1

Establishment of a national strategy for promotion and preservation of specific

quality products The case of yak

traditional products Dr D. Barjolle & Dr E. Vandecandelaere

In collaboration with Marie Dervillé Based on the experts’ reports of Marie Dervillé, Sonam Tobgay, Nedup

Tshering and the comments and help of Jigme Wangchuk

Acknowledgements

This presentation is based on the reports provided by the 3 experts contracted by FAO • Marie Dervillé • Sonam Tobgay • Nedup Tshering

We thank them very warmly for their work, and we also thank Jigme Wangchuk for his comments and support in carrying out the studies, and Chadho Tenzin for his support in coordinating the work.

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General framework

The Project “Establishment of a national strategy for promotion and preservation of specific quality products: the case of yak products” is part of the FAO Multidonor Partnership Project – Bhutan and has been formulated in 2009 on the basis of: • RGoB project proposals related to yak products development and yak community based

ecotourism; • consultations with RGoB staff, in particular during the FMPP workshop in June 2009; • recommendations from previous reports on value chain analysis on yak products and

specific quality products in Bhutan

The first step (2009-2010) objectives : • To estimate the market potentials and requisites for quality schemes for Yak traditional

products, including the potential linkages with tourism. • To assess the relevance and need at the institutional level. • To define a national strategy for preserving and promoting high-quality traditional products of

Bhutan, amongst yak products. • To raise awareness of policy makers and stakeholders.

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Outline

Action Plan Value chain and

institutional capacity building

Technical support of grazing and rearing

Standardization and Labelling

Promotion and market’s development

Strategic options 2 scenarios for the

evolution of yak rearing Strategic choice Main goal and vision

Pressures and opportunities Technical constraints Consumption Tourism

General context Country and agriculture Markets and products of the yak’s rearing

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CONTEXT Country and Agriculture

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Situation and main pressures

• Traditional society open-minded to the international community • Bhutan is in the process of accession to the WTO (request submitted in September 15th 1999,

still in examination) • Amplification of monetary exchanges (barter remains but decreases) within the country and with

foreign countries

• Environment and well-being are strong political concerns; • Priority is given to the development of both sectors : hydro power and

tourism; • Tourism is strongly regulated to prevent negative externalities

• The Bhutanese agriculture has been developed but unequally according to the regions • Regions close to urban areas and situated in more moderate and flat zones benefit from

technical progress. A food-processing sector is emerging. Small supermarkets have been created.

• People in remote areas suffer from deteriorated conditions for barters, from lacking technical support, isolation, and from unsatisfactory hygienic conditions for the preservation and the transport of their products to the urban areas.

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Main challenges/constraints in the agricultural sector

• Agriculture and craft industries still remain a primary importance in the Bhutanese life. The geographical origins of these products are well recognized in term of reputation, especially for craft industries’ products

• Increase of imports and competition from abroad • Imports 2006: 7% of cheese consumption, 28% of butter, 83% of the milk

• Lack of infrastructure • Needs for new market channels

• Needs for Farmers / Herders organization to supply urban markets

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PRODUCTS AND MARKET SITUATION

Yak Pilot Rearing

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Yak rearing activities (Marie Dervillé)

Yak rearing is strongly linked to the Bhutanese identity and culture. The herders still live in a traditional way, preserving the natural resources and sustaining the traditions

• Key data • 1 416 households in 2000 (in 10 Dzongkhags in the North) • 48 800 yaks in 2008 (59% Western, 16% Central, 25% Eastern Bhutan)

(average:34 yaks/family).

• The productivity level is low and work is very arduous

The activity is not very attractive (hard labour, low remuneration (from 2$ to 4$/day) despite the fact that it is still considered as the main stable activity from the herders communities’ point of view.

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Traditional yak products and specific qualities Food products

• Butter : quality varies and the storage (temperature, container) and the transport conditions are key-factors for the improvement of the final quality

• Cheese: 3 types of local traditional cheeses (white chugo, black chugo, regional fermented cheese, see next slide). They represent the main cash source for producers’ households; more than 85% of the production was estimated to be sold in 2006

• Meat: Dried meat and fresh meat. Slaughter takes place at the road, fresh meat is checked by BAFRA inspectors before being sold on the Sunday market.

