This section is the outcome of the survey undertaken among Chhurpi producers and exporters of Nepal. The results are presented in three different sections dealing with relevant findings associated to Chhurpi exporters, Chhurpi producers and Marketing Channels of Chhurpi based on the data obtained from the primary and secondary sources of information collected during the study. The major key findings suggest that most of the producers are located in the eastern hills because it has a long history of such production trends while exporters are centred in Kathmandu valley as it has all sorts of a resources required by the exporting companies.
Chhurpi exporters
Present status of exporters
In Nepal, Chhurpi exporters are mainly centralized in the capital city of the country (Kathmandu) because here only the international airport (Tribhuvan International Airport) is located till date. Also, all sorts of other amenities could be easily made available there. After 2003 the initiation of Chhurpi trading as a dog chew was started. According to the total data acquired from the exporters, on average they started their business in the past 6–7 years. Apart from Chhurpi, as per customer demand exporters are also exporting Chhurpi powder and Chhurpi Puff. Chhurpi is the only milk product that is exported to Europe and America (including all American states), and is fetching a premium price. Other countries for export include Canada, Hong Kong, Taiwan, Malaysia, Japan, Philippines. Most of them buy locally made Chhurpi from the farm located in the Ilam district while some exporters have their farms in Rasuwa and Langtang districts as well. Exporters stated that if the quality is not compromised then products can be exported across the globe as they are receiving good feedback from importers of their products. The quality of Nepalese Chhurpi is good as compared to other countries' products. It is common for Nepalese Chhurpi to develop moulds if it has to be transported for a long period of time.
COVID-19 impact and survival mechanism
Corona has negatively affected dairy activities despite the government's relaxation allowing most dairy operations to remain operational, even though the entire country was in lockdown. In the course of this COVID, almost all economic and public activities were shut down. The sale of liquid milk has decreased to a lower level along with other milk products. The stock of Skimmed Milk Powder (SMP), butter and cheese have been piled up in dairy industries resulting in blockage of capital which made dairies unable to pay the producers, staff, and banks. Therefore, to solve this situation dairy entrepreneurs were demanding soft loans/working capital to ease the regular operation of the dairies at a maximum of 3–4% for a period of at least 2 years.
As a result of the change in the economy, most exporters experienced a minor drop in their sales. It may be concluded that the importer's order decreases as the price of Chhurpi increases. To manage this critical period, the importer made the proper use of stock. To cope with this situation, exporters reduced the quantity of Chhurpi bought from producers. This condition does not last for long period but it disbalanced the trading status for a couple of months after the lockdown is initiated. Alongside, Chhurpi's cost has risen primarily due to the increase in feed supplements, as well as the higher transportation fees from the farm to Kathmandu as there was irregular transportation.
Major competitors in the market
Since the market of Chhurpi is growing consistently in the past 10 years, many new companies are being registered. But the main competition remains with those companies or firms that are operating in an unorganized way without being registered that are mainly private. Also, they can enter into space between organized companies and importers and thereby trying to attract the market towards them.
The survey found that the major players in Nepali Chhurpi export, have been in this business for more than 5 years with Himalayan Dog Chew being the top competitor in this scenario. Other companies that are boosting up Nepali economy with Chhurpi as major exporting commodity are Native Nepali Agro Supplies Pvt. Ltd., Omega Pet Foods Exports, International Himalayan Dairy Industries Pvt. Ltd., Zephyr International Pvt. Ltd., Continental Cashmere Pvt. Ltd., Unique Organics Pvt. Ltd. Kathmandu Nepal, Made in Nepal Pvt. Ltd., Fireball Trading Company Pvt. Ltd., Sudha Trading Pvt. Ltd., Nepa Dog Chew, Everest Dog Chew, Silver Lining, Godawari International, Naulo Venture, etc. Most of these companies are located in Kathmandu while some of them are operating from abroad as well as having production units in Nepal. Their major trading items include Dog treats, Dog chew, Dry Dog foods, Chhurpi powder, Puff, etc. A healthy competition between these competitors will likely increase the total exports, ultimately accelerating revenue collection.
