Lack of investment in value addition slackens agri marketing

Choki Wangmo 

While tonnes of raw agricultural products are stranded at various auction yards which were procured through Food Corporation of Bhutan Limited’s (FCBL) buyback scheme, the agriculture ministry is yet to implement the value addition processes.

Since June 18, FCBL started buying 24 agriculture produce from farmers at government-approved rates ranging between Nu 4 and Nu 48. To avoid such lapses in marketing the farm products, value addition is at the centre of agribusiness plans.

This, however, has received little attention in implementation.

The officials in the ministry said that value addition had huge potential for a small country like Bhutan to create income and employment opportunities but the country should have an impact-investment model. But the government should take risks to invest in niche products for a niche market. It requires one-off investment in developing technology and human resource.

“Although outsiders prefer Brand Bhutan, we cannot supply because the market linkage is lost. There is no enough investment in agriculture marketing and value addition. Value addition of agri products has never received the attention it requires, therefore, there is no growth,” he said.

For example, Bhutanese exports potatoes and buy it in value added forms like chips from India at a higher cost. To reach wider markets through value addition, the products should meet international quality standards, certification and consistency in production, which again requires investment.

To achieve that private sector engagement is a way forward, which again needs the government’s support to create proper channels for interested entrepreneurs which can be made possible only if impact investment is implemented.

The production should be demand-driven to avoid overflow of products in the market, said the official. He said that if Bhutan could produce turmeric powder for Indian markets and sell at high market value of Nu 5,000 per kilogram, there would not be a lack of market.

“We are not doing it because we lost our focus,” he added.

Since Bhutan’s cost of production is comparatively higher than that of the neighbouring countries, farmers could never sell products with the market price at par with India, he said. “But we are not without options—identify target consumers and create a market for the product. For instance, Bhutanese red rice has a high demand in the US sold at a premium price.”

Currently, the farmers and entrepreneurs do not have a proper market. Creating price gap system instead of buyback scheme was the key, said the official. “Buyback scheme is unsustainable and makes people dependent on the government.”

To create price gap system, farmers can be asked to grow pulses for school feeding programmes instead of importing from India but the government should cover Nu 5-10 difference to encourage growers. It would save money on logistics, supply system, surplus management, and also bring growth in the agriculture industry. This is the ministry’s future plan.

The official said that villagers brought farm produce at the main market in the capital and sold their products at a throwaway price to wholesalers. “As an institution, the market should be transparent which requires investment in market logistics and market system. If 15 wholesalers control the market, price control is in their hands.”

To strengthen the agriculture sector, the agriculture ministry has been allocated a budget of Nu 7.17 billion for the financial year, which is an addition of about 10 percent of the total budget appropriation.

Some of the major activities are land development, construction of cold storage facilities, installation of input supply infrastructure facilities, enterprise development programmes, and development of the livestock sector.

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