By-products • Hair for wool, used for making traditional tissues and tents for transhumance. The

wool made from yak hairs can be a high quality product, which starts being developed in other countries

• Dung to be burned (only burning material in certain regions)

• Skin, tail, Horns

Services • Transport for trekkers • Draught power to carry loads

Data collected by Marie Dervillé (2009) and Sonam Togbay 10

Market channels for yak products

919

56

53

34

11 7

7

73

35

7

2618

47

22 435

60

30

10

0

20

40

60

80

100

120

dried meat

meat Butter white chugo

black chugo

export

Indian processors

Sunday markets+retailers

Middleman

rural consumers

relatives

herders

owners / taxes

In Percentage

Elaborated with data collected by Marie Dervillé (2009)

Market access: main findings

• Animals represent a capital for herders • Traditional cheeses are unique, while other Bhutanese yak products are

generally not very different from those originating from other Himalayan countries • Not all products are available for promotion and marketing;

• Food safety hinders the access to new markets. The problem is more acute for butter and other highly perishable products (butter / fresh meat / fresh cheese)

• Importance of self consumption and herders do not have easy direct access to urban markets, hotels and supermarkets

• The consumption of fresh meat is limited due to religious concerns • Logistical problems hinder the availability of the traditional products on the urban

markets

Needs for up-grading products quality and supply chain / channels

organization

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PRESSURES, CHALLENGES AND OPPORTUNITIES

Future of yak products and rearing

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Imports & New

technologies

Substitution (imports and

new Bhutanese cow products)

Difficulties to access urban

markets Lower price to

consumer

Lower attractiveness

for herders

Risk is the decrease of volume of production

Risk is the decline of yak

rearing

A way to reverse the Vicious circle? Emergence of new values

of urban consumers Problems to meet food safety requirements Logistic difficulties

Population growth Political willing to enhance well-being of the population

Remuneration for Yak products per day is not attractive compared to other activities

Yak production remains the main activity in terms of occupation (highest number of working days / year) but young generations are not very motivated

From data collected by Marie Dervillé (2009)

0

100000

200000

300000

400000

Cash per year (min)

Cash per year (max)

02000400060008000

1000012000

Return to family per day (min)

Return to family per day (max)Risk of a decline in yak rearing

and rural migration (e. g. in Haa, the yak population decreases)

General consumption trends +++ Food consumption increases (food intake increases)

- - Food habits change - Consumption habits (food consumption patterns) change (for example,

traditional yak’s butter is not as much demanded as in the past)

+ + + There is a certain urban demand for safe products, originated from

Bhutan. There is also a certain potential of selling traditional Bhutanese products to tourists

-- - These two potentials (urban and tourism demand) are only partially

activated because food safety and logistical problems are important obstacles

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Situation in the tourim sector (Nedup Tschering)

• National Council for Tourism is in charge of the policy regarding the development of tourism. Any activation of tourism opportunities needs to be discussed and decided in strict cooperation with them.

• Tourism activities started being developed in Bhutan few decades ago

• Basically, yak rearing and the survival of yak rearing cultural aspects contribute to the attractiveness of the country for cultural tourism products

• No tourism products related to yak are developed yet

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Potential linkages with sustainable tourism

The potential synergies between rearing activities and tourism have been identified (Nedup Tshering)

• Possible linkages 1. Sale of traditional products

– products for immediate consumption (hotels and trekkers)

– products that can travel and therefore be taken back home

2. Provision of services (transport for trekkers).

• Conditions to activate the sale of traditional yak products to tourists

– Adoption of basic food safety standards, labelling and indication of content (to meet the basic expectations and needs of the tour operators and the tourists).

