Expensive talk

The Ministry of Agriculture says that the prices of local vegetables is increasing. They are right. In fact, the prices of local vegetables have not just increased; they have skyrocketed.

Between this time last year and now, according to the Ministry of Agriculture, the price for local cabbages increased from Nu 37.43 to Nu 48.75. That’s an increase of 30.25%. The price of local chillies increased from Nu 270 to Nu 300 or by 11.11%. And the prices of potatoes and beans have jumped by a massive 47.22% and  39.40% respectively.

So what’s driving the prices of local vegetables?  The Ministry of Agriculture has blamed inflation, the seasons and the rupee crisis.

Yes, inflation would have caused price increases. The last quarter recorded inflation at 13.53%. That’s the highest rate we’ve seen in years. But that’s nowhere near the 47% increase in the price of local potatoes. By comparison, the price of imported potatoes, which was Nu 17.83 per kg last year, increased only slightly, to Nu 20 per kg this year. We import most of what we consume from India. So inflation rates here follow those in India. And since the price of imported potatoes (and other vegetables) went up only marginally, inflation cannot be blamed for the huge increase in the cost of local potatoes (and local vegetables).

Nor can we blame the seasons. In their report, the government compared vegetables prices between two years but at the same season. So when they say that the price of local cabbages have increased from Nu 37.43 to Nu 48.75 per kg, they are talking about  prices in June last year, versus prices in June this year. More significantly, the government has found out that production of local vegetables have gone up. All this means that we can’t pin the blame on the season.

The third excuse that the Ministry of Agriculture has offered for increasing vegetable prices is the rupee crisis. I agree, the rupee crisis is to blame. But not for the reasons that the Ministry of Agriculture thinks; not because the ngultrum is fetching fewer Indian rupees at the informal exchange market.

The rupee crisis did indeed cause a sudden hike in vegetable prices. But they went up due to an unlikely event. On 12 April the prime minister went on national TV to talk about the rupee crisis. During that talk, the prime minister announced that the government would no longer permit vegetables to be imported from India. Prices of local vegetables went up immediately. And haven’t come down since.

 

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Comments

  1. It is a common trend in every country to see increase in the price of vegetables. The prices of vegetables in countries like Australia, USA, UK etc are far higher than our current rates. This year, the prices have shot up because the imports have decreased. We don’t mind paying more because the money goes to our own farmers. The farmers are excited and encouraged with the new system of vegetable trading. We thank the government for helping us to eat healthier vegetables which are locally produced. We can never expect the prices of food comodoties to fall. It will be even higher after one year from now and no government can stop.

  2. Honourabl OL, why do you think there is rapid growth of inflation in Bhutan? Not always rupee problem in Bhutan.
    The value of rupee against dollar has fallen rapidly!
    How can you solve such problem if you were a PM of Bhutan in future?

  3. Hi observer,
    Don’t you think its too early to compare Bhutan with Australia,USA or UK.They are developed, industrialized and rich countries.Their currencies have higher values in the world.Please offer proper vindication when you compare.

    I give my credence to OL’S statement,comparing the income of the people, the vegetable price is significantly high.Atleast there should be check and balance system,otherwise people may charge Nu.100 for a kilo of potato.

  4. Thinlay says:

    My non-economist assumption is that price of food including vegetables world over will not come down. It will keep increasing as there is more demand for food than supply. Farming population everywhere is decreasing whereas urban non-farming population is increasing. If we desire price of food to come down we should produce more by staying in the village or by subsidizing production. Otherwise, whatever we talk it will be just talk.

    Cheers

  5. Deb-Nagpo says:

    When there is no equivalent rise in the income of the consumers (esp low-medium income group) to off set the increase in inflation, they are worse off by the amount of increase as their purchasing power has weakened. The higher income group who are generally the decision makers have no incentives to correct this market-driven forces caused by failure of monetary and fiscal policies. The central bank’s initiative of increasing interest rates to discourage spending and encourage investment and savings has not met its objective because it is natural to see less of investment and savings at the time when the economy is seing hyperinflation as high as 13.53%…..

