Coffee Cultivation Practices and Socio- Economic Dynamics of Coffee

Farmers in Gulmi district, Nepal.

Submitted By

Aditya Karki

Arya Pokharel

Benish Koirala

Deepika Neupane

Manju Kafle

Neeraj Bhandari

Sukriti Acharya

A Field Immersion Report

Submitted to

School of Management, Tribhuvan University

In the partial fulfillment of Masters of Business Administration

May, 2024

Kirtipur, Kathmandu
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Abstract

Coffee farming dominates the mid-hills of Nepal due to its profitability, which is

nearly three times higher than other cash crops. While organic Nepali coffee from

smallholder farmers gains international recognition, it faces challenges from pests, diseases,

and climate change that impact its sustainability. This study focuses on exploring the

dynamics of coffee production in Gulmi district of Nepal, the challenges, and socio-economic

impacts. Using descriptive and exploratory research design, this research adopted a

qualitative approach to evaluate the current practices, challenges, and socio-economic

impacts of coffee farming in Gulmi. Data were collected through purposive sampling offering

detailed qualitative insights from the study area, Gulmi district. Specifically, respondents

included participants from the District Coffee Program in Baletaskar, the District Coffee

Cooperative Union in Tamghas, as well as farmers, and processors in Anpchaur. The key

findings indicate that an aging farming population with limited education is engaged in

coffee farming, highlighting the need for interventions in modern farming practices. The

sector also faces challenges from pests, diseases, climate change, and labor shortages, which

impact sustainability and livelihoods. Additionally, there is a need for various government

support mechanisms, such as irrigation, subsidies, and training, to assist farmers.

Key Words: Coffee Farming, Organic Coffee, Socio-Economic, Gulmi Nepal

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Introduction

Coffee has become an important beverage with significant value in the global export

market, which has led to an expansion of coffee cultivation in Nepal, which now reaches 42

districts in the mid-hills region (MoAD, 2015). When compared to other cash crops, coffee is

almost three times more profitable and when compared to cereal crops, it is almost five times

more profitable (Dhakal, 2004). In Nepal's mid-hills, the coffee industry may be a suitable

and profitable venture (Acharya et al., 2015). The unique ecological conditions of the

Himalayan hills provide Nepali coffee with a distinctive opportunity to enter international

specialty markets. As a result, Nepali coffee is often exported as organic, cultivated by

smallholder farmers in resource-limited settings under organic conditions (PACT, 2012).

The production of coffee has increased from 135.7 ha in the fiscal year 1994/95 to 3,343

ha in 2021/22 with an increase from 12.95 mt of dry cherry to 394 mt of dry cherry in the

same duration (Paudel & I.H, 2023). Due to the abundance of organic produce and a distinct

microclimate, Nepalese coffee has a traditional flavor, aroma, and taste, exhibiting the great

potential of coffee growing in Nepal (KC et al., 2014). In 2022, Nepal exported coffee worth

$977k, making it the 111th largest exporter of coffee globally. Additionally, coffee was the

102nd most exported product from Nepal that year, according to the Observatory of Economic

Complexity (OEC). However, the Nepalese coffee sub sectors are still categorized as low-

production sectors attributed to biotic and non-biotic factors (Paudel, 2023). The 2021/22

harvest season, Nepal produced 354.9 tonnes of coffee, a decline from the record 530 tonnes

produced in 2018/19 (National Tea and Coffee Development Board, n.d). Although Nepal

produces very little coffee for the global market, its highland and organic Arabica coffee has

been enjoying premium prices and niche markets for the past ten years because of its pleasant

aroma and superior cupping, which has gradually accelerated the spread of coffee farming
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throughout Nepal‟s rural areas (Manandhar et al., 2009; Panthi et al., 2008). This calls

attention to the practices adopted in Nepal for the cultivation of coffee.

Even though there are 42 districts involved in coffee production, Gulmi district was

first district to start coffee production in Nepal when Mr. Hira Giri brought some coffee seeds

from Sindhu Province, Myanmar in 1938 A.D (National Tea and Coffee Development Board,

n.d). Gulmi has 1965 small farmers and 256 ha of land cultivated for coffee production

boasting a yield of 121.09 kg per ha in fiscal year 2022/23, in comparison has increased from

fiscal year 2021/22 (MoALD, 2023). As such, this research aims at exploring the coffee

production in Gulmi district of Nepal, the challenges, and socio-economic impacts on

farmers.

Purpose

The major objectives of this study are as follows:

1. To assess the current practices and challenges in coffee cultivation, within Gulmi

district.

2. To explore the socio-economic effects of coffee production on farmers livelihood in

the Gulmi district.

3. To examine factors such as income generation, livelihood, gender roles in coffee

production, and support mechanisms related to coffee farming in Gulmi District.

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Literature Review

Coffee Production

In the realm of coffee production, various studies (Kattel et al., 2007; Khanal et al.,

2017; Kafle &Kaphle, 2019; Kharel & Adhikari, 2021) have highlighted the importance of

effective farming techniques, shade management, and achieving optimal output.

Conventional and organic farming practices offer different benefits and challenges. Organic

farms tend to yield lower quantities but fetch higher market prices, suggesting a trade-off

between quantity and value (Kattel et al., 2007). Additionally, the integration of shade crops

with coffee cultivation has been shown to significantly enhance productivity, underscoring

the ecological benefits of such practices (Khanal et al., 2017). However, productivity issues

continue to be a major concern, with factors like shade management, soil fertility, and farm

management practices playing critical roles in determining output (Kafle &Kaphle, 2019;

Kharel & Adhikari, 2021). The optimization of these factors is crucial for maintaining the

sustainability and profitability of coffee farming.