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STRATEGIC OPTIONS

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Future of yak rearing and of yak traditional products In other high-mountains of the world, very similar constraints or pressures have already produced measurable long-term effects. The two main scenarios of effects are the following: • Scenario 1 : Decreasing production : as a result of lower work input, yak

will essentially be used for transport, until abandonment of rearing in certain cases

• Scenario 2 : Developing a value chain approach, linked to the marketing of specific products that will trigger consumers to buy even at high prices and allowing thus covering the high production costs

Without a strong policy in favour of a transition to the second

scenario, the implicit evolution would be the first described scenario.

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Scenario 1: Decreasing production In this scenario, at long-term perspective (30

years), due to the increasing difficulties to sell dairy products at a correct price and the arduous work necessary for dairy products, the activities of the herders will move to :

- A provision of services for tourists and transport activities.

- Milking and butter/cheese-making will cease progressively

- Depending of the number of yaks, by-products and meat may continue

As consequences: 1. The rural herders communities will

decrease. 2. The traditional culture of cheese making

will disappear. 3. Butter and cheese will be produced in

regions outside the mountains. 4. A lot of cultural traditional by-activities

and events will slowly disappear.

Scenario 2: Value Chain approach

In this scenario, a fair reward of the production will allow the herders to develop their activities of milking and cheese making. As consequences: 1. Livelihoods of the herders communities could

increase, allowing the maintenance of family herders all over the territory.

2. The traditional culture of cheese making could remain.

3. Traditional products could increase in terms of volumes and prices.

4. The maintenance of cultural traditional by-activities and events, strengthening the Bhutanese identity.

5. Long-term benefits of positive externalities of yak rearing could be preserved

Strategic choice Scenario 2 Strengthening the yak value chain Emergence of new values

of urban consumers Problems to meet food safety requirements Logistic difficulties

Population growth Political willing to enhance well-being of the population

Imports & New

technologies

Substitution (imports and

new Bhutanese cow products)

Difficulties to access urban

markets Lower Better

price to consumer

Lower Better

attractiveness for herders

Risk is the decrease

Stabilisation of volume of production

Risk is the decline

Survival of yak rearing and of

traditional dairy products

•Organisation of herders •Adoption of standards •Differentiation though information to consumers •Activation of new marketing channels, incl. tourism

Strategic choice

We suggest setting-up a program in order to implement technical support in the direction of the scenario 2. The main questions are:

– Do decision makers want to engage a policy in order to go in this direction thanks to a “value chain approach” ?

– Which priorities to set ?

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General goal and vision

The general goal of Bhutan is to increase the well-being and happiness of the population with respect to the preservation of natural resources.

In this frame, the entire value chain of yak rearing (from the grazing to the consumption of traditional yak products) will contribute to:

1. The improvement of the herders communities livelihoods 2. The survival of the cultural and culinary heritage and the identity

of the Bhutanese population as a whole (as consumer and final beneficiaries of a preserved environment)

3. The preservation of natural resources in a sustainable way

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Value Chain Approach From the grass to the consumer

Grazing • Grazing

techniques • Management

of the natural resources

Rearing • Labour

management • Herd

management • Prevention of

diseases

Processing • Dairy

products • Meat

products • By-products

Trade • Seeking for

best opportunities

• Storage facilities management

• Transport

Promotion • Visiting

buyers (hotels / urban buyers)

• Communication towards the consumers

Consumption • Choice of the

best price/quality product

Gives the value and rewards

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National Strategy for preserving and promoting high-quality traditional products of Bhutan: Strengthening the Yak’s Value Chain Goals :

– To improve livelihoods and therefore the quality of herders communities life – To differentiate the yak products from imported products and from local

cow products Means: • Identification of products specific qualities • Modernization of production techniques • Streamlining the production processes • Up-grading of the quality of the products (butter, cheese, and other products

and by-products) and implementation of food quality standards (Codex, Indian standards, others)

• Improvement of market access through better storage facilities and better logistics

• Promotion through differentiation downstream of the value chain • Seeking for adequate labelling and communication tools towards the

consumers 27

4 Pillars for the strategy

2. Technical support of

grazing and rearing

3. Standardisation

and labelling

4. Promotion and market’s development

1. VALUE CHAIN AND INSTITUTIONAL CAPACITY BUILDING

Grazing Rearing Proces-sing Trade Promo-

tion Consum

-ption

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ACTION PLAN

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Develop overall policy and institutional support dedicated to the yak subsector.

