Lhakpa Quendren

Sarpang—As the mandarin export season approaches in November, sawmillers in Sarpang are working frantically to meet the growing demand for wooden crates.

Many are concerned that they may not be able to supply the required quantities, despite increasing their production efforts.

Currently, sawmillers have scaled down their timber production due to a construction moratorium in Sarpang and are focusing on producing crates. However, due to the lack of offcuts and wood waste, the crates are now being made from firewood and logs, which is costly.

This year, the price of each crate has increased from Nu 95 to Nu 110, and Nu 130 with transportation services. Despite that, sawmillers said that their profit margins are minimal, as logs are purchased at Nu 132 per cubic foot from the Natural Resources Development Corporation Limited.

Phubgyel Sawmill in Gakiling, which started producing crates two months earlier than in previous years, has managed to stock only 22,000 crates so far out of an order for 50,000 from an exporter. Last season, the sawmill supplied 24,668 crates after beginning production in August.

The operator, Hom Nath Nepal, said that producing crates from logs is a labourious task that incurs high costs with low returns. “The small nails have to be sourced from Alipur in India, as they are not available in Phuentsholing and Gelephu.”

“The frequent changes in foreign labour also add strain to production progress,” he added. 

Currently, six workers are making the crates, while another six operate machines for wood processing. The labour charge per crate is Nu 22, and the monthly salary for machine operators ranges from Nu 17,000 to Nu 22,000.

He also purchased offcuts from the army sawmill in Wangdue at Nu 60,000 per truckload, including transportation. A truckload can produce about 1,200 crates, which would generate a revenue of Nu 72,000 in profit at the current rate of Nu 110 per crate.

Another challenge is the lack of storage space at sawmills, which hinders early production. For instance, stocks at Samdrup and Zhonggar Sawmills in Gelephu are piled in open areas, exposing them to damage from extreme heat and heavy monsoon rains.

Zhonggar Sawmill in Pelrithang is short 80,000 wooden crates from a total order of 100,000 from three mandarin exporters—two have ordered 40,000 crates each, and one has ordered 20,000. In 2023, the sawmill produced only 15,000 crates out of an order for 25,000.

The sawmill manager, Ugyen Thinley, said that while collaboration is essential to utilise wood waste and offcuts, it seems unlikely they will meet demand despite scaling up efforts.

Samdrup Sawmill in Gelephu Throm is on a trial run to produce 20,000 crates after opting out last year due to low prices. “I have produced only 3,000 crates so far, and I am uncertain if I can meet the initial demand. The wooden crates require a lot of wood,” says operator Samdrup Gyaltshen.

Another sawmiller at Jigmeling, Kuenga Tenzin, is preparing to produce wooden crates. He supplied about 30,000 wooden crates last season, with over 4,000 surplus crates still remaining in storage. “I am still awaiting a payment of over Nu 1.5 million from my client,” he said.

Last year, exporters were allowed to import crates from India after a shortage of wooden crates hit the mandarin exporters hard for two weeks during the peak of the export season in January, leading to damage to their produce.

Local sawmillers were unable to meet the demand despite the formal agreement between the Association of Wood-Based Industry and the Bhutan Export Association in Gelephu to use local crates starting in 2023.

Imports cost millions annually, with Nu 25.5 million import bill in 2022 alone.

The representative of the Bhutan Chamber of Commerce and Industry in Gelephu, Suresh Rai, said that he would discuss backup plans with his head office in Thimphu, although the Association of Wood-Based Industry affirmed that they would meet crate demand.

“Meetings were held with seasonal exporters in Thimphu to prevent the same issues this year. We need to prepare early, especially for wooden and packaging boxes,” he said, adding that interested private individuals can also take part in producing crates to meet demand.

There are 13 orange exporters in Gelephu, primarily from Jabana in Paro, who buy mandarins from Punakha, Tsirang, Dagana, Sarpang, Zhemgang, and Trongsa, placing orders for wooden crates with sawmills in Phuentsholing, Wangdue, Thimphu, Paro, Tsirang, Dagana, and Sarpang.

Exporters say that while the restriction on crate imports is justifiable, a sustainable and timely solution should be implemented for smooth exports and to prevent depot spoilage. Some pointed out the lack of monitoring and preparation on the ground by the relevant agencies.