Support Mechanisms for Coffee Production

Support mechanisms such as training, loans, and subsidies are essential for the

development of a robust coffee sector among which access to training and technical

assistance has been identified as a key factor in enhancing coffee productivity and

competitiveness (Bhandari, 2022; Bhattarai et al., 2020). Training programs help farmers

adopt more sustainable practices and improve their understanding of market dynamics, which

in turn can lead to better crop management and increased yields. Moreover, financial support

in the form of loans and subsidies enables farmers to invest in better technology and

infrastructure, thereby facilitating improvements in both quality and quantity of coffee

production.
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Income Generation (Source of Livelihood)

Coffee farming is a significant source of livelihood for many rural households in

Nepal, contributing substantially to household income (Bhandari, 2022). The profitability of

coffee, characterized by its benefit-cost ratio and profitability index, highlights its potential as

a lucrative agricultural sector (Bhandari, 2022). However, the dependency on coffee also

makes farmers vulnerable to market fluctuations and production shocks, which can drastically

affect their income stability.

The study conducted by Bhattarai et al. (2020) revealed that the agriculture sector

contributed 41% to total household income, whereas the non-agricultural sector accounted for

59% in Gulmi district. Within the agricultural sector, the primary contributors were milk and

milk products, comprising 43%, followed by others while Coffee cultivation represented 5%

of the total agricultural income. In the Gulmi district, 78% of coffee-growing households had

both male and female members actively involved in coffee production, while 20% had only

female members, and 2% had only male members participating. Cost-Benefit Ratio in Gulmi

district is 2.02 signifying higher profitability in coffee production.

Kafle and Kaphle, (2021) states that in the coffee super zone areas, Gulmi and

neighboring districts face challenges in manpower due to small family sizes and rising labor

costs. Coffee production is largely managed by female household heads, but youth are

increasingly involved due to its profitability. Most growers rely on district cooperatives for

organic certification and marketing. The pricing of coffee is determined by local factors and

quality, with occasional premium prices offered by district-based organizations.

Supply Chain

The coffee supply chain is fraught with challenges, particularly in the aspects of

marketing margins and international market access (Pandit et al., 2015; Sainju, 2021).

Despite the high quality of Nepali coffee, issues such as inconsistent quality, limited quantity,
 5

and logistical challenges hinder its competitiveness on the global stage, and also the lack of

modern processing facilities and the inefficiencies in local packaging and certification

processes further exacerbate these challenges (Sainju, 2021). Strengthening the supply chain

through better infrastructure, streamlined logistics, and compliance with international

standards is crucial for enhancing the global presence of Nepali coffee.

Challenges (Biotic and Abiotic Factors)

Coffee production in Nepal is affected by both biotic and abiotic challenges that

significantly impair crop yield and quality. Biotic factors such as insect pests and diseases are

prevalent, with studies noting these as major impediments to coffee productivity (Bhandari,

2022; Kattel et al., 2007). Abiotic factors, including frost and hailstone, also pose risks,

particularly due to climate variability and inadequate orchard management techniques (Kafle

&Kaphle, 2019). Addressing these challenges through integrated pest management, improved

irrigation practices, and climate-smart agriculture is vital for sustaining coffee production in

the face of changing environmental conditions.

In 2022, Nepal exported coffee worth $977k, making it the 111th largest exporter of

coffee globally. Additionally, coffee was the 102nd most exported product from Nepal that

year, according to the Observatory of Economic Complexity (OEC). In 2015, Ministry of

Agricultural Development initiated the process for insurance of coffee plantation. Despite of

this, Nepal faces challenges in organic certification and lacks a structured crop insurance

system, both of which are top concerns for coffee producers (Bhandari et al., 2022).

The productivity and growth of coffee cultivation in Nepal are threatened by the

White Stem Borer (WSB) and Coffee Leaf Rust (CLR) (Bhandari et al., 2022; Acharya and

Pun, 2016; Poudel et al., 2009). If these challenges, along with the lack of organic

management practices, are not addressed, Nepal could lose its international market for

organic and fair trade coffee. Additionally, coffee farms in Nepal require irrigation support to
 6

maintain adequate moisture levels for plant growth and to reduce WSB infestation (Acharya

& Pun, 2016). One of the major limitations faced by the research team was inconsistency in

coffee related data published by Planning Commission, Ministry of Commerce and Supplies

and Nepal Tea and Coffee Development Board.

Policies Review for Coffee Production

The Tea and Coffee Board Act, 2049

The Tea and Coffee Board Act, 2049, established the National Tea and Coffee

Development Board as an autonomous entity aimed at enhancing the tea and coffee industry

in Nepal. The Act empowers the Board with corporate characteristics such as perpetual

succession and the authority to manage assets, undertake transactions, and initiate or face

legal actions in its name. Structurally, it features a decentralized approach, with a main office

in Kathmandu and the provision to open branches as needed. The Board is tasked with a

multitude of responsibilities including the formulation of development strategies, resolution

of industry issues, and coordination with relevant stakeholders to bolster industry growth.

Furthermore, it encompasses the creation of training and research centers to foster innovation

and skill development within the industry.

