2017年-世界发展银行全球_Increasing_Agribusiness_Growth_in_Bhutan_104页_3mb

Increasing Agribusiness Growth in Bhutan: Summary

Core Content

This Policy Note evaluates the current state of Bhutan's agribusiness sector and provides recommendations to the Royal Government of Bhutan (RGoB) for enhancing its growth and development. The analysis highlights the importance of agribusiness in driving economic growth, reducing poverty, and promoting inclusive development, as outlined in Bhutan's Eleventh Five-Year Plan (2013-2018). The study focuses on non-farm enterprises within the agribusiness sector and the business-enabling environment in which they operate.

Main Points

1. Factor Endowments of Agriculture

• Bhutan has favorable agro-climatic conditions and technical capacity to produce and market various agricultural products.
• The country has a significant portion of its population (56%) engaged in agriculture, yet the sector contributes only 17.7% to GDP in 2014.
• Agricultural productivity has been declining at a compounded annual rate of 1.84% over the past 27 years, contrasting with global productivity trends.
• Challenges include limited labor availability, lack of mechanization, low input use, and wildlife depredation.

2. Institutions Supporting Agribusiness

• Key institutions include the Ministry of Agriculture and Forests (MoAF), Ministry of Economic Affairs (MoEA), State-Supported Enterprises, Business Associations, and Development Partners.
• MoAF plays a central role in regulating and promoting agricultural activities, while MoEA is responsible for economic development and investment policy.
• The Bhutan Development Bank Ltd. (BDB) is the primary financier of agribusinesses, but it faces limitations such as inability to offer letters of credit, factoring, or handle foreign exchange transactions.

3. Legal and Regulatory Frameworks

• The legal status of agribusiness firms is mixed, with some operating under quasi-public models (e.g., Farm Shops).
• The RGoB has the opportunity to develop a robust legal and regulatory framework to manage the "Brand Bhutan" label and improve standards for quality and compliance.

4. Access to Finance

• Agribusinesses have limited access to finance compared to other sectors.
• The RGoB and BDB should improve financial support by developing leasing products for agricultural machinery and enhancing trade finance options.

5. Innovation and Productivity

• Innovation levels in Bhutan's agribusiness sector are low, with only 1% of agribusinesses having a website, compared to 16.7% of other businesses.
• Agribusiness firms invest less in research and development (R&D) than other sectors, even after controlling for worker education.
• A need exists for entrepreneurship and innovation hubs to foster growth and competitiveness.

6. Trade and Market Access

• Bhutanese agribusinesses are not well networked with external markets, primarily selling to Bangladesh and Indian merchants.
• The RGoB should support the Bhutan Exporters Association (BEA) and Bhutan Chamber of Commerce and Industry (BCCI) in expanding access to export markets in Kolkata, Dhaka, and beyond.
• Trade logistics and customs delays have increased, affecting the competitiveness of agribusinesses.

7. Investment in Agribusiness

• Bhutan has very limited foreign direct investment (FDI), with only 0.01% of agribusiness firms having foreign ownership.
• The RGoB should consider establishing a standalone investment promotion agency and strategy to attract more FDI and private investment.

8. High-Value Agricultural Products

• Bhutan has potential in producing and exporting high-value niche products such as matsutake mushrooms, retail honey, crated fruit, asparagus, processed hazelnuts, walnuts, black pepper, Sichuan pepper, cardamom, and ginger.
• These products are critical for household income, and their export potential should be explored to increase the volume and value of trade.

Key Recommendations

• Refine Public Sector Incentives: The RGoB should realign subsidies to support, not replace, the private sector. This includes evaluating the impact of existing programs like Farm Shops and separating public and private functions of the Food Corporation of Bhutan (FCB).
• Improve Access to Finance: The RGoB and BDB should enhance financial support for agribusinesses by offering more large loans for capital investments and developing leasing products for agricultural machinery.
• Promote Innovation and Entrepreneurship: Establish innovation hubs and entrepreneurship centers to support agribusiness growth and competitiveness.
• Enhance Market Access: Support BEA and BCCI in expanding agribusinesses' reach to international markets such as Singapore, Hong Kong, and Dubai.
• Develop Regulatory Frameworks: Create a legal and regulatory environment that supports the management of the "Brand Bhutan" label and improves quality standards.
• Stimulate Investment: Develop a standalone investment promotion agency and strategy to attract FDI and private investment, particularly in high-potential sectors.
• Encourage Diversification and Specialization: Focus on increasing production and productivity of high-value crops to enhance export volumes and unit value.

Conclusion

The agribusiness sector in Bhutan is a crucial component for achieving the country's national objectives, including inclusive growth and poverty reduction. Despite its potential, the sector faces challenges in access to finance, innovation, and market connectivity. A favorable business environment, supportive policies, and targeted investment promotion are essential to unlock the sector's growth potential and integrate it into global value chains.