The past FYPs and various projects in the Ministry of Agriculture and Forests have strived to enhance production through various supports for crops and livestock commodities. However, the production areas being scattered has posed a big challenge for farmers to do collective marketing. The transaction cost is very high and hence marketing of agricultural products was difficult. The scale of production has been low despite efforts from technical departments to increase production.
The capacity in terms of production and marketing among the farmers as well as relevant stakeholders has improved substantially with farm road establishment. Despite the enhanced farm production and importance given to private sectors in the value chains of agricultural products, their presence today is not very strong. This had led to poor linkage among the value chain actors and the producers leading to unorganized markets.
With enhancement of production through accelerated agricultural commercialization programmes of the technical departments there is a need to put in place a strong marketing component (infrastructures, value addition, transport, and storage, linkages) to realize the Government goal of import substitution and export enhancement.
Farmers are however not able to reap the benefits of the improved road network and groups without an organized marketing and amalgamated production clustering. It was proposed that an organized marketing structure in the form of Food Corporation of Bhutan Limited (FCBL) services be put in place to provide assured buy back and price guarantee, to boost agricultural production through contract farming using farmers’ groups and cooperatives in the framework for “Revitalization of Crops and Livestock products marketing for import substitution and export”, submitted and endorsed by the Ministry of Agriculture and Forests (MoAF). FCBL has proposed to establish Farm Shops (FS) in the major agricultural production potential areas across the country as its business model offering farmers at one-stop access to wide range of agricultural solutions including inputs (seeds, fertilizers, pesticides, farm machinery and equipment spare parts, tools/ implements and irrigation sets etc.) and other agricultural marketing services (market access, in-kind credit/cash advance, market information/advice) from one location. In particular, FS can be defined as follows.
Business model offering customers the convenience of having multiple needs met in one location including output marketing services without having to “drive all over town” to attain related services at different stores.
The operation of the FS by FCBL will enable and empower the farmers by becoming the much awaited pull factor to create and generate more value for farm produce through provision of assured buyback mechanism for quality farm produce using agreed price (farm gate price equivalent to the cost of production plus a premium) every year, to encourage farmers to get into mass production. This initiative is aimed at increasing farm productivity to improve farmers’ income and their quality of living.
Farm Shop establishment across the country is expected to create a sustainable and economically viable business enterprise serving all sections of the farming community to reduce rural-urban migration, generate gainful employment and meet food demand domestically and gradually reduce food import and increase export.
These FS will be equipped with essential facilities such as weighing scale, crates, packing materials, deep freezers, display freezers, stores and value addition unit etc. To facilitate, farmers shall be given cash advances and in-kind credit to encourage contract farming through groups and cooperatives.
Functions of Farm Shop
The concept of FS is purely based on identifying critical needs of the farmers. It is a business model offering farmer’s easy access to a wide range of agricultural solutions including inputs and other agricultural marketing services from one location. Additional facilities like Cash Advance, Credit Extension (in kind) and advisory services on agricultural marketing shall also be made available from the FS. The three functions of FS are detailed below.
1. Buy Back Guarantee
The FS shall provide buy back guarantee for quality farm produce at a predetermined price through contract farming thus encouraging agricultural commercialization. The predetermined price offered to the farmers shall be the farm gate price equivalent to the cost of production plus a premium. Under this arrangement, the RNR products are purchased and value added before it is further marketed in domestic as well as export markets. Besides buying and selling of farm produce, FS will also facilitate and link farms to local institutes for marketing their farm surplus.
All kinds of farm inputs like fertilizer , packaging materials , seed , feeds/feed supplements (import/ link with local feed mills in consultation with DoL), irrigation equipment , tool and implements and , spare parts shall be made available for sale.
3. Food & Essential Commodities
Provide easy access to all types of food, fresh farm produce and essential commodities required by farmers especially during the lean agricultural season (April- June) when food is scarce.
Farmers will be facilitated with cash advances and credit which should be repaid only in kind (i.e. Agricultural products) by the farmers. This is mainly to encourage farmers to diligently cultivate in their field to boost the production.