Food security is a central element development agenda across the world, whose importance cannot be understated and underemphasized.  Traditionally, agriculture has two primary responsibilities in the growth process- supply food, raw materials and earn foreign exchange through exports. Due to its dependence on highly volatile natural factors, like weather conditions, and very complex institutional factors, the agriculture sector operates under a higher degree of uncertainty and consequently in a high risk environment. In this context, it requires greater support from the government for its advancement. Main objective of this article is to communicate that the agriculture sector in Bhutan is faced with a serious existential crisis, which in turn, will adversely affect food security, and will exacerbate pressure on already scarce foreign exchange reserves.

The agriculture sector in Bhutan started to recover and grow faster since 2009 after a long term deceleration starting from early 1990s. This growth story lost its momentum since 2017 and the sector receded into a very steep decline. Total sown area declined by 57% from 204,728 acres in 2017 to 89,490 acres in 2023, which translates into a loss of about 11,500 acres of the sown area each year.  Increasingly a larger portion of cultivable land is left fallow. Without a parallel productivity growth, decline in the sown area leads to fall in production. This is exactly what happened in the agriculture sector. Output of all the cereals has declined steeply since 2017. Paddy production has declined by 53%, while the production of maize, wheat, barley, buckwheat, and millet has declined by 70-80% each. Further, the yield (measured as production kg per acre) of all the cereals has declined since 2017.   This means that technological breakthroughs have not been successful in supporting productivity growth. Fall in the production of cereals has not been accompanied by rise in production of cash crops, this is a major source of worry.  Production of vegetables declined by 61%, potato declined by 34%, spices, pulses and oilseeds declined within the range of 50-70%. Production of fruits also declined by 22% (refer table 1). Decline in the agricultural production across the range of products is a cause of serious concern and it should not be neglected. There are some small projects related to high value crops which have been sighted as success stories, yet they have little relevance unless their success is replicated on a larger scale.

To add to the woes, production of all the major livestock products (milk, butter, cheese, honey and eggs), except meat, has also declined since 2017. An issue, which has a long term implication, is the declining population of livestock in Bhutan (refer table 2). Declining population of livestock will adversely affect mixed farming and will have adverse effect on the availability of food. Declining agricultural production has also exacerbated pressure on foreign exchange reserves. Agriculture exports have declined from Nu 2.85 billion in 2017 to Nu 2.5 billion 2023, while agricultural imports have increased from Nu 7.8 billion in  2017 to Nu 13.3 billion in 2023.  Clearly, the sector is not performing any of its role- supply food and raw materials and generate net export revenue.

The sector has not received adequate investment despite efforts to scale up the investment through public investment and priority lending. Agricultural infrastructure, especially irrigation, is not sufficient. According to the National Irrigation Master Plan 2016, only 64,000 acres of 200,000 acres of arable land was under assured irrigation.  Stories of water shortage faced by farmers are aplenty in BBS news bulletins. I also heard that water has started to become a source of discord among the farmers.  Another issue, for which I have no evidence but only a hunch, is that the investment in the agriculture sector has also not been used effectively. Credit constraints and labour shortage in agriculture are already well known issues and deserve no further discussion.

Institutional framework of the agriculture sector also hinders its growth.  75% farmers are marginal farmers (owning less than 2 acres of land), and 16% are small farmers (owning 2-5 acres of land).   Predominance of marginal and small landowners tend to impose a constraint on technological upgradation due to limited returns to scale. Most of these farmers are bound to practice subsistence farming. Agricultural prices and therefore farmers’ income are subject to high variability due to volatility of agricultural prices. Since the farmers make decisions to produce much in advance of the actual production, price changes during this period are critical to farmers’ livelihood safety and financial sustainability. The marginal and small farmers are more vulnerable to it. There is an important source of farm sector distress. 

How to stem the rot?  First, the agriculture sector should be accorded higher priority- both in terms of allocation of resources and bringing required institutional changes. Primacy of cereals in the agricultural system needs to be re-established. This will help to reduce import bills and also impart food security. Evidence from African countries show that cereals, especially traditionally grown cereals, are important to achieve SDG 2 (End hunger, achieve food security and improved nutrition, and promote sustainable agriculture). Promotion of high value crops is a good idea but it should not be done at the expense of cereals. This is an important lesson for Bhutan. (Please refer https://www.mdpi.com/2413-8851/5/1/8 for details). High value cash crops can continue to focus on exports orientation.

Cooperative or collective farming   should be promoted to reap the benefit from returns to scale and expand the potential of effective technological upgradation. Public expenditure on irrigation needs to be stepped up to expand the assured irrigation facility. There is a need to provide greater risk coverage to highly vulnerable agricultural activities. 

The economic stimulus plan (ESP) of the government has essentially tried to address these issues. The element of price support to the farmers is a particularly noteworthy aspect of ESP. However, it is important to learn from the Indian experience with minimum support prices. ESP also focuses on bridging the infrastructural gaps, it would be important to accord a higher priority to expanding the irrigation network. Greater access to credit and allowing the migrant labour in the agriculture sector are also the defining features of MSP that are critical to the revival of the farming sector. Alarm bells are ringing, we need to respond to the crisis with a sense of urgency.   

Contributed by

Sanjeev Mehta,

Professor of Economics, Royal Thimphu College

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