Low rainfall, fertiliser shortage, high fuel prices and strict border trade. What impact will it have on Nepal’s ailing agriculture sector?

Experts say the impact will be big because it will reduce the purchasing power of farmers, increase food prices, drive up food imports, reduce water level in the rivers, reduce electricity generation, weaken aquifer recharge and more. This will weigh down heavily on the overall economic growth.

Nepal is likely to witness below-normal monsoon rains after three consecutive years of above-average rainfall, according to a regional consensus among South Asian meteorologists.

The 34th session of South Asian Climate Outlook Forum and Climate Services User Forum, on Wednesday, indicated that below-normal rainfall is most likely during the 2026 southwest monsoon season (June-September) over most parts of South Asia, including Nepal.

This regional climate outlook was jointly prepared by the nine National Meteorological and Hydrological Services of the region, with support from international experts. The process involved an expert assessment of the prevailing global climate conditions, national level forecasts and forecasts from different climate forecasting agencies around the world.

“The combination of low rainfall, shortages of chemical fertiliser and high fuel costs may spell disaster for the farming sector,” said Devendra Gauchan, a leading agricultural and food system expert in Nepal. “We need an urgent coping mechanism. The government has to plan,” said Gauchan, who is also a member of the National Planning Commission.

Monsoon rains are vital for Nepal’s Rs6.6 trillion economy, as they deliver nearly 80 percent of the water essential for agriculture and replenish reservoirs and aquifers.

As nearly half of Nepal’s farmland lacks irrigation, the June-September rains play a pivotal role in crop production. The monsoon is therefore seen as a critical macroeconomic factor, closely monitored by investors, policymakers, and consumers alike.

As Nepal’s economy heavily relies on rural areas, monsoon performance directly influences consumer spending. The agricultural sector contributes about 24 percent of Nepal’s GDP and employs over 60 percent of the population.

The combination of three factors—low rainfall, fertiliser shortage, high fuel prices—as said by experts may affect the country’s struggling economy further, a big headache to the new Rastriya Swatantra Party government, which aims to achieve 7 percent annual economic growth and double the per capita income to at least $3,000. With this growth rate, the government has promised jobs and better public service delivery, and aims to increase the size of the economy to close to Rs100 trillion within five to seven years.

The World Bank said on Tuesday that fertiliser prices are projected to increase by 31 percent in 2026, driven by a 60 percent jump in urea prices as the US-Israeli war on Iran hits the global economy in cumulative waves.

“Fertiliser affordability will fall to its worst level since 2022, eroding farmers’ incomes and threatening future crop yields. If the conflict proves more prolonged, these pressures on food supply and affordability could push up to 45 million more people into acute food insecurity this year,” according to the World Food Programme.

Nepal is also bracing for the worst-case scenario. The appreciation of the US dollar against the Nepali rupee, along with global shortages of chemical fertilisers, has nearly tripled the costs of these farm vital inputs in the last two months, according to Nepali authorities supplying chemical fertilisers.

Besides, the rise in petroleum prices may also affect farmers using pump sets and borewells to irrigate their farms in the upcoming paddy transplantation period, which normally begins in mid-May in the hills and mid-July in the Tarai.

“Research has revealed that the organic matter content in the soil in Nepal is very low, approximately 1 percent when it should be 4-5 percent. In such a context, lack of fertiliser and water may spell disaster for farmers,” said Rajendra Uprety, a rice expert. “Low rains also mean low water supply in irrigation channels.”

According to him, if there is low rainfall, low productivity is normally offset by applying higher chemical fertilisers. “If both are scarce, food yields drop and trigger acute food insecurity.”

He, however, said that low rainfall does not mean it will not rain at all. “It’s a distribution pattern. If there is low rainfall but its distribution is regular, it won't affect the crop.”

This forecast, however, does not include variations in rainfall, which have now become a key feature of Nepal’s monsoon.

The below-normal rainfall forecast, for example, is no indicator of how many extreme rainfall events are likely to occur this coming season. Such events have been steadily increasing over the last few years and have turned into large-scale disasters.

Unseasonal rainfall in 2025 caused widespread damage to paddy crops. The farming season was further disrupted by drought conditions during the transplantation period in June last year, particularly in Madhesh province, followed by floods in October that destroyed remaining harvests.

Several studies have linked the increasing trend of such incidents in recent years to climate change.

According to Uprety, the government should remove the subsidy on fertiliser and boost supply using the same resources currently allocated for subsidies.

For Nepali farmers, smuggling from neighbouring borders has long been a common practice, but this year borders have been more strictly regulated.

The fertiliser and fuel problem is also present in India. If Nepal’s southern neighbour suffers from low rainfall, it may significantly impact Nepal’s market as well due to the large volume of food Nepal imports from India.

According to a report by USAID, nearly 70 percent of the 600,000 to 800,000 tonnes of fertilisers consumed annually in Nepal are imported through informal channels. This shows the country’s heavy dependence on smuggled supplies.

A former executive of the state-owned Salt Trading Corporation, one of the main importers and distributors of chemical fertilisers, said that for decades Nepal has relied on such smuggled supplies. However, this year India—the world’s largest importer and consumer of fertiliser—is itself under pressure to secure adequate supplies for its farmers.

The National Statistics Office on Tuesday said that the agricultural sector, which contributes 24.03 percent to the GDP, is expected to grow by only 1.58 percent in the current fiscal year ending mid-July, down from 3.05 percent last year, reflecting the impact of extreme weather events.

Paddy production alone is estimated to have declined by 4.16 percent, although gains in other crops such as legumes and cereals helped partially offset the losses.

Gauchan said that the government should launch coping programmes—using deep tube wells, changing cropping patterns to drought-resistant crops, and diversifying income sources.