Background

The National Statistics Bureau (NSB) of Bhutan established the national poverty line at a minimum monthly earning of Nu1,096 per person, with an estimated food requirement of Nu688 and non-food requirement of Nu408. The NSB survey estimates 146,100 people from an estimated total population of 630,000 (23.2%) to be below the poverty line. Poverty rates are found to be high in the eastern districts of Zhemgang, Samtse, Mongar, Lhuentse, and Samdrup Jongkhar (Kuensel 16 January 2008) due to a complex of reasons including the lack of off-farm income opportunities. Most of the poverty is in the rural areas.

Several authors point out that the distillation of lemongrass (Cymbopogon flexuosus) has become a major source of income for rural communities for these poverty stricken eastern districts, with a contribution of up to 30% to the annual income (Budur et al., 2005; Lama, B., 2003; Mukhia, P., 2006; Namgyel, P., 2005).

Initiated in 1981 by a private firm, Bhutan Aromatic & Phytochemicals, an affiliate of Tashi Commercial Corporation, and later supported by the Ministry of Economic Affairs through the Essential Oil Development Programme (EODP), the industry produced 115 tons of lemongrass oil from 1998 to 2007 and is the first example of the industrial use of NWFPs in Bhutan.

It is important to note that Bhutan is an exceptional case where lemongrass oil is collected from the wild as opposed to cultivation for the production of essential oil. Today, the industry contributes seasonal cash income to about 2,000 people in four of the eastern districts (Mongar, Trashigang, Lhuntse and Trashiyantse) where lemongrass occurs abundantly in association with the chirpine forest.

Among the governmental agencies, the Social Forestry Division (SFD) of the Department of Forests (DoF), which is responsible for the provision of technical support, establishment and implementation of the community forest programs, has played a key role in supporting NWFPs for income generation of the rural population and support for the collection and marketing of NWFPs within the boundaries of community forests through the establishment of small scale enterprises (Bhutan Ministry of Agriculture, 2006a).

The focal agency for the promotion, establishment and coordination of activities concerning organic agriculture in Bhutan is the National Organic Program (NOP) of the Department of Agriculture (Bhutan Ministry of Agriculture, 2006b). Together with the Agricultural Marketing Section (AMS) and the Bhutan Agricultural and Food Regulatory Authority (BAFRA), NOP identifies potential export markets for organic commodities and is working toward the establishment of a national certification agency. In accordance with its mandate, NOP along with SFD and Helvetas/SDC Bhutan, supported Bio Bhutan in contracting INDORCERT, an Indian-based internationally recognized certification agency, for the first inspection of lemongrass in Dozam CF in October 2005.

In relation to product development and marketing, the UNDP supported the EODP. This program has been the main development partner for the lemongrass oil industry of Bhutan. With support from EODP and UNDP, the Lemongrass Cooperative, of which Dozam Community Forest Management Group (CFMG) is a member, has been established by the distillers of four eastern districts (Bhutan Ministry of Economic Affairs, 2006). The cooperative is expected to gradually take over responsibility for the marketing of lemongrass oil from EODP.

The main drivers for the certification of lemongrass oil are the private enterprise Bio Bhutan (see Box 1 [ PDF 16.6KB | 1 page ]) and the Dozam CFMG in Drametse gewog (see Box 2 [ PDF 16.6KB | 1 page ] and Chapter 2.1).

2.1 Dozam Community Forest Management Group

The Dozam CFMG is the oldest community forest in Bhutan with an established management plan for 358 hectares of chirpine forest. It was first approved in 1997 for a period of five years, and renewed in 2003. The management plan is now approved until 2013 (Temphel, J. and Beukeboom, H., 2006). Drametse gewog forms part of Mongar district.

Though originally conceptualized for the management of timber, the already available management plan and resource assessment, the by-laws, the excellent community organization in Dozam and the interest of the distiller group provided an ideal platform for the Bio Bhutan enterprise to venture into the organic certification of lemongrass oil.