The Act specifies the composition of an executive committee comprising various

stakeholders including government officials and representatives from the private tea and

coffee sectors, ensuring diverse input in decision-making processes. This committee is

charged with overseeing the day-to-day operations and broader strategic initiatives of the

Board. In terms of financial management, the Act outlines the establishment of a distinct fund

for the Board, detailing permissible sources of funding such as government grants,

international assistance, and revenue from services provided by the Board. Additionally, it

mandates regular audits by the Auditor General to uphold financial transparency. The

governance framework within the Act facilitates robust management and sustainable
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development of Nepal's tea and coffee industries, aiming to enhance both domestic operations

and international competitiveness.

National Coffee Policy 2003

The National Coffee Policy 2003 of Nepal, initiated under the National Tea & Coffee

Development Board Act 1992, is designed to transform the coffee industry into a significant

economic contributor by promoting exports, enhancing employment, and ensuring

sustainable agricultural practices. The policy strategically focuses on technological

advancements and infrastructure development such as improved road access and modernized

equipment, vital for enhancing productivity and quality. It supports a regulatory environment

that includes incentives for machinery imports and the development of skilled labor tailored

for the coffee sector. Additionally, it emphasizes branding initiatives, including the

promotion of a national logo for Nepali coffee, and advocates for the production of coffee

processing tools domestically to reduce import dependency.

Marketing and trade promotion are pivotal to the policy, with simplified export

procedures and initiatives to prioritize domestic coffee consumption to stabilize local markets

and reduce imports. Institutional arrangements encourage industry engagement in

international fairs and continuous quality enhancement, aiming to foster a globally

competitive coffee sector. The establishment of a Coffee Development Fund, sourced from

various international and national avenues, underpins these initiatives, ensuring financial

support for continuous research and development. Overall, the National Coffee Policy 2003 is

comprehensive, aligning production, marketing, and institutional frameworks to make the

Nepali coffee industry sustainable, attractive, and economically vital.

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Methodology

This research adopted a qualitative approach to explore the socio-economic impacts

of coffee production on farmers in Gulmi district, using descriptive and exploratory research

design. The study utilized an inductive approach, drawing insights from the data to develop

broader themes and patterns.

A structured questionnaire was developed to gather data on key themes related to

coffee production, including production, support mechanisms, income generation, supply

chain and challenges.

Study Population

The study area is Gulmi district. Specifically, District Coffee Program in Baletaskar,

District Coffee Cooperative Union in Tamghas, Government officials and Farmers

incorporated the respondents to capture diverse range of perspectives from individuals

involved in coffee production. In total, there are 1965 farmers in Gulmi district.

Sample Size and Sampling Technique

Qualitative studies typically require a minimum sample size of at least 12 participants

to reach data saturation (Clarke & Braun, 2013). Therefore, a sample of 13 was considered

adequate for the qualitative analysis and scope of this study. In total of 13 respondents, 7

farmers from Anpchaur, and 5 officials groups are the sample for this study.

Participants were selected purposively based on specific criteria relevant to the

research objectives, including expertise in coffee cultivation, processing, and community

leadership roles. First, farmers in Anpchaur municipality were purposefully selected because

it is the highest coffee-producing local body in Gulmi. Second, there is a lack of an actual list

of coffee farmers. Hence, a non- probability sampling method, snowball sampling was

employed in which the respondent (farmer) assisted in recruiting other participants.

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Purposive sampling was employed to select the respondents for in-depth interviews

based on specific criteria relevant to the research objectives, including expertise in coffee

cultivation, processing, marketing, and community leadership roles.

Data Collection Procedures

In-depth interviews are the primary data collection method for detail exploration of

the participants‟ perspectives. Key informant interview was administered to selected

stakeholders, experts, and individuals involved in the various organizations related to coffee

industry in the Gulmi district. Interviews were conducted in person to build rapport between

the interviewer and participants, encouraging open dialogue. This study used a semi-

structured interview schedule (See Appendix), ensuring consistency across interviews while

allowing for flexibility to explore the main issues targeted by the research.

Prior to interview, participants were informed about the outline of the study and their

rights and ensured the confidentiality of their responses. Interviews were only to be recorded

with participants‟ consent and transcribed as it for further analysis.

Data Analysis Procedures

Systematic thematic analysis was used to identify, analyze, and interpret patterns in the

interview transcripts. This involved systematic coding, categorizing, and refining the data to

uncover underlying meanings and connections. Latent reflexive thematic approach was used

to generate codes, themes, and subthemes for the study.

Credibility and Rigor

To ensure the credibility and rigor of the research, several measures were

implemented:

Member checking: Transcripts were shared with participants for feedback, to verify

accuracy and to ensure no misinterpretation done by the researcher during the transcription

process.
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Mentor supervision: The researchers worked constantly under guidance and feedback

from the supervisor throughout the research process, ensuring that there is proper adherence

to methodological standards and enhancing the quality of the research.

Ethical Considerations

The research will adhere to ethical principles throughout the study:

Informed consent: Participants were provided with clear and comprehensive

information about the study, including its purpose, procedures, and potential risks if there are

any. Participants will have full right to withdraw from the study at any time.

Confidentiality: Researchers realize the importance of the respondents' privacy, so their

identities and personal information will be kept strictly confidential.

Non-maleficence: The researchers will avoid causing any harm or discomfort to

participants. Respect for autonomy: Participants of the study will be treated with respect and

their autonomy will be kept as utmost priority throughout the study.

