In a strategic move to revitalize Bhutan’s agrifood sector, the Ministry of Agriculture and Livestock (MoAL) has introduced a series of transformative interventions under the Agrifood Sector Strategy 2034 (AFSS 2034). These initiatives aim to strengthen support for smallholder farmers, promote commercialization, and mitigate sector risks to attract essential financing.
The agrifood sector faces mounting challenges, including climate change, human-wildlife conflict leading to crop losses, and persistent threats from pests and diseases. These issues not only hinder growth but also jeopardize the livelihoods of countless smallholders. In response, the MoAL is prioritizing the establishment of robust de-risking mechanisms to enhance sector resilience and sustainability.
Tackling Financial Barriers
Access to finance has long been a major obstacle for smallholders and agrifood commercialization efforts. To address this, the government is developing a sustainable agricultural financing mechanism designed to bolster existing funding channels. This initiative is expected to improve support systems for farmers, fostering significant growth in the agrifood sector.
Innovative Financing on the Horizon
As part of its commitment to revolutionizing Bhutan’s agrifood industry, the MoAL is working to establish a sustainable funding mechanism leveraging innovative financial tools and collaborative partnerships. This fund will provide crucial financial backing for strategic initiatives aimed at enhancing resilience, inclusivity, and sustainability.
New financing packages will be introduced to encourage farmers to invest in agricultural ventures, laying the foundation for long-term funding solutions that ensure the sector’s sustainable development.
Strengthening Financial Institutions
The Bhutan Development Bank Limited (BDBL), which accounted for over 90 percent of total agricultural loans in the 2020/21 fiscal year, remains pivotal in rural development. The government is committed to ensuring that BDBL continues to prioritize agrifood sector support. To facilitate access to low-interest loans, endowment and fiscal support will be extended to BDBL and other financial institutions. Additionally, rigorous monitoring and evaluation measures will be implemented to ensure that loans are effectively utilized for their intended agricultural purposes.
Expanding Financial Product Development
To bolster the entire food systems value chain, financing initiatives will extend beyond farming to enterprises providing essential services such as input supplies, farm machinery, crop and livestock insurance, aggregation, storage, and transport services. MoAL’s collaboration with financial institutions is expected to result in the development of tailored financial products catering to every component of the value chain.
As part of modernization efforts, Digital Financial Services (DFS) will be deployed to enhance financial accessibility and improve loan repayment tracking. The government is also championing bioprospecting-based product development, fostering a green economy and improving livelihoods within the agrifood sector.
Through these comprehensive initiatives, the MoAL aims to secure robust financing and establish a resilient agrifood sector capable of thriving despite prevailing challenges. As these reforms take root, Bhutan is poised for a transformative leap in its agricultural landscape, ensuring a sustainable and prosperous future for its farming communities.
Sangay Rabten from Thimphu
