The Nepal government has officially declined to revise the existing advance payment system for mandarin exports, despite a mounting “fruit drop” crisis that has severely impacted citrus yields across the eastern mid-hill districts. This season, farmers in major hubs like Dhankuta and Sankhuwasabha have reported massive premature fruit loss, with some areas seeing yield declines of up to 70% due to a combination of citrus greening (HLB) disease and erratic weather patterns. Despite these agricultural setbacks, the Ministry of Finance and Nepal Rastra Bank have maintained that the mandatory bank certification of advance payments or Letters of Credit (L/C) remains a non-negotiable requirement for customs clearance. Authorities argue that the system is a critical safeguard for the nation’s foreign exchange reserves, ensuring that export earnings are accurately tracked and repatriated within the stipulated six-month window.
Exporters have voiced growing frustration over this policy stance, noting that the rigid financial regulations are creating a liquidity crunch during an already difficult harvest. Under the current Foreign Exchange Control Act, customs officials cannot release export shipments without a bank-certified document proving that payment has been received or secured. Traders argue that this “payment-first” model lacks the flexibility needed to navigate the reality of damaged crops, where the final quantity and quality of produce often fluctuate until the moment of shipment. The refusal to implement more flexible credit terms or “Cash Against Documents” (CAD) for regional trade means that smaller exporters, who lack the collateral to maintain high-value bank guarantees, are being squeezed out of the market just as regional demand for Nepali mandarins peaks in India and Bangladesh.
In lieu of policy reform, the government is urging stakeholders to utilize the National Crop and Livestock Insurance Scheme, which was expanded in late 2025 to cover citrus-specific losses. Ministry officials suggest that insurance payouts, rather than financial deregulation, should be the primary tool for mitigating the economic blow dealt by the fruit drop crisis. However, many small-scale farmers remain skeptical, citing low awareness and the bureaucratic hurdles involved in filing claims for “gradual” losses like those caused by citrus greening. As the export window for the 2025/26 season begins to close, the stalemate between the state’s fiscal security measures and the agricultural sector’s need for emergency relief threatens to dampen Nepal’s citrus trade ambitions for the foreseeable future.