1 Situation Analysis
Background
The qualitative assessment of agriculture development in the past four decades reveals a distinct path – barter system to subsistence farming and then moving into a semi-commercial economy. While following this path, the overriding policy of the MoA has been to achieve certain level of self-sufficiency in cereals12 and buy the rest from the revenue generated by export of cash crops to achieve national food security. Closer examination shows that while the food crops production remained largely subsistence in nature, there was a steady drive on the promotion of cash crops given their comparative advantages. As a result, the export of cash crops and the revenue thereof have been growing over the years. The export value of the four main cash crops - oranges, potatoes, apples and cardamom - was Nu. 522.065 million in 200513.
In food crops, rice production has seen increases in production through yield improvements of adopting improved varieties. About 35% of the area is under improved varieties with an estimated annual increment in production of 5,000-10,000 MT, which is equivalent to Nu. 60 -121 million.
The present rice production in the country is estimated at 55,762 MT against the national requirement of 94,808 MT (CCARB). In 2005, we imported 45,230 MT of rice (rice in husk or paddy, husked brown rice, semi-milled or wholly milled, and broken rice). The total import value for rice, edible oil (both crude and refined) and maize (as raw material) was Nu. 539.51 million14. The projected trend would be widening the gap between domestic production and import. The reason would be simply because of our poor delivery of services to attract farmers to increase their production and productivity. The declining area for rice sends a serious signal of stiff competition from other sectors and the inherent system deficiencies within. The farmers have no choice but to adopt an approach of growing just enough to feed their families and look for other cash earning opportunities.
With the gradual diversification of the Bhutanese economy, the contribution of the agriculture sector to GDP has declined over the years. It has declined from 53% in 1985 to 26.7% in 200515. While the declining trend is normal and healthy since it indicates higher economic growth in other competing sectors, agriculture will still play a significant role in the future economic development of the country.
In the past, in terms of approach, the agriculture sector was engaged in general development of agriculture in the whole country. This approach was needed to uplift the general living condition of the people and to provide basic services. In recent years, the need to focus more on potential areas vis-à-vis general approach has received attention in the form of exchange of ideas, debates and certain activities. However, the idea could not be developed into programs (except farm roads) since the fund implication was high and its allocation to the sector has been decreasing over the plan periods. Thus, the sector was faced with the dilemma of whether to continue with the same approach or move to potential areas. It was realized that adopting the new approach had to be at the expense of general services since additional fund was not forthcoming. Faced with this quandary, the Ministry’s strategic decision to open farm roads as a forerunner of development to potential areas is a move towards the new direction. In addition, a proposal for economic feasibility study to develop the southern belt for rice production was prepared and submitted to GoI in May 2006.
With the basic infrastructure in place, the stage is set for a paradigm shift from a general approach to a potential-driven one for commercialization of selected commodities. The main focus of this new drive should be providing better services to the potential areas. Besides services, the external factors (policy, across border competition, wild life damage, competing land uses, markets, etc) that affect food production must be addressed. Better services can be provided if all the stakeholders work closely together bound by common objectives. The main stakeholders who need to work closely together are research, extension, infrastructure developers, farmers, private sector, marketing, cooperatives and even the consumers. The foundation of this new partnership must be built on research innovations in relevant fields, aggressive extension in prompt delivery of extension support and services, development of high quality farm infrastructures, timely delivery of demand and price forecasts and active involvement of the private sector and cooperatives for value addition and marketing.
The major challenges in achieving the goal of commercial production of selected commodities lie in providing efficient services, which in turn would depend on fund and capacity. For fund, the RGoB should explore long-term soft loans since FDI may not be possible due to low return on investment. Capacity development at this juncture is more urgently required for infrastructure developers since high quality infrastructure development must precede production of commodities. As a short term measure, existing people with background knowledge and experience must be pooled to start the work. After a careful needs assessment, covering all disciplines, a capacity development plan must be drawn for implementation. Capacity development will be required by the commercialization program as we move from a general approach to a specialized one and we need more specialists in different disciplines to lead the program.
