Agricultural systems in the hills of Nepal are subsistence and semi-subsistence, complex and labour intensive. The present production capacity is unable to meet the demand of feeding the growing population, and for many years productivity has been declining. The main factors associated with decline are decreasing forest resources, increasing soil erosion rates and increasing cropping intensity. Research is aimed at using local resources to increase crop productivity, preparation and more efficient use of quality compost and nutrient recycling through growing green manuring crops. Integrated nutrient management systems studied for some of the major cropping patterns have provided options to the farmers of the eastern hills for sustained crop production without causing adverse effects on soil properties in the long-term. Forest and livestock activities are intricately interrelated with agriculture. Organic materials are the main source of plant nutrients for sustaining productivity. The use of chemical fertilizers is a new practice, but of negligible importance in the hills. Consumption rates, however, have been increasing every year.