Invest and engage private sector: BCCI

Agriculture: If the agriculture ministry is to realis e the self-reliance dream, a comprehensive development policy, more public investment, and private sector engagement are necessary, according to the latest Bhutan Chamber of Commerce and Industry  (BCCI)report.

The report presents analysis of the sector’s current situation and the gaps in policy coordination and implementation besides others.

“Private sector participation in agricultural value chain can contribute to agricultural self-reliance,” it states.

It calls for commercial farming of selected crops, facilitate farmers with credit and subsidised loans, market access both locally and outside, and infrastructure such as post harvest storage, refrigerated transport system, and collection sheds.

Agricultural production is undermined by lack of a clear land policy, retrogressive inheritance practices, poor management of seed bulking and management, and inadequate access to agricultural credit.

“Key constraints within the sector include poor governance, limited access to credit, low public funding, inappropriate agricultural policies, and poor international terms of trade, adverse weather conditions, and inappropriate technology,” the report stated.

Agriculture ministry aims to increase self-sufficiency in food commodities through domestic production. One of the objectives of agriculture ministry is to reduce the food poverty.

This objective would have greater impact on the rural areas since more than 90 percent of the population under poverty lives in rural areas. The food grain Self Sufficiency Rate (SSR) for 2011 was recorded at 51 percent for paddy and 64 percent for total cereal.

Thus, it calls for greater attention for public investments in agriculture and encouragement of private sector investment to achieve the target of food sufficiency, the report stated.

The national budget allocation for the sector has not crossed 13 percent, according to the report.

The sector has also not received much investment through loans in the past three years indicating a lack of investments in agriculture both from public and private sectors. The loan disbursed to agricultural sector constitutes only 1.6 percent in 2011. It increased to 2.2 and 2.7 in 2012 and 2013 respectively.

The report attributes this as one of the reasons for low productivity in agriculture that led to increase in import of essential commodities.

The report also noted a significant decrease in the RNR sector. (see table)

Trade deficit in food with India increased by 34.9 percent in the 2012-13 fiscal year as exports slumped by 0.1 percent against an 11 percent growth in imports during the same year.

Bhutan imported essential food items worth Nu.5.1B in 2012, with the overall food trade deficit increasing from Nu 2.9B in 2011 to Nu 4.2B.

“While Bhutan remains an agrarian economy with over 65 percent of the labor force engaged in farming, food sufficiency looms as a major issue to policy makers, due to its vast socioeconomic implications for the nation,” the report states.

Further, continued escalation in food prices across the border as well as rise in global food and energy prices could make food security an important concern.

BCCI argues that these challenges could be overcome only by increasing public investments in agriculture, encouraging private investments and making agriculture sector an attractive investment destination.

The sector, that provides for 60 percent of the country’s food requirements, could grow to meet the local and international demand only if adequate financial, marketing, production, transportations supports are provided.

“Private sector can play pivotal role in plantation and marketing of agricultural commodities,” the report states, while the free trade relations with India can assure the permanent market for the produce of Bhutan.

The report released recently during a dialogue between the government and the private sector, calls on the government to work towards changing the outlook on agriculture through creating awareness, scope and opportunities within the sector.

Changing farming culture through mechanisation with improved technology was proposed to attract more unemployed youth towards agriculture.

More seminars, educational tours, exposure trips, gifts, and appreciations certificates, among others would encourage youths to take agriculture as their profession. It stresses on the need to promote “Brand Bhutan” in all agricultural produce.

The report was compiled to put forward concerns, identify opportunities and associated challenges that are faced by the private sector and suggests a ‘way forward’.

By Tshering Palden

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