Importance of field crops
Field crops form the main staple food. Food being the basic nourishment for a healthy and productive life, it is the ultimate source of energy for all productive human activities. Generally, only after the basic needs for food is fulfilled, people explore other money making opportunities to further enhance their well being. Therefore, those crops which constitute staple food of majority of the population are important as the basic source of energy and they invariably carry cultural and social significance. In addition they also have national food security and other considerations of strategic nature. However, with the emergence of free trade driven world economy, these characteristics of food crops are becoming less obvious.
It is generally believed that Bhutan is self-sufficient in food crops if we produce what we consume. But, the reality is, with increase in purchasing power given by the general development of the country, our food habits have changed. The traditional food crops like maize, wheat, buck wheat and millets are not consumed while rice has emerged as the most important preferred staple food. It is estimated that we produce 58% of our rice requirement while the other 42% is imported, mainly from India.
While the policy has been to buy food from the revenue generated by export of cash crops, this policy objective has not been achieved as the balance of trade is negative (Nu. 539.51 – 522.065 = Nu. 17.445 million). Therefore, the importance of field crops lies in saving on the import of rice, edible oils and maize. Plugging this drain will significantly improve the balance of agriculture trade and make our economy more vibrant. Besides the monetary gain to the national exchequer, field crops offer income generation, livelihood and employment opportunities directly to our farmers and indirectly to other people who are engaged in agri-businesses.
Commercialization of field crops: Constraints and opportunities
The SGNH sets strict criteria to identify field crops and products thereof (after product development) that have potential and competitive edge in the market (local and outside) for production on commercial scale. If we consider these criteria only from commercial production and market angles, field crops have limited scope given the narrow production base and the low economies of scale. In addition, across the border competition is perceived as a serious obstacle to field crops production beyond subsistence scale. However, giving due weight to other equally important parameters such as import substitution, income generation, livelihood and employment opportunities, national food security, agriculture trade balance and as staple diets, rice, oil seed crops and maize have production potential in certain pockets in the country provided factors that affect production efficiencies are addressed.
Constraints
There are common and specific constraints that restrict field crops production beyond subsistence nature. The common constraints are:
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Narrow land resource base with only 7.8% of the country under arable agriculture;
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Narrow land resource base does not generate the economies of scale;
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Lack of high quality farm infrastructures;
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Main production resource – water is scarce when and where it is needed;
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Field crops production is more labour intensive than other forms of farming;
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Farm labour shortage and the difficulty of mechanization make growing field crops beyond self-feeding the last option;
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Damage of crops by wild life acts as the proverbial last straw on the farmers’ backs;
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Stiff competition from across the border for markets acts as deterrents;
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Absence of road access for free movements of inputs and produces restrict production initiatives; and
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There are production management deficiencies for field crops.
Bhutan being a mountainous country with only small strips of flat areas in certain parts of the southern foothills, arable land is a premium. Our present rice growing areas are mainly located in river valleys of mid and high altitude areas. This is because significant land areas in the southern belt remain mostly uncultivated while about 50% may be under a single crop in a year. Such a small and scattered land resource with major chunk of potential area not being utilized has resulted in shortage of food crops, especially rice and edible oils.
Bhutan is seen as a country endowed with rich water resources. This is only true at the national level, where the amount of water resources is calculated based on the flows in rivers generated by precipitation. But the irony is, there is water shortage when and where it is needed. It is because the rainy season lasts for three months and the rest of the year is mostly dry. The rivers flow along the valley bottoms while land is situated up the slopes. Therefore, irrigation infrastructure assumes great importance. The southern belt has no irrigation facilities to take advantage of the potential area for rice and oil seed crops. The main reason is that southern belt falls in the fragile foothill zones and irrigation development is capital intensive and there is not enough resources for investment. There have been efforts to provide irrigation services in the mid and high altitude regions. But the quality of irrigation system developed has been poor and characterized by frequent break downs. The main reason is attributed to fund-strapped patch-work irrigation development rather than quality infrastructure development. In addition, the water users’ associations who look after the facilities have not been effective.