Importer’s milk preference
Most of the country prefers Chhurpi made from Yak milk while some prefer that of Cow. The mixture of cow and buffalo milk is also subjected to preference in some countries and the milk of Chauri is also popular among importers. Among all these species, the Yak lives at a higher altitude and grazes in highland pastures that are full of medicinal and herbal plants. The quality of milk it produces is rich in medicinal and nutritional properties that is why it has more demand. While some found its milk product unpleasant as their dogs are already habituated with that of Cow milk. Other element responsible is the population of Yak/Nak/Chauris in the country with their numbers limited to 69,978, out of which the milking population is only 18,359 [36]. This is creating pressure on producers and also the grazing land shortage is an eminent problem.
Seasonal fluctuation in sales of Chhurpi
Although Nepal does not have a tradition of feeding dogs with Chhurpi, Nepali Chhurpi is gaining popularity outside Nepal as a chewing food for dogs. It is because the dog can be kept calm, quiet and under control, for 4–5 h while it is busy chewing. It is beneficial for dog health as well, being rich in surplus nutrition.
The market of Chhurpi remains almost the same throughout the year for most of the Nepalese exporters, even though some exporters reported a decrease in sales during the rainy season. But it was found that the sales within foreign market increase somehow during the festive seasons like Christmas, New year etc. as foreigners have a tradition to give a treat to their dogs in these seasons. People with no dogs also buy dog chew and offer it to their neighbours’ dogs which ultimately increases the sales of Nepalese Chhurpi.
Annual growth of Chhurpi export
Figure 3 is the representation of the increase in annual growth of sales in Chhurpi export in the last five fiscal years. Exporters who were having only 5% growth in 2016/17 increased their growth rate up to 56% while coming in 2020/21. In between these years also they have shown a continuous rise in their growth 15.6% in 2017/18 and 33.8% in 2018/19 while in 2019/20 exporters were having 40% growth.
This trend shows that growth in this sector is consistent and can always be made up going if proper care is taken in managing the market abroad. Since it is rapidly growing with an average growth rate of 10–11% annually the competition in this line is certain to increase in future.
Annual variation in Sales, Profit and Export of Nepali Chhurpi
The data associated with annual sales (in lakhs in Nepalese Rupees), annual profit (in lakhs in Nepalese Rupees), annual export (in tonnes) and percentage change in annual export of Nepali Chhurpi is depicted in Fig. 4. It can be noted that in the recent fiscal year (2020/21) all the three parameters have shown superiority in terms of annual sales (102 lakhs), annual profit (20.6 lakhs) and annual export (18.59 tonnes), while all these parameters remain at a lower level during 2016/17 being annual sales (20.52 lakhs), annual profit (3.18 lakhs) and annual export (3.89 tonnes).
In between these fiscal years, all three parameters have an increasing trend throughout the period while the maximum quantity exported was 15.65 tonnes in 2019/20 which was only 8.5 tonnes in the previous fiscal year. In the fiscal year 2019/20 the annual sale was 85.89 lakhs and the annual profit was 16.55 lakhs which remained at 45.13 and 8.055 respectively in 2018/19. There exists variation between each fiscal year in terms of percentage change in annual export. Annual export increased by 50.39% in 2017/18 which was only 3.89% in the previous fiscal year 2016/17. But in 2018/18 export percentage was reduced to 45.30% which again took a surge to 84.12% in 2019/20. During the last fiscal year 2020/21, only an 18.79% change was achieved in annual export. The reason behind this was the outbreak of COVID-19 which lowered the demand for Chhurpi. Similarly, to cope with this situation, export was reduced by reducing production as well.
