The Government of Japan, based on a request made by the Government of Nepal, has approved the utilization of the Counterpart Fund under KR and KR2 of Nepalese Rupees two hundred and fifty million (NRs. 250,000,000) for the implementation of the Project for Cooperative Farming, Small Irrigation and Transportation Subsidy on Fertilizers and Improved Seeds, and Nepalese Rupees one hundred and sixty-two million (NRs.162,000,000) for the implementation of the Project for Transportation Subsidy.

 The Project for Cooperative Farming, Small Irrigation and Transportation Subsidy on Fertilizers and Improved Seeds was approved in order to rehabilitate and maintain small irrigation infrastructure; enhance food security of small-farmers; support poverty alleviation programs; give relief from the effect of an increase in the price of chemical fertilizers and seed to  farmers in the target areas,  and make local areas self-dependent by increasing the production of locally feasible agricultural products in 47 districts of Nepal.

Similarly, the Project for Transportation Subsidy was approved in order to counter the existing food deficit problem in Nepal, particularly in the remote hill and mountain districts due to low agriculture productivity. Under this project the Nepal Food Corporation (NFC) will deliver an additional 3,544 metric tons of rice to seven remote hill and mountain districts.

 The Counterpart Fund was established through financial assistance extended by the Government of Japan under the KR2 (grant assistance for underprivileged farmers) and KR (food aid) schemes. The Government of Nepal has procured fertilizer and rice through this assistance in the past. The amount collected from selling the fertilizer and rice in the domestic market was deposited as a Counterpart Fund. The Fund can then be utilized for implementing various social and economic development projects through consultation between the two governments.