| Abstract | Land fragmentation is pervasive in Nepal. However, its impact on production efficiency and alternatives to address this problem remains unexplored. This study, with a view to bridge this research gap, examined impacts of particularly land parcel fragmentation on resource use and production efficiency, and evaluated alternative options for promoting land consolidation in the mountains of Nepal. Required information for this study was collected through a survey of 184 households, comprising 93 households from the highway corridors and 91 from the distant locations, key informants' interviews, group discussions and observation. Analytical tools employed included descriptive and analytical statistics, indexes and logical reasoning. Landholdings and land parcels are undergoing rapid fragmentation in the study area, with the contradicting trend of increasing number of parcels but decreasing size of holdings and land parcels. The intensity of bari fragmentation is relatively higher than the fragmentation of khet but more so in the accessible areas. The regression analysis revealed land inheritance and land purchase as the most influential variables inducing fragmentation in both locations. Variations in land quality, lack of non-farm employment opportunities, increasing costs of health and education, poverty and indebtedness are other variables explaining land parcel fragmentation. Farmers are aware that they would be able to reduce production cost, increase crop yields and profit margins if holdings and parcels are consolidated. Despite higher productivity due to use of higher amounts of inputs, small parcels (analogous to smallholdings) are inefficient due to high production cost arising from higher allocation of inputs per unit of land. Contrarily, big parcels have higher production efficiency as they are using resources more efficiently. The findings affirm that fragmentation of land holding and parcels ultimately leads to economic degradation of the farm households. The inefficiency of small parcels undermines farmers' competitive capability, which ultimately constrains commercialization of agriculture, which is essential for enabling farmers to improve their quality of life. When asked about their opinion, farmers accorded higher priority to non-statutory measures of land consolidation such as voluntary swapping, governments initiated land pooling, leasehold farming and private sector led purchase of fragmented parcels. Despite policymakers' emphasis, farmers least preferred cooperative/group farming. These statutory measures, while providing access to land, ease farming operations, reduce production cost, enhance income levels and employment opportunities. However, policymakers did not like voluntary swapping and private sector led land parcel consolidation as they thought that the pace of land consolidation would be very slow through such measures. Farmers less preferred the statutory measures of land parcel consolidation because of the apprehension that they may affect the structure of land distribution. However, they realized the need for controlling fragmentation of very small holdings and parcels. Government sponsored land pooling was another most preferred option from the perspective of all stakeholders. Several short- and long-term strategies have been suggested to control land fragmentation and promote land consolidation. |