Agriculture Needs Organized Entrepreneurs: Evidence from Vegetable Value Chains in Nepal

Abstract

Despite investing in and working in agribusiness in low-income countries such as Nepal, farmers are underperforming in the market system. There is limited access to market actors in the value chain. Despite long-term investment, many barriers to entry beyond production have been identified as barriers to their entrepreneurial development. This study was conducted through a systematic random survey of 158 SMEs of vegetable value chain actors in Dhankuta and Chhathar Jorpati regions, including key informants. The study was conducted to identify the underlying problems and structural barriers to vegetable business development. Using factor analysis, the study adopted a mixed-methods design. The study identified four major underlying constraints, namely i) infrastructure and logistics gaps, ii) governance and policy constraints, iii) financial and human resource constraints, and iv) export and quality standards challenges. These major factors collectively explain 68.55% of the observed inefficiencies. The study findings further highlight the "missing middle," where the lack of organized agro-entrepreneurs weakens coordination, which limits value addition, and points to unequal price distribution, whereby producers receive a lower share of the returns when they reach the final market. Based on the study, the missing middle problem should be addressed to promote value chain development, lower production costs, improve market access, and upgrade. This implies that a policy shift is required to foster an entrepreneurial sectoral approach from a production-led to an agribusiness entrepreneurship ecosystem through investment in infrastructure, capacity, and institutional development to promote inclusive and sustainable agricultural transformation.