Strategy for gross national happiness (sgnh) Annexures to the Main Document
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STRATEGY FOR GROSS NATIONAL HAPPINESS (SGNH) Annexures to the Main Document (Sub Committee Reports) (Edited and compiled) Table of ContentsTable of Contents 2 Part I. Innovation, Creativity and Enterprise (ICE 2008) 3
Part I. Innovation, Creativity and Enterprise (ICE 2008)Track 1: High Value Manufacturing and Service Industries Organic food and beverages/productsBackground There is an increased awareness globally of health and environmental issues, and the sustainability of general agricultural practices adopted worldwide. These issues are of high importance especially in developing countries where there is huge potential of either having well balanced development plans based on sustainable farming and healthy economic growth, or of trading the natural resources for hastened economic growth. The global trend of increasing organic farming is a result of international communities becoming more conscious of these issues, and many government policies being formulated to support the growth of the organic sector and sustainable agriculture. More importantly, organic agriculture offers trade opportunities for farmers in the developing countries. Market Analysis Globally, the markets for organic products are growing rapidly and it is estimated at US$ 25 billion - US$ 30 billion annually. The biggest markets are the USA, followed by Germany, UK, France, Japan and Italy. In developed countries, the share of the organic products in total food sales exceeds 4% and in many of the bigger markets, the organic foods sales share is about 2-3%. In developing countries, this share is small but growing rapidly. The US and EU make up 95% of the world’s retail sales of organic food products. The growth in some market segments were as follows:
Scope for organic farming in Bhutan Bhutan has a large rural population still practicing traditional farming due to the lack of access to facilities and technology. Farmers have been producing food crops simply using forest litter and farmyard manure (FYM). There is potential to increase productivity of these traditional farming systems by adopting organic farming, which include: development of farming systems applicable to the local soil, agro-climatic conditions and local crop species; crop rotation and intercropping; efficient production of vermi-compost and FYM from farm wastes and organic farming plant materials; and pest management with improved farming systems and the use of botanical and other natural formulations. Such practices could change farming from subsistence to sustainable, providing safe and quality nutrition and ensuring food security. Value could be added to surplus production to meet market requirements. India, which is the closest market for Bhutan, has huge potential for organic production as well as a decent domestic market. The upper-middle and upper class Indians with disposable income will be the main consumers to be targeted. The Indian organic market segment to watch out by importance would be as below1:
There is good potential to develop the organic fresh fruit and vegetable market as the market segment seems wider with 400 tons traded in 2002, but by premium indication, tea is the most important product for which Bhutan has no comparative advantage over India currently. However, the development of organic specialty teas could have potential. Pulses and minor cereals may be the other option. With the volumes Bhutan will be producing initially and the poor logistic organizations, regional markets like India, Bangladesh, Thailand and Singapore may be the potential markets to start. The Singapore and Thailand markets demand closer study as Singapore has an import based food industry with a population with high disposable incomes and a strong food culture with diversity in menu. Singapore is also a trade centre where many products are imported to be re-exported. The Japanese market is very lucrative and is the biggest Asian organic market with high demand and strong purchasing power combined with low domestic supply, reflecting a growth rate of 20% annually. The most commonly imported organic products are soy bean, frozen vegetables, herbal teas and bananas. Japanese organic food and beverage retail sales were estimated at US$ 2.5-3 billion in 2001 with US$ 360 million worth being imported in 2000. The Japanese Integrated Market Institute predicts that imports of organic products will grow by 40%. Future of Bhutanese organic farming Bhutan’s less than 7.8% arable land, low technology and skill levels and inadequate human resources make farming to optimum capacity of the land unlikely. Further, with rural - urban migration taking place, the farming population will continue to reduce thus making farming a greater challenge. With Bhutan soon to become a member of WTO, farming may no longer be economical and the flooding of markets with cheap imports will further discourage farming. Besides, the high labour costs in Bhutan constrain us from competing with our neighbours. The only way Bhutan can continue to farm economically then will be to distinguish Bhutanese products from others and market the uniqueness of the production systems and market high value low volume products where Bhutan has an advantage. There may be concerns that converting to organic farming results in reduced yields and quality. From research in the west which has optimized inputs and yields, there are reports of up to 40% reduction. However, in countries like Bhutan, where there is little or no external inputs such as agrochemicals, there is little difference in yield in most crops except for a few cash crops like apple, citrus and potato. Assuming that there is 20% yield reduction during the conversion period from conventional to organic practices, the benefits from organic farming, if export markets can be linked to producers, will offset any yield reduction and increased production costs due to intensive management.
