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Bhutan: Bhutan Economy Profile


Bhutan uses the Gross Happiness Index

Bhutan, or the 'land of the thunder dragon', is a small, land-locked, mountainous country in South Asia, bordered by China and India. Land rises from about 150 metres in the south to about 7,000 metres in the north. Although a small country, Bhutan has a wide range of agro-ecological zones and climates, ranging from sub-tropical to temperate and alpine vegetation, providing opportunities to cultivate a wide variety of crops. This isolated Buddhist kingdom, identified as a world biodiversity hotspot, began to open up to the world in the 1960s, adopting a policy of cautious modernisation.


The country's economy is based on agriculture, forestry, tourism and the sale of hydroelectric power to India. About 70 % of the people live in rural areas and most depend on subsistence agriculture, inclunding livestock and forestry. The average farm size is about 1.7 hectares. Poverty is almost entirely a rural phenomenon, and affects additional than 30 % of the people.

With much of Bhutan too steep, too high or too cold to farm, only 8 % of land is cultivable, and most of this is fragmented and scattered in difficult terrain, making farm labour intensive and mechanisation difficult. Characterised by remoteness and inaccessibility, marketing and large-scale commercialisation is a significant challenge. In a lot of rural communities, people have to walk from a few hours to a few days to reach the nearest road chief. As a result, barter trade is prevalent in the country. Smallholder farmers as well face other constraints, inclunding the small size of landholdings, lack of irrigation, poor soil fertility, limited access to technologies and inputs, few off-farm employment opportunities, poor access to markets and high transport costs.

Rice is the major staple crop and is grown by about 60 % of rural households. Over 500 varieties of local rice have been collected and catalogued. Bhutan consumes about 100,000 tonnes of rice a year but only produces half of that all. Low-altitude rice is often grown in rotation with crops such as mustard, wheat, pulses and tropical fruit. Other major crops include maize, buckwheat, barley, foxtail millet, finger millet, potatoes and soybean.

While most households rear livestock for home consumption, livestock farming and nomadic herding are the predominant activities in the alpine and cool temperate zones. Over 80 % of rural households own cattle. Other significant livestock include poultry (reared by about 65% of rural households), pigs (38%), horses (23%), goats (15%) and yaks (2%). Inadequate pasture land and poor access to markets are significant constraints to improving production, but increasing urban request for livestock products is encouraging farmers near urban areas to keep better breeds and improve feed and fodder management.

Making the majority of trees

About 70 % of Bhutan is forested and 40% of this is protected. A significant proportion of the people depends on forests for timber, fuel wood and non-timber forest products (NTFP). Most NTFPs are used for subsistence purposes but, according to FAO, there are several that have great cottage industry potential, inclunding Cordyceps sp. (parasitic fungi used in traditional medicine), Matsutake mushroom, lemon grass, and bamboo. To protect forests, the government is promoting community forestry and the establishment of fuel wood plantations in degraded areas.

About 28 % of rural households own orchards. The major crops include apple, orange, walnut, plum, peach, pear, guava and areca nut. To transform degraded mountain slopes, and address landslides and declining soil quality, the Mountain Hazelnut Venture is aiming to plant 10 million hazelnut trees over five years. It is hoped that the trees will stabilise the soil, sequester carbon and provide a sustainable source of firewood to thousands of farmers. By 2020 the venture hopes to be exporting additional than 40,000 tonnes of hazelnuts worldwide.

Boosting trade

With high mountains and narrow valleys, opportunities for producing food and generating cash gain are limited but the government is committed to strengthening agricultural marketing by expanding local markets for primary products, exporting high price products and improving infrastructure, inclunding roads, irrigation and research facilities.

In 2013, Bhutan's Minister of Agriculture and Forests as well pledged to ensure that the country became the initial completely organic country. The aim is to slowly ban the sale of pesticide and herbicide, and rely on manure and crop waste for fertiliser. The Buddhist national has as well made commitments to protect its biodiversity, inclunding the preservation of at least 60 % of its land as forest.

Statistical information

Country: Kingdom of Bhutan
Capital: Thimphu
Area: 38,394 sq km
People: 725,296 (July 2013 est.)
People increase rate: 1.15% (2013 est.)
Life expectancy: 68 (2013 est.)
Languages: Sharchhopka 28%, Dzongkha (official) 24%, Lhotshamkha 22%, other 26%
Inflation: 10.9% (2012 est.)
GDP purchasing power parity: US$5.036 billion (2012 est.)
GDP per capita: US$6,800 (2012 est.)
GDP composition by sector: agriculture: 14.7%; industry: 41.8%; services: 39% (2012 est.)
Land use: arable land: 2.49%; permanent crops: 0.46%; other: 97.06% (2011)
Major industries:adhesive, wood products, processed fruits, alcoholic beverages, calcium carbide, tourism
Agricultural products: rice, maize, root crops, citrus; dairy products, eggs
Natural resources: timber, hydropower, gypsum, calcium carbonate
Export commodities: electricity (to India), ferrosilicon,adhesive, calcium carbide, copper wire, manganese, vegetable oil