1. Market Access for Smallholder
Farmers in Eastern Bhutan
(9 July 2012)
Sangay Wangdi
Project Coordinator
MAGIP
Ministry of Agriculture & Forests (MoAF)
Thimphu 11001
Bhutan

2. Outline
• Project Area
• Project Cost
• Background
• Solutions
• Bhutan at a cross-road
• Way Forward
• Case study of off-season vegetable
• production
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3. Project Area
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4. Project Cost
Funder Amount (USD) Type
IFAD 8.49 Loan
IFAD 2.00 Grant
RGoB 1.99 Contribution
Beneficiaries 0.86 Contribution
SNV 0.16 Contribution
Total 13.5
Project Duration
• 4 years (22 April 2011 – 22 April 2015)
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5. Goal
• Alleviate poverty & improve food security & the
standards of living of target rural households.
Components
i. Support to poor subsistence farming
communities (11 blocks).
ii. Agricultural intensification & support to market
access (37 blocks).
iii. Project management & Coordination.
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6. Background
I. Agriculture
• Core of the Bhutanese economy
• 69% of population dependant
• Arable land not utilized properly
• Prospect for agricultural expansion constrained
– Lack of arable land (2.93%)
– Inadequate technology
– Poor road access
– High transaction cost
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7. Background
II. Smallholder farmers
• Backbone of the Bhutanese food system
• Role in agriculture, food security and economic
development and the concentration of poverty
in rural areas.
• Individually are too small to supply sufficient
volume
– low bargaining power
– may also lead to buyers looking for other suppliers
that can supply them with sufficient volume
– Relying on India
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8. Solutions?
Two solutions
Solution 1 Solution 2
Producers Producers
Middlemen/Local Producer
Traders Groups/Farmer
Groups
Sorting, grading &
Processors/Wholesa packaging
Processors/Wholesa
ler/Retailers
ler/Retailers
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9. Background
III. Marketing Systems in Bhutan
• Direct sale to traders or consumers at the farm gate
• Weekend markets
• Auction markets
– Mostly Indian traders
Facilitated by DAMC
– Identifies markets & conducts trial marketing in liaison
with the interested private sector.
FCB
– Marketing agent for agriculture produce
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10. Background
IV. Market access in Bhutan
• Access to roads, output markets, input markets,
financial markets (e.g. credit) and market
information
• Road access alone cannot create market access
• Appropriate policy and legislative frameworks
and effective government support services
• Traders – clear incentives to develop
partnerships with farmers, which require them
to assume high costs per unit procured.
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11. Background
V. Constraints
• Low, unreliable and scattered production
volume and post-harvest losses are some
persistent constraints.
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12. Background
VI. Government Support
• Construction of farm roads
• Construction of other marketing infrastructure
– post-harvest storage, primary processing facilities
& weekend markets.
• Formation of farmer groups and cooperatives.
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13. Background
VII. Bhutan at a cross-road
• With expanding opportunities and new competitive
pressures.
• To harness export opportunities, smallholder farmers
must first become more market-oriented, producing
the right commodities at the right time in the
volumes required and at competitive prices.
• Major structural problems in the rural sector must be
addressed.
• Smallholder farmers must maximize their revenue
per land area by cultivating higher-value crops.
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14. VII. Bhutan at a cross-road
• Supply-side constraints need to be resolved in order
for smallholders to benefit fully from such markets.
– lack of marketing skills, technology & high transportation
cost
• Smallholder farmers must also cope with the reality
of its landlocked position, mountainous terrain &
dispersion of farms.
• Recognisation by the govt. the enormous changes
taking place in Bhutan’s food systems & their
implications for small and marginal farmers.
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15. Way Forward
• Smallholder farmers used to supply domestic markets & are
Way forwardto low cost imports.
particularly vulnerable
• Limited resources to invest in technology & switch to other crops
and markets.
• Need time, knowledge & public support to make such a transition.
Way forward
• Limited access to markets contributes to high marketing costs &
poses a major deterrent to commercialization.
• Price transmission is low and price changes in urban markets are
not fully transmitted to producers & traders, whose prices are
volatile and drop drastically even with a small increase in market
arrivals.
• Entire marketing systems must be upgraded to allow for cost-
effective movement of goods between producers & consumers.
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16. Increasing Market Access for
Smallholders: a case of Off-Season
Vegetables
The approach can be presented in 5 distinct steps:
1. Understanding market opportunities
2. Organizing farmers into clusters (farmer groups)
Way forward
to meet market requirements
Way forward
3. Promote production and required (input)
support and supplies.
4. Facilitate actual market linkage with Bhutanese
and Indian traders.
5. Monitoring and feedback
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17. Increasing Market Access for
Smallholders: a case of Off-Season
Vegetables
1. Assists farmers to understand their potential
markets
Way forward
3000
2500
2000 Potato
Way forward Cabbage
1500 Radish
1000
500
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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18. Increasing Market Access for
Smallholders: a case of Off-Season
Vegetables
2. Assist smallholders, those who want to
participate, to organize themselves into groups of
10-15 members that focus on the supply of
Way forward
agricultural products, with a clear understanding
Way that this is for commercial vegetable production.
forward
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19. Increasing Market Access for
Smallholders: a case of Off-Season
Vegetables
3. Prepare & support farmers for sustainable
production practices & promote service providers to
gear up & meet the input demands for the required
Way forward
production.
Way forward
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20. Increasing Market Access for
4. Facilitate actual market of Off-Season
Smallholders: a case linkage & ensure market
information flows down the chain and inform the
Vegetables
producers.
In the interaction with Indian vegetable wholesalers, the latter could very well explain their
Way forward
requirements to Bhutanese traders, cluster representatives and extension agents:
Cauliflower: One head should be between 500 - 1200 g. Packaging: sun dry to vaporize water
Way forward its own inner leaves & wrap in paper, tight packing in plastic bags (perforated
drops, cover with
plastic bag) & stitching of sack once filled.
Radish: 3-4 pieces should make 1 kg. Wash after harvesting, dry water & pack in jute bags, keep
3-4” of leaves on it.
Carrot: 7-12 should make 1 kg; don’t want cracked ones. Wash after harvesting, dry water &
pack in jute bags, keep 3-4” leaves on it. Packaging same as radish.
During the interaction, the Indian traders were able to adjust their packaging requirements to what
Bhutanese saw as feasible. Other aspects like payment modalities were also discussed.
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21. Increasing Market Access for
5. Monitoring & feedback towards both
Smallholders: a case of Off-Season
farmers, extension agents and traders is required to
Vegetables
solve upcoming problems, capitalize on learning &
adjust the programme planning and activities
Way forward
Way forward
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22. Increasing Market Access for Smallholders: a case of Off-Season Vegetables
A range of different lessons have already emerged:
Way forward
Way forward varieties available in Bhutan are not suitable for summer
Some of the
production (the lean season in India): for example the radish (Ivory White at
lower altitude) variety showed early bolting in several areas.
While many extension agents showed excellent support and
understanding, others still tended towards the traditional kitchen gardening
approach instead of the proposed semi-commercial farming or could not resist
social pressures to equally support all farmers.
2012 turns out to be a very dry year, and access to water for production
purposes should have been a more stringent criterion in farmer selection. This
needs to be combined with support in or access to more efficient water supply
technology like drip irrigation, sprinklers and water harvesting.
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24. Tashi Delek &Thank You
for your attention
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