The Bhutanese Leading the way.
Proposes price control as a solution
An agriculture ministry report has confirmed what many households in Thimphu already know that the prices of vegetables have shot up due to a combination of factors from inflation to the rupee crunch.
The report compared prices for six months from January to June for the two years of 2011 and 2012 for vegetables like cabbage, chilli, potatoes and beans.
In some cases the prices of vegetables had even doubled.
The prices for local cabbages were Nu 37.43 in June 2011 against Nu 35 for those imported. The price increased to Nu 48.75 for the local cabbages and Nu 35 for the imported cabbages in 2012 of the same month.
Local cabbages are produced in Dawakha, Thimphu, Haa, Tsirang, Wangdi, Paro, Punakha.
Local chilli entered the market in the month of April with a very high price (Nu 270 in 2011 and Nu 300 this year). The price of imported small Indian chili was Nu 53 as of June 2011 and Nu 75 in June 2012. The sources of local chili are Punakha, Paro, Thimphu, Wangdue, Paro and Tsirang.
The price of imported potatoes did not change much as it was Nu 17.83 in 2011 and increased to Nu 20. However, the price of the local potatoes rose up to Nu 26.25 in 2012 from Nu 17.83 in 2011.
Imported beans increased from Nu 57.5 in 2011 to Nu 60 in 2012. The local bean prices have increased from Nu 53.8 in June 2011 to Nu 75 in June 2012.
According to an official with the Department of Agriculture and Marketing Cooperatives (DAMC) the increase in prices is inevitable. “In general it is on the higher side but it is expected,” he said adding that ultimately with the generous increase in supply, the price would also come down.
As per the import data for 2011 in the unpublished report, the vegetable deficit in the country is roughly about 12,000 metric tonnes (MT). This target, according to the report is achievable; however, the challenge will be to make the prices of local vegetable competitive to that of imported vegetables and affordable to consumers.
The report also reflects three probable reasons for the inflation in vegetable.
1. Over the last couple of years the inflation rate has been averaging at 9 % and the prices of all commodities, fuel, services etc has increased proportionately. This phenomenon also includes food and vegetables.
2. It is noted that prices of vegetables are always higher in the summer seasons. Summer months are off-season for vegetable production in India leading to a situation of low supply of some imported vegetables while some locally produced vegetables is exported to India which keeps the local prices high. This has been the case thus far.
3. The report says that it is possible that the vegetable and fruit wholesalers still import from India in Ngultrums at unfavorable exchange rates which increases the import price. These differences in the exchange rates would be passed on to consumers which would increase the retail prices.
Numerous price-control measures have been put in place including the auction of vegetables through FCB’s, price tag system and increasing of the market days.
In the future, the department has also kept the option of the minimum price-support for farmers. However, this according to the report entails a heavy amount of funding which could be a burden on the Government’s coffer.
The report also says that the government can enforce a maximum price for these selected vegetables based on the minimum support price which will be based on the cost of production.
It is proposed that the production of off-season winter vegetables will be initially subsidized by the government to boost productions and make it competitive with imported vegetables produced from across the borders. The report says to authenticate that the products are locally produced, the subsidy should be given to selected production pockets which will be monitored at the time of production.
It has also been proposed that the prices can be regulated through a cross-sectoral committee like in the case of meat.