For Chhurpi producers
Present socio-economic status of Chhurpi Producers
Nepal is a country where people with varying cultures, religions and languages are residing throughout the country. Ilam is in the easternmost part of Nepal and has a moderate type of ambience for dairy farming and is the reason why most Chhurpi producers are in this region. As for the ethnicity of the Chhurpi producers is concerned (Fig. 5), the maximum number of Chhurpi producers was found to be Brahmin (30%) and Chhetri (30%), while the rest of the other percentage share was divided equally with 10% each among Tamang, Rai, Janajati and Sherpa. Among the Chhurpi producers, it can be seen from the chart (Fig. 5) that the age of maximum Chhurpi producers lies between 20–30 years and 30–40 years, having 30% of producers in each category. From the observation, it is clear that youths are attracted to the production trend. 20% of producers were found to be between 40–50 years, while the least percentage of people were between 50–60 years and 60–70 years in which they share 10% in each category. Out of the total producers surveyed, more than three-fourth (80%) were male, whereas 20% were females.
In the context where dairy farmers and producers are not literate, Chhurpi-producing farmers have shown opposite results where the maximum number (40%) of producers are those with higher secondary education. 30% of producers know to read and write without formal education, which is followed by those with School Level Certificates (SLC; 20%). The least number (10%) is of those who are university graduates. The maximum and major proportion (70%) of Chhurpi producers have a nuclear type of family while the remaining 30% of producers consist of a joint one. The maximum number (70%) of Chhurpi producers are involved in cooperatives, while only 30% are not involved with cooperatives. In the course of our survey, we noticed that producers who do not currently belong to cooperatives were also interested in joining them in the near future. Those who were already members of cooperatives took membership 5–6 years ago.
Income from Chhurpi production and marketing
Chhurpi has been taken as a major exportable commodity in Ilam for years ago. Many new enterprises minded individuals are involved in this business to explore its opportunities. The income range is classified into three categories; 0–5, 5–10 and 10–15 lakhs Nepalese Rupees(NPR) per year (1 USD = ~ 131 NPR). It can be noted that the highest percentage (60%) are earning income between 0–5 lakhsNPR per year while those earning between 5–10 and 10–15 lakhs NPRper year are 20% in each category (Fig. 6).
Annual Price variation of Chhurpi among seller (wholesaler and retailer)
The price (NPR/kg) of Chhurpi is mostly fixed across the year but it can vary if the producer sells it to others. The annual variation of selling price among each producer to wholesaler and retailer has been presented in Fig. 7. It can be noted that there is no result of retailing price in the case of producer number 3, because this producer only sells Chhurpi to the wholesaler at a maximum price of NPR 1000 (USD 7.63) and minimum at NPR 880(USD 6.72).
It is evident that the maximum price paid by the wholesaler and retailer was NPR 1100(USD 8.40) and NPR1150 (USD 8.78) respectively for producer number 4 but there is no minimum price in this case because the producer has fixed the price of Chhurpi in yearly basis (Fig. 6). A producer that has received a minimum price from both the wholesaler and retailer is producer number 7. They have received NPR 800(USD 6.11) from the retailer and NPR 700(USD 5.34) from the wholesaler respectively. All other remaining producers have got a price variation between the highest and lowest price received from the wholesaler and retailer. Furthermore, it was noted during the survey that this change in annual price variation is due to producers earning more profit, selling their product to a new exporter who is paying little more, lowering their image among previous buyers.
Crosscutting issues of Chhurpi producers
Sources of animal feed
Maximum cultivated land area (50%) was in the range of 10–20 ropani (0.51–1.02 hectare) whereas minimum cultivated land area (20%) was in the range of 30–40 ropani (1.53–2.03 hectare) (Fig. 8). Maximum uncultivated land (40%) was in the range that was similar to maximum cultivated while minimum uncultivated land (10%) was found in the range of 70–80 ropani(3.56–4.07 hectare). Chhurpi producers were found to grow fodder and forage on their land, while concentrate was bought from nearby agro vets and agriculture inputs suppliers.
The available land area was divided into a section of fodder production and crop production. The crop residues like wheat and rice straw were also used in feeding. The land area that was allocated for fodder plantation included plants like Amriso (Thysanolaena latifolia), Khanayo (Ficus semicordata), Nemaro (Ficus auriculata), Dudhilo (Ficus neriifolia), Kutmero (Litsea polyantha), Kimbu (Morus alba), Gogan (Saurauianapaulensis), and Bar (Ficus benghalensis), while Napier (Pennisetum purpureum) and Alfa-alfa (Medicago sativa) were planted as a forage crop. Furthermore, from the survey, it was found that almost all producers have their own land for cultivation, most of which is upland and have good provision of irrigation. Very few landowners struggle with rain-fed issues.
