Increase due to stocking of essentials
If import substitution is seen as a means for reviving the local economy, there is a huge scope in the dairy production sector.
Bhutan imported about 810.69 metric tonnes (MT) of cheese in six months, from January to June this year. This is about 54 truckloads of cheese, assuming that a 10-wheeler truck can carry 15 MT.
In the same period, the country also imported 5,899 MT of milk and milk powder, 178.9 MT of butter.
The import in the first half of 2020 was worth about Nu 1.09 billion (B), according to the finance minister, Lyonpo Namgay Tshering.
Bhutan Trade Statistics (BTS) showed that in 2019, Bhutan imported about 7,370.2 MT of milk and milk powder, 337.7 MT of butter and 1239.3 MT of cheese worth about Nu 1.6B.
The increase in import in the first half of the year, however, was because the Food Corporation of Bhutan Ltd. (FCBL), wholesalers and retailers started stocking essential commodities since April.
Economic Affairs’ minister, Lyonpo Loknath Sharma, said that Bhutan imported 4,808.90 MT of milk and milk powder, 221.55 MT of butter and 788.91 MT of cheese for Covid-19 related emergencies. He said, “We didn’t import most of the essential items after the lockdown because some stores still have excess stock of processed cheese and butter.”
The Economic Affairs’ minister said that Bhutan has adequate production of local dairy products for the domestic consumers. “But the local dairy products are all perishable,” he said.
The ministry is emphasizing on encouraging the production units to produce non- perishable cheese and butter to substitute import of processed dairy products to meet the domestic demands.
“Import substitution is still our priority. We have enough domestic products but we have to focus more on turning those perishable livestock products into non-perishable products,” said Lyonpo.
Bhutan’s only cheese processing plant Koufuku International Limited (KIL) in Trashigang claims that the company contributed almost 10 percent of processed cheese in the market.
KIL produces 400 to 500 kilograms of processed cheese every day. KIL’s manager, Sanjok Biswa, said the quantity they produced was not enough for the nationwide dairy product consumers.
The manager also said that the company’s main objective was sustainability and import substitution. The company is also looking at the perspective of expanding cheese production. “Expansion would be difficult given the high cost of production and expensive investment cost. If the government supports the initial establishment, we would be able to cater to the whole nation.”
The Department of Cottage and Small Industries (CSI) promotes the production of pasteurized butter, cheese and yogurt as an activity to gradually supplement or replace imports through local production.
Lyonpo Loknath Shrma said that it was high time that domestic production of cheese and butter in the country should take place. “Some other startups should explore the potential of establishing dairy product processing plants,” he said.
Bhutan imports dairy products such as fresh butter, processed butter, fresh milk, tetra pack milk, condensed milk, milk powder, processed cheese and yogurt mostly from India.
Bhutan imported 11,138.1 MT of dairy products worth more than Nu 1.5 billion from India in 2019 while the import from other countries was 251.3 MT worth about 45M.