Success story of Vegetable Value Chain Programme in the East from

Bhutan

Workshop on Best Practices in Contract Farming: Challenges and Opportunities in Nepal

February 10-11, 2015 Kathmandu, Nepal

Sangay Wangdi, Project Director, MAGIP Dorji Wangchuk, Marketing Officer, DAMC Karma Tenzin, Marketing Officer, RAMCO Ministry of Agriculture & Forests (MoAF)

Bhutan

Presentation outline • Country Profile • Project Profile • Background on VVCP-E in the east • Aim and objectives • Vegetable value chain map • Production support • Marketing support • Impact of VVCP-E • Constraints/Challenges • Opportunity

1. Bhutan - 38,394 km2

- 27.5274° N, 90.0453° E between China & India

- 20 districts, 15 sub-districts, 205 blocks

- Currency – Ngultrum (pegged with Indian Rupee)

- National language - Dzongkha

- Population - 748,500 (53% male: 47% female) [2014]

- Government - Parliamentary Democracy [2008]

- Flora & Fauna – Forest cover >72% & 60% under protection

- People - Tshanglas, Ngalops &Lhotshampas

- Religion – Mahayana Buddhism

• Market Access and Growth Intensification Project (MAGIP)

• Six eastern Dzongkhags (districts) of Bhutan comprising Lhuentse, Tashiyangtse, Trashigang, Mongar, Pemagatshel and Samdrup Jongkhar

• Ministry of Agriculture and Forests (Lead Implementing Agency); in collaboration with District Authorities (District and gewogs (blocks) RNR Sector Staff) RAMCO & SNV.

Project Profile

Goal

• to reduce poverty and improve food security and the standards of living of targeted rural households in six eastern dzongkhags.

Specific project purpose

• to improve the productivity of subsistence-based farming systems in communities with no road access, and to intensify the production of cash crops and dairy products, while enhancing smallholders’ access to markets, in communities with road access.

Outputs

• In 11 remote gewogs, some 880 households will be supported with the relevant low cost, labour-saving production technologies and quality inputs

• In 49 gewogs with good road access and the necessary agro-ecological potentials, the project will support some 3,600 producers organized in groups or cooperatives with the necessary inputs, training and services

Cost & Financing

IFAD loan: USD 8.49 million

IFAD grant: USD 2.0 million

RGOB: USD 1.99 million

SNV: USD 0.15 million

Beneficiaries: USD 0.86 million

Project Period:

5 years (22 April 2011 – June 2015)

Components

Component 1: Support to poor subsistence farming communities

Component 2: Agricultural intensification and support to market access

Component 3: Project organization and management

Background on VVCP-E • VVCP-E is a programme initiated to enhance

production and marketing of vegetables in the region • VVCP-E Programme was started in mid 2011 by

RAMCO/DAMC in collaboration with other stakeholders

• The programme has 119 FGs comprising of 1527 households in 35 Gewogs out of seventy

• The linking programme as a part of VVCP-E was initiated in 2012 based on.

a. Internal market study conducted in106 schools has huge vegetable demand (link)

• Till 2014, 90 FGs have been linked with 40 schools/institutions to supply vegetables.

Aims and Objectives • The aim of the programme is to promote semi-

commercial production and marketing of summer vegetables in order to increase income of more than 2500 households from 5 to 15 percent by 2016

Objectives: • To assist production of larger volumes of vegetables

required for both internal/external markets. • To explore both internal and external market

opportunities. • To identify, facilitate and link both local and Indian

traders with farmers groups

Supply seeds, fertilizers, training, equipment etc

Prepare land, grow, protect, harvest , clean and store

Assemble, grade, pack, carry to the road head and transport to school /local market or the auction yard

