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Reining in the rupee

Publication Date : 08-05-2012

 

No one doubts the intentions of the Bhutan government in trying to increase vegetable production and replace imports from India as one small measure to rein in outflow of the rupee.

Besides providing an additional source of income for those who can work the land, our own produce will be healthier, because it is more naturally grown, the prime minister was heard saying in a televised address to the nation last month.

In less than two weeks, the government is going to stop dishing out rupee to vegetable wholesale dealers in the capital, and maybe elsewhere as well, to curb imports, just as the vegetable season here begins.

The timing is good, because there is not really much to import from India, other than what you don’t get here, like onions, for example. 

In fact, at this time of the year, the greens from many of the valleys in the western districts flow south to be sold to India through the FCB auction yards.

But there are concerns. Of course, the vegetable wholesale vendors are hopping mad, because a substantial source of income has now suddenly gone. There are also allegations their margins bordered on daylight robbery, but no one is absolutely clear on what margins need to be kept when dealing with perishables.

The wholesale vendors are sure that, after the ban comes into effect, it will only be a matter of time before problems arise. This is mainly because a clear organised supply chain of how to distribute homegrown veggies within the country does not exist. There is so much that goes on beyond the weekend vegetable market that most people are familiar with.

A clear cut supply chain is also the worry for a number of schools, shedras and training institutes in the eastern region that grows a lot of potato and maize, but not quite enough of other greens that can feed thousands of students.

The more important concern for school principals is the pricing of these vegetables. While some sort of arrangement is being worked out between institutions and nearby farmers to provide supply when the season is on, nothing so far has been said on pricing.

It is a fact that local produce costs a lot more than what is imported, and people are generally willing to pay for it at a household level.

But what about educational institutes that receive a fixed stipend of  700 ngultrum (US$13) a month a student, which has not changed for many years? Will the farmers, especially the big growers, agree to the prices offered within the country, or will they choose to auction in the border towns?

The best case scenario would be Bhutan being an exporter of organic greens, but that may be a long time coming.  For now, the supply chain and pricing issues need to be sorted out properly, because the problems it might create might not be worth the rupees unspent.

 

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