Dozam CFMG has been part of the essential oil producing community since 1981. With five distillers in a total CF area of 358 hectares, the Dozam group represents 0.7% of the potential area of 50,000 hectares of chirpine forests with associated lemongrass in the Eastern districts. The production of 1.2 tons of oil from Dozam CF accounts for 14% of the average production of 8.9 tons in 2007 (Bhutan Ministry of Economic Affairs, EODP, January 2008). See Photo 1, which shows a distillation unit in the Dozam area.

2.2 Development of the Lemongrass Oil Industry

A complex of environmental and economic factors, including the decrease of grass and firewood resources brought about by unsustainable resource management and price competition from cheaper Indian oil, has led to a decline of LGO production from 17.6 tons in 1999 to 8.9 tons in 2007. The major share of the world's production of lemongrass oil is based on cultivation with high yields per production unit and consequently low production costs as opposed to the high production costs in Bhutan due to the labor requirement for the collection of the grass.

Budur et al. (2005) point out that if clear management guidelines are not put into place the industry will suffer if not disappear within a couple of years and thus take away income opportunities for approximately 2,000 people including the distillers, firewood collectors and the mostly female grass collectors.

2.2.1 Resource management

In the past there were (and still are) frequent disputes over land resources among private distillers, and forest fires are a frequent occurrence. While the local people believe that forest fires stimulate the growth of lemongrass, research findings indicate that they favor the growth of weeds such as Lantana spp. and Stipa spp. leading to declining yields of lemongrass (Dungyel, D. 2002; Budur et al., 2005). At the same time forest fires lead to an acceleration of the decline of the firewood resources required for the distillation process. Firewood is sourced through the collection of chirpine and broad-leaved trees based on permits issued by the DoF, or through supplies from Forest Management Units (FMUs) by government-appointed contractors.

The Community Forest Management Plans have led to a reduction of both disputes as well as forest fires.

With regard to the management of lemongrass, organic producers must adhere to international guidelines on wild collection (WHO, 2003; ISSC-MAP, 2007), and the requirements of importing countries such as the EU Regulation EEC 2092 and the NOP of the United States. The most important requirements are:

• Resource assessment and definition of the botanical species that will be collected, including time of harvest.
• Definition of maximum harvestable quantities and annual records of harvesting volumes according to the area defined in the management plan.
• Locally defined good collection practices to ensure the long-term survival of the species.
• A clear description of post-harvest practices: These practices include an assurance that no chemicals have been used over a period of the three previous years. A record must be made of all substances used for cleaning, disinfection and pest control.
• Assurance that commingling with conventional produce is avoided.
• Clear records of training extended and supervision of procedures.
• In order to assure fair distribution of duties and benefits for producers, organic management requires a clearly structured management group indicating the name, address and function of the respective members.
• Transparent records of harvest volume, processing and sales.

Most of these criteria are described in the Community Forest Management Plan. Therefore if the CFMG has a plan for the implementation, the most essential criteria for organic lemongrass oil production will be met.

Once the documentation is prepared and the external inspector is satisfied with the situation in the field, the inspector submits a report to the certification agency as the base document for the issue of the organic certificate.

This certificate is the assurance for the customer that collection and post-harvest management has been carried out in accordance with the standards set for organic wild collection.

2.2.2 LGO Production and Income Opportunities

In contrast to the rather negative scenario for the lemongrass oil industry in Bhutan with a dwindling share in the world markets due to price competition with cheaper Indian oil and the consequent decline of income opportunities for rural communities in Eastern dzongkhags, the organic production of lemongrass offers export opportunities in international niche markets. In particular, the aromatherapy and perfume industry appreciate the unique composition of oil from wild collection with a high content of limonene² in addition to the main component of lemongrass oil, citral. Premium prices are offered for high-quality organic certified oil.

The total demand for Bhutanese certified lemongrass oil is expected to increase to 3 to 5 tons in 2008, providing income opportunities for 22 distillers and 260 people.

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