  6. Now Observer..lol. Keep posting..I enjoy reading your comment..little boy…Hahaha.

  7. It is the PM’s speech and the trade minister who openly mentioned to pay more than double the prices to the local farmers than to buy from outside.Now that more or less looks like a vote catching talk to please the farmers without analyzing the sensitivities of the issue at all. 13.53% inflation is only in paper but the actual ground reality we know it has crossed 300%.
    So the govt seriously needs to have a proper control mechanism over the prices of local vegetable products.

  8. matubmey says:

    OL,
    Be grateful that we don’t have riots like they have in Assam or blackouts in New Delhi, droughts and floods in other parts of India, our closest neighbor. Be grateful that you don’t have to go eight miles to fetch drinking water. Be grateful that we can still have food with lots of vegetables on our tables. Be grateful that you are still in a position to oppose.

  9. tangled says:

    Lets be a little patient. Eggs became so expensive when imports were stopped due to bird flu. short term result- high prices due to shortage as there were so few local producers. situation now is that we have so many poultry farmers with good source of income. Prices of local eggs are coming down and they are much better quality.We don’t need to import anymore.

    Given just a little time, the same will happen with vegetables.

  10. mongar123 says:

    I don’t think this post of OL is in good faith. It is his job to pull govt down if it is flying high and to drag hard if Govt is not walking… Either way, there is always opposition.

    If Farmers can’t sell vegetables at high prices, he will carp, if farmers get good prices he will carp because he needs support from both farmers and non-farmers….

  11. the price of farm egg from kolkatta which we get at Jaigaon is just Rs 120 per tray.The local eggs though abundant is not less than Nu 260 per tray.So where has the price come down.

  12. Hi Yendra, be it developped or developing country, the price of comodoties is determined by the market force. When the demand is high and supply is less, the price is bound to increase. You cannot keep the price low just because Bhutan is not a developed country. Very soon, when our supply increases, the prices will fall.

  13. Obsever

    Obsever: It is a common trend in every country to see increase in the price of vegetables.

    My Comment: Yes we know that vegetables prices increase is a common trend in all the countries but the maximum increase would be 10% here we are talking about 40 to 50% increase … there is surly something wrong …

    Obsever: The prices of vegetables in countries like Australia, USA, UK etc are far higher than our current rates.

    My comments: Yes I agree with you prices of vegetables in the above countries are much higher than our current rates BUT the income level in those countries are also much much more than ours the per capita income of Bhutan is US$ 1,800 whereas the per capita income of USA is US$ 40,000

    Obsever: This year, the prices have shot up because the imports have decreased.

    My Comments: Why did the IMPORTS DECREASE … THE Government did not allow the vegetable dealers to IMPORT … it is totally a Government created situation…..

    Obsever: We don’t mind paying more because the money goes to our own farmers. The farmers are excited and encouraged with the new system of vegetable trading.

    My comments: Yes i agree that the money is paid to our farmers … it is okay for the Rich and who have lots of resources and who spend only about 5% of their income on vegetables even if the vegetable prices increase by 100% they would only need to spend 10% of their income to consume the same amount of vegetables BUT think about the Poor people who spends almos about 60% of their income on vegetables … even a slight increase would lead them to cut down on their consumption…

    I don’t know whether our Government realizes this or not…

    Obsever: We thank the government for helping us to eat healthier vegetables which are locally produced. We can never expect the prices of food comodoties to fall. It will be even higher after one year from now and no government can stop.

    My Comment: Eating healthy is always a choice for the ones who can afford and for the ones who cannot afford it is always better to allow them to purchase the imported vegetables … with the current policies the poor are consuming non ….. I guess Obsever you are earning a very high income and travel in a Prado who has not seen the poor and their living conditions …
    Plz I know you intentions are good but should see whether the poor people would be able to survive…

  14. Tashi: My Comment: Yes we know that vegetables prices increase is a common trend in all the countries but the maximum increase would be 10% here we are talking about 40 to 50% increase … there is surly something wrong …

    My comments: It may be true that the prices of some vegetables increased drastically. But, the prices of some vegetables still have remained the same. For Instance in my place, I can buy potatoes at the last year’s rate. So, I tell you again it depends on the supply and our farmers doing their best to increase the supply.

