Presentation and Discussion of Results

4.1 Demographic Profile of Respondents

There were forty-eight respondents from each group (organic and conventional). Of the ninety-six participants, over fifty percent were female, with the majority of the female workers being engaged in grass collection. Thirteen percent of the participants owned distillation units, five percent were operators of distillation units (hired labor), and eight percent owned and operated distillation units. Sixty-three percent of the participants were grass collectors and ten percent firewood collectors (see Table 2 [ PDF 13.7KB | 1 page ]).

4.2 Employment and Wage Rates

The distillation of lemongrass provides seasonal income for a maximum of six months beginning with the onset of the monsoon rains in May and ending with the decline of vegetation in October. During these six months, the industry employs up to twelve skilled and unskilled laborers per distillation unit including two operators of distillation units (one of which is usually the owner of the unit), six to seven grass collectors and three firewood collectors.

The wage rates paid to operators and grass and firewood collectors are similar irrespective of organic or conventional management practices.

Operators are paid Nu50 per drum of lemongrass. Considering that on average five drums of lemongrass can be distilled over 24 hours, the total wage paid to operators amounts to Nu250 per 24 hours and Nu125 per 12 hours (one shift). The distillation units are run day and night.

Wage rates for grass collectors are based on the number of loads carried per day. The weight per load ranges from 25 kg for women to 45 kg per men. The number of loads carried per day differs depending on the grass yield and intensity of grass occurrence per area. The survey findings show that men carry on average 3.3 loads of grass per day while women carry 4.9 loads. As a result, the total weight of grass collected per day amounts to approximately 122 kg for women and 148 kg for men. Considering a male/female ratio of 1:1 among the grass collectors, we estimate that an average of 135.5 kg of grass is collected per day. The wage rate for grass collectors is Nu150 irrespective of gender. The lower weight carried by women is compensated by the better quality of the grass, as women are more careful in rejecting unwanted weeds. Therefore the higher quality of the grass collected justifies the lower quantity collected.

Likewise with this difference in grass loads carried per day, the amount of firewood collected per day depends on the distance between firewood collection places and the location of the distillation unit. On average, one firewood collector collects and carries up to four backloads or 180 kg of firewood for an average wage rate of Nu150. (See Photo 2, which shows firewood collectors.)

4.3 Cost of LGO Production

The cost of production is calculated based on costs per kg of oil. Costs include the depreciation of the distillation unit⁵ over 10 years, operating costs including wage rates of operators, grass and firewood collectors, and the purchase of firewood for distillers located at the roadside. Table 3 [ PDF 13.6KB | 1 page ] shows the total labor cost for the distillation of one kilogram of LGO at Nu371.

Only owners of distillation units that are located away from the road are allowed to collect firewood within the CF. Distillers located next to the road are required to purchase it from allotted Forest Management Units through firewood contractors appointed by the Forest Development Corporation Ltd. One truckload comprising twelve cubic meters, or 3 to 4 tons of wood, costs approximately Nu4,000 and is sufficient to distill between 30 to 40 kg of lemongrass oil. As shown in Table 4 [ PDF 12.4KB | 1 page ], costs of production are higher by Nu22 (5%) per kilogram of oil for those distillers who depend on the supply of firewood from governmentappointed contractors.

On average, five drums of grass each are distilled over a period of 24 hours, resulting in 3.75 kg of LGO per five drums or 0.75 kg of LGO per drum. Each drum requires 150 kg of grass and 75 kg (1.7 backloads) of wood.⁶

As shown in Table 4, organic producers pay a royalty for the lemongrass oil and a water fee into the CFMG fund (benefiting the entire community). Costs for barrels, transportation charges of the oil to the dry port in Phuentsholing and handling fees of Nu46.0 are paid to EODP as the government marketing agent, although Bio Bhutan facilitates the marketing of the certified oil. This double charge increases the production price unnecessarily.

