Bhutan has been characterized by good economic growth (9% annually) in the 9th Five-Year Plan (2002-2007) and is further continuing on this growth path. As domestic incomes rise because of this growth, Bhutanese consumers are expected to shift their consumption patterns from staple grains to fruits, vegetables, dairy, eggs, and meat, leading to an increase in demand for these high-value agricultural products. Likewise, as Bhutan becomes integrated into the regional and global economy, farmers will diversify into high-value agricultural products that are in demand in urban areas of its South-Asian neighbors and in high-income countries. This is particularly true since, within South-Asia, Bhutan has a comparative advantage in temperate and sub-tropical commodities.
In this research theme, we define agricultural diversification as the shift in production from low-value staple crops, such as maize and rice, into higher-value commodities such as fruits, vegetables, medicinal plants, and animal products. Commercialization refers to the trend toward increasing the proportion of agricultural production that is sold by farmers.
More in particular, this theme examines the following research questions: 1/ What are the patterns and trends in agricultural diversification and commercialization in Bhutan? 2/ Are households that are more diversified into high-value commodities and more commercialized better off than other rural households? 3/ What are the constraints preventing farmers from diversifying into higher-value commodities and becoming more commercially oriented?