Pilot auction yard near CFM opened with grand ambitions but faces practical issues

The auction yard in Sabji bazaar, Thimphu was constructed with the objective to encourage local farmers and to facilitate the sale of local products. It was also to create competition in the market and to link farmer’s group cooperatives whereby they can sell their products at a competitive price.

However, in reality the auction yard remains unused and vacant most days of week leading one to question the effectiveness of the whole project and system. Instead the auction yard built to cut out the middle men are prey to the prices of the middle men between the actual farmers and the market.

The Ministry of Agriculture and Forest (MoFA) took the initiative to construct the auction yard in light of the rupee crunch issues and to solve issues like the hike in price of eggs when there an egg crisis in the country last year.

An official from Department of Agricultural Marketing & Cooperatives (DAMC) , MoFA, said that there was a need for trial auctioning it was built on a trial basis since auctioning is done only in Phuentsholing, Samtse, Samdrup Jongkhar and Gelephu.

Currently, the auction yard is given on lease to two cooperatives called the Youth Business Corporative (YBC) and Sarpang Broiler Cooperative.

Being on lease, they do not have to pay any rent for the auction yard but they have to manage all the maintenance and they also have to bear the water and electric bills.

DAMC has give the auction yard on lease for a year after which the cooperatives have to vacate in-order to give a chance to give a chance to those who are interested.

Meanwhile, spokesperson of YBC, Yeshey said that, the objective of doing such business is to give employment to the youths, make the company sustainable and help the public by selling products at a lower cost.

He explained about the yard remaining unused. He said that the yard might be seen vacant sometime because it depends upon the production of products.

He said, “With the support from DMCA and Ministry, we have been selling egg at subsidized rates, but sometime we find difficulty in getting the eggs from the distributors.”

YBC had signed a contract with Sarpang Cooperative and Tsirang Cooperative, but he said, “We never get eggs from Tsirang since there are lots of broker in between who pay a bit higher than what we pay them.”

“Farmers attend to those who pay a high rate and so they are not ready to supply eggs saying there is no egg production”, he added.

They started the egg business with Nu.1670 per cartoon which was raised to Nu.1750 per cartoon. “With high demand and less supply the distributor started demanding for higher prices, and it has reached to Nu 2050 per cartoon at the moment”, he said.

He shared that to get the product on time and to continue a smooth business they have to give the price that the distributor is demanding.

“We are under loan process and if it come out to be success than we will be supplying 400 cartoons per week”, he said.

Talking about the price difference of same product between the product that they sell and the product in the market, he said that, there is a vast difference. Currently YBC are selling the product (egg) at Nu 310 per tray whereas in market they sell at Nu 360 per tray.

He said, “Now the numbers of brokers are decreasing because we are controlling the price and we keep on decreasing the rate in between, if in the market, they are selling at Nu 390 per tray than we are selling the same product at Nu 330 per tray.”

“This has a lot of advantage to both the consumer and to us where we can promote the business in many ways”, he added.

He said that they don’t have much profit from this business, as they just get Nu.10,000 to Nu.20,000 per month as a profit after calculating all the expenses.

However, he also said, “We requested for agreement for lease of the auction yard for one year where we can do a proper set up and have the opportunity to sell all agriculture related goods but they were not ready to sign agreement as it is being owned by every farmer”.

“But in reality there is no much farmers who have products in bulk, if they have a product they will book a place in CFM and do the business there”, he added.

He also said that, it is not that government is of no help, government is helping in many ways but what they need to have is a proper system.

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