Nepal’s largest economic activity agriculture shrank to 26.98 percent of the gross domestic product this fiscal year from 27.59 percent in the last fiscal due to an enlarged service sector, according to the Economic Survey unveiled by Finance Minister Yuba Raj Khatiwada at Parliament on Monday.

The farm sector’s contribution to the economy was 33 percent in fiscal 2014-15, and it has been declining steadily since then. Agriculture employs a massive amount of unproductive manpower which should be diverted to other sectors like industry, trade, tourism, education and health, the survey said.

As per the survey, Nepal’s agriculture sector is expected to grow 5.1 percent in the current fiscal year, a sharp rise from its 2.7 percent growth rate in the last fiscal year. The increase has been attributed to the better-than-expected monsoon this year. Government officials claimed that an adequate supply of chemical fertilizer and improved varieties of seeds also contributed to the growth.

According to the survey, Nepal’s agriculture has posted an average annual growth rate of 3.2 percent in the last two decades. The survey said that land plotting and construction of fish ponds had led to a decline in the area of fertile fields by 0.9 percent this fiscal year. Even then, crop production and productivity swelled by 6.2 percent and 7.1 percent respectively.

Nepal’s paddy harvest is expected to hit a record high of 5.61 million tonnes this fiscal year, according to the preliminary statistics of the Ministry of Agricultural Development slated to be released officially on Wednesday. The bumper crop is a 9 percent increase from the previous year, ministry officials said. The productivity of paddy is expected to grow by 3.76 tonnes per hectare. Maize production is expected to increase by 3.5 percent to 2.64 million tonnes. Nepal’s wheat harvest is projected to exceed 2 million tonnes this fiscal year and set a new record, up 5 percent. Overall, the country is likely to harvest 10.62 million tonnes of cereal crops this fiscal year, up 6.2 percent.

The survey said that sugarcane production was expected to grow 11 percent to 3.95 million tonnes this fiscal year. The sugarcane acreage also grew 9.5 percent to 86,101 hectares. Coffee and tea production is expected to grow 34.5 percent and 2.2 percent respectively.

Fish production is estimated to expand by 3.8 percent to 71,726 tonnes. Fish production has swelled as a result of the Prime Minister’s Agriculture Modernization Project which encourages farmers by providing incentives, the survey said.

This fiscal year, production of the high value crop large cardamom is expected to grow by 15.2 percent. Dairy and meat production is expected to rise by 6.5 percent each to 1.47 million tonnes and 248,000 tonnes respectively as of the eighth month of the fiscal year, the survey said.

This fiscal year, crop losses have been reported on 39,239 hectares of land against 144,724 hectares in the same period last year.

The survey said that as of this fiscal year, irrigation facilities had been provided to 1.47 million hectares out of the total 2.64 million hectares of farm land. Lack of water and delays in the completion of multipurpose projects meant that only 33 percent of the total agricultural land received irrigation facilities throughout the year. Irrigation was extended to an additional 3,210 hectares of land this fiscal year.

In the current fiscal year, agriculture loans mobilized by financial institutions jumped 40.6 percent to Rs180.42 billion, the survey said. Five years ago, loan mobilization in the agriculture sector was Rs50.91 billion, as per the survey.