The labour intensive nature of cultivating field crops, farm labour shortage and difficulty in farm mechanization have forced the farmers to cling to subsistence farming. To worsen the situation, the costs related to crop guarding comes to as high as 30% of the total production cost. Absence of road access, stiff across the border competition, deficiencies in crop production management and poor marketing support have forced the farmers to remain subsistence in their efforts rather than produce for the markets.
Coming to specific constraints, the rice production in the southern belt did not take place since there was no infrastructure development due to security reasons. During the seventies and eighties, Taklai Irrigation Project, the only big irrigation project in the country was implemented. Right after the project was commissioned in 1988-89, the southern problem did not allow reaping benefits from the investment. In addition, development of infrastructure in the southern belt is investment intensive and to make the situation worse, the heavy monsoon wreaks havoc to the developed infrastructures.
In terms of suitable rice varieties, only a few rice varieties are available for the southern belt and research needs to develop varieties (in terms of quality and yield) along with management packages. Rice production in the altitude of 1,600-2,600 m faces constraints related to water and temperature. The latest transplanting must be done by mid July as there is drastic yield decrease after this date. On the other hand, water shortage due to the existing rainfall pattern pushes the date of transplanting. Therefore, screening and identifying varieties for August transplant with a respectable yield potential may solve the problem of water shortage due to delayed rainfall. With imminent climate change, change in rainfall pattern is expected which may throw our farming system out of gear.
Maize production in Eastern Bhutan needs to be looked at from product development and value addition point of view. Value addition and marketing have not received adequate attention though there have been reports of surpluses. Surpluses have been scattered and it has been difficult to collect them for value addition or marketing.
Oil seed crops have been cultivated only at subsistence level. It is due to the absence of assured irrigation. Without assured irrigation and suitable varieties, yield has been low at the national average of less than 400 Kg per acre.
Opportunities
The southern belt has a projected command area of 15,090 ha, 40% of the total area under rice in the country. With assured irrigation, double cropping of rice is technically feasible. With 100% of the area under two crops of rice at a modest yield level of 2 MT/ha, the estimated production is more than 60,000 MT. With assured water and good production management, experts comfortably put the yield level at 3 MT/ha. Therefore, there is potential to grow rice and reduce the imports to a minimum level and subsequently go for total import substitution.
Mid and high altitude areas spreading into five Dzongkhags (Paro, Punakha, Wangdue, Tsirang and Dagana) have 8,230 ha of land under rice cultivation. By creating conducive environment, there is potential for production increase through increase in yields. Experts believe that yield have not reached the optimum level. The yield increase would come from adopting high yielding varieties, through better water, nutrient and pest management practices. Creating efficient marketing channels would lure the farmers to increase their production for the markets. In addition, these prime rice producing areas have potential to produce natural red rice for the western markets fetching premium prices.
The oil seed crops fit well with the rice-based system, both in the southern belt and in higher rice growing areas. Right mix of rice and oil seed crops would enhance the economic feasibility of each other. In terms of production potential, with assured irrigation and the readily available technology (varieties and management package with ICAR) yield of rapeseed-mustard can be increased from the present national average of less than 400 MT/ acre to 800-1,000 MT acre. Depending on the acreage we devote to oil seed crops, there is potential to decrease import of edible oils at least by half.
Maize production in Eastern Dzongkhags is more than 90,000 MT. There is potential to increase further through adoption of improved varieties and management packages and most importantly by creating a sustained demand. The demand has to be created by innovations in product development and value addition. There is substantial import of maize from India mostly as a raw material for the animal feed industries. With efforts on value addition and creating the markets for the products, total import substitution of maize as a raw material can be achieved.