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Results

Demographics

Table 1

Demographic Profile of Farmers

Output

Family Area 2080BS * Selling

Farmer Gender Age Education size Cultivated (dry cherry) Price**

F1 Female 41 SLC 6 2 ropani 10 160

F2 Female 43 Below SLC 6 1 ropani 10 150

F3 Male 63 Below SLC 10 17 ropani 100 180

F4 Male 62 Below SLC 6 2 ropani 40 160

F5 Female 63 Below SLC 11 1 ropani 6 150

F6 Male 63 Below SLC 6 10 ropani 40 170

F7 Male 71 Below SLC 7 10 ropani 20 160

* in Kgs.

** in Rs.

Table 1 presents the demographics of the farmers who were interviewed. The table

depicts almost equal participation of both the genders in coffee farming process with 4 males

and 3 females. The case was confirmed through observation as most of the house sampled

consisted of both the male and female members working together in the field. The table also

reveals that most of the farmers have entered late adulthood (60-99 years) as only two

farmers are in middle adulthood (40-59 years). This signifies lack of younger generation

(aged 40 and below) in coffee cultivation process. Further, the education level of the

interviewed farmers is SLC (School Leaving Certificate)or below, with only one farmer (F1)
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having reached the SLC level, indicating that the educational attainment among the farmers is

relatively low. This may influence their farming practices and training comprehension.

The family sizes range from 6 to 11 members, representing that these households are

relatively large, suggesting more mouths to feed, which could put financial pressure on the

outputs from farming. Additonally, the output in dry cherry coffee ranges from 6 kg to 100

kg, highlighting the variability in production. Despite this, the low output means even farmer

F3 was able to earn only Rs.18,000 (100 kg times Rs. 180) in the year 2080 BS, suggesting

the income from coffee not being enough to sustain livelihood, adding to the large family size

as well.

Selling prices per kilogram of dry cherry coffee vary slightly among the farmers, from

Rs. 150 to Rs. 180. This variation might be due to differences in the quality of the coffee,

negotiation skills, or access to markets or direct contracts with buyers. It is also noteworthy

that the highest selling price is for F3, who produces the most coffee, suggesting he may have

better access to lucrative markets or quality production that fetches higher prices. The floor

price for coffee is determined by The National Tea and Coffee Board of Nepal.

The price of „A‟ grade dry cherries dried in direct sunlight or through other processes

with a moisture content of 11 percent has been fixed at Rs200 per kg for 2081 BS, up by

Rs30 per kg. The minimum price of „B‟ grade dry cherry has been fixed at Rs150 per kg for

2081 BS, up by Rs35 per kg. The minimum support prices are government-guaranteed prices

for farmers' produce.

The area cultivated varies significantly among the farmers, from as little as 1 ropani

(approximately 508.72 square meters) to as much as 17 ropani (approximately 8651.24

square meters). This substantial variation might affect the total production output, as

evidenced in the table where F3, with 17 ropani, produces ten times more coffee (100 kg)

compared to F5 who cultivates only 1 ropani and produces 6 kg.

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Table 2

Coding of Key Informants

Key Informant Organization

KI1 Coffee Research Center,Gulmi

KI2 Coffee Cooperative Limited, Gulmi

KI3 District Cooperative Union, Gulmi

KI4 Coffee Development Board, Gulmi

KI5 Agriculture Knowledge Center,Gulmi

KI6 National Tea and Coffee Development Board, Kathmandu

Production

For the production of coffee, farming technique, the output generation, and shade

management are of vital importance. While the farming techniques have changed slightly

from the start of coffee production till today, trainings have played a crucial role in shaping

farmer‟s knowledge in changing the farming technique and adopting an effective one.

However, the output has been in declining phase despite awareness for shade management; a

crucial aspect of coffee farming.

Farming Technique

There have been slight changes in the farming technique from the inception of coffee

farming till date. The training has made farming easier and faster because initially the

farming was solely based on shared knowledge among farmers. However, coffee production

in Gulmi district is still labor-intensive. Despite using modern machineries for parchment,

hauling, roasting, and dusting the coffee beans, the farming on the other hand is still labor

intensive with farmers employing labors minimum 6 days a year for physically demanding

works such as digging, mulching and also for less physically demanding works such as
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bedding. Additionally, there is disparity in the payment between males and females, since

males are engaged in more physically demanding works. Furthermore, dung from livestock

farming (buffalo and cows) is used as manure for the plant by the farmers. The coffee

research center is researching manure such as chicken feces, mustard seed cover, cow &

buffalo dung, and goat feces to identify the high cherry yielding manure for coffee.

“Yes, there are small changes. For example: we used to be engaged in coffee farming

based on shared knowledge based on experience rather than based on training. Previously,

we just used to plant 18 months old plant on soil, we didn’t have the conceptual knowledge of

having to dig the ground for planting the plant”- F3

“Since coffee is a laborious crop, 85% of female workers are found as patience is

required from harvesting to orchard management and beyond. Males don't try to make

bedding by picking sand” – KI4

“I pay Rs. 400 per day to labors and employ 4 labors 6 days a year, mostly females”

– F1

“Yes, and there is difference in the wages given to men and women labors. 400 for

women, a skilled woman gets about 600.”- F3

“…….digging holes and other labor intensive works are accomplished by men, while

carrying manure and other small works are accomplished by women.” – F3

Furthermore, the farmers are strictly prohibited to use any fertilizers other than

organic. However, Quick Lime (“Chuna”) is allowed to control pests. Organic certification is

provided through bodies such as NASAA (The National Association for Sustainable

Agriculture Australia) and OCN (Organic Certification Nepal).

