The hill farming system in Nepal is characterized by a complementary relationship among crops, trees and livestock. Hill farmers have long been growing a variety of native trees in their farm lands to maintain land productivity and to provide for subsistence needs, such as timber, fodder for livestock and fuel wood for cooking. Assorted species of trees and shrubs grown on farms are an integral component of local economies. Besides providing for human needs, crops and trees supply feed, fodder, and bedding materials to livestock. Animals contribute to the system by providing crops and trees with nutrients via manure. The system is sustained through the recycling of organic materials within the farm as well as through the utilization of forest products.

However, there has been a continuous decline in the availability of forest products due to deforestation, especially the clearing of forests for agriculture. The decline in forest cover has been associated with increased soil erosion, lowered soil fertility, and reduced agricultural productivity. There is growing evidence that agroforestry can be a promising solution to these and hence a key to the sustainability of the hill farming system.

Agroforestry plays a vital role in achieving sustainability in the hills farming system. It plays a better role in increasing agricultural productivity by nutrient recycling, reducing soil erosion, and improving soil fertility and enhancing farm income compared with conventional crop production. Furthermore, it also has promising potentials for reducing deforestation while increasing food, fodder, and fuel wood production.  The improvement in vegetative cover through agroforestry in the form of contour hedgerows has been found to be an appropriate innovation for reducing soil erosion on sloping lands.  

Agroforestry practices are more productive and profitable compared with conventional practices over the long run. Combining useful trees and shrubs and bee keeping and trees increase economic benefits to farmers. Farmers through experience have developed sophisticated indigenous knowledge base about tree–crop interaction and about the nutritive value of local fodder species in the hills farming system through the use of agroforestey. In recent years there has been growing concern over the importance of agroforestry to sustaining the hill agriculture and some efforts are being made to promote agroforestry at the farm level.