    Tashi: Yes I agree with you prices of vegetables in the above countries are much higher than our current rates BUT the income level in those countries are also much much more than ours the per capita income of Bhutan is US$ 1,800 whereas the per capita income of USA is US$ 40,000

    My comment: Yes, the per capital income of USA, Australia, etc.is far more higher than Bhutan. Similarly, the prices of vegetables are also far more higher in those countries. So, is not proportionate?

    Tashi: Why did the IMPORTS DECREASE … THE Government did not allow the vegetable dealers to IMPORT … it is totally a Government created situation…..

    My comments: You know very well why imports have been stopped. Rupee problem is due to excessive imports from India. How long should we depend on imports even for basic necessities like vegetables? Our fourth king always stressed on self sufficiency and is it not important?

    Tashi: Yes i agree that the money is paid to our farmers … it is okay for the Rich and who have lots of resources and who spend only about 5% of their income on vegetables even if the vegetable prices increase by 100% they would only need to spend 10% of their income to consume the same amount of vegetables BUT think about the Poor people who spends almos about 60% of their income on vegetables … even a slight increase would lead them to cut down on their consumption…

    My comments: Who are the poor people in Bhutan? The majority are the farmers and when they can fetch more money, will they suffer? If you are talking about the low income employees, they could also grow vegetables and earn extra income. It will in fact help narrow the gap between rich and poor.

    Tashi: Eating healthy is always a choice for the ones who can afford and for the ones who cannot afford it is always better to allow them to purchase the imported vegetables … with the current policies the poor are consuming non ….. I guess Obsever you are earning a very high income and travel in a Prado who has not seen the poor and their living conditions …
    Plz I know you intentions are good but should see whether the poor people would be able to survive…

    My comments: Who is consuming nothing? Anybody starved to death? It’s in fact the rich and greedy people complaing against the inflation. I live in a semi-urban area and I don’t see any people suffering from inflation. I see more farmers taking opportunities for earning more. This is going to help fulfil our dream of self sufficiency. People complained against egg import before, but now, they do not. The same will be the case with vegetables. We must think of exporting instead of importing.

  15. sonam penjar says:

    Some hard facts.
    Local veggies will always be expensive. There are no folks in the villages. Poor farmers have to hire hands at Nu.500/day (transplantation time especailly)and feed 4 good meals a day.
    Even sr.officers in service get only Nu.500/day as DSA minus meals. lesson we learn from this…Land is the most reliable and sustainable asset, if you are willing to dirty your hand and grow what you wish to eat and not worry about dynamics of economics…well! get back to the farm. hence, invest in wet land for a change now.

  16. I think we in Bhutan should adopt certain practices that is different from other countries. Let us not leave everything for market force and law of supply and demand. Why not all of us grow our own veges. If land is a problem, we should buy pots and plastic buckets to grow at least some vege items. For example, stuffs like spring onion, corriender, chinese cabbage etc. could be easily grown in pots or on small area to meet our household requirement. These days, technologies are available to grow veges year around.

    Although my heart is with low income people, but they should also gear up to become self sufficient. They should not use low economic status always as excuse for not able to do anything. God helps those who help themselves, and if there is a way there is a will. In Bhutan, if we do proper studies almost all Bhutanese will have small piece of land, if not in urban areas but in villages where we all come from. let us not always whine and finger point. There are many small things we could do as individuals to build coherent society.

    For example, on P day i guess many urban dwellers are not happy. I can understand some inconveniences but if we change our mind set and look on positive aspects P day has several advantages. It is a way to keep ourselves healthy at least for one day in a week. Using less vehicle will have long term saving of fuel, money and economy in general. it is a way to show that we care for pure air and healthy life style. The place i work is about 5 KMs from where i stay, but on P day I make sure that I either walk or use Buses. We will get used to this new life style as we go on practicing it.

    So folks, please adopt positive outlooks in life. Life is beautiful if we know how to live it. Harnessing negative energy will make our existence short and miserable.