“….right now Quick Lime (“Chuna”) is being tested for controlling pests and we

allow farmers to use them in the plants”. – KI1

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“Without going through ICS (Internal Control System), the coffee cannot be declared

as organic. Organic certification can only be obtained through ICS. [………..] we can only

use quick lime in the plants…….”- F3

“Nepalese coffee, especially Gulmeli coffee is regarded as Organic Coffee, and was

certified by the regulatory authority NASAA, as purely organic […………]but the coffee is

purely organic without the use of any pesticides and chemicals during production” – KI3

Shade Management

Shade management is of utmost importance for coffee farming. Cultivated at an

altitude ranging from 700- 1400 m above the sea level, maintaining 50-60% shade to sunlight

proportion is absolutely necessary for coffee farming. For shade management, artificial

shading such as the use of nets or natural and permanent shading through fruit bearing trees

such as avocado, jackfruit, banana, guava, macadamia nut and non-fruit bearing tree such as

epil are also used for shade management. However, the yields from fruit bearing plants are

not sufficient to be sold for income generation. Farmers are aware about the importance of

shading for coffee, but improper shade management still persists in certain farm (F1, F2 &

F5).

“Coffee is shade loving plant; either temporary or permanent shading must be there,

with 60 % shade. We also Suggest to use plant/ trees like avocado, guava, Jack fruit ,

macademia nut etc to shade which can be used as substitute for source of income (double

purpose)” – KI1

“We have planted jackfruit and epil (grass for goats, similar to “amala”(goose

berry)) for shade management. Best is jackfruit for shade management.” – F3

Output

The interviews with farmers in Anpchaur and key informants revealed a significant

decline in the coffee cherries produced. All the stakeholders were in agreement that the
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demand for coffee is increasing; however the production is declining rapidly. Considering

parchment yields higher price than dried cherries, the farmers in the “Anpchaur” area did not

parch the coffee and sold only dry cherries. This speaks volume of the decline in cherries

produced in the area. The decline in production is attributed to various biotic and a-biotic

factors. These factors are discussed under the theme “Challenges”.

“Right now, it is shameful. It’s very low. ..…..This year I cultivated around 100 kgs of

dry cherry (1 quintal), a decline of 6 quintal from last year (last year 700 kgs)…. …due to

low production, none of the farmers parched the coffee, we only dried them” – F3

“We had planted 50 plants, but only 20-25 of them survived.” – F5

“In the past, trainers who came to the village would instruct us to separate Arabica

and Robusta cherries. Arabica beans fetch a higher price in international markets compared

to Robusta. However, nowadays, we don't focus much on distinguishing between the two. We

just harvest all the coffee cherries available because there is low production.” – F4

“17-18 tons of cherry were produced this year (2080 BS) in the area, which is

decreased up to 30-40%” – KI3

Support Mechanisms

Support mechanisms include irrigation, subsidies and loans and training. While proper

irrigation was started with the facilitation of Late King Birendra, most of the farmers have no

issues regarding irrigation, unlike some. Yet, subsidies and loans are not able to meet

farmers‟ expectations. Similarly, insurance in coffee production is avoided by the insurance

companies and farmers are left without insurance for their crops. However, trainings have

been regularly provided to farmers and these trainings have been effective to inculcate

farmers with necessary knowledge on coffee cultivation.

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Irrigation

Identifying coffee as a potential crop to uplift the standard of farmers in Anpchaur,

Gulmi, which is the mother place of coffee cultivation in Nepal, late king Birendra facilitated

the village with adequate facilities of irrigation, through building of canals, and ensured their

condition through timely maintenance and supervision during his reign. Only a few farmers

have problems with irrigation, which is due to the location of their place. Besides this, there

is not any problem of irrigation in the village for coffee production.

“It is very difficult for me to save the plants due to lack of water” - F1.

“Late king Birendra provided the facility of irrigation to the coffee farms during his

reign, which helped in growth and development of coffee in this area” – F4.

“There is plenty of water available for coffee plantation” – F3.

Subsidies and loans

The subsidies and loans were facilitated to coffee farmers from 2032-2046 B.S., when

there was Panchayat system in Nepal. For this, Agriculture Development Bank used to

provide loans at low interest rates to the farmers, which helped them

produce large amounts of coffee during the time, and coffee farming was gaining a large

interest among farmers in the area, but after the multi-party system was introduced in the

country, the funding and subsidies has been ignored.

“We had provided subsidies of Rs. 10,000 per Ropani for coffee plantation, but it was

not enough for farmers, and due to lack of feedback at the policy level and monitoring at the

field visit level, success was not achieved.” – KI4

“Despite the allocation of funds for coffee, resources haven’t reached the farmers” -

F4.

“Most of the coffee farms are self-funded, so are mine. Previously ADBL used to

provide loans to farmers for coffee cultivation” -F3.

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Trainings

The Coffee Development Board and Coffee Research center are the responsible

authorities to provide effective training to farmers involved in coffee production. They

provide training to leading farmers and coordinate with other agencies on R&D matters.

Selection is done based on the purpose of training. There is also provision of entrepreneurial

development and technical training for farmers across the country. There is a contrast

between stakeholders claim and our findings in regard to effectiveness of training program on

farmers.

“Various training based on seed planting, manure, shade management, etc. are

provided to farmers, and organic training is provided to 20 new farmers every year.” - KI1

“Training doesn’t give the solution to main problem of stem borer, and as suggested

by trainers, cutting and burning of plants, doesn’t prevent the disease” – F7.

