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The Government of Bhutan aims to transform the country's agri-food systems so that it goes from deficit to surplus. The strategies to achieve this include improving agricultural practices to produce more fruits, vegetables, cereals, and livestock products, thereby achieving self-sufficiency and increase marketable surplus, and reducing CO2 emissions from agriculture for long-term sustainability.

The Hand-in-Hand initiative facilitates investments in eight of 20 districts, unlocking untapped agricultural potential for both investors and farmers. These socially inclusive investments promise high returns for farmers, elevating farm incomes and reducing poverty. The initiative prioritizes transparent, innovative, and impactful investments in Bhutan's Special Agricultural Products (SAP), offering production and market advantages.

The government provides access to state land lease in addition to farmers’ holdings, supports with development of major infrastructures including road, irrigation and energy supplies; and has enabling policy environment to invest and operate trading. Recently, government has introduced investment allowance for priority sectors that includes agriculture.

 

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Citrus Mandarin  22.58 Million USD 20,000 Beneficiaries

 

Citrus mandarin from Bhutan is known for its high quality, exceptional taste, and unique flavour, being grown in a clean and green environment with limited or no use of agrochemicals. This makes it highly sought after both domestically and internationally. The suitable climate allows for production at altitudes ranging from 300 to 1800 meters above sea level. Additionally, Bhutan boasts abundant land and water resources for production and processing.

The government supports this sector by providing access to state land leases for production expansion and investing in major infrastructure, including roads and irrigation. With rich production experience, more than 23,800 households cultivate citrus across 13,600 acres nationwide. Production can sustain over 30 years using local varieties, with new varieties being introduced to reduce seasonal gaps and meet demand for processing and export markets.

Currently, Bangladesh is the key export market, with potential to increase export volumes. Bhutan exports an average of 15,000 MT annually, while Bangladesh's annual import exceeds 260,000 MT. Bhutan also aims to expand exports to Thailand and Singapore in future.

Bhutan plans to increase citrus production by 5,000 acres over the next five years, benefiting more than 5,000 households in six high-potential districts. The government also intends to establish three primary processing facilities to facilitate aggregation, grading, packaging, standardization, and certification to enhance export market value and distribution systems.

An investment of USD 20.51 million over 20 years is required to increase annual production by 28,800 MT, with an estimated Internal Rate of Return (IRR) of 15.79% and a Financial Net Present Value (FNPV) of USD 18.91 million. Supporting primary processing will require an additional investment of USD 1.99 million, with an estimated IRR of 33.57% and an FNPV of USD 2.23 million.

This investment will increase annual per capita income by USD 189 per farmer, create 212,085 person-days of jobs annually, and reduce GHG emissions by 54,815 tCO2e.

 

Quinoa  12.37 Million USD 16,000 Beneficiaries

 

Quinoa has been identified as a strategic crop for Bhutan due to its ideal agro-climatic conditions and potential to enhance food, nutrition, and income security for marginal farmers. It is easy to produce with minimal pest and disease issues, requires low inputs, and thrives on marginal land. Quinoa can be grown as a double crop following maize or potatoes, or as a mixed crop. It offers year-round production opportunities by leveraging diverse agroecological zones.

The government is planning to increase annual production by 2,360 metric tons by engaging close to 4,000 households in eight districts. Processing will involve upgrading existing facilities to a 4 MT/day capacity and developing a new facility with an 8 MT/day capacity. The production expansion requires an investment of USD 11 million, estimated to generate IRR of 22.60% and an FNPV of USD 4.75 million. Processing improvements require an additional investment of USD 1. 37 million, estimated to generate an IRR of 32.87% and an FNPV of USD 1.37 million.

The investment will increase annual farmer per capita incomes by USD 60, create 226 588 person-days jobs, and reduce GHG emissions by 22,921 tCO2e over 20 years. The project will support climate-smart production across 4,000 acres, providing high-yielding seeds, harvesting tools, and storage solutions. Training will be offered to 8,000 farmers and 50 extension workers on climate-smart practices. The upgraded and new processing facilities will be equipped with automated processing lines, colour sorting machines, and enhanced storage.  