    Cheers

  17. Obsever,
    Its nice to see that you have given pertinent comments to Tashi, I too agree with you but not at this stage.At present think about the rates of goods and commodities purchased from India due to rupee shortage.For instance in Thimphu a driver earns Nu.6500(currently my driver gets 6500 only in hand).He said he has to pay 4500 as rent lo.Now think how is he going to survive for the whole month.Besides,he has 2 kids and wife is jobless.I think we have to see such issues from their point.For me i don’t mind paying Nu.100 per kg of potato.
    At this stage, I perceive that our shopkeepers and veg. farmers are taking the advantage of the situation and grabbing the penny out of the poorest.Therefore,my point here is rather then comparing our country with other countries,we should come together and urge the govt. put certain mechanism for check and balance because certain percent of population our taking advantage of such situation in the land of GNH.
    And i would like to comment on your following point.
    Observer: Who are the poor people in Bhutan? The majority are the farmers and when they can fetch more money, will they suffer? If you are talking about the low income employees, they could also grow vegetables and earn extra income. It will in fact help narrow the gap between rich and poor.

    My comments:I agree with you that majority of people are farmers but not all of them are poor.Those who sell vegetables in Thimphu and other towns are rich farmers,they own 3-5 acres of land.The poor farmers have land only enough to grow for themselves.I don’t find that poor farmers are benefited.For instance, some farmers in Paro and Punakha are richer than some Dasho’s in Thimphu.And i don’t find people from far flung villages selling vegetables.Therefore,narrowing down the gap may be kind of hypothesis.
    And also people in urban places don’t get a proper and affordable place for rent also.How could you think of them growing their own vegetables.Be realistic.

    Thanks!

  18. whenever i have conversation with any friend who have recently in job in Thimphu, they complain about the rise in price of vegetables. And yes the price is gone up but the local vegetable price is really rocketing up.I don’t know why the farmers put their price so high in such a way that they would become rich overnight.

    For those imported vegetables: the price is bit affordable the price fluctuates and this time the price will be high because of road problem and many factors too.
    now the vegetable problem is coincided with housing problem in urban like in thimphu. We like good and luxury house but the aim is detained by the vegetable price.

  19. bhutangossip says:

    The rupee crisis or the financial crisis has effected the whole nation and we should take responsibility collectively as said by the governor and the government. This trend has finally led to increase of vegetable prices and the prices of so many other necessary commodities. This is just the beginning:

    I would like to make two points here on the above topic.

    1. People of Bhutan have been affected but many civil servants and corporate employees think themselves as part of government. All the arguments in papers and forums are between the private sector and the government. They are blaming each other for the present situation.

    Who is getting effected?
    People of the lower and middle income are the first ones to get effected wether he/she is a civil servant or a corporate employee. The next will be the house rents, jobs and so on and so forth. Its a rippling effect and just now we are seeing only the tip of the iceberg, vegetable prices. Vegetables prices and house rents are not of a concern to higher income group and business houses.

    Why is government not taking action?
    This is because the ruling government has majority and also because they feel that the civil servants and corporate employees are on their side. The problem is only with the business people. Belive me, if the civil servants and the corporate employees join hands with the private sector as one voice and make themselves heard, the ruling government will be on the full alert and will start taking action.

    2. RMA Governor and the Finance Minister says that the whole nation is responsible. Yes it is true, but then why have a governor and a finance minister? The fact that such posts exist with an establishment of an entire institution behind them, paid just to do this particular job, is to ensure that fiscal and monitoring polices are put in place. Not to play the blame game once the problem has already set in. They should know that people in position have to take moral responsibility and act or just resign. Neither of which has happened.

    Like I mentioned earlier, This is just the beginning of our problems if something is not done soon.

  20. OBSERVER=ProOL.

    Same with two different names.

  21. In any other country such high inflation would bring down the government. In the land of GNH the people are very tolerant it appears but for how long can this continue?

    It is definitely good news that our money spend on vegetables is now staying within the country and our farmers are benefiting. But how about increasing the buying capacity of the customers especially the poor civil servants!!! If we dont see a pay raise soon DPT can bid good bye in 2013.

  22. OL keep up the good work. Keep the people informed. Your becoming the PM in 2013 will not be a distant reality.
    Good luck. We will be behind you all the way.