“Experience would come from years, but training teaches new ways in quick time”-

F3.

“Nepal doesn’t prioritize those who really seek training” – F3

Insurance

According to the respondents, insurance companies are rarely interested on providing

insurance facilities on agricultural products. In this regard, insurance companies cannot give

an insurance claim for coffee, and no insurance companies are motivated towards insuring the

coffee farms. The insurance companies present in the district are more focused on providing

insurance to livestock and other cash crops rather than coffee.

“There is an insurance company present in the headquarter, Tamghas, but it doesn’t

show any interest in providing insurance facilities to coffee farms due to high risks of white

stem borer.” -KI5.

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“Coffee is highly affected by weather conditions and farmers seek insurance, but it is

not provided yet” – F3.

Source of Livelihood

The interaction with farmers‟ inAanpchaur reveals an insight of livelihood strategies,

in which agriculture plays a central role for most farmers. Family support, particularly from

children working abroad, is crucial for financial stability. Some farmers see coffee as a long-

term investment for future gains, while others grow it mainly because they enjoy it. Besides

farming and coffee, many farmers also have other jobs to support their livelihoods.

"I primarily farm maize, mustard, and paddy. With my sons working abroad and

helping us financially, we grow coffee for personal enjoyment. “-F4

"Coffee cultivation is a side job for me"-F3

Supply Chain

It has been found that farmers follow different methods for selling their coffee

produce. Some farmers sell directly to primary coffee cooperatives at their homes or through

local groups. Cooperative bodies play a significant role in collecting cherries and further

processing them. Additionally, some farmers used to rely on local businessmen for selling

their coffee beans, but this practice has declined over time. Overall, cooperative sales appear

to be a common method among the farmers, with some variation in the involvement of local

businessmen and the availability of cooperatives in different areas.

"We sell cherries to cooperatives."- F6

"We used to sell our coffee beans through some local businessmen, who would then

sell them to the cooperatives."- F4

"Cooperative bodies come to collect cherry from us."- F1

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Challenges

The challenges have been classified into biotic and abiotic factors.

Biotic Factors

The coffee breed/variety which are recommended to farmers aren't strong or high

yielding, leading to confusion about what to grow. Moreover, the coffee plants currently used

don't produce sufficient beans, further worsening the problem. Similarly, some farmers are

also unaware of the varieties which they have planted on their farm. The high mortality rate

,with about half of them not grown can be due to lack of awareness among farmers regarding

the correct method of plantation or lack of best technology adaptation. White steam borer

disease which destroys the plant from the inside (heading towards the root of the plant) and is

not visible, has severely affected the coffee production. But at the same time farmers with

few coffee plants don‟t have problem regarding white stem borer. With climate change, the

rainfall has reduced which increases the chance of disease like white steam borer and red

steam borer in plants. Climate change has reduced coffee production. Primarily is the white

stem borer, next is the red stem borer. Apart from this, if water gets accumulated then

“leech”, “zuka” attacks the plant.

“For me the main reason for increasing “setogavaro” in the area is lack of livestock

farming (cows). The cows used to herd in the forest and eat a lot of herbs, their excreta would

prevent pests in coffee plants (85 to 90 % for me).”-F3

“With the hype of organic farming trend back in 2051/52, There's been a rise in white

stem borers damaging coffee plants”-K14.

“The farmers have an interest in coffee plantations and have the required capacity,

but the problem of disease is the main barrier for other plantations.”-F7
 21

Abiotic Factors

Migration and Manpower Gap. Many people have migrated from the hilly areas

where coffee is mostly grown, leaving a shortage of workers. There are no youth in the

family of coffee farmers as most of them have migrated to foreign areas or city areas for

better opportunities. IT is assumed that, there is very low chance of succession planning and

sustainability of coffee production in Gulmi because of the lack of skilled and capable

manpower. (K14,F7, F3,K12)

Political Instability. Due to sudden change regarding government policies de-

motivate farmers about coffee cultivation. (K14)

Data Availability. It is found that, there's no clear information on how much coffee is

being packed and there is lack of coordination between different organizations involved in

coffee production.(K14)

Climate Change. With the climate change, the rainfall has reduced which increases

the chance of disease like white steam borer and red steam borer in plants. Climate change

has reduced coffee production. (F4, F6)

"Irrigation is the most relevant problem in this area. All the problems can be solved if

irrigation is well facilitated."-F1

Motivation. Farmers feel the investment is higher than profit which demotivates them

to cultivate coffee in coming days (F1)Similarly farmers feel they haven‟t got enough from

support from government as they used to get earlier during panchayat era . Farmers with

limited land suffer from unfair market price for their coffee bean .(F4) Similarly there is lack

of approach from government side to stop immigration of youth by bringing various

programs to motivate them. Farmers are shifting from growing coffee to other cash crops

including avocado, ginger, kiwi, and cardamom to avoid financial loss. (K12)

“After the panchayat era , the coffee cultivation has starteddeclining“-F4

 22

Awareness. Most of the farmers are unaware about the other line products of coffee,

like biscuits, chocolates, which would get relatively higher price than the dust or

beans.(K12). Some of the farmers lack basic knowledge regarding diseases.