Based on a prescribed set of criteria (current husbandry practices, logistics, post harvest preservation need, and price and premium), the following crops have been selected for organic development:
Enabling environment for the growth of organic industry For any industry to start, grow and take root, the basic infrastructure to support that industry needs to be in place supported by enabling policies that promote that industry. For the organic industry, one can look at it from two angles: firstly, from the health, environment and sustainability angle; and secondly, from the market angle to achieve economic growth and revenue earnings for the country. While both are important, the approach to achieve the goal and the path one chooses will be different if an overarching priority is not clear. With Bhutan’s natural potential and the growing global demand for organic food, it is a great opportunity to invest in the development of organics in the country in a phase-wise manner starting from easily produced products that have high market value and eventually convert all possible areas by proactively linking production to market. While a market led development is very important to kick-start the export oriented industry for organic food and beverages, one should not underestimate the need for a government-led holistic integrated development of the industry as the nature of farming system in Bhutan is such that crops, animals, forests, etc. cannot be separated. Private sector involvement Private sector should be involved from the start to build a network of operators who can immediately pick up the trading between the producer groups and the markets. They should have the opportunity to avail of required exposure and participation through trade fairs, expos, study tours and also training in business management. The government should facilitate the operation of innovative businesses that venture into organic production, processing and trading through technical and policy support. Organic standards and certification If export markets are to be targeted and production initiated based on market linkages, certification will be a requirement. Bhutan should develop a National Organic Standard based on the Codex Alimentarius minimum requirements and institute a system of regulation that covers certification issues including the operation of external certifiers in Bhutan. The standards could be voluntary to start with and made mandatory when the time and industry is mature. As it can take anywhere from one year (for wild collected) to five years (conventional soil) with an average of three years to get a certificate, it is recommended that as soon as a market lead is found and it has indications for organic certification requirements, conversion to such certification should be started. In the meantime, Bhutan should sell the clean green image and build a brand for organic produce from Bhutan based on the origin of the material. This should be backed by the government not only through legislation but also in its marketing and promotion. In the short term, to cut certification costs, a team of inspectors from BAFRA should be trained as qualified organic inspectors for foreign certifying agencies. Limitations to production
Policy issues that need to be addressed in regard to land for any farming The revised Land Act will have to be reinforced through a national policy on land that provides broad guidelines along which Acts, rules and regulation are made. Usually Acts legalize guidelines but in this case there is no framework on land to be legalized so the Act may cause more confusion and uncoordinated development in the country, which the proposed National Spatial Act will hopefully address.
With most households in Bhutan owning less than 2 acres, there is the issue of equitable land distribution which enables the people to engage in some productive income generation of food producing work. While a small minority own land in huge excess of the land ceiling through innovative management, there is a large number of population who have land especially in horticultural production which are in excess of their ownership but by marginal areas. In such cases, the farmers should be allowed to buy excess land to be used productively but with a ceiling on the total land owned.
Many people have lost land to the forest due to overgrown trees. A survey by DoA found that a total of around 11,000 acres of agricultural land is lost as forest land according to the Forest Rules. There are cases where paddy fields are included in the forest land under this rule and reverted back to national forest. The farmers are being penalized under this legislation instead of being rewarded for their conservation efforts.
There is considerable area of land under citrus and cardamom cultivation in national forest land in the warm temperate and sub-tropical areas of Bhutan. Due to legal land title issues, many orchards are abandoned or not managed and are acting as sources of disease and pests. These are very important cash crops that earn the first and third position by value from exports. There is immense potential to improve and manage the production, and in the case of cardamom, expand production in other possible areas as this is a high value niche crop that Bhutan has potential to develop without too much competition. Since cardamom is mostly grown organically, this is a very important crop that needs immediate attention. A study needs to be conducted to validate the situation of cardamom. Policy specific to organic agriculture MoA has decided that organic farming will be the way all farming systems should be adopted and has developed and endorsed a National Framework for Organic Farming in Bhutan. Such a move was taken considering the potential of the country, the nature of farming practices and farming population, the growing global market for organic food and environmental benefits that can result from agrochemical free farming. The vision stated in the document now needs to be adopted at the national level in order to reach the goal and realize the end result. After adoption at the national level, all of MoA’s plans should be developed in order to achieve the common goal of moving towards making the country organic. Strategy “To be an internationally recognized producer of organic foods by 2028”.
Given below is an extract from the document, National Framework for Organic Farming in Bhutan by DoA, stating the vision and broad strategies. To start development of the organic production for this project which needs an economically lucrative angle, focus could be given to the strategies numbers 2 and 3 which are market and profit driven and which also roughly matches with the economic hubs and growth centers where most market opportunities will grow. Vision In the long term Bhutan strives to develop and promote organic farming as a way of life among Bhutanese farmers and trade in organic food items, to enhance nutrition, health and farm household income, and to become a net exporter of organic agricultural products. Bhutan envisions to become ‘Organic’ before 2020. Mission To develop and promote Organic Farming and environmentally friendly farming systems and programmes that will enable Bhutanese farmers and traders to provide safe, quality food, produce and products for Bhutanese consumers and other markets. Broad Strategy A three pronged strategic approach will be adopted to cover potential development areas.
What to grow If selected niche products are picked with assured market linkage such as contract growing, the potential is huge to kick start the organic industry. This would be best taken up by the private sector but assisted by the government with technical backstopping and necessary market information. The organic production should start with easy-to-grow crops that are grown with natural traditional practices or with very little agrochemicals. The short list of potential crops is given according to its cost of production following organic and non-organic practices where possible. While there may be potential to produce all products, one has to bear in mind that limitations to production be they technical, financial, organizational and above all, market information for an established or assured market will be key to the growth of organic production in the country. As much as possible, it is desirable to allow FDI in this sector as the interest, responsibility and accountability of success is shared and the risk factor to farmers involved is reduced. If this is not permitted, then the possibility of using contract production, whereby the importer pays for the certification if required, should be explored. A suggestion of how production clusters could start based on production capacity of the Dzongkhags and how infrastructure developments could be prioritized is given below. Organic Crop Cluster
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