Selection of dairy animals among Chhurpi producers
The selection of animals plays a crucial role in the success of any dairy farm. Improved cow and buffalo breeds are the potent producers of milk while local animals are low milk yielders. Producers were found to rear improved breeds of cattle (Jersey and Holstein) and buffaloes (Murrah), while local breeds are not much popular in that area in terms of Chhurpi production.
It has been observed that maximum producers have a preference for cattle (40%). The percentage of producer-rearing buffalo only is 0% while those having both animals on their farm were 30%. The remaining 30% are the producers that do not own any animals but collect the milk from MPC (Milk Producers Cooperatives) to produce Chhurpi. The land holdings of such producers were found nil therefore they do not cultivate any fodder and forage species. It is believed that mixed milk from both cattle and buffaloes is the best for good-quality Chhurpi production. Milk only from buffalo has problems like breakage and uneven surface after it gets solidified. In order to overcome this problem, buffalo milk is mixed with cattle or yak milk. After milk (cattle and buffalo) gets homogeneously mixed, it results in Chhurpi with a smooth and uniform surface that is mostly preferred by consumers.
Milk collected or produced, and milk used for Chhurpi making
The majority of Chhurpi producers are those with less capacity of milk collection or production because they either have a limited number of farm animals or purchase a low amount of milk from cooperatives.
It is evident that the maximum collection or production of milk (50%) lies in the range of 100–200 L while the minimum (10%) lies in the range of 300–400 L which share the same.
percentage as that of 1000–1100 and 1300–1400 L (Fig. 9). Highest range of milk that is used for Chhurpi making is 100–200 L which have half percentage share of total milk used while the minimum percentage of milk (10%) used in the conversion is 300–400 L which are also similar for 1000–1100 as well as 1300–1400 L.
Problems faced by Chhurpi producers
Higher costs of milk
Milk producers have to buy agricultural inputs at high costs and there is an absence of a mechanism to regulate farmers' cost of milk production according to their incurred cost leading towards an abrupt rise in the price of milk for Chhurpi producers. Another reason for the price hike of milk is the shortage of the required labourer’s number in the farm.
Feed shortage
During the monsoon period there is excess green forage and fodder available but after the monsoon remaining six months of winter and spring there starts a shortage of feed and fodder. In this situation animals are fed with concentrates that are too costly. This does not meet the requirement of animals which increases cost without an increase in production. This leads to a scarcity of milk, especially in the lean season. The lean period is known as risk season because the demand for production cannot be reached.
Storage and transportation
One of the major problems with Chhurpi producers was the storage of Chhurpi as it is hygroscopic and can easily absorb moisture. According to them, the maximum price they acquire per kg of Chhurpi (NPR 1100; USD 8.40) gets reduced to NPR200(USD 1.53) if Chhurpi gets moistened. So, transportation and storage of Chhurpi depend upon the types of Chhurpi (hard and soft). Hard Chhurpi should be stored at 8–10 °C. Such type of Chhurpi during the winter season can be transported without chilling (if the maximum temperature is 20–21 °C) for 1–2 h, and if the maximum temperature is lower than 15 °C the entire transportation does not require any chilling.
Animal health
The health of the herd is vital for producing the optimum level of milk. When it comes to the major infectious diseases in animals, Foot and Mouth Disease (FMD), Haemorrhagic Septicaemia (HS)and Black Quarter (BQ) are most common in Nepal. Henceforth, the government launched a nationwide FMD control project focusing on the vaccination of animals in pockets area of the dairy sector, Ilam is one of them. A periodic deworming and awareness campaign has been implemented for the same in the country.
Breed improvement
To meet the demand in the lean season and to maintain a regular flow of products to the market regular supply of milk to producers is crucial. For this local animals are not best suited and improved breeds of animals like Murrah in buffalo and Jersey and Holstein-Friesen in the cow are the option for boosting milk production. Good-quality semen of superior bulls should be used for Artificial Insemination (AI) in cows and buffaloes.
