Council: Against the backdrop of insignificant loan schemes for the agriculture sector, the National Council (NC) has recommended the government to identify the sector as a priority.
The House, presenting the recommendation on December 5, also submitted that the Royal Monetary Authority (RMA) should facilitate mandatory lending of certain percentages of a financial institution’s investment to support farmers, their groups and cooperatives and youth entrepreneurship. “Establish more credit schemes for agriculture in collaboration with financial institutions,” the recommendation stated.
This recommendation was submitted after the NC’s natural resources and environment committee, in its review on agriculture, found out that credit from the financial institutions to the agriculture sector was only Nu 2.65B in 2014. The credit from the financial institutions to agriculture amounted to just 4.1 percent of the total 63.98B issued that year.
But the report, however, stated that 99.9 percent of this credit came from Bhutan Development Bank Ltd (BDBL), as it dished out Nu 2.650B of the total credit of Nu 2.653B to agriculture.
Though the credit for agriculture grew by 52 percent in 2014 as compared to 2013, the chairperson Dasho (Dr) Sonam Kinga, during the deliberation, said that access to credit for agriculture should further improve. “Going by the existing interest rates, other credit schemes like vehicle and housing are still much cheaper than agriculture while it should be the other way round,” the chairperson said.
The House also found out that the financial institutions currently have no mandate from the regulatory authorities like the RMA requiring the banks to allocate credit facility to the agriculture sector to ensure its credit growth.
In order to enable farmer groups and cooperatives to gain access to credit facilities and other financial support, it was submitted that the Cooperatives Act of Bhutan and its rules and regulations also be amended.
As crop depredation from wildlife still remains a major challenge impeding food production, the House recommended expediting the completion of the draft agriculture insurance policy. The House also recommended that work on the draft marketing policy be sped up to facilitate food distribution and stabilise supply.
Since irrigation water supply under the conventional practice is still heavily reliant on temporary sources liked rain-fed streams, a recommendation to scale up investment on developing irrigation infrastructure was proposed. The proposal is that the government must explore options to exploit water resources from large perennial streams, build large-scale water storages and use water pumps and micro-irrigation technologies.
The House also asked for timely repair and routine maintenance of the damaged irrigation channels for consistent and improved water supply to the farmers.
Because employment was not considered as one of the criterion for budget allocation in the five-year plans, the committee found that the budget for the agriculture sector has been dwindling over the years with agriculture getting just 6.4 percent in the 11th Plan.
The House, therefore, submitted that employability be incorporated as one of the factors for budget allocation to increase investment in the agriculture sector to make it vibrant.
This in turn is to help expedite domestic food production by supporting farmers, their groups, cooperatives and youth entrepreneurs.
The House also recommended to create youth enterprise development centres to encourage youth in the agriculture sector and facilitate linkages among the existing youth related agencies and programmes.
Following the committee’s report that there is poor linkage between the farmers and the food processing industries, the NC recommended to link the entire value chain from agriculture input supply to production, processing, distribution and marketing.
Though the government is yet to implement the NC’s 16th session resolution to deposit at least one percent of the royalty energy to the agriculture ministry, the House once again reiterated that this be implemented as per the Bhutan sustainable hydropower development policy, 2008. “Involve the agriculture and the economic affairs ministries to work out the modalities for integrated water resources management,” the recommendation stated.
Since, the higher prices for local produce is the reason people prefer imported food, the NC recommended working on the pricing policy based on the cost of production. The House also submitted to put in place effective measures to protect prime agricultural lands from urbanisation and rapid development through enforcement of the Land Act.