<p>This paper attempts to examine Bhutan's transitioning agricultural sector through shedding light on the history of the government initiated seed production and distribution programs, and its influence on farming households in western Bhutan. A framework for seed system development is used, based on the recognition that there are two district seed procurement systems: formal (outsourced commercial seed production) and informal (non-commercial household, or community-based). The analysis is based on a household questionnaire survey and interviews conducted in western Bhutan and Japan in 2014 and 2015. Emphasis is placed on Japan's influence on the formal seed system, notably through the introduction of improved vegetable seed varieties in the mid-1960s, and hybrid vegetable seeds since 2006. The household survey revealed varied but sustained coexistence between the two seed systems, with a high rate of seed saving as a common thread in all communities. Variation between districts reflected degree and maturity of market integration, and the increasing popularity of hybrid seeds. </p>