Impact of subsidized inorganic fertilizers on farm input usage and food self-sufficiency in Terai, Nepal

Nepal faces the challenge of a growing population and diminishing cultivable land, necessitating enhanced agricultural productivity to ensure year-round food availability. Despite this urgency, farm input use remains low. To address the low farm input use, the Government of Nepal has prioritized subsidized inorganic fertilizers (SIF) as a key policy tool. However, the causal impact of SIF on farm input usage and food self-sufficiency remains underexplored. This study examines the impacts of SIF on farm input use and food self-sufficiency among agricultural households in the Terai region of Nepal. The study utilizes data from the 2021 National Agriculture Sample Census (N = 147,070). An instrumental variable (IV) approach is employed to ensure robust causal inference. Findings indicate that households receiving SIF exhibit an annual increase of 3.21 quintals in inorganic fertilizer use, and an expansion of irrigated land by 1.1 hectares and gross cropped area by 0.98 hectares. These improvements correspond to 3.53 months increase in household food self-sufficiency. Further analysis reveals stronger effects among households in western Terai, those with climate change awareness, formal agricultural training, and sustainable farming practices such as refraining from burning crop residues. This study underscores the critical role of SIF in improving farm input use and food self-sufficiency among Nepalese agricultural households. The findings support the continuation and enhancement of subsidy programs that provide farmers with affordable fertilizers, thereby contributing to national food security. Policymakers should consider targeting support towards regions and household groups most likely to maximize the benefits, ensuring sustainable agricultural development in Nepal. • SIF recipients used 3.31 quintals more inorganic fertilizer annually. • SIF access increased irrigated land area by 1.05 hectares. • Gross cropped area expanded by 0.82 hectares among SIF users. • Food self-sufficiency increased by 2.44 months per year due to SIF. • Effects were stronger among trained, climate-aware, and residue-retaining farmers.