Dog chew made in the eastern highlands has become an unlikely contender for Nepal's top export.

American and Canadian pooches love the hard cheese made of yak milk, and traders can barely keep up with demand, officials say. Dog chew exports are neck-and-neck with Nepal's tea shipments which have traditionally been a major foreign currency earner.

Most of the tea and dog chew exported from Nepal are produced in the eastern hill district of Ilam.

Insiders say demand for dog chew rose sharply in the United States and Canada after people bought more pet animals when they were forced to stay home during the Covid-19 lockdowns.

The statistics of the Department of Customs show that exports of dog chew jumped by 38 percent to 1,744 tonnes in the last fiscal year 2021-22. The export value swelled by 48 percent to Rs2.91 billion.

In the first 10 months of the current fiscal year ended mid-May, dog chew shipments totalled 1,346 tonnes worth Rs2.53 billion. The figure was Rs2.30 billion in the same period of the previous fiscal year.

Going by the flow of export orders, traders are optimistic that dog chew shipments will cross Rs3 billion by the end of the current fiscal year.

Exports have shot up by 240 percent in the last five years.

Manufacturers and exporters say Nepali dog chew is prepared from Himalayan yak milk and at high elevations, which has made it widely popular.

The dog chew contains no added preservatives, colours or chemicals. It is prepared manually with milk and natural products using traditional techniques.

The process of making the hard cheese, or chhurpi, involves boiling the milk, separating the whey and then shaping and drying the remaining curd. The resulting hard cheese is then sliced into sticks and let dry and smoke for a month.

“The dog chew does not contain any artificial ingredients. It is fully natural which makes it unique for pet feed compared to other products available in the international market,” said Shreska Acharya, business development manager of Lekali Himalayan Dog Chew, one of the largest manufacturers of Himalayan chew in Nepal.

Acharya says they export 30 to 50 tonnes of dog chew monthly. They bring unprocessed cheese and process it in Godavari. Nepali dog chew does not have problems like staining and odour compared to other pet food, she added.

According to manufacturers and exporters, 90 percent of the dog chew produced in the country is exported. The rest of the hard cheese is consumed locally by people. Nepalis do not feed it to their pets due to the high cost.

“Export inquiries are coming gradually,” said Dhurba Raj Regmi, director and CEO of Native Nepali Agro Suppliers, another commercial dog chew producer.

Regmi says dog chew is preferred as it contains more than 60 percent protein, calcium and vitamins. The dog chew is made of 99 percent milk from yaks and cows. Other ingredients like lime juice and salt are also used in its preparation.

"The high fat content in dog chew leads to indigestion in dogs, so manufacturers have been lowering the fat content," Regmi said.

Native Nepali Agro has been exporting dog chew for the last six years. The company said it has been producing around 5,000 kg at its plant and outsourcing the production of another 5,000 kg.

Regmi says demand for dog chew in the global market increased by 10 percent in the last fiscal year, and as a result, demand for Nepali dog chew has risen.

Native Nepali Agro exports 100 tonnes of dog chew annually. The company said it has an annual turnover of Rs200 million.

Niranjan Dairy in Fikkal, Ilam has been producing dog chew for the last four months.

“We produce around 4,500 kg of dog chew in a month. It takes 20 days to a month to produce dog chew,” said Khagendra Adhikari, proprietor of Niranjan Dairy.

Manufacturers say demand for chew has increased at a fast rate but milk production has remained static.

Nepali dairy industries have requested the government to lift the restriction on imports of milk to avert possible shortages in the domestic market.

“There is a shortage of milk. Besides, the price has been rising,” Adhikari said.

Adhikari sells the dog chew to Kathmandu-based exporters for Rs1,250 per kg. The price was Rs1,150 per kg before the price of milk went up.

Regmi says the export price of dog chew is around $14 per kg.

According to Regmi, dog chew is mainly produced in Taplejung, Ilam and Panchthar.

The major buyers are the US, Canada, the UK, Japan and Hong Kong, as per department data.

“There is great demand for dog chew in Europe, but Europe does not allow the entry of dairy products from Nepal,” said Regmi. "If the government can ensure quality, there is huge potential for Nepali dog chew exports to Europe."

Traders say unhealthy market competition has risen due to lack of proper guidelines.

Nepal’s multi-million dollar carpet industry collapsed due to unhealthy competition, and the dog chew business could face a similar fate if it is not monitored in time, they say.

There is no authentic data, but exporters say the country produces 3,000 tonnes of dog chew annually, half of which is exported.

"The government needs to grade the dog chew produced in the country to ensure its quality," Regmi said.