Load, Pack, transport & supply to schools, sell in the local market or export

Consume as vegetable, use for chips and crisp making or keep for seeds

Middlemen/ Local Traders

Consumers in India

Bidders at Auction

Yard

Local Vegetable Vendors

Consumers in Bhutan

DAO, RAMCO, MAGIP, SNV, RNR-RDC

FCBL

RNR-RDC, SNV, RAMCO, Dzongkhag

Disease, pest control, production

improvement

Market infrastructure,

MIS, Training on grading,

packaging

Auctioning of vegetables

VC Operators VC Supporters VC Functions

Training, technical

advice

Inputs

Production

Collection & Transportation

Trading (Wholesale &

Retail)

Consumption

Existing Value Chain Map of Vegetable Subsector

DEO, DAO, RAMCO, MAGIP,

SNV,RDC

MoE, MoAF, MoF and GNHC

Create enabling

environment

Institution

Vegetable Growers (119

FGs)

OSFS/ Commission

Agents

Dzongkhag

,RAMCO,

SNV, RNR-RDC

Contractual

agreement

Support to value chain actors

(Production) • Inputs like seeds, sprinklers and HDP pipe to the groups on

cost sharing basis (75:25) • Group Coordinators was introduced for better coordination

of group activities • Incentive mechanism was introduced for the group

coordinator for programme sustainability • Provide training to FGs (Postharvest, staggered sowing,

pests and diseases management) • Developed cropping calendar • CoP of 15 major vegetables

Marketing support • Identified various markets at nearby border towns to

market Bhutanese vegetables

• Conducted regular Buyers-Sellers meeting to discuss and understand the market mechanism

• Auctioning system was introduced mainly to export vegetables to India

• Provided timely market information, packaging materials (plastic trays), and value addition equipments.

• Provide capacity building support (entrepreneurial development, group advocacy, book keeping, leadership, marketing aspect, post harvest, exposure visit and consultative meeting )

Infrastructure development

support • To facilitate smooth marketing of vegetables market infrastructure like market sheds for Sunday market, sales outlet, collection shed, cold storage, and OSFS was supported.

Progress trend of VVCP-E

1307

1377

1527

1150

1200

1250

1300

1350

1400

1450

1500

1550

Year- 2012 Year- 2013 Year- 2014

Total number of members

29

104

119

0

20

40

60

80

100

120

140

Year 2012 Year 2013 Year 2014

Total number of groups

355.75

1229.36

1935.63

0

500

1000

1500

2000

2500

Year 2012 Year 2013 Year 2014

Total quantity sold (MT)

5.13

20.67

38.81

0

5

10

15

20

25

30

35

40

45

Year 2012 Year 2013 Year 2014

Total income earned (Nu in Million)

Impact of VVCP-E • The income generated by 119 FGs in 2014, Nu. 38.81 million

was quit impressive • Awareness among farmers on the opportunity of vegetable

production and marketing for income generation has greatly increased

• Several villages started producing summer vegetables on a semi-commercial scale for the first time as they were only used to kitchen gardening

• Group marketing has a history with potatoes, but not for vegetables. For the first time joint and collective marketing of vegetables was applied on a large scale

• More FGs came forward to link with schools/institutions • Schools have shown great interest to buy local vegetables • From the total production of vegetables FGs have sold 63% ,

19% used as home consumption and 18% were damaged.

Constraints/Challenges • The expected prices for vegetables by FGs are very

high, hence leading to low demand by local traders and consumers.

• There is shortage of farm labour in the communities.

• Limited landholding per household

• Not being able to compete with cheaper Indian vegetables – during vegetable season in India (Oct – April)

• Poor access (poor conditions of farm roads) and high transportation costs (increase in fuel price) are also hindrance to marketing of vegetables.

Opportunity • As vegetable cultivation is a business-oriented

activity: a. It has potential to attract the youths to the

rural areas thus solving labour shortage on the farm.

b. will create youth employment. c. It will curb rural-urban migration. d. Help to enhance income and livelihood e. Reduce import of vegetables

KADRINCHEY