Regions and Countries

	Table of Contents
p. 9 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Development IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Bhutan : III. Sector Strategies

---

A. Agriculture

1. Agriculture and Rural Development

51. In view of the very large proportion of the population in rural areas and of the increasing issues associated with rural-urban migration, developing private sector activity in the rural areas of Bhutan represents an important opportunity for raising incomes nationally, for dispersing economic activity, and for addressing the income dimension of poverty reduction. The coverage of rural financial services has improved over the years. However, the rugged topography of Bhutan has constrained the expansion of agricultural production, and considerable efforts have been devoted to increasing the productivity of existing croplands. The constraints to productivity improvement and agricultural diversification are poor soil quality, fragmented farmland, limited technical know-how and weak institutions and market infrastructure.

52. ADB has provided 19 TA grants amounting to $7.7 million, including the Irrigation Action Plan in 1993 and the Irrigation Program Strengthening in 1997 and 2 loans totaling $7.8 million for Chirang Hill Irrigation and Highland Livestock Development. The Government reiterated to the ADB's Country Programming Mission in March 2000 that adequate grant assistance is available for agriculture sector development in the next few years. As such, the Bank is not planning any assistance in the agriculture sector for the next three years. However, improving the physical infrastructure both within and running through rural Bhutan could provide (i) a potent force for market integration and the release of spontaneous private initiatives; (ii) improved access for tour groups, and a fillip for the employment generating services and handicraft industries that cater to them; and (iii) in the case of power transmission and distribution, a means for developing local agroprocessing and generating alternative employment. In turn, this would help to promote balanced regional development, an important consideration of the Government. Emerging rural income and employment opportunities may also contribute to a slowing in the pace of rural out-migration.

Back III. Sector Strategies	Next B. Infrastructure