Organic Certified LGO Contributes to the MDGs in Bhutan

Bhutan's Tenth Five Year Plan (2008-2013) focuses on the MDGs, and has poverty reduction as its key development theme and objective. To achieve MDG 1 (eradicate extreme hunger and poverty) the government aims to raise agricultural productivity and promote other rural income.

In this context, the present study shows that organic certification of lemongrass producing areas under the CF programme has a direct impact on the promotion of off-farm activities in rural areas. Over the past two years Bio Bhutan has opened niche markets in Asia, Europe and the United States and sold organic LGO at CIF⁷ rates of US$20-23 per kg of oil. The higher price offered for organic certified oil from wild collection in 2007 made it possible to increase the profit shares of organic distillers to US$3.6 per kg of LGO with a 30% profit, as compared to US$2.4 per kg with a 13% profit for conventional distillers that are paid by EODP⁸. Along with incentives such as advance payments at the onset of the season and cash down payments at the time of delivery, oil production has increased from an initial 500 to 600 kg produced by the CFMG to 1.2 tons in 2007. However, the profit increase has not yet resulted in higher daily wages for the workers.

The total demand for organic certified LGO in Bhutan is estimated as 3 to 5 tons for 2008. At current production rates of 230 kg of oil per unit the potential demand would provide greatly improved income for 22 distillers and 264 associated workers (operators, grass and fire wood collectors). Given the current production of 10 tons of oil in Bhutan, the share of organic oil would then constitute 40-50% of the annual LGO production and increase gross income from the industry by US$55,000. To tap into this potential, more area under lemongrass needs to be put under CF management. At the moment at least two more lemongrass-based CFs are in preparation.

However, income shares are not equally distributed amongst the stakeholders of the industry. While the owners of the distillation units benefit to a great extent from increasing prices, the daily income of the operators and grass and firewood collectors has remained at the same level as that of conventional producers. As shown in Table 9, the income of the operators, and grass and firewood collectors, increases only due to the longer working season. It will be desirable for the recently formed lemongrass cooperative to address the issue of raising the income of the collaborating groups in order to distribute benefits more evenly amongst the stakeholders and to improve the working conditions.

The costs for external certification are presently borne by Bio Bhutan and are relatively high. With an expansion of the area under certification, costs for certification per kg of LG would fall and thus enhance the benefits for the Dozam CFMG and new groups who opt for the management of lemongrass under the Government's CF programme. With the expected establishment of a National Certification Agency in Bhutan, the costs of certification could be reduced even more and thus further benefit the communities.

MDG 7 (Ensure environmental sustainability). The Bhutan Millennium Development Goals Needs Assessment and Costing Report (2006-2015) (Bhutan Planning Commission, 2007) stipulates a direct linkage between environmental conservation and people's livelihoods. Based on the findings of this report, the Tenth Five Year Plan foresees increasing participation by local people in the management and governance of natural resources through community forestry and community-based forest management. In this line, the study has demonstrated the capacity and willingness of Dozam CFMG to adhere to national legislation (Bhutan Ministry of Agriculture, 2006) and International Standards (WHO, 2003; ISSC-MAP, 2007) on good agricultural and collection practices for the sustainable management of medicinal and aromatic plants through the development, application and monitoring of guidelines for the sustainable management of lemongrass resources.

Regular training of communities in the application of overall concepts of organic production, and the provision of technical expertise for the management of natural resources by the private sector (see Photo 4, which illustrates the training provided by Bio Bhutan for CFMG members) has heightened public awareness of the importance of sustainable resource management based on economic and environmental considerations.

However, ensuring the sustainable supply and use of fuel wood requires further research into how to improve the current distillation system in collaboration with government and nongovernment agencies.

Reducing inputs (labor and resources, mainly firewood) will lower production costs and thus increase the returns of those communities who are willing and able to participate in the organic certification process. As such, organic certification can become a promising tool for transferring payments for environmental services by farmers, thus contributing further to poverty reduction.

In the medium and long term, the improvement of the current technology combined with the awareness program initiated by the private sector will result in efficient and sustainable management of firewood resources with a reduced burden on the public sector in terms of environmental protection.

MDG 2 (Achieve universal primary education): The Tenth Five Year Plan will focus on improving enrolment from the present 79% at the primary level, the quality of education at the primary and secondary levels and raising the adult literacy rate from the current 53%. The direct impact of the introduction of organic management practices on the achievement of universal primary education cannot be expected over just two years of observations. However, increased cash income from off-farm activities such as the distillation of lemongrass oil will contribute to raising living standards, enabling families to release their children from farm and household chores to attend school.

MDG 3 (Promote gender equality and empower women): The Bhutan Millennium Development Goals Needs Assessment and Costing Report (2008-2013) (Bhutan Planning Commission, 2007) states that “women in farming communities are highly vulnerable as they comprise a large portion of poor rural households as many of them are unpaid family workers or earn very low wages.” In this regard, the study shows that women constitute over 50% of employed labor and thus are indispensable stakeholders in the lemongrass oil industry. Women are mostly employed as grass collectors, and are more efficient than their male colleagues. We have shown however that women carry less weight than men and must compensate for the lower weight of their backloads through a higher number of loads carried per day, which places a heavier burden on their shoulders. At the same time, women, who have fewer alternatives to income generation through off-farm activities than men, adjust to the difficult working conditions as grass collectors, and make significant contributions to overall household income, thus strengthening their position within the family.

No direct impact of organic practices can be demonstrated on MDG 4 (reduce child mortality), MDG 5 (improve maternal health) or MDG 6 (Combat HIV/AIDS, malaria and other diseases). However increased income, particularly for women, contributes to better living standards and consequently to an improvement of the overall health status (but the difficult working conditions contradict this). The Ninth Five Year Plan of Drametse (Bhutan Mongar Dzongkhag, 2002) foresees the construction of two outreach clinics and six water schemes for the supply of safe drinking water for the benefit of 308 households. The rehabilitation of an existing water scheme in Zhangkhar community is underway. As plans are made in a participatory manner, it can be foreseen that people will invest part of the income earned from the production of organic certified oil into the development of health services and public water schemes.

International trade in innovative products such as certified organic lemongrass oil from wild collection requires adherence to international standards of certification and contributes thus to achieving MDG 8 (develop a global partnership for development) with a particular focus on landlocked and small countries. With Bio-Bhutan, EODP, and Lemongrass Cooperative as partners of the community, this will ensure a durable and sustainable relationship and enhance development.

Download this Discussion Paper [ PDF 117KB| 23 pages ].

Comment(s)

There are [0] comment(s) for this entry. Post a comment.