The Bhutanese Leading the way.
Following the National Day address by His Majesty The King in Trongsa all Financial Institutions in a meeting with the Royal Monetary Authority (RMA) voluntarily pledged to enhance credit and support to agricultural projects as a priority sector.
However, the only condition of the banks was that the Ministry of Agriculture (MoA) and the RMA should come up with productive agricultural projects that can be supported.
The RMA in a letter on 26th December 2016, wrote to the MoA to identify priority sector activities in the agriculture, livestock and forestry sector to enable RMA to develop a priority sector lending strategy.
The MoA has come up with an initial list that it sent to the RMA recently. The MoA’s proposal focuses not only on priority areas but targeting different types of borrowers in the agricultural sector.
It has listed loans to individual farmers whether existing or aspiring and farmers groups or cooperatives. There are loans to school drop-outs, agriculture graduates and retired extension agents and loans to corporations like FCB, NRDCL etc. The list has also recommended loans for NGO’s and private dealers and commission agents.
The separate priority areas are listed under these various different classes of borrowers.
In the case of individual farmers the priority areas under agriculture are mushroom cultivation, orchard development, floriculture, green houses, farm machinery and grain storage. Under livestock it is purchase of various livestock, bee keeping, pond fishery and livestock related equipments. Under forestry there are areas listed like private forestry, growing high value trees, domestication of wild plants of high value and bamboo nursery. General areas that are listed are loan for buying capital like land and for setting up of farm offices.
In loans for farmers groups and cooperatives the priority areas proposed under agriculture are cold chain facilities, community grain storage electric fencing, lift irrigation and agro processing units including marketing.
There is a lot of processing related work under livestock that has to do with processing and packaging of eggs and egg products, milk and milk products and honey and honey products. Others areas are for animal feed production and distribution along with transportation loans. There is also community forestry management and community sawmills.
For school drop-outs, agriculture graduates and retired extension agents the loans proposed under agriculture are Organic agriculture, setting up agri-business, leasing fallow lands for farming and setting up youth groups skilled in certain agricultural processes. Others are leasing government pasture lands for dairy farming, setting up wood based cottage industries, setting up offices to facilitate crop and livestock insurance with banks and vehicle repair workshops at the gewog level. An interesting idea is setting up firms that are licensed to shoot wild boars attacking crops.
For corporations the loans are recommended for mega farms, agro processing, purchase of machinery, purchase and distribution of fertilizers and pesticides, state of the art value addition and facilities for wood products. An interesting idea is for running of one-stop shops where there is collection of farmers’ produce along with sorting, packaging, sales etc.
For NGOs the loans are for agri-business, microfinance, crop insurance, livestock insurance and extension services.
In the case of private dealers and commission agents the loans are for sale and marketing of agricultural and livestock equipments.
The MoA minister Lyonpo Yeshey Dorji said that this was an initial and early list as there had been very less time and more work would be done.
The RMA has also taken this as an early preliminary list and it will be working with the MoA in the coming days to come up with viable commercial activities in the field of agriculture that banks can fund.