  23. @observer

    The current UK price of potatoes is £ 0.23 kg
    which works out to about Nu. 20

    http://potato.org.uk/knowledge-hub/newsletters/potato-weekly

    So prices for Bhutanese potatoes in Bhutan are actually far higher than for British potatoes in the UK

  24. Perhaps the government should provide small allotments to urban dwellers who want to grow their own vegetables

    http://en.wikipedia.org/wiki/Allotment_%28gardening%29

    http://www.nsalg.org.uk/allotment-info/

    http://www.allotment.org.uk/

  25. Karma =OL with same attitude. The prices of vegetables will depend on the season, item itself and the place of market. Even in Bhutan, here in my place, a KG of potatoe is costing just Nu10, that’s half the price mentioned by Lodru for UK.

  26. Truth_is_Buddha says:

    Main reasons for veg price skyrocketting:
    1) Price at Thimphu CFM is average of 100% high than Falakata, pointing to very high & unreasonable profit margins by traders and wholesalers.
    2) This retail price at CFM Thimphu creates the baseline price for all veg markets around the country
    3) Local produce, because it is local is then charged extremely high after looking at the INdian veg price.
    4) Customers then cannot afford the local veg. Farmers then say they cannot sale the veg, citing no demand. In reality, they are out-pricing themselves.
    5) in the meantime, govt keeps quiet coz they are happy farmers are getting high price, not realising that there will be no market assurance if our farmer conduct business with such short-sightedness.
    6) Govt has no plans or mechanism to check price control of veg. For packaged foods, the MRP is there but for veg and other items, the customers are at the mercy of wholesalers and traders.
    Govt, Please think about the poor customers. Have a consumer rights policy and price control regulation in place. Don;t blame IC crunch or inflation, without proper analysis la.

  27. Truth_is_Buddha says:

    On the IC crunch and inflation: sack the people in responsbile positions. RMA and Finance MInistry should own responsibility and not just blame others.If they cannot deliver, they are not competent.

  28. Did DPT government ever care about this issue? Did opposition ever question? WHY NOW ONLY?? SAD…our government takes too long to understand REALITY. And they will never understand, with their hefty salary they will never FEEL the pinch ordinary people FEELS. LONG LIVE GNH

  29. dear OL,
    When the prices of fuel, commodities, house rent and everything can go up every year, why not agricultural products that come from the drudgery and backbreaking of our own Bhutanese farmers who own marginal lands with low productivity compared with the fertile Indian plains! To tell the truth even the civil servants at the current salary can afford to buy our own vegies. Do you mean that Bhutan should depend on cheap and toxic loaded indian agricultural products while letting our farmers suffer??? Think once again….On this topic i dont support you… and because of this sometimes i feel that you need to season like the Prime minister!

  30. Your Excellency,
    What are your views, is it good or is it bad? I guess you would have to have an opinion as well and can’t just rely on the feedback and comments posted here on your website and form an opinion. As far as I’am concerned this is a very good move. The rise in prices is temporary and should soon stabilize and we are at least encouraging our farmers to produce something. situations of demand and supply should take care of itself.

  31. Ha ha, why did the Government ban the import of vegetables …. They did not do the same for the imported foreign alcohol… the five star hotels are allowed to import foreign alcohol but the others can’t why is this so…

    the government should have banned the import of alcohol and not the VEGETABLES …

  32. Do you think Bhutan can produce the foreign alcohol? Be logical in commenting.

  33. I guess all the policy makers are logical like you, thats why they have banned the import of necessity and allowed five star hotels (which of course is owned by them or their relatives) to import expensive alcohol. We can do without alcohol …. the dollar saved on purchase of alcohol can be used to buy other necessary stuffs like …. vegetables ….

    IF it makes any sense to you Observer…

  34. First of all, in Bhutan, we are all relatives and we should not have hard feelings for anyone. Now, Imports of all vegetables are banned. only the vegetables that do not grow well Bhutan are banned. Why should our country import the vegetables which our farmers can produce here. Self sufficiency is a key for the country’s economy. The viewers in this blog have expressed about prices being too high. But, it is now slowly coming down. Actually, not only vegetables, all other food items have become expensive such as dry fish, milk powder, beef, etc. So, it is all due to global economic change rather than the ban of vegetable import.

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