Advancing Bhutan’s Agriculture for Food Security and Export Growth

Bhutan presents an unusual agricultural paradox. Despite being endowed with comparatively abundant arable land and water resources (including 0.13 hectares of arable land per capita in 2023, the highest in the Bangladesh–Bhutan–India–Nepal subregion) the country continues to face low domestic food production and remains highly dependent on a concentrated set of trading partners for both food imports and exports. This long standing mismatch between natural potential and actual agricultural performance forms what may be considered the Bhutan conundrum.

Agriculture’s share in GDP has been on a declining trend since the 1980s. In recent years, agriculture has contributed roughly 15% of GDP, but further growth remains constrained by several deep-rooted challenges.

A large share of farming takes place on small, fragmented plots located on steep terrain where mechanization is difficult and costly. These plots also face soil fertility decline due to nutrient depletion, erosion, and topsoil capping—often described by older farmers as soil “becoming tired.”

Human–wildlife conflict is another major challenge, responsible for an estimated 30% loss of agricultural production. Between November 2022 and November 2023, over 82% of surveyed^[1] farmers identified wildlife-related crop loss as one of their most serious concerns.

Distance from motorable roads further increases transport costs, raising input prices and reducing farm-gate prices, which together compress farmers’ already thin profit margins.

The agricultural workforce is also aging. The average farmer is 54 years old, and labor shortages are expected to worsen as young people migrate to urban areas and opt out of agriculture.

Irrigation access remains limited due to Bhutan’s rugged terrain. Less than one-third of cultivated land has reliable irrigation. Farmers rely heavily on monsoon rainfall, which has become more erratic due to climate change. During dry periods, many fields are left fallow or face reduced cropping intensity.

Together, these constraints have heightened Bhutan’s dependence on food imports. The food import bill accounted for 11% of total imports in 2011, rising to 18% in 2023. India supplies more than 90% of Bhutan’s food imports, creating a highly concentrated import source market that is unlikely to change significantly due to geography and trade patterns. On the export side, for decades, more than 90% of Bhutan’s agricultural exports have gone to India and Bangladesh due to geographical proximity resulting in highly concentrated export destination markets that limit diversification.

Recognizing the dynamics of the Bhutan conundrum, the 13th Five-Year Plan seeks to ease pressure on foreign exchange reserves by strengthening both sides of the country’s agricultural portfolio:

1. revitalizing traditional crops whose performance has weakened over time, and
2. expanding the export potential of high-value crops with strong niche demand in international markets.

Bhutan already cultivates several high-value commodities that command premium prices abroad, including cordyceps, mushrooms, areca nut, quinoa, black pepper, organic coffee, and mandarin citrus. These products are well-suited for high-end markets in developed countries and present real opportunities for income diversification and rural prosperity.

However, two major obstacles constrain the expansion of high-value crop exports.

First is the challenge of meeting SPS requirements. Bhutan currently lacks sufficient domestic capacity for comprehensive food testing, standardization, and certification. For many testing parameters, samples must be sent to accredited laboratories overseas, delaying transactions and raising costs. Strengthening national systems for standardization, conformity assessment, and accreditation is therefore essential for accessing and sustaining niche export markets.

The second barrier is scale. Current production volumes of high-value crops are too low and inconsistent to guarantee reliable supply chains for potential international buyers. This makes it difficult for Bhutanese producers to secure long-term export contracts.

Improved SPS capacity can also help address scale constraints over time by reducing costs and increasing buyer confidence.

Aligned with the government’s strategy, ADB is adopting a programmatic approach that both safeguards Bhutan’s traditional crop strengths and builds new capacity in diversified high-value commodities. This staged approach (spanning immediate, short- to medium-term, and long-term interventions) is summarized in Figure 1.

Figure 1: Schematic Presentation of the Roadmap for Promoting Food Security in Bhutan

Source: Asian Development Bank.

Immediate term: Strengthening the potato value chain

ADB supports Bhutan in enhancing productivity and export earnings from potato, the country’s leading agricultural export. Potatoes are grown widely across Bhutan, and 51.3% of all agricultural households are engaged in their production. Improvements in productivity therefore have the potential to generate broad socioeconomic benefits and strengthen household food security through higher incomes.

Current potato yields, however, remain below the global average and the lowest among South Asian comparators. Productivity is held back by:

1. Poor-quality seed stock accumulated over decades,
2. Low seed replacement rates, and
3. Weak post-harvest handling and marketing systems.

To address these gaps, ADB has approved a project that adopts a comprehensive value chain approach. With grant support from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), the project will strengthen the capacities of the National Seed Center and the National Center for Organic Agriculture. This includes upgrading laboratory facilities and enhancing the skills of laboratory technicians to expand the supply of high-quality seed potatoes.

In parallel, the project will boost the capabilities of registered private seed growers in seed multiplication, handling, storage, and quality assurance. Tailored training programs (of which at least 50% of participants will be women) will support certified seed production and expand the pool of reliable seed suppliers.

The project will also help farmers adopt high-yielding potato varieties, improve post-harvest management practices, enhance access to markets, and build digital literacy to make effective use of Bhutan’s web-based agricultural trading platform.

Enhancing SPS capacity for high-value export growth

Beyond traditional crops, ADB is also supporting Bhutan in strengthening its sanitary and phytosanitary systems to meet the requirements of key trading partners. This includes building the capacity of regulatory agencies to comply with international standards, testing protocols, and certification procedures, as well as establishing a national SPS inquiry point.

These reforms are essential for unlocking the export potential of Bhutan’s high-value commodities and reducing dependence on external testing facilities.

Toward a self-propelling growth cycle

Improved SPS capacity, combined with upgrades across the potato and high-value crop value chains, is expected to foster a more enabling agricultural ecosystem. As compliance improves and export opportunities expand, benefits will increasingly reach producers—encouraging higher production volumes and more consistent supply lines for international buyers.

Over time, these reforms can strengthen Bhutan’s competitiveness in high-value niche markets and support year-round production systems.

^[1] A total of 425 respondents in 10 gewogs from 18-60 age groups were interviewed, of which 52.9% were females and 47.3% were males.