Initiate dedicated policy support and institutional arrangements with adequate funds and equipped with qualified human resources. E.g Institutionalize a new division within

the DoL for yak subsector development.

Enhanced yak subsector development. Herd size and quality improved. Income generation and improved livelihoods.

Human resources development and technical capacity building dedicated to the subsector.

Human resource planning, training and appointment through rightful placements.

An enhanced government and private sector research and development capacity capable of addressing current and future needs of the subsector in particular and the livestock sector in general.

Pillar 1 Capacity building Value chain and public administrations (Sonam Tobgay)

1. VALUE CHAIN AND INSTITUTIONAL CAPACITY BUILDING

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Proposed activities for the Pillar 1 1. Information and training

1.1 Information, communication and dialogue to increase awareness among all stakeholders 1.2 Training of the officers and facilitators in order to get knowledge and self-confidence

2. Build up a consistent organisation framework 2.1 Build up a national working group with all the institutions (public and private) concerned to set

up coordination between several policies / administrative issues 2.2 Build up the national association among the herders, with regional and local sections to bundle

their interests and promote them in the fine-tuning of the working plan and the implementation of the activities - they will represent the herders’ interests at national level and be involved in the choice and implementation of activities (participatory approach), composed of representatives of all yak rearing areas, including pilot areas

2.3 Build up a new group (for instance a “National Council of Yak Value Chain”) among all the stakeholders to establish a strong private/public partnership

3. Change the general frame

3.1 Identification of the gaps in the current policies to facilitate the general frame at all steps of the value chain

3.2 Workshop and elaboration of formal documents to establish the long term vision and the adequate policies

3.3 Coordination among the donors to boost synergies

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Improve yak production and environmental sustainability. Attend to animal health and welfare. Develop alternative sources of feeds and veterinary services.

Support dedicated policy, institutional, and financial support towards the subsector. New product development and value addition. Access to animal feedstuffs (forage, fodder, and concentrate feeds) at affordable prices needed to optimize animal production. Effective programs to control and eradicate disease in animal populations.

Improved herd size and animal health. Increase income of herders and secured livelihoods. Land degradation reduced.

Pillar 2 Technical support of grazing and rearing

(Sonam Togbay)

Grazing Rearing

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1. Selection of pilot areas to increase chances of success and efficiency of the program 1.1 Selection of 2 pilot areas for a pilot group of herders willing to participate 1.2 Fine-tuning of the activities according to the local needs of the herders community

2. Implement applied research, agriculture extension through training, experience sharing and advices, to facilitate modernization, to improve animal health, herd size increase and to improve labor conditions and reduce land degradation 2.1 Define Good Agricultural Practices 2.2 Implement training for the local sections of the herders on best practices for grazing and rearing (book keeping,

fodder cultivation, quality products ) 2.3 Organize study tours among herding communities (Bjee and Sephu geog for example), and study tours in

dynamic yak herding regions abroad 2.4 Looking for and introduce new technical solutions and equipments (raise awareness on the possibility to

invest some of the cordyceps money collectively into infrastructures for the community) 2.5 To establish a yak farm “model” on the governmental land in Rukupji (Sephu geog) to improve the breeding

stock

3. Facilitate the generation of cash in order to increase the investment capacities of the herders and their income 3.1 Support opportunities of monetary income diversification in para-agricultural activities (cordyceps) / exploring

micro-credit solutions 3.2 Seek for opportunities of better local synergies with the tourism

Proposed activities for the Pillar 2 Grazing Rearing

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Pillar 3 Standardization and Labelling

• Developing food safety and quality standards, proper packaging, labels and brands.

• BAFRA certification and inspection strengthening required.

