research relating to development in the Asia and Pacific region.