Price of hazelnuts can only be renegotiated after the repayment of the company’s loan: Agriculture Minister

The issue of fairness on the floor price for the hazelnuts production has always remained widely discussed for years.

This is because while Bhutanese farmers are being offered Nu 30.34 per kg the finished product in India commands Nu 1200 to Nu 2000 per kg even in the cheaper online stores. Internation prices are even higher.

‘“The floor price was established with the Ministry of Agriculture and Forests (MoAF). On behalf of farmers and the government, MoAF performed extensive analysis to establish a hazelnut floor price that would provide attractive income compared to other cash crops, such as potatoes and apples, when considering inputs and labor invested,” justified the company’s communications officer, Lhaki Woezer.

The current floor price offered by the Mountain Hazelnuts is Nu 30.34 per kg. Mountain Hazelnuts exports the nuts to Europe and East Asia.

While the company feels that the floor price set is fair, there are, however, dissatisfaction among the farmers on how the regional and international prices are much higher then what the company is offering. Talking on the same context, the Mountain Hazelnuts said that in working with the company, hazelnut grower benefit from both technical guidance and the investment the Company has made in establishing the ability to successfully get the crop to international markets.

“Field Extensions regularly inspect each orchard providing technical guidance to growers, nuts are purchased from convenient collection centers, and the Company processing and exports the nuts,” said Lhaki.

The minister of Agriculture, Lyonpo Yeshey Penjor said that his enquiry to the Mountain Hazelnuts team on the low floor price was met by the response that the company first needs to recover the investment that they made on the project as it was done through the loans.

“I raised the issue of low price to the members of the Mountain Hazelnuts at Lingmethang and mentioned that this might discourage the farmers from pursuing the cultivation.

However, the company said that the price can only be hiked substantially once they recover their investment and as for now, they have loans to pay as the investment was made through loans,” said Lyonpo Yeshey.

The agriculture minister said that since Mountain Hazelnuts is a FDI company and if the trees do not bear any fruits, that it is a way of holding them accountable given the huge losses they incur. “And when it is a business venture and the investment is on loan with interest as this, they’ll be liable to ensure the success of the project by default- which will also benefit our famers.”

Lyonpo Yeshey said that there is nothing much the government can do, considering that the company carried out awareness programs for transparency prior to signing agreements with the farmers and laid out clear terms on the risk factor associated as well.

Moreover, Lyonpo said that the cultivation is encouraged mostly on the fallow lands that would have remained unproductive otherwise.

“Farmers have only carried out smaller scale cultivation, while the company is undertaking the project in a larger scale, so there is not much for our farmers to lose. So, that is another reason the ministry did not take it up seriously as the company has to bear all the loss if the productions do not take off,” said Lyonpo.

Mountain Hazelnuts first signed a MoU with the DPT government in 2009 at a floor price of 30 US cents per kg and the PDP government intervened after realizing that the floor price for hazelnuts was too low where the rates were then revised to 44.2 cents.

However, Lyonpo Yeshey feels that there is no need for every successive government to revise the rates as the investment from the farmers was very minimal.

“The moment the company recovers their investment cost, it will then be the responsibility of the government to make sure that the farmers get a deserving share of the price. “Right now the company is not making enough due to poor production, so there is no room for the government to renegotiate the rates at the moment,” said the agriculture minister.

Narrating his personal account, Lyonpo Yeshey said that he planted around 420 hazelnuts saplings around 5 years back which have now been reduced to mere 50 or so numbers. He said that the plant requires care and are susceptible to the wildlife attacks given its tender leaves.

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