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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Sangay Wangdi


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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Sangay Wangdi

  1. 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. 2. Outline• Project Area• Project Cost• Background• Solutions• Bhutan at a cross-road• Way Forward• Case study of off-season vegetable• production09/07/2012 Copyright MAGIP©2012 2
  3. 3. Project Area09/07/2012 Copyright MAGIP©2012 3
  4. 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 13.5Project Duration• 4 years (22 April 2011 – 22 April 2015)09/07/2012 Copyright MAGIP©2012 4
  5. 5. Goal• Alleviate poverty & improve food security & the standards of living of target rural households.Componentsi. Support to poor subsistence farming communities (11 blocks).ii. Agricultural intensification & support to market access (37 blocks).iii. Project management & Coordination.09/07/2012 Copyright MAGIP©2012 5
  6. 6. BackgroundI. 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 cost09/07/2012 Copyright MAGIP©2012 6
  7. 7. BackgroundII. 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 India09/07/2012 Copyright MAGIP©2012 7
  8. 8. Solutions?Two solutionsSolution 1 Solution 2 Producers Producers Middlemen/Local Producer Traders Groups/Farmer Groups Sorting, grading & Processors/Wholesa packaging Processors/Wholesa ler/Retailers ler/Retailers09/07/2012 Copyright MAGIP©2012 8
  9. 9. BackgroundIII. Marketing Systems in Bhutan• Direct sale to traders or consumers at the farm gate• Weekend markets• Auction markets – Mostly Indian tradersFacilitated by DAMC – Identifies markets & conducts trial marketing in liaison with the interested private sector.FCB – Marketing agent for agriculture produce09/07/2012 Copyright MAGIP©2012 9
  10. 10. BackgroundIV. 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.09/07/2012 Copyright MAGIP©2012 10
  11. 11. BackgroundV. Constraints• Low, unreliable and scattered production volume and post-harvest losses are some persistent constraints.09/07/2012 Copyright MAGIP©2012 11
  12. 12. BackgroundVI. 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.09/07/2012 Copyright MAGIP©2012 12
  13. 13. BackgroundVII. 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.09/07/2012 Copyright MAGIP©2012 13
  14. 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.09/07/2012 Copyright MAGIP©2012 14
  15. 15. Way Forward• Smallholder farmers used to supply domestic markets & areWay 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.7/20/2012 Copyright MAGIP©2012 15
  16. 16. Increasing Market Access forSmallholders: a case of Off-SeasonVegetablesThe approach can be presented in 5 distinct steps:1. Understanding market opportunities2. Organizing farmers into clusters (farmer groups)Way forward to meet market requirementsWay forward3. Promote production and required (input) support and supplies.4. Facilitate actual market linkage with Bhutanese and Indian traders.5. Monitoring and feedback7/20/2012 Copyright MAGIP©2012 16
  17. 17. Increasing Market Access forSmallholders: a case of Off-SeasonVegetables1. Assists farmers to understand their potential marketsWay forward 3000 2500 2000 PotatoWay forward Cabbage 1500 Radish 1000 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec09/07/2012 Copyright MAGIP©2012 17
  18. 18. Increasing Market Access forSmallholders: a case of Off-SeasonVegetables2. Assist smallholders, those who want to participate, to organize themselves into groups of 10-15 members that focus on the supply ofWay forward agricultural products, with a clear understandingWay that this is for commercial vegetable production. forward09/07/2012 Copyright MAGIP©2012 18
  19. 19. Increasing Market Access forSmallholders: a case of Off-SeasonVegetables3. Prepare & support farmers for sustainable production practices & promote service providers to gear up & meet the input demands for the requiredWay forward production.Way forward09/07/2012 Copyright MAGIP©2012 19
  20. 20. Increasing Market Access for4. Facilitate actual market of Off-SeasonSmallholders: a case linkage & ensure market information flows down the chain and inform theVegetables producers.In the interaction with Indian vegetable wholesalers, the latter could very well explain theirWay forwardrequirements to Bhutanese traders, cluster representatives and extension agents: Cauliflower: One head should be between 500 - 1200 g. Packaging: sun dry to vaporize waterWay forward its own inner leaves & wrap in paper, tight packing in plastic bags (perforateddrops, cover withplastic bag) & stitching of sack once filled. Radish: 3-4 pieces should make 1 kg. Wash after harvesting, dry water & pack in jute bags, keep3-4” 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 whatBhutanese saw as feasible. Other aspects like payment modalities were also discussed.7/20/2012 Copyright MAGIP©2012 20
  21. 21. Increasing Market Access for5. Monitoring & feedback towards bothSmallholders: a case of Off-Season farmers, extension agents and traders is required toVegetables solve upcoming problems, capitalize on learning & adjust the programme planning and activitiesWay forwardWay forward09/07/2012 Copyright MAGIP©2012 21
  22. 22. Increasing Market Access for Smallholders: a case of Off-Season VegetablesA range of different lessons have already emerged:Way forwardWay forward varieties available in Bhutan are not suitable for summer Some of theproduction (the lean season in India): for example the radish (Ivory White atlower altitude) variety showed early bolting in several areas. While many extension agents showed excellent support andunderstanding, others still tended towards the traditional kitchen gardeningapproach instead of the proposed semi-commercial farming or could not resistsocial pressures to equally support all farmers. 2012 turns out to be a very dry year, and access to water for productionpurposes should have been a more stringent criterion in farmer selection. Thisneeds to be combined with support in or access to more efficient water supplytechnology like drip irrigation, sprinklers and water harvesting.09/07/2012 Copyright MAGIP©2012 22
  23. 23. 7/20/2012 Copyright MAGIP©2012 23
  24. 24. Tashi Delek &Thank You for your attention09/07/2012 Copyright MAGIP©2012 24