Way forward: Policies and strategies
Policy changes/implications
In order to bring efficiencies in the overall system, land uses must be determined by land capabilities and the competing economic benefits. The best way to rationalize the land use will be to separate 60% as forest for all times. Since the main function of this land use category is for environmental services, steep areas (above 51 degrees), core protected areas and biological corridors, scattered and small settlements with steep agriculture land should fall under this category. In addition, good forest for timber production through dynamic management may be included under this category. After keeping aside the 60%, the remaining areas must come as a common kitty to be divided among different land use categories based on land capabilities and competing economic benefits.
Water is another productive asset that needs rational sharing among competing uses. The Bhutan Water Policy (draft Dec 2006) sets general guidelines on water resources management. However, legislation to support the policy is not in place. There are traditional water sharing and management practices which need to change in order to do away with the inherent inefficiencies. A national Water Act needs to be enacted to regulate water uses among the different sectors to bring efficiencies. Related to the Water Act is the legislation on Water Users Associations to give legal framework to the associations to play an important role in sharing and managing water at on-farm level. The water users’ associations have not been effective at solving conflicts and disputes on water since these organizations are not recognized as legal entities. As water will become an important resource for crop production, water storage to bridge the seasonal gaps may need to be explored. Tying this up with storages for hydropower will give multi-purpose dimension and may add value to each other.
Crop damage by wild life has acted as the proverbial straw on farmers’ back. Though there has been much discussions and studies, nothing concrete has come out. Therefore, the issue of crop damage by wild life must be addressed if we want our farmers to produce for themselves and for the markets.
In area of subsidies, food crops have received minimum subsidy. The present scale of subsidy16 to the agriculture sector is spread too thinly across a wide range of basic services. Subsidy on food crops is limited to transportation of inputs like fertilizers, weedicides, and plant protection chemicals to the road head. Agriculture development, especially the food crops sector, needs support and the government must rationalize application of subsidies across sectors. Power/energy and natural resources subsidies to industries raise the whole question of equity in subsidy application. The government must come out with a policy on subsidy to provide a level playing ground across sectors so that subsidies are given where absolutely necessary. In the agriculture sector, providing services (irrigation, farm road, research, extension, marketing) to the farmers must be seen as a subsidy package. The change in approach must be that we provide these services in an effective manner so that farmers are able to capitalize on them. On top of providing these services, a dynamic minimum price support for their produces will go a long way in attracting farmers to produce surpluses.
Implementation Strategies
The main strategies must revolve around providing effective services and creating the conducive environment required to increase production and productivity. The areas that need focus are:
(i) Infrastructure
The southern belt needs assured irrigation water as the first priority for production of rice and oil seed crops. Therefore, investment is needed to develop high quality infrastructure. In order to make good investment, feasibility study for rice and oil seed crops production with the development of high quality irrigation and allied infrastructures needs to be done. As the belt falls under a fragile foot hill zone, irrigation development with buried hume pipes as the main conveyance structure seems to be more appropriate and therefore will be explored. Experience indicates that such a system will be more economical in the long term though the cost of construction will be higher in the short term. Since the command areas are bigger, the volume of construction will be higher and must be mechanized to speed up the progress of the work. To aid mechanization, hume pipe spinning units will be set up to reduce the cost of construction and to bring standardized quality of construction. In mid and high altitude regions, the quality of irrigation canals will be improved by using prefabricated canal sections. Prefabricated canal sections of portable sizes will be produced by batching plants set up at strategic locations.
A project approach to develop the farm infrastructure and area based program or commodity approach to intensify food production will be adopted. In order to do this, pooling of existing manpower may be necessary. Such an approach in the short term will gain time in terms of starting the work such as, survey, feasibility study and design which take a lot of time. It is proposed that intensification of rice and oil seed crops production activity be started in the command area of the Taklai Irrigation Project, where there is assured water.
