Neten Dorji | Trashigang

After suffering losses for six years, Koufuku International Ltd (KIL), a dairy processing plant at Chenary in Trashigang earned a profit of Nu 1.77 million last year.

Its revenue rose from Nu 25.4M in 2020 to Nu 56.25M last year from the sale of dairy products which was double the revenue from the previous year. The revenue was from the sale of processed dairy products like block cheese, butter, and yoghurt in domestic markets.

KIL declared a profit after tax of Nu 1.77 million indicating a promising future for dairy industries and opportunities for sustainable rural livelihoods for the dairying communities in the eastern region.

The selling of Druk Zambala Cheese earned Nu 43.16M followed by income from yoghurts at Nu 4.56M and selling unsalted butter earned Nu 2.72M. More than 80 percent of the income was from Druk Zambala Cheese sales. 

In 2021, the company collected a total of 678.05 metric tonnes (MT) of milk and produced 46.6MT of Gouda cheese, 100.0555MT of processed cheese, 10.429MT of butter, 213,808 cups of 100 ml stirred yoghurt, and 22,047 cups of 400ml  premium yoghurt.

KIL’s Chief Executive Officer, Tshering Dorjee (PhD) said, “The installation of milk chillers and deep freezers in various collection centres has helped to prevent milk quality deterioration. We have zero milk quality deterioration today, which saves the company from losses.”

Initially, given the low quality of milk, the company had to dispose of the gouda cheese it produced. “Now with the improved quality of milk, KIL produces almost 100 percent yield in the form of gouda cheese.” 

He said that the increased flow of milk and the sale of processed cheese also contributed to the company’s performance. In july, 2022, KIL collects an average of 3,883 litres in a day from 24 collection and chilling centres under four eastern dzongkhags.

As of July,  2022, KIL expanded milk supply chain linkages to a cumulative of total 1,689 micro-farms or  households. The income gained by farmers also increased to Nu 23.41M in 2021 from Nu 12.88M in 2020 which KIL directly benefits the livelihoods of rural farmers of eastern dzongkhags. 

KIL is venturing into this business as the import of cheese is the highest among other dairy products in the country and the company plans to substitute the import of processed cheese. 

KIL produced 56MT of processed cheese in 2020 and 100 MT in 2021 which replaced four percent of imports and eight percent respectively. The sales growth of Druk Zambala cheese also increased over the years to Nu 43.16M in 2021 from Nu 21.46M in 2020.

Tshering Dorjee said that Druk Zambala cheese produced from the farmer’s cow milk is appreciated in the market owing to its authentic production in Bhutan. 

“We manufacture processed cheese as naturally as possible which is safe to consume. We use preservatives as per World Health Organisation standards. Unlike imported cheese there is no complaint of side effects such as sinusitis, headache, and allergic reaction in Druk Zambala Cheese,” he said.

He said that Druk Zambala processed cheese captured at least 8 percent of the local market share by substituting imports. 

KIL expanded its market networks in 16 dzongkhags and aims to capture at least 15% this year. However, one of the key challenges is huge imports of dairy products and market competitiveness. 

Meanwhile, Bhutan imported almost all dairy products worth Nu 1096.73 million in 2021, of which 1,128.65MT was processed cheese worth Nu 518.98M as per Bhutan RNR statistic 2021. 

The dairy processing plant was established in 2015 as a joint venture between Druk Holding and Investments and its Japanese counterpart SNBL. KIL is an ISO 22000:2005 and BAFRA certified dairy processing company.