𝐄𝐱𝐞𝐦𝐩𝐭𝐢𝐧𝐠 𝐀𝐧𝐢𝐦𝐚𝐥 𝐅𝐞𝐞𝐝 𝐅𝐫𝐨𝐦 𝐆𝐒𝐓 𝐂𝐨𝐮𝐥𝐝 𝐄𝐚𝐬𝐞 𝐏𝐫𝐞𝐬𝐬𝐮𝐫𝐞 𝐎𝐧 𝐅𝐚𝐫𝐦𝐞𝐫𝐬 𝐀𝐧𝐝 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬

…𝒓𝒊𝒔𝒊𝒏𝒈 𝒇𝒆𝒆𝒅 𝒄𝒐𝒔𝒕𝒔 𝒕𝒉𝒓𝒆𝒂𝒕𝒆𝒏 𝒍𝒐𝒄𝒂𝒍 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏, 𝒇𝒐𝒐𝒅 𝒂𝒇𝒇𝒐𝒓𝒅𝒂𝒃𝒊𝒍𝒊𝒕𝒚 𝒂𝒏𝒅 𝒄𝒐𝒎𝒑𝒆𝒕𝒊𝒕𝒊𝒗𝒆𝒏𝒆𝒔𝒔

By Kezang Choden

Exempting essential goods such as animal feed from the Goods and Services Tax (GST) could provide significant relief to farmers and consumers, as feed prices remain high and continue to rise. The cost of animal feed directly influences the prices of end products such as dairy, eggs, and poultry, affecting the competitiveness of locally produced goods against imported alternatives. Animal feed is a critical input in the production of everyday food items that form an important part of household consumption. When feed prices increase, farmers are often left with little choice but to pass on the additional costs to consumers.

Local producers, many of whom operate with narrow profit margins, say the added burden discourages domestic production at a time when the country is striving to strengthen food security. Keeping essential food items affordable remains central to the national vision of self-reliance. Domestic production of dairy, poultry, and pork not only supports rural livelihoods but also reduces dependence on imports. Farmers and local leaders warn that taxing key inputs such as animal feed risks increasing production costs and weakening the market position of local producers.

There are also concerns over possible price escalation. Although the five percent GST may appear modest, farmers and consumers fear it could be used as a justification for price increases that go beyond the actual tax impact, further burdening households. At the same time, there is confidence that businesses will act responsibly and avoid unfair price hikes, guided by principles of ethical conduct. The issue affects the entire value chain, from producers to consumers, as any rise in the cost of locally produced food ultimately impacts household expenses.

Gyeltshen, a dairy farmer from Trashigang Dzongkhag, shared concerns over the rising cost of animal feed as the Goods and Services Tax begins to affect farm operations. He currently runs a dairy farm with 25 cows and is managing with feed stock purchased before GST was applied. However, he said this temporary relief will soon end.

“Once the existing stock is exhausted, farmers like me will have no option but to purchase new feed at higher prices that include GST. This additional cost will place a heavy financial burden on small scale dairy farmers who are already struggling with rising input costs,” he said.

Gyeltshen explained that animal feed accounts for one of the largest expenses in dairy farming. Any increase in feed prices directly raises production costs and reduces profit margins. He added that farmers cannot easily pass on these added costs to consumers, as milk prices remain sensitive and highly competitive.

He also highlighted the broader role of dairy farming in supporting rural livelihoods and ensuring a steady supply of fresh milk to local markets. Increased operational costs, he said, could discourage farmers from continuing or expanding their operations, eventually affecting domestic milk production.

Farmers in Denchukha Gewog under Samtse Dzongkhag are also experiencing growing distress as rising feed costs and the impact of GST strain livestock farming. Of the 100 farms operating in the gewog, 10 are poultry farms and 90 are piggeries. Many farm holders say they are losing hope and interest in continuing their work due to mounting challenges.

Nar Bahadur Rai, a poultry farmer from Denchukha, said he feeds around 600 hens daily, requiring one full bag of feed each day. He explained that managing feed costs has become increasingly difficult, especially after the introduction of GST, which has further raised input expenses.

Farmers in the gewog also cited poor road conditions as a major challenge. Difficult terrain and inadequate connectivity make the transportation of feed costly and unreliable. Excessive rainfall last year worsened the situation by damaging farms and disrupting supply routes, leaving many farmers struggling to recover from losses.

“These combined challenges have created a situation where sustaining livestock farming is becoming unviable,” Nar Bahadur Rai said. “Without timely support, such as improved infrastructure and relief from high feed costs, many farms may be forced to shut down. This would not only affect farmers’ incomes but also disrupt local food production and supply.”

Farmers in Denchukha say exempting animal feed from GST is crucial, as feed already accounts for the largest share of production costs for poultry, dairy, and piggery farms. They argue that GST further increases this burden and reduces profit margins, particularly for small scale farmers.

The impact of rising food prices is also being felt by consumers. Choki, a resident of Thimphu, said exempting animal feed from GST would benefit both farmers and households. She said prices of basic food items such as milk, eggs, and chicken have already increased, placing pressure on family budgets.

“Any further increase directly affects household expenses and makes it harder to manage monthly costs,” she said. “Local farmers should be supported so they can continue producing food within the country.”

Choki added that keeping essential inputs like animal feed tax free would help stabilize food prices, support domestic production, and reduce reliance on imported goods. She emphasized that affordable local food is important for both consumers and the country’s long term food security goals.

Concerns were also raised in Tsangkha Gewog under Dagana Dzongkhag, where piggery farming remains the main source of livelihood for most households. The Mangmi of the gewog, Sangay Dorji Tamang, said many families depend heavily on pig rearing, making changes in production costs and market prices a serious concern.

He shared that pork, which earlier sold for Nu 500 per kilogram, is now fetching around Nu 350 per kilogram. This sharp decline, combined with rising feed costs, has placed significant pressure on farmers.

“If feed continues to be taxed under GST while pork prices keep falling, farmers will face even greater losses and their hard work may go in vain,” he said.

The Mangmi explained that several farmers had expanded piggery farming in recent years, encouraged by expectations of supplying pork to the Gelephu Mindfulness City. However, the increase in the number of producers has led to oversupply, contributing to the fall in prices.

While farmers remain hopeful about future market opportunities, the current situation remains discouraging. Rising feed costs and declining market prices, he said, are affecting incomes and weakening farmers’ motivation to continue. He added that exempting animal feed from GST would provide timely relief and help piggery farmers sustain their livelihoods while preparing for future demand.