• Technical capacity building with other product value additions.

• Trusted and quality products in the market.

• Increased income of supply chain players.

(Sonam Togbay)

Proces-sing Trade

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Proposed activities for the Pillar 3

Proces-sing Trade

1. Selection of 3 relevant traditional products and active herders to address activities which are suitable both for the herders and the consumers (trusted quality products) 1.1 Selection of 3 products in the 2 pilot-areas, based on appropriate criteria – see 3 next slides 1.2 Do the characterization of the selected products and fine-tuning of technical assistance activities (Products sampling

could be organized as well and delivered to BAFRA laboratory in Yusipang) 1.3 Identify 2-3 persons by product and within a pilot area as leaders: organize study tour to visits retailers, restaurants,

processing enterprises to discuss requirements and define standards and certification schemes with BAFRA

2. Up-grade the quality of the final products to meet food safety requirements 2.1 Analyze with BAFRA gaps between current practices and these which are required to fit market requirements and

standards (Codex alimentarius, etc.) 2.2 Define Best Practices for each selected product 2.3 Develop BAFRA controls/certification strategy and capacity

3. Implement applied research and advices about process of transformation of the milk into butter and cheese to facilitate the streamline of the dairy processes and storage conditions, and to improve labour conditions

3.1 Research for the development of equipments in order to reduce labour intensity and arduousness all along the process until the delivery at selling point (e.g. Pelela: supply of cream separator and butter churner, organization by the herders group of milk collection and supply of wet cheese)

3.2 Training for herders, experience sharing and advices regarding dairy production 3.3 Introduce new equipments / new logistical solutions

4. Improve cooling systems and transportation to develop trade 4.1 coordination between herders and buyers to facilitate implementation of cooling system and transportation 4.2 Coordination with other institutions to favour new roads and transport means

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Pillar 3- Activity 1.1 Selection of 3 products Step 1 - Criteria of selection

First step is to define proper criteria to judge the adequacy of the product with a range of requisites

– Food safety • Compliance with food safety requirements

– Market specificity (uniqueness) • Specificity compared to cow products • Specificity compared to yak imported products

– Access to urban markets • Storage ability & logistical aspects • Quantity available

– Consumers • Attractiveness for Bhutanese urban consumers • Capacity for tourists to take home the product

Second step consists in a ranking of each criteria for each product,

giving them an evaluation between -5 (very hard) to +5 (very easy) See table after – to be adjusted by consultations during the workshop 36

Pillar 3- 1.1 Selection of 3 products Step 2 - Ranking

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Proces-sing Trade

Food safety: compliance with food

safety requi-rements

Specificity compared

to cow products

Specificity compared

to yak imported products

Access to urban

markets: Storage ability & logistical aspects

Access to urban

markets: quantity available

Attractivity for

Bhutanese urban

consumers

Capacity for tourists to take home

the product

TOTAL

Butter -3 5 0 -3 2 2 1 4Black chugo -3 4 4 2 2 4 1 14

White chugo -3 4 4 2 2 4 1 14

Regional fermented

cheese-3 4 5 2 0 4 1 13

Dry meat 1 5 1 2 0 5 5 19Fresh meat 1 5 0 2 1 1 0 10

Hair for tissues

5 5 0 5 1 2 5 23

Hair for tents 5 5 0 5 1 0 0 16

by-product: skins

2 1 0 5 1 0 0 9

Ranking -5 very hard / bad 5 very easy / good37

Proposed selection of the products

• We propose to focus on the following products – Traditional Cheeses

• There are the most sold products • They are already known in the urban markets • They have the highest degree of specificity (uniqueness)

– Dried meat • This product is known as a « must » (=niche product which is well-known as speciality) • It is a product which can be stored for a long time • It can be taken home by the tourists

– Hair / Wool / Tissues made from hair • These products are very traditional • They can be taken home by the tourists • They face no problem with sanitary issues • It can be a good opportunity to earn money at periods when the labour is less intensive

for yak’s rearing activities / it is an activity which has interest for the women (gender issue) 38

• Development and marketing of value added yak products and explore the comparative advantage of natural resources.

