Photo: FCBL

Buyback not a good approach because it depletes government resources: FCBL

FCBL says export restrictions are designed to safeguard trading partners’ local farming communities, while some are designed to defend against diseases and chemicals

According to the Chief Executive Officer (CEO) of Food Corporation of Bhutan Limited (FCBL), Naiten Wangchuk, Buyback is not a good system because it will deplete government resources even while providing financial relief to farmers.

He said that even if FCBL is buying through an overdraft facility, it eventually puts a strain on the government’s resources.

“An overdraft is a type of loan. And we can’t continue to lose money. At the very least, we should get our investment money back, even if we don’t make a profit. As a result, we must devise strategies to strengthen trade,” he said, adding that the farmers are pleased with the rate the FCBL is offering for buying back their crops, though they anticipate a high price.

He said that a Buyback takes place when there is a market barrier or a trade interruption, and it is a challenging for FCBL to manage it.

“There are a lot of regularity shifts; on one hand, we have always emphasized on the informal way of trading, while on the other hand, Government of India (GoI) wants trade to be formalized now. We were unable to match their standard and policy, and as a result, we were relegated to the back of the line,” he said.

He said, “What we’re saying is that even if private traders want to trade, they should be given a mandate because what private traders do is they want to trade when there is profit, and they want to avoid accountability when there is a loss.”

As a result, FCBL has requested the government to issue the license to every private trader, as well as a mandate to trade even amid market failures and when there is a profit.

“Trading norms should be established. We should trade and compete on an equal level. We won’t have to go after and struggle for the market if we set up a good trading system. People will come in search of our goods. And that is what we are attempting to establish, but it will take time. We must mature, the farmers must mature, the traders must mature, in terms of business conventions, and then we must have a really robust system in place to handle all of this,” he said. 

FCBL is unable to sell on a commercial scale in the domestic market due to the tiny size of the market in the country.

FCBL has recommended the government and other relevant agencies to start processing the items and develop a standard and reliable certification method. Currently, there is no certification procedure in place, and output is inconsistent and low in volume.

“The products are given extra consideration if we have a large volume. We must concentrate on doing more with our produce. Relevant authorities should meet and discuss with GoI,” he said.

He said that the current restrictions while exporting are designed to safeguard the trading partners’ local farming communities, while some are designed to defend against diseases and chemicals.

“Such procedures exist in our country as well. Because of these technical measures, our farming system, post-harvest system, production standard, management, and packaging must all alter. Everything has to change in general. We have a lot of maturing to do,” he said, adding that the export of the items that are not subject to restrictions are trading well.

Meanwhile, following the country’s experience with raw product exports, the government intends to focus on value addition to agricultural products

The Agriculture Minister Yeshey Penjor said that the country’s product quality maintenance and value addition system are severely lacking. Until now, the focus has been on the production field solely, and left out the need for value addition, storage, and marketing fronts.

“We’ve learned a lot thanks to the COVID-19. Not only must we create, but we must also add value to our products, maintain a reliable storage system, and market them according to demand. We lack value addition and storage facilities, so the vegetables quickly perish, and we were unable to export them owing to COVID-19,” the Agriculture Minister said.

Lyonpo said that furthermore, the country lacks aggregation and transit capabilities when export takes place.

“We had to use truck parking to aggregate the produce last year, and we’re doing the same thing this year. We are now completing the certification process, and as a result, BAFRA will need to increase human resource capacity and establish labs. We have a lab in Thimphu, but we require an immediate check lab at the entry and departure points,” Lyonpo said.

According to Lyonpo, when it comes to value addition, the government should not be doing it, instead the private sector should do it as a business.

“We intend to provide entrepreneurship opportunities to the youth as well as those interested from the private sector, and to work together with the government. Although the private sector has recognized the significance of entering the food processing industry, COVID-19 has affected everyone economically, thus there haven’t been many takers,” Lyonpo said, adding the ministry is looking into long-term skilling opportunities for the youth in agricultural value addition with the Ministry of Labour and Human Resources.

In the meantime, Lyonpo said that the government is looking at exporting ginger to Bangladesh as soon as the deal is finalized.  

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