(ii) Research
There is need to conduct need-based research related to field crops production. For the southern belt, suitable rice varieties (quality and yield) is limited, though work is going on for about fifteen lines to screen them for suitable varieties. Research will focus more on this area. In addition, there is a need to develop production management packages for rice, covering soil/nutrient, pest and water management. In high altitude areas, cold tolerant short duration rice varieties to fit into the rainfall pattern needs to be developed.
(iii) Extension
An aggressive extension approach will be adopted. Extension is mainly involved in communication of information on available technologies. There is a need to go beyond dissemination through proactive mobilization of farmers to achieve targets in production. For this to happen, there is need to change the extension deployment system. Therefore, in potential areas more extension personnel will be deployed and will be backed up by subject matter specialists to plan and work together in a result oriented manner. In the present system, extension lack supervision and guidance from Dzongkhag, regional and the central agencies. Also there is conflict or mis-match between the objectives of different agencies who push work to the extension. The extension will focus more on issues of production management. Their skills will be developed through training on the commodity he/she is responsible to promote. Private sector and cooperatives must be encouraged to deal with supply of production inputs, while the government may take regulatory roles.
(iv) Marketing
Full marketing support will be provided to the producers. Besides creating marketing facilities, market information on prices and demand of produces will be given to the farmers on timely manner. In order to plan production by farmers, price forecasts generated through market intelligence will be made for important commodities. The marketing agency will assume facilitating role while the actual market transactions will be encouraged to be done by the private sector and cooperatives.
(v) Product development and value addition
Product development and value addition are needed. Maize as a raw material to animal feed industry and conversion of maize to kharang to capture the school feeding program of WFP will be explored. Other areas of product development from maize like breakfast cereals, sip, high quality ara and singchang need to be studied in terms of quality of the products vis-à-vis markets. For rice, one-stop units in rice growing areas that deal in collection, milling, grading, bagging, branding and marketing will result in economy of scale and create confidence both in growers and consumers and should be encouraged to be done by cooperatives or the private sector. The oilseed crops will be extracted into edible oils of various qualities. The technology and the equipment of various performance levels are available.
(vi) Capacity development
A need-based capacity development plan will address capacity requirements for enhanced services delivery to commercial scale production. Capacity development is expected to be required in special areas like building high quality irrigation systems, research into product development or value addition etc.
(vii) Farm mechanization, land pooling and lease farming
In order to offset the impact of labour shortage, farm mechanization in the southern belt will be encouraged. To bring the economies of scale, land pooling will also be encouraged. If a large tract of forest land is converted to agriculture, lease farming by private firms will be allowed and encouraged. As farm mechanization is capital intensive, hiring of farm equipment is seen as a better option to start with. Farm machineries like tractor, transplanter, harvester, winnower, rotary weeder will be made available to the farmers on hiring basis. Private sector involvement to provide the hiring services will be encouraged.
(viii) Other approaches
The above strategies are to support production and productivity increase through the efforts of individual farmers. If effective services are provided coupled with sustained demand, farmers will grow for the market. As a safety net, ensuring minimum price support for their produces in the initial years will be very helpful.
Going beyond individual farmers as a production unit, cooperative farming comes to mind. This can happen at two levels. In level one, farmers from nearby areas can form part of a cooperative (private enterprise) to produce for it. In this arrangement, the cooperative will provide all the necessary inputs to production, like hiring of farm machineries, seeds, fertilizers and plant protection chemicals. The farmers will focus on production without hassles on production inputs. The produce will be sold to the cooperative. In level two, cooperatives or private sector will lease contiguous land from farmers or government on long term basis. The cooperatives will produce on commercial scale on their own.
The above production models will definitely bring efficiencies in the production system. However, there are certain risks involved when we shift the production system from individual farmers to cooperative farming. The skill levels of farmers may not be adequate to get jobs in other trades. In addition, being driven solely by commercial nature of the enterprise, the cost to the environment may be significant. Pollution of land and water from high use of fertilizers and plant protection chemicals cannot be ruled out. This may have implication on the quality of life of the Bhutanese people.
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