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Bhutan: Priorities for Agriculture and Rural Development

BACKGROUND

Located "on the roof of the world", the Kingdom of Bhutan’s tiny population (roughly 670,000) is famous for its commitment to preserving its cultural and natural heritage and to pursuing Gross National Happiness, making this country rather unique in South Asia. However, Bhutan shares many features of rural development issues with its Himalayan neighbors.

  • Poverty is clearly a rural phenomenon, with 29 percent of the rural population and 2.4 percent of the urbanites living below the poverty line.
  • Most Bhutanese live in remote villages, often several days walk from the nearest road, posing enormous challenges for their access to public services and market opportunities for farm products.
  • Agriculture is essentially subsistence - contributing one third of GDP – and the sector constitutes the majority of income, employment, and food security to most Bhutanese, particularly the poorest.
  • Three quarters of Bhutan is covered in forests, and this sector is important for the rural poor in terms of fodder, fuel wood, and building material. Forestry contributes to 10 percent of GDP, but its indirect contribution is much larger in terms of protection and maintenance of soil and water regimes (especially given Bhutan’s high reliance on hydro-power).

Achievement of Gross National Happiness and growth, therefore, requires concerted effort in the so-called Renewable Natural Resources (RNR) sector, which comprises crop and livestock production, forestry, farm roads, and natural resource management. The Government’s RNR sector strategy is a central feature of the Ninth Five Year Plan (FYP), which was derived largely from demands expressed by rural communities through their newly elected local governments.

ISSUES AND CHALLENGES

¨ Reliance on subsistence agriculture: Agricultural land in Bhutan covers only 7.8 percent of the country. Available land is under increasing competing demand from urbanization. Food production, from nine traditional crops, is generally sufficient for an adequate per capita food consumption level (2500 kcal) above the South Asian average. However, subsistence agriculture is relatively extensive and exacerbates land scarcity issues. To increase rural incomes, the challenge for Bhutan will be to diversify and commercialize within a limited market. Cash crops, particularly fruit and horticulture, have demonstrated the potential to diversify farm incomes, contributing not only to food security but also to meeting needs for cash and intensifying land use. However, the lack of roads or airfreight means that agricultural exports will be very limited for a long time to come. Other constraints to growth include declining farm labor, lack of financing, depredation of crops by wildlife, and lack of economic infrastructure to increase value-added in agriculture.

¨ Limited access for rural communities: Distance to roads is widely seen as the major factor to poverty. Accessibility is "the defining development issue in Bhutan, be it access to opportunity, enterprise, markets, or services". One third of communities have no motorized access, and only 40 percent of Bhutan’s population lives within one hour’s walk from a road. Demand for rural roads features as a high priority for most communities -- mainly basic farm roads and upgrading of mule tracks to permit the passage of power tillers. Road construction and maintenance in Bhutan’s mountainous terrain is particularly challenging, complicated by monsoon floods, landslides, and icy conditions. Availability of funds remains in short supply compared to the needs.

¨ Tradeoffs between conservation and development. Bhutan has by far the strongest conservation ethic of any country in the region. Yet, despite this  commitment, erosion, deforestation, and overgrazing are all too common, especially in densely populated areas. Tradeoffs between conservation and development need to be agreed upon by communities and the government, especially in view of on-going decentralization process.  

¨ Sustainable natural resources management and private sector investment. Private investment has the potential to provide substantial growth and employment opportunities in agriculture and forest products industries. But this will require an improved investment climate with rational and stable marketing policies, expanded opportunities to export value-added products, adoption of improved processing technology and strengthened management capacity.

¨ The challenge of decentralization: The RNR sector strategy will be implemented within the context of, and in support of, decentralization and empowerment of local communities. In a marked departure from previous Plans, the Ninth FYP focused on a national participatory appraisal exercise. Devolution of resources and decision-making powers to the local level is a key feature of the Plan to give local governments autonomy for planning, regulations, and raising taxes. However, the flow of resources and exercise of decentralized decision-making powers has yet to be seen. Capacity is extremely weak in these new institutions in terms of planning, administration, financial management, and monitoring.

PRIORITY AREAS FOR THE WORLD BANK'S SUPPORT

1. Stimulate agriculture and forest sector sustainable growth

· Access to agriculture and RNR services: Promotion of new technologies, development of input and output markets, and support infrastructure will be critical to stimulate agriculture growth.The ’professionalization’ of the agricultural extension service and incentives for front-line staff to live in remote areas will be a key to promote better services to the farmers. Ministry of Agriculture plans to construct ’RNR centres’ to enable farmers to learn about new technologies. It will implement its programs for food security, forestry, livestock, NRM, income generation, non-farm employment, and capacity building for producer organizations. The opportunities for the timber industry may need to be weighed against existing restrictions on export and manufacturing as well as the overwhelming focus on preservation rather than sustainable use.

· Invest in rural roads: The Royal Government of Bhutan considers rural access a top priority and is actively seeking multilateral and bilateral support for road investments. Given the environmental implications, this investment must follow "Environmentally-Friendly Road Construction" guidelines, which have been tested successfully and shown to be economic. The Government should clarify institutional mandates over roads construction and maintenance between Ministry of Agriculture and the Ministry of Works. Also, districts should be assisted in developing Master Transport Plans to integrate and prioritize investment.

2. Improving access to assets for sustainable natural resource use

Successful models for land and forestry management with community participation need to be scaled up. Bhutan’s commitment to the environmental conservation may not be enough to retain its pristine environment. The Government will also need to invest in public and community efforts for land, forest, and water conservation in areas where population pressure is mounting. Models may be adapted from other Himalayan areas in Nepal and India.

3. Support for community-based rural development

The recent decentralized approach have presented an opportunity for supporting local needs and building capacity of the lowest tier of Government (geogs) at village level. The Government should "prime the pump" by transferring resources down to the district level and below. Otherwise, locally elected officials will remain disempowered and will continue to rely on central government or isolated donor projects. Livelihood opportunities for community groups should also be promoted by facilitating access to productive investments and social forestry.




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