Bhutan is an agrarian society. More than 60 percent of Bhutan’s population is engaged in agricultural activities.
But agriculture’s contribution to gross domestic product (GDP) has reduced from 45.1 percent in 1981 to 13 percent in 2017.
Poverty is also among the highest in this group. According to a World Bank report launched yesterday in Thimphu, working in agriculture is highly correlated with being poor. Sixty-six percent of the poor live in a household where the head is engaged in agricultural activities.
Move to reduce poverty in rural households, dependent on agriculture as the main source of income was impeded due to conversion of limited arable land to non-agricultural uses. Of the total land, more than 30 percent is located on slopes of more than 50 degrees.
The sector’s productivity was negatively affected by low input use, low mechanisation, lack of irrigation facilities, wildlife predation, and labour shortage due to rural-urban migration.
The sector is also vulnerable to extreme weather fluctuations triggered by global warming and the country’s location in the Himalayas, the report stated.
However, the output value of crops grew at 71 percent between 2012 and 2016 while the contribution of livestock and forestry to GDP declined significantly in the last decade.
Cash crops such as apples, areca nuts and mandarin accounted for more than 90 percent of earnings from fruits and cardamom, chili and potato make up more than 80 percent of earnings from crops. Trends showed that these crops accounted for an increasingly larger share of agricultural exports.
Although, the total earning from the cash crops had improved, the report stated that there was volatility in average yield and prices, hence volatility in earnings.
An Economist with the World Bank, Yeon Soo Kim, said that introduction of formal insurance mechanisms for subsistence and smallholder farmers, and providing efficient transport infrastructure could improve commercial farmers to have access to market. “The market surplus of export crops would be higher if marketing systems were better and post-harvest losses were lower.”
The report concluded that if Bhutan was to make progress in poverty reduction, increasing agriculture production and promoting agribusiness is the only means after hydropower sector had several loopholes—increasing debt and less job creation.
Increased agricultural production is directly related to increasing yield. Diversifying from low to high-value crops and shift to commercial farming is recommended.
Raising the earnings of rural agricultural households will require paradigm shift in farming practices with use of technology, better irrigation facilities and training and mentoring farmers.
Participants at the launch of the report suggested increasing subsidies to farmers to encourage them to commercialise farming. An official from the agriculture department said that the department was exploring means to subsidise output rather than subsidies in input.
“It would be beneficial if the government buys agriculture product from farmers rather than providing subsidies in inputs such as seeds and fertilisers,” the official said.
As of now, market infrastructure and wholesale systems were found to be absent and marketing activities were largely dominated by public agencies.
About 8 percent, 277,000 acres of land in the country is cultivated arable land from which about only 23 percent of it is currently irrigated.