"I haven't planted white stem borer"-F1

Discussion
Demographic insights reveal an equitable gender distribution in coffee cultivation, with

joint participation of male and female household members, aligning with previous research

findings. Bhattrai et al. (2020) similarly reported that among coffee growers in Gulmi district,

78% had both male and female active members in coffee production respectively. This

consistency underscores the collaborative nature of coffee farming in Gulmi households,

where both genders contribute actively to the cultivation process. However, the absence of

younger farmers indicates a potential generational gap in the industry, which could impact its

long-term sustainability which contradicts with Kafle and Kaphle, (2021).

Coffee production is largely managed by female household heads, but youth are

increasingly involved due to its profitability. This gap may stem from the patience required in

coffee farming, a trait lacking in younger generations focused on quick earnings and

achievements.

In Gulmi, despite its status as a significant coffee-producing area, coffee farming isn't

the primary income source (Bhattarai et al., 2020). Instead, livelihoods rely on agriculture,

businesses, and remittances from abroad.

Coffee's contribution to household incomes is limited due to variability in production

outputs, with even top producers earning modest incomes that can't fully sustain livelihoods.

While farmers mainly sell through cooperatives or local groups, Bhandari (2022) highlights

direct trader interactions for coffee exports, indicating different market structures.
 23

Certification offers market access but doesn't notably improve livelihoods due to ongoing

productivity challenges (Kattel et al., 2007).

The study underscores the need for enhanced production practices and robust value

chain support for coffee in Gulmi, aligning with findings by Bhandari (2022). While modern

machinery and training have streamlined some processes, labor remains integral to coffee

farming, with gender disparities in labor allocation and wage distribution. Support

mechanisms such as subsidies, training programs, and insurance play vital roles in facilitating

coffee cultivation. Historical initiatives, like irrigation projects during King Birendra's reign,

have bolstered production, but contemporary challenges persist, including inconsistent

funding allocation and the absence of insurance coverage. Though Ministry of Agricultural

Development initiated the process for insurance of coffee plantation in 2015, farmers have

been facing challenges in organic certification and lack a structured crop insurance system,

both of which are concerns for coffee producers (Bhandari et al., 2022).

The study findings are consistent with Khanal et al.'s (2017) research on highland

organic coffee production in Gulmi and Palpa districts, which highlighted the importance of

intercropping and shade crops in enhancing coffee productivity. However, the study revealed

contrasting results regarding irrigation facilities. While Khanal et al. (2019) reported limited

access to irrigation among coffee farmers, the findings indicate that most coffee farmers in

Anpchaur have access to irrigation facilities. Farmers reported an abundant water supply,

indicating a notable improvement from past challenges.

Additionally, the study aligns with Bhandari et al. (2022), identifying insect attacks,

particularly white stem and red stem borers, labor shortage, poor technical knowledge

(Bhattarai, et al., 2020) as major production challenges in coffee farming. Production

limitations, such as scarcity of quality coffee saplings and lack of modern packaging and

processing equipment have been reported to hamper the competitiveness of the industry while
 24

the persistent use of traditional methods has resulted in inefficiency (Sainju, 2022). Both

studies emphasize low market prices as significant marketing hurdles, diminishing farmer

interest. Furthermore, the study has revealed inadequate government support post the

establishment of the multi-party system, along with a lack of awareness about alternative

coffee products and disease knowledge. Additionally, migration and the consequent lack of

skilled manpower are highlighted as significant challenges in coffee farming.

Conclusion

The study examines the socio-economic impact of coffee cultivation in Gulmi district,

Nepal, using qualitative research methods. The study used purposive and snowball sampling

through exploratory and descriptive research design using qualitative approach to gather and

analyze the collected data. The study offers a thorough examination of coffee farming in

Gulmi, Nepal, looking into key aspects such as demographics, production techniques,

challenges, and support mechanisms.

This study reveals an aging population with limited education involved in coffee

farming, suggesting a need for targeted interventions on farming methodologies and the

adaptation of modern practices. Similarly, production techniques and shade management are

crucial for coffee cultivation. Despite that, labor-intensive methods persist, affecting

productivity and efficiency. Furthermore, effective shade management remains paramount for

ensuring optimal growth conditions, prompting farmers to employ diverse strategies to

sustain coffee plant health and yield.

However, the sector faces multifaceted challenges, spanning biotic and abiotic factors.

Pest infestations, disease outbreaks, climate change, and migration-induced manpower

shortages present formidable obstacles to production sustainability and livelihood security.

 25

These challenges underscore the urgent need for comprehensive interventions aimed at

bolstering resilience and adaptive capacity within the coffee farming community.

In response to these challenges, various support mechanisms, including irrigation, subsidies,

and training initiatives, have been implemented. While these interventions aim to alleviate

pressing concerns, shortcomings in implementation, access, and effectiveness persist,

highlighting areas for refinement and enhancement in supporting coffee farming

communities.

Furthermore, recent adjustments in minimum support prices for coffee cherries reflect

government efforts to mitigate the impact of rising production costs on farmers. While these

measures offer temporary relief, achieving long-term sustainability demands a holistic

approach integrating education, technology adoption, policy formulation, and community

engagement. Only through collaborative and integrated strategies can the coffee sector in

Gulmi, Nepal, navigate its inherent complexities and pave the way for enduring resilience

and prosperity.
 26

Implications

The implications of the study on Coffee Cultivation Practices and Socio-Economic

Dynamics of Coffee Farmers in Nepal are significant. The shift from traditional knowledge to

formal training in coffee farming has led to increased efficiency and productivity. However,

despite advancements in post-harvest processes such as roasting and grinding, coffee

cultivation remains labor-intensive, with notable gender disparities in labor utilization and

wage payments. The strict enforcement of organic practices, including the use of organic

manure and approved substances for pest control, aligns with international organic

certification standards. Shade management, crucial for coffee growth, reflects efforts towards

environmental sustainability, although challenges persist in optimizing shade setups for

maximum yield.