While the CFMG members bear all costs related to the production of LGO (see Table 3), additional costs of Nu121 for Bio-Bhutan handling charges (see Table 4) and Nu177 per kg of LGO (Table 6) arise for the marketing agent Bio Bhutan for training, for the salary of the field supervisor and for the actual certification costs (as shown in Table 5 [ PDF 12.4KB | 1 page ]).

The estimated costs of Nu95,000 for the establishment of the CF management plan (including inventory and farmer group formation) are not included in the cost calculation in Table 5 since the management plan is approved by the Government until 2013.

As shown in Table 6 [ PDF 12.8KB | 1 page ], the costs for annual inspections of Nu155,000 (US$3,974) are borne by Bio Bhutan (based on 2007 costs). Since there is no certification agency in Bhutan, inspectors must be invited from abroad and expenses have to be paid for the air travel, daily allowances and fees for certification.

Table 7: Total Cost of Production: Organic Versus Conventional Management (Nu and US dollar) [ PDF 12.8KB | 1 page ]

The study shows that with Nu757 (US$19.4) per kg of organic certified LGO, the total cost of production increases by 66% in comparison to Nu457 (US$12) for conventionally produced oil.

4.4 Bio Bhutan Sales and Payment Schemes

Over two years, Bio Bhutan's exports of organic certified LGO increased from 306 kg (2006) to 1,200 kg (2007) indicating the interest of customers in Asia, Europe and the United States for Bhutanese certified LGO. Attractive payment schemes including advance payments of Nu20,000 per distiller at the beginning of the distillation season, a higher price of Nu600 in comparison to Nu550 and Nu531 per kg of LGO paid by EODP in 2006 and 2007 respectively, and the cash down payments at the time of delivery have encouraged the CFMG distillers to opt for organic management practices.

The EODP scheme with an initial payment of Nu300 per kg of LGO at the time of delivery and the payment of the balance five months after the end of the distillation season, when the customers of the oil in Europe settle accounts with EODP, lacks incentives.

4.5 Income and Employment

Over the two years of observation, the seasonal income of distillers of the organic management group was in the range of Nu32,000 in comparison to Nu9,300 for the distillers of the conventional group (see Table 8 [ PDF 15.7KB | 1 page ]).

Figure 1 [ PDF 15.7KB | 1 page ] and Table 9 [ PDF 14.5KB | 1 page ] show that organic management significantly lengthens the duration of employment. Though the daily wage rate does not differ between the management groups (except for the distillers), the duration of employment increases as a direct result of the higher prices and attractive payment schemes offered for organic products.

However, as shown by Table 9, the seasonal income earned by the individuals (operators, grass and firewood collectors) is low given the hard work of often 11 to 12 hours a day and reflects an imbalance of benefit shares for the stakeholders. This is of even more concern in regard to female workers. In comparison to male collectors, they must compensate for the lower weight carried per backload through an increased frequency of trips from the grass collection site to the distillation unit. Yet, the lack of other income opportunities, especially for women who have to attend to their families, obliges them to abide by the current payment system.

4.6 Sustainable Management of Lemongrass Resources

Through intervention and regular training by Bio Bhutan, guidelines for the sustainable management of lemongrass have been established and now form part of the CF management plan in Dozam. The lemongrass guidelines limit the annual harvest to one cut per area and consider the maintenance of the reproductive capacity of the plant through higher cuts at 10 to 15 cm above ground. Forest fires must be (and have been) prevented under the CFMG management plan since 1997.

While the management of lemongrass has certainly improved through the inclusion of guidelines into the CFMG management plan (see Photo 3 for a demonstration of correct grass collection technique presented by a CFMG member in Dozam), the issue of critically high firewood consumption of about 75 kg per kg of LGO requires urgent action by the government and non-governmental organizations as it put pressure on forest resources in general. Trials for improving the efficiency of existing distillation units, the identification of alternative energy sources through the recycling of distilled grass, and the introduction of alternative energy sources (electricity from hydropower, solar energy) in collaboration with UNDP-Global Environment Facility (GEF) Bhutan and Bio Bhutan will be initiated in 2008.

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