Effects of government subsidy support on livelihood of dairy farmers in Bhutan

Abstract

The Royal Government of Bhutan provides up to 30% subsidy support to supplement major costs of cows for dairy farming. However, no study was conducted to evaluate the effects of this initiative. A nationwide study was conducted with the objectives to compare production of milk and milk products and income generation of Dairy Farmer Group (DFG) members before and after subsidy support, understand contribution of subsidy scheme to rural household, and gain deeper insight into the future prospects of subsidy scheme for dairy enterprise development. Field sampling included 566 households across all four regions of the country. Results showed that subsidy support led to significant increase in production of milk and milk products mainly butter and cheese. The support also enabled respondents to purchase more improved breed of cattle. With the subsidy support, many farmers were able to improve their living condition and nutritional status of farm families. The increased household income as a result of subsidy support has reduced the financial burden of those parents or guardians who had to fund their children for higher education. The study concluded that subsidy scheme is highly beneficial to resource poor farmers. However, in future, the scheme needs to be strategic and target areas where it is most needed.