The study highlights a decline in coffee cherry yields influenced by various factors,

including pest infestations and inadequate shade management. Ongoing support in areas like

irrigation, subsidies, and targeted training is necessary to address challenges such as pest

management and plant survival rates. The Tea and Coffee Board plays a crucial role in

coordinating research, providing farmer support, and managing certifications to ensure the

sustainable growth of Nepal's coffee industry.

 27

The research is limited to the Gulmi district, focusing on a select number of farmers,

primarily from Anpchaur, due to time constraints. However, there is potential for further

exploration in neighboring districts such as Kavrepalanchowk, Lalitpur, Syangja, Nuwakot,

etc., where coffee production is also prevalent. Expanding the research scope to include these

districts could provide a more comprehensive understanding of coffee cultivation practices,

socio-economic dynamics, and challenges across different regions of Nepal. Additionally, it

could offer valuable insights into variations in farming techniques, environmental conditions,

and community engagement strategies, contributing to the broader knowledge base of coffee

farming in the country.

Overall, the study underscores the need for continued efforts in training, research, and

policy implementation to overcome challenges and foster the sustainable development of

Nepal's coffee sector.

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 Appendix

Interview Checklist

Coffee Research Center (Baletaskar)

Functions and Position in Value Chain
1. What are the functions of the Coffee Research Center? In which level of coffee value
chain does it lie?
Current Practices and Situation
2. Please explain the current situation of coffee production in this area.
3. How is it changing? A brief evolution story? Change in farming techniques, materials,
processing techniques, policy and management? Change in farming size, farmers‟
involvement, productivity?
4. What is the average annual production of coffee (beans) in this area? (last year record
file)
5. What is the average annual production of coffee (beans) in this area? (last year record
file)
6. What are the different varieties of coffee cultivated in the area?
7. What is the amount of coffee exported annually?
Community Development Initiatives
8. What are the different types of training programs organized? What percentage of
farmers have received such trainings?
9. What policies and regulations from the government benefit coffee production?
(registration, inspection, subsidies, incentives, etc)

District Coffee Cooperative Union (DCCU), Tamghas and Primary Coffee Cooperative
(PCC), Tamghas
Functions and Role
1. What are your major functions?
2. What are your major roles in the coffee value chain?
Current Practices and Situation
3. What is the annual production of coffee (cherry) in this area?
4. Do you facilitate any internal control system? How is the quality determined?
5. Do you get demands of coffee before production season? How the next level actors
approach you? How is the selling price determined?
6. What is the current practice of pricing of coffee at farm-gate, cooperative-gate,
processor-gate? Who determines the price?
Community Development Initiatives
7. What types of support and services do you provide to farmers?
8. What percentage of coffee production is organic? Inorganic? How organic coffee
farming is being practices? What are the constraints and opportunities associated with
existing organic certification for the farmers? What is your proposed solution from farmer‟s
perspective?
9. What is the situation of insurance in coffee production?
10. What is the funding situation? What are the issues?
11. What are the current policy obstacles?

Issues
12. What are the major issues in coffee production and distribution?
 Coffee Processor
Functions and Role
1. Please explain what your position in coffee value is chain? What function do you
perform?
2. Do you have multiple roles (for example as collector, as processor, as trader ?)
3. Which type of processing do you perform? (pulping, hulling etc?) Please explain the
technical process. (raw material, process and output)
4. What is your technical capacity in processing (kg/day ?), is your unit occupied throughout
the year, please explain the seasonality of your processing function.
5. Is your processing function demand driven? Or supply driven? What determines how
much to process and when?
Current Practices and Situation
6. What is the current practice for pricing your raw material? Who determined that? You or
raw-material supplier?
7. What are the costs for value addition in your function? (operation, maintenance, labor,
capital, raw material etc)
8. How do you sell your products? Who determines the price, how?
9. Community Development Initiatives
10. Have you organized an association? What is the role of association in determining the
price?
11. What policies and regulations from the government benefit your business? (registration,
inspection, subsidies, incentives etc)
12. What are the current policy obstacles? What are the current technical obstacles? What the
current financial obstacles? And what do you suggest for overcoming those obstacles?

Issues
13. What are the constraints, problems in your function? (supply side, technical aspects and
demand side?)

Farmers
Demography
i. Gender:
ii. Educational background:
iii. Income Generation and Livelihood
iv. Varieties of coffee cultivated:
v. Ownership:
Self owned
Jointly owned
Leased

vi. Years engaged in coffee production:

vii. Other occupation engaged(if any):
 1. How has your income from coffee production changed over the past 5 years?

Community Development Initiatives

2. Have you received any trainings for coffee production?
a. Yes
b. No

3. If yes, How do you rate the effectiveness of training?

a. Highly Effective

b. Effective

c. Neutral

d. Ineffective

e. Highly Ineffective

4. Have you faced any challenges in participating in the training programs? If yes, what are
those?

Current Practices and Trend

5. What percentage of cultivated coffee by you is organic? Inorganic?
6. How has the demand for coffee changed? Can you describe the trend?

Issues
7. Are there any specific climate-related challenges or risks in coffee production? Can you
describe them?
8. What are the major issues in coffee production?