Assessing Socio-Economic Impacts of Agricultural Subsidies: A Case Study from Bhutan

Abstract

As an agrarian nation, Bhutan’s agricultural policies prioritize agricultural subsidies to boost agricultural production, rural incomes, improve food security, and reduce income poverty, especially among the rural poor. However, the effectiveness and efficiency of such policy interventions remains unknown. Based on semi-structured interviews with heads of households from six blocks representing two districts, expert consultation with agricultural policymakers and extension agents, we attempted to evaluate the socio-economic impacts of agricultural subsidy programs including co-payments. The study found that while over 90% of the households received at least one form of subsidy, except for agricultural machineries and piglets, the non-poor population has greater access to the subsidies compared to the poor. For instance, only 35% of the poor received seed and sapling subsidies compared to 52% seeds and 39% sapling subsidies received by the non-poor population. Furthermore, none of the poor received Jersey cow or biogas subsidies due to their inability to co-pay. Additionally, the agriculture machinery subsidy was found to be counterproductive to the lower income groups (<US$153.85) and beneficial to the higher income groups. However, 14.5% of the households who received a poultry subsidy experienced 3 times more income (at a mean income change of 634.31 US$) compared to those who did not, indicating that this subsidy has larger potential to improve income for the poor. To efficiently achieve the objectives of increasing rural income and reducing poverty, we recommend agricultural subsidy programs and projects be provided as a package to poor small holders, where inputs are given based on existing capacity, availability of technical support, and market accessibility.

Assessing Impacts of CAP Subsidies on Financial Performance of Enterprises in Slovak Republic

“…Wang et al [71] confirmed that agricultural subsidies are an important strategy to improve farm incomes and alleviate their poverty. However, their application is also very difficult given the socioeconomic dimensions of the receiving farms.…”

Impact of Agricultural Extension Services on Cereal Production among Rural Farmers in Bhutan

“…In Bhutan, adequate infrastructural facilities and efficient extension services are indispensable for boosting the agriculture sector (Dendup, 2018). A study on the socio-economic impacts of agricultural subsidies in Bhutan indicates a large disparity in the provision of extension services between poor and non-poor populations, with poor farmers having less access to agricultural subsidies than non-poor populations (Wang et al, 2019). The study shows that none of the poor farmers received farm machinery, improved livestock such as Jersey cows and piglets, or biogas subsidies due to their inability to co-pay.…”

Key Directions and Problems of Efficiency Assessment for State Support of Agriculture

“…The need for state support of agriculture is explained by a number of reasons [7], and at the same time it is logical to assume that on the basis of these reasons, methodological approaches to assessing the effectiveness of implemented measures can be formed. Consider the main reasons for supporting agriculture based on the work of Minakov and Kuvshinov [8], and highlight the possible approaches to assessing the effectiveness of eliminating these causes with the help of state support measures (Table 2).…”