Embracing Full FDI in Agriculture: The Path to Prosperity

Yesterday marked a pivotal moment for Bhutan’s agricultural sector as the government announced 100 percent foreign direct investment (FDI) in agriculture during the inaugural session of the Bhutan Agrifood Trade and Investment Forum (BATIF) 2024. This policy shift, a significant leap from the previous 74 percent cap, is designed to invigorate the production of key commodities such as mandarin, quinoa, rainbow trout, black pepper, asparagus, and strawberry. It is a bold move that underscores Bhutan’s commitment to modernizing its agricultural landscape.

Prime Minister Tshering Tobgay articulated the pressing need for Bhutan to invest in modern technologies and climate-smart agricultural practices to overcome the challenges posed by rugged terrain, climate change, human-wildlife conflict, labor shortages, and land fragmentation. He emphasized that while these obstacles are formidable, the opportunities they present are equally compelling. The Prime Minister highlighted the potential for organic apple cultivation as a viable market opportunity that could significantly benefit smallholder farmers and entrepreneurs.

Minister of Agriculture and Livestock, Younten Phuntsho, reinforced this vision, emphasizing the necessity of embracing innovation, technology, and sustainable practices to build a modern, efficient, and market-oriented agri-food system. He called for collective effort and collaboration, underlining the transformative potential of such initiatives for Bhutan’s agrifood system. This transformation is not just about food and nutrition security but also aligns with global sustainability goals.

In policy terms, Bhutan’s agrifood system is supported by a robust macro-policy framework aimed at sustainable agriculture, food security, and economic prosperity. Key policy documents, such as the Food and Nutrition Security, National Food System Pathways, and Low Emissions Development Strategy, guide the nation’s efforts in enhancing resilience and sustainability, all within the unique context of Gross National Happiness (GNH).

Industry Minister Namgyal Dorji stressed that agricultural investments should empower farmers, highlighting Bhutan’s openness to foreign investors and the potential for collaborative efforts to uplift the farming community. Notably, the government’s decision to allow unrestricted employment of foreign expatriates in agriculture is a testament to its commitment to fostering an inclusive and collaborative agricultural environment.

The numbers tell a compelling story. The contribution of the Renewable Natural Resources (RNR) sector to Bhutan’s GDP has declined from 38 percent in 1992 to 14.67 percent in 2022. Yet, the sector still employs 43.5 percent of the population, working on just 2.75 percent of arable land. The government aims to reverse this trend by increasing the agriculture sector’s contribution to GDP from USD 365 million in 2022 to USD 625 million by 2029, and USD 854 million by 2034. Specific targets have been set for various crops, such as engaging 5,000 households in citrus production across 16 dzongkhags and achieving an annual production of 28,800 metric tonnes.

The BATIF 2024, which runs from May 15 to 19, serves as a crucial platform for policymakers, entrepreneurs, and businesses to showcase investment opportunities to a global audience. This year’s event, organized by the Ministry of Agriculture and Livestock in collaboration with various national and international agencies, saw the launch of six new products, including mushroom tea, organic green and black tea, vermicompost, and more. Such initiatives highlight the diversity and potential of Bhutan’s agricultural sector.

Bhutan’s move to embrace full FDI in agriculture is more than a policy change; it is a strategic vision aimed at transforming the nation’s agricultural landscape. By leveraging modern technologies, fostering international collaboration, and focusing on sustainable practices, Bhutan is poised to create a resilient, innovative, and prosperous agricultural sector. This policy is a testament to Bhutan’s dedication to not only enhancing national food security but also contributing to global sustainability efforts.

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