• Public-private partnership engagements

• Technical assistance, training and government subsidy support.

• Increased income of herders and ex-herders in targeted areas based on improved productivity of their yak stock and income diversification.

• Strengthening marketing supply chains.

• Integrated subsistence herders with a market economy.

• Encourage public-private partnerships.

• Favorable policy support for takers to come in.

• Developing project proposals with secured funds and technical assistance.

• Specialized players resulting to efficient economy.

• Strengthened resilience of herders to vulnerabilities in the livestock sector and improved disaster preparedness and environmental stewardship.

Pillar 4 Promotion and market’s development

(Sonam Togbay)

Promo-tion

Consum-ption 39

Proposed activities for the Pillar 4 Promo-tion

Consum-ption

1. Elaboration of a promotion strategy by the National Council of Yak’s supply chain to raise awareness of consumer and tourists about uniqueness of yak products (compared to imported or wow milk products), and their contribution to sustainable development

1.1 Raise image of Bhutaness or Bhutan made or... 1.2 Promote the adoption of the standards among the buyers (compliance with food safety standards) 1.3 Information campaign and tools (leaflets, web-site, TV-spots) towards urban consumers and tourists

2. Visit the retailers / restaurants in the urban centres to discuss their specific needs and organise feed-backs to the herders communities

2.2 Identify the gaps between the needs / expectations of the retailers / restaurants and the supply (quality / quantities / prices) and give feed-backs to the herders communities

2.3 Facilitate contacts between herders, buyers and consumers (fairs, festivals, study tours...) 3. Develop access to new and remunerative markets to increase selling 3.1 Enhance local markets by activating and relocate the RNR outlets for all yak product sale counter and other local

products 3.2 Define properly the packaging and the labelling of final products to make a difference for the end-consumers 3.3 develop linkages between herders association and Tour operators

4. Coordinate with the National Council of Tourism and other stakeholders concerned to leverage synergies to promote the yak products and image of Bhutan as a whole

4.1 Coordination of the promotion abroad between tourism and traditional products 4.2 Coordination between quality seals for handicrafts products and traditional food products 4.3 Creation of trekking paths, festival, house of yak products and other attractions related to yak rearing and

products 40

Planning

41 Year 1 Year 2 Year 3

Technical support of grazing and rearing

Standardisation and Labelling

Promotion and market's

development

Institutional capacity building

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CONCLUSION PERSPECTIVES

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Revival of yak rearing and new ways of commercialisation will engage new dynamics

• Strategy “strengthening value-chain approach” = Improved agricultural practices and processing methods, up-grading of the quality and a better identification towards the consumers to support the development of yak products and improve livelihoods

• The characterization and promotion of Bhutanese traditional products could help to maintain intact the cultural heritage, so that the yak rearing could survive in long term in Bhutanese mountainous areas despite very arduous conditions of work.

• The proposed strategy should be accompanied with a broader « Bhutaness » strategy, addressed both to the Bhutanese urban consumers and to the tourists, to make stronger the image of the country in general

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Expected Work-Shop Outputs Questions to be answered during the workshop

• Do decision makers agree on implementing a policy favouring the technological and economic transition ?

• Do they agree on the scenario 2 strategy ? (slides 39-44) • What is their opinion about the 4 pillars ? (slide 45) • What is their opinion about the activities for each pillar? (slides 51-

65) – Activity to remove? – Additional activities? – Some reformulations?

• What are the pilot areas ? (slide 56) • Do they agree on the criteria and ranking for the selection of the

products ? (slides 59-61) • What are the final pilot products selected ? (slide 62)

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Next steps

1. Communicate findings to decision makers and FAO 2. Decision makers do the clear the strategy 3. Fine-tuning of the description of the general conception of the

program 4. Identify gaps in order to set up complementary programs

(certification of agro-food products for ex.) 5. Decision makers set up a working group at national level to

manage the program 6. Fine-tuning of the working plan 7. Implementation

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