Technical knowledge
Chhurpi producers do not have adequate knowledge regarding different technical aspects of production. Milk should only be marketed after its technicality has been assured by the experts because Chhurpi producers have faced clotting problems in milk while boiling. There should be a proper understanding of demand and amount of milk production to overcome the problems of milk holidays. By boosting up technical manpower adequate technical support on vaccination, treatment of diseases, forage and fodder cultivation, ration formulation, preservation of fodder via silage making etc. should be taught to the farmers and producers.
Suggestion of Chhurpi producers and exporters to the government
Policy framework
It is the prime role of the government to enact a feasible policy regarding the market of Chhurpi. To increase the production of milk and milk products, small farmers should be given topmost priority in policy because the dairy sector of Nepal has a large percentage of small milk producers. The dairy cooperative model of milk collection should be framed and made functional in milk-producing sites. The business environment can only be created when government work on framing effective plans and policies for the overall development of the Chhurpi market.
Government subsidy
Governmental subsidies are essential in encouraging entrepreneurs to start their businesses. Chhurpi producers are urging the government to provide subsidies only based on the performance of producers. To boost the production of Chhurpi, the government should also offer subsidies for equipment so that it eases the preparation process. Subsidies are mostly provided to export-oriented industries, prioritized industries, as well as industries located in the least developed, undeveloped, and underdeveloped regions of Nepal. A technological subsidy can aid in tremendous ways to surge production.
Government should be proactive in providing training to the milk-producing farmers and the Chhurpi producers to educate them with technical information about Chhurpi. This should provide remunerative and subsidies for the inputs required for production. A high bank interest rate of around 16% is working as a prime hurdle in the growth of Small and Medium Sized Enterprises (SMEs) in Nepal. The government should direct the banking sector to allow such businesses to work by lending a nominal interest rate. Taxation should be subsidized for entrepreneurs as a result business environment would be created that ultimately would make a win–win situation for both the exporter and the country.
Foot and Mouth Disease (FMD) free zone
It is suggested to the government by both the producers and exporters of Chhurpi, to create FMD free zone in Ilam and other Chhurpi-producing districts. It can be done by adopting Sanitary and Phytosanitary (SPS) measures to eliminate health problems in animals thereby preventing them from major health diseases. After that, a clean certificate can be generated to the area that is specifically free from FMD or any other disease. The lack of a certificate prevents exporters and producers from entering the Australian market as Australia does not import milk and milk products from countries with animal health problems.
Marketing Channels of Chhurpi
Most of the Chhurpi produced in the study area is marketed through varied channels at different prices. The channels that were prevalent in the study area for Chhurpi marketing include the following:
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Channel I: Producers → Exporters
This channel is characterized by the direct selling of Chhurpi to exporters by producers. Generally, a contract is made between producers and exporters for a certain period and the price of Chhurpi is fixed without any scientific basis in mutual understanding between producers and exporters. There are also some exporters with production facilities in the study area.
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Channel II: Producers → Collectors → Exporters
In this channel producers and exporters are connected by collectors. Here collectors may be MPC, Dairies, etc., that purchase the products from producers in bulk at a reasonable price and sell to the exporters making some profit in between.
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Channel III: Producers → Middlemen → Exporters
The channel involves the middlemen as connection between producers and exporters. Middlemen purchase Chhurpi from producers and sell it to exporters. Middlemen are generally from the place of production, being local they have a good relationship with the producers and thus can collect the product easily. Most middlemen remain in the Terai area and develop a market link with other personnel to build up the business. Birtamode of Jhapa district is the place where many such middlemen of Chhurpi reside.
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Channel IV: Producers → Wholesalers / Retailers → Exporters
In this channel, producers firstly sell their products to wholesalers in large quantities. Wholesalers collect enough Chhurpi to store at their store and then sell that product to exporters mainly in Kathmandu. Occasionally, producers have also been found selling their products to local retailers when they do not have surplus quantities.