Royalty rate for non-wood forest products to increase by 10%

Cordyceps exporters and traders will be paying higher royalty to the government from the next collection season (2013). This is if the proposal of the Department of Forests and Park Services (DoFPS) to fix the royalty rate for all Non-wood forest products (NWFPs) at 10% of the market value comes through.
The need to revise the royalty rate was discussed during the Dzongkhag Forest Officers’ workshop held on 9th May in Thimphu. During the workshop, the Department’s director general, Karma Dukpa said that it is important to realize the royalty of the forest products based on their true value. This, he said will make beneficiaries realize the true value of the product. “However, we’ll have to carry out an economic study before that,” he said.
The revision, according to the Social Forestry and Extension division (SFED) officials was also felt necessary because the rates of 2006 were set on arbitrary grounds which resulted in unrealistic royalty rates. “The proposal to revise the royalty rates has been put up to the Ministry of Finance for approval,” said Forestry officer with SFED, Sonam Peldon.
Currently, the exporters and traders pay Nu. 7,000/- for every kilogram of Cordyceps that are bought from the collectors. This is deemed very low compared to the huge market price the “magic worms” fetches in the international market. As per the proposed rate, they will have to pay 10% of the market price at par with other NWFPs which will be fixed by DoFPS.
The prices of the Cordyceps ranges from Nu 80,000 and can go as high as Nu. 0.4mn per kg. A record with SFED says that those from Lingzhi and Sephu area fetch better prices compared to those from Bumdeling.
According to Sonam Peldon, the royalty rates currently in force are based on flat rate and are different for different NWFPs. For instance, collectors contribute nominal fees of Nu 16 per kg for rubia, Nu 5 per kg for Amla and the fees for different types of Pipla range from Nu 4 to Nu 30 per kg. Similarly, the government collects Nu 2 per kg for Star Anis (Illicium) and Nu 24 per kg for Chirata. “But the proposed rate will apply to all these products based on the farm gate price or market price.”
Meanwhile, the gewog administrations in the Cordyceps growing jurisdiction in the previous year used to collect Nu 250 from each collector. The money collected went directly to the gewog account to be used for gewog development purposes
Now, the amount has been increased to Nu 310. “From the amount, Nu 150 is deposited in the gewog account while the same amount goes to human-wildlife conflict endowment fund. The remaining Nu 10 per permit is collected by the department as permit fee.”
The participating households has witnessed an increase of 69% in the rural income in 2011.

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