Aviation tycoon Birendra Bahadur Basnet on why farming is safer than flying

Basnet sees farming as a safer livelihood when it provides dependable income without sending workers abroad. He estimates that two bigha in the Tarai could produce about Rs400,000 in annual net profit. That is roughly Rs32,000 to Rs33,000 monthly, similar to what a worker earns in the Gulf. The farmer also stays near family and may earn more from livestock.

The key is not farming alone. Farmers need machines for planting and harvesting, credit to finance production, and a buyer who honours a declared minimum support price. Better storage and distribution can prevent crops from spoiling before sale. These services turn small plots into part of a larger, organised system.

The model is still new and has lost money so far. Arju Rice Mill currently organises about 5,000 bigha and aims for 10,000. Basnet’s argument is that farming can become a stable livelihood if the market works as reliably as the field.

An anchor enterprise is the central business around which many small farms can organise. It matters because individual farmers often lack bargaining power, machinery, storage and reliable access to buyers. The anchor creates a practical link between production and the services needed to make production profitable.

Arju Rice Mill is meant to provide that link. It announced a minimum support price before planting and buys both the spring and main-season crops. It also promotes a fine-grain variety developed by Nepal’s research council. The wider plan connects farmers to bank credit, machinery and a guaranteed buyer, while service providers handle field operations.

The experiment has taken time. Farmers needed two or three years of honoured prices before trusting the arrangement. About 5,000 bigha are now organised around Belbari through 12 or 13 farmer groups. Basnet aims to reach 10,000 bigha, although the mill has recorded a Rs25 million operating loss.

Basnet’s planned network is designed to make small farms operate at a much larger scale. It would cover 10,000 bigha of paddy land. The purpose is to spread the cost and use of machinery across many plots, while owners keep their individual land. This addresses the problem of many people farming small areas with limited equipment.

The equipment plan includes roughly 100 harvesters and 400 mechanised transplanters. Together, the machinery represents about Rs1 billion in investment. Around 50 young entrepreneurs would operate the machines and provide ploughing, transplanting and harvesting services on fixed schedules. Drones would help identify where spraying or fertilising is needed.

The article does not state how many individual farmers would join the network. It says the land would involve smallholders and that about 5,000 bigha are already organised around Belbari. Basnet is heading toward the 10,000-bigha target through Arju Rice Mill and farmer groups.

Basnet’s family learned that a successful harvest does not guarantee a successful business. Their bananas grew beautifully, but Biratnagar could not absorb the supply. Much of what they sent to Kathmandu rotted on the journey. The problem was not cultivation. It was the lack of sufficient demand and dependable distribution.

Coconuts showed the same danger in a different form. After seeing five fruit-heavy trees near Itahari, Basnet’s father planted 2,000 saplings. The article says the family lost millions in today’s money. The trees and idea were not enough to create a viable market. Production came before a clear plan for selling the crop.

The experience shaped Basnet’s view of agriculture. He calls producing the easy part and markets the place where farmers lose money. Fish fry worked better, generating Rs1.5 million to Rs2 million annually by the late 1980s. That contrast supports his focus on buyers, storage and distribution.

A promise to buy a crop can make borrowing less risky. The farmer has a clearer sales destination and a better estimate of future income. That matters because a bank needs confidence that the loan can be repaid. The guarantee does not remove farming risks, but it can make the farmer’s expected cash flow more visible.

In Basnet’s model, Arju Rice Mill announces a minimum support price before planting and buys both the spring and main-season crop. The planned anchor enterprise links smallholder paddy to bank credit and a guaranteed buyer. A bank-backed guarantee could strengthen that promise by assuring payment if agreed conditions are met.

The article does not describe a specific loan contract or lending decision. It does show that farmers took two or three years of honoured prices to trust the mill. That trust, combined with reliable purchasing and guarantees, is intended to help farmers finance seed, labour and machinery while giving banks greater repayment assurance.

Basnet rejects land pooling as a political project because small plots are central to family security. A typical Tarai household holds about two bigha, and that land may be worth Rs8 million to Rs15 million. Taking or combining it by force could create serious conflict. His alternative keeps ownership intact while making production more coordinated.

Under the service model, machine-owning entrepreneurs plough, transplant and harvest across hundreds of bighas on fixed schedules. Farmers do not need to operate every machine or personally manage each field boundary. They keep their land, while an app lets them follow the crop’s progress. Scale comes from shared services, not shared ownership.

Basnet believes this arrangement can bring mechanisation without the political danger of compulsory pooling. The plan calls for about 50 young entrepreneurs to operate 100 harvesters and 400 transplanters across 10,000 bigha. It also creates work around machinery while helping smallholders use modern methods.

Farming profitability depends on what happens after harvest as much as on what happens in the field. Without storage, crops can spoil. Without distribution, produce may not reach buyers in time. Without reliable demand, farmers may be forced to sell cheaply or watch a good harvest lose value. These failures can erase the income created by production.

Basnet’s banana experience shows the mechanism. The crop grew beautifully, but Biratnagar could not absorb it. Half of the bananas sent to Kathmandu rotted on the way. By contrast, fish fry became profitable because the family found a working market, selling Rs1.5 million to Rs2 million annually by the late 1980s. The difference was commercial organisation, not simply farm skill.

That lesson drives Arju Rice Mill’s model. It offers a minimum support price, buys both seasonal crops and aims to connect farmers with storage, distribution, credit and machinery. The mill has still lost Rs25 million operating the business, so the model remains an experiment rather than a proven solution.