Coffee Culture Expands in Nepal, But Production Lags Behind

Coffee culture in Nepal has evolved beyond a passing fashion trend to establish itself as a genuine lifestyle choice. However, the rapid proliferation of coffee shops and cafés in urban streets has not been matched by a corresponding increase in domestic coffee production.

According to recent data from the National Tea and Coffee Development Board and the Department of Customs, coffee consumption and imports have risen sharply while production growth remains sluggish.

The expansion of coffee culture is particularly visible in major cities such as Kathmandu, Pokhara, Chitwan, Biratnagar, Butwal, Nepalgunj, and Dhangadhi. Industry sources indicate that more than 7,000 coffee shops are currently operating across the country. These cafés have become popular hubs for the younger generation, serving as venues for social gatherings, business meetings, and "work-from-café" setups.

Despite this significant growth, the failure to boost production remains a key challenge for the coffee sector, said Omanath Adhikari, president of the Nepal Coffee Federation.

"Coffee consumption habits have increased rapidly, but production has not kept pace with demand," Adhikari said.

He noted that while approximately 1.1 million hectares of land in Nepal are suitable for coffee cultivation, only a fraction is being utilized. "If we could commercially cultivate just 25 percent of that land, it would be possible to produce coffee worth Rs 8000 billion— more than four times the country's annual budget," he added.

According to Adhikari, domestically produced coffee meets only about 25 percent of internal demand. "We have learned to drink coffee, but we have failed to increase its production," he said.

Data from the National Tea and Coffee Development Board shows that in fiscal year 2024/25, coffee was cultivated on 5,500 hectares of land, yielding 642 metric tons. During the same period, Nepal imported 203 metric tons of green bean coffee valued at Rs 144.1 million.

The Board estimates that annual coffee consumption in Nepal stands at approximately 2,400 metric tons. However, officials note that actual import figures may be underreported due to the same HS code being used for coffee and other commodities in customs classification.

Deepak Khanal, a director at the Board, said cultivation area has not expanded in proportion to rising consumption. "We have introduced programs to expand cultivation, but they have not attracted the expected interest," he said.

An attempt in 2018 to collaborate with the private sector through the Federation of Nepalese Chambers of Commerce and Industry failed to generate the desired response, Khanal added. "Currently, we are working with local governments to expand coffee plantations."

The Board has launched a program to establish 200 coffee gardens along the Mid-Hill Highway corridor with an investment of 20 million rupees, providing 100 percent subsidies to farmers. Additionally, a subsidy program for coffee cultivation on 50 ropanis of land has been in place for the past five years.

However, the Coffee Federation has complained that the private sector has not received sufficient encouragement. President Adhikari said government bodies have been active in production and plantation efforts but have made weak attempts to engage private producers. He suggested implementing a collective production system in Nepal, similar to Japan’s "One Village, One Product" model.

Nepal currently imports large quantities of coffee from India, Vietnam, and Brazil.