Rainbow Trout  1.33 Million USD 52 Beneficiaries (Farms)

The fishery sector in Bhutan is rapidly evolving, with cold-water aquaculture, particularly rainbow trout farming in high-altitude regions using fresh mountain river water. Rainbow trout production not only bolsters local food supplies but also has substantial export potential. Currently, Bhutan’s low domestic fish production necessitates significant imports, leading to a notable outflow of foreign currency. To counter this, the government aims to increase annual trout production by 72 metric tons, establishing at least 13 new farms to reach a target of 120 metric tons within the next decade. A central aggregation and primary processing unit will be developed to modernise processing, packaging, standardization, and certification, to enhance export value and distribution.

An investment of USD 1.25 million is required to expand production, with an expected Internal Rate of Return (IRR) of 14.22% and a Financial Net Present Value (FNPV) of USD 0.39 million. Additionally, setting up processing facilities will require USD 0.46 million, projected to generate an IRR of 21.75% and an FNPV of USD 0.34 million. Currently, Bhutan produces approximately 15 metric tons of trout per year but has the potential for significant expansion with its availability of abundant fresh water. Bhutan can competitively supply trout at CIF prices between USD 13-20/kg to Singapore market, where CIF from other suppliers is as high as USD73/kg, thereby tapping into a high-end market, as well as leveraging on growing the interest of the local market.

To support this expansion, 13 commercial farms will be equipped with advanced production infrastructures, and establishment of processing facility with cold storage systems to support 600-700 kg/day. This initiative will benefit 13 direct farmers and 52 indirect individuals, generating 12,816 person-days of employment annually.  

 

Black Pepper 5.56 Million USD 12,000 Beneficiaries

Black pepper stands out as a strategic commodity in Bhutan due to its favorable agro-climatic conditions and its ability to be cultivated understory crop within arecanut plantations without requiring additional land. This crop is relatively easy to grow, with minimal pest issues and a productive lifespan extending beyond 30 years. Investments aim to enhance production by adopting high-yielding varieties, implementing climate-smart irrigation, and establishing connections between producers and private aggregators and traders for export to India and beyond.

A proposed investment of US$5.56 million over 20 years could significantly increase production to 4,320 metric tons annually. This investment is expected to generate an internal rate of return of 28.79% and a net present value exceeding US$37.89 million. The investment is projected to raise farmer per capita income by US$632 per person, create 190 350 person-days job annually, and reduce greenhouse gas emissions by 68,640 tCO2e.

The project leverages the crop's unique value of being grown in a clean, green environment with GAP/organic production standards. It will help to overcome current limitations such as low productivity and small scale by introducing climate-smart production systems across 3,000 acres, providing improved saplings, irrigation systems, harvesting equipment, and capacity-building programs for farmers and staff. It is targeted to directly benefit 3,000 farmers, with indirect benefits reaching 12,000 people.

Organic Coffee 12.46 Million USD 24,000 Beneficiaries

The Government has prioritized organic coffee production to promote high-value, low-volume commodities and integrate climate-smart technologies into agriculture production systems. Investment support is required for production in open fields-adopting climate production systems, and using organic inputs; and for primary processing facilities. Target export markets include Europe, Singapore, and Japan, while also targeting to substitute imports. 

The Southern Foothills are highly suitable for cultivating Arabica coffee varieties, with approximately 200 farmers currently engaged.  Coffee require low input, less labour-intensive and environmentally friendly. Significant potential exists for expanding production using available fallow land and integrating coffee into agroforestry systems across seven priority districts.  

A substantial domestic market for organic coffee is evidenced by annual imports of 46 metric tons valued at USD 0.20 million. Export potential is promising, with opportunities in Japan, Singapore, and Europe. Leveraging the "Brand Bhutan" and establishing Geographical Indication (GI) Systems and adopting Geographical Indications Environmental and Sustainability (GIES) can highlight Bhutan's clean and green production environment, attracting international consumers. However, current productivity is low due to inadequate irrigation, limited technical knowledge, and insufficient primary processing facilities. Investments in irrigation, capacity building, processing infrastructure, and technical support are crucial to improve productivity, quality, and sustainability.

An investment of USD 12.46 million over 20 years could increase production to 3,940 metric tons annually, with an internal rate of return estimated at 25.43% for farm production and 38.11% for processing, and generate FNPV of over USD 12.81 million. This investment could increase annual per capita income by USD 90 just by cultivating about 0.25 acres/household, create 70,446 additional person-days of employment annually, and reduce GHG emissions by 68,460 tCO2eq in 20 years.

 

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For more information, please contact the Hand-in-Hand team.