A thesis submitted in partial fulfillment of the requirement for the degree of Master of Science

Thesis (M.Sc.) - Asian Institute of Technology

The general objective of this study was to identify factors that constrain agricultural production and to estimate the gap between the farmers' need and income from the existing and alternative resource allocation for the farm planning and policy implications. The Shivanagar Village Development Committee of the Chitwan district located in the Terai region of Nepal has been selected for the study. A two stage survey method has been applied, one for the overall features of farming systems in the area and other for the representative farm households selected based upon the first stage survey for the application of linear programming. The analysis of the existing farming systems showed that the principal constraints for crop production were: lack of irrigation facility, especially in the winter and spring season; unavailability of agricultural inputs and extension services; and labor shortage for the largest farm group; capital shortage and small size of holding for the small farms. The main problems of livestock production were: fodder shortages; lack of capital and small land holding size for the small farm; and unavailability of veterinary services. The linear programming approach has been employed to develop the farm models at the existing and alternative levels of resource use and technology of four representative farm categories. The existing farm plan (Type I) of each category of farm was compared with the existing optimum farm plan (Type II) and optimum farm plan under irrigated condition (Type III). Also, the comparison was made between the farm plan Type II and Type III of each farm category. I It was found that a small farmer can earn a gross margin almost 1.29 and 1.55 times higher than that he is getting now by Type II and III respectively. Farm Plan Type III provides 1. 2 times higher a gross margin than Type II. However, this amount of incremental benefit will not meet the present farm and households requirements which need to be supported by a considerable amount of non-farm income or an increase of land size by 1.09, 0.9 and 0.65 hectares under the farm plan Type I, II and III respectively. The medium, large and largest farms can maximize their gross margin to the extent of 1.24 and 1.42, 1.36 and 1.94, and 1.89 and 2.15 times higher than the present value obtained from Type I by executing Type II and III farm models, respectively. Farm model Type III generates 1.14, 1.13, 1.42 and 1.13 times higher gross margin than the farm model Type II for small, medium, large and largest farm size respectively. This study provides an insight for farm planing and the policies required for the improvement of the Terai farming systems of Nepal.