1) A case study from Dolakha, Nepal describes how establishing community-managed distillation units has led to a sustainable green enterprise for extracting and selling essential oils from medicinal and aromatic plants. 2) Over 25 distillation units have been set up across 12 districts to process plants like wintergreen, juniper, silver fir, and mugwort into high-value essential oils. 3) Certification for forests, oils, and organic practices has enabled cooperative sales through Himalayan Biotrade Ltd, generating over $27,000 from 2008-2012 and benefiting forest communities.

1. Asia Pacific Graduates’ Youth Forum on
Green Economy
25-29 September 2012
Kathmandu, Nepal
Value Addition of Medicinal and
Aromatic Plants: A Sustainable Green
Enterprise, a case study from Dolakha, Nepal
-Vivek Dhar Sharma
National Programme Assistant
vivek@sgp.org.np

2. Background
• Nepal exports a significant volume of Non Wood Forest Products (NWFPs) and
Medicinal and Aromatic Plants (MAPs).
• The volume and value of NWFPs trade in the international and domestic market
are very difficult to estimate due to lack of available and reliable data.
• Hertog in 1997 reported that 21.5 million rupees worth NWFP was collected from
Salyan district alone.
• The value of medicinal plants in Gokha district was reported at 12.13 million rs
corresponding to a volume between 180- 417 tons per year (Olsen, 1997)
• Overseas report of NWFP reported by the Trade Promotion Centre is NRS 17
million per year. But this report does not consider the unrecorded figures of
NWFP that are directly exported to India.
• In another report prepared by ANSAB estimated that each year Nepal sells
medicinal plants and NWFP, which worth above USD18 million.
• In the fiscal year 1993/94 AD, Nepal had exported equivalent to USD 8.6 million
worth NWFPs species which is six times higher than the economic value of the
timber exported to India (Edwards, 1994)
• (USD1=Nepalese Rupee 85)

3. Dolakha
Himalayas

4. Dolakha rich in NWFPs and MAPs
• Dolakha, a mountainous
district in Central Nepal,
is rich in non wood forest
products and Medicinal
and Aromatic Plsnts
(MAPs).
• Varied topography,
climate and edaphic
condition favor the
growth of various MAPs.

5. Establishing the community managed
distillation units
• Deudhunga Multipurpose Cooperatives (DMC) has with
the support from GEF SGP established distillation units
in 3 different clusters in Dolakha to extract essential
oils from MAPs in 2007.
• At that time, the units have extracted essential oils
from 7 MAPs, collected from 18 certified forests in the
district
• Build capacity of local users and members of CFUG on
the FSC, CoC and organic certification and maintaining
the record for audit and verification.

6. Green enterprise
• The raw material used is renewable as it
followed sustainable harvesting principle
• Use of Stainless Steel distillation unit with
boiler is efficient and spent up grass as fuel
• Reduced cost and frequency of transportation
(being low volume but high value)

7. The 7 MAPs in use
Wintergreen Jatamansi (Spikenard) Silver fir Mugwort
Gaultheria fragrantissimma Nardostachys jatamansi Abies spectabilis Artemesia sps
Leaves, 2000m Rhizome 3000-5000m Needle, 2400-3600m Leaves, 1000-2500m
Anthopogon Juniper Nepalese pepper
Rhododendron anthopgon Juniper communis Zanthoxylum armatum
Leaves, 3000-4000m Needle and berry, 3000-4000m Berry, 1200-3600m

8. Value addition
• 500 Kg of wintergreen leaves produces 3.5 kg
of essential oil.
• 500 kg of raw wintergreen leaves cost Rs2500
• On the other hand 3.5 Kg of wintergreen oil
cost Rs 7,350. (Nearly 3 times)
• Beside, it also reduces the transportation cost

9. The extraction process
Weighting raw material Paying the collectors Inserting raw material
for purchasing for distillation
Closing lid with chain Tightening the tube Igniting the boiler with
pulley with condenser dried raw material
The tank, condenser & Removing the essential Packing the oil in HDPE
oil separator. oil through oil separator food plastic container

10. The extraction…
Essential oils Marketed by Himalayan Biotrade Limited (HBTL)

11. Distillation MS vs SS
Particular MS SS
Capacity 300 kg of raw material 500 Kg of raw
material
Fuelwood required 150 Kg 160 Kg (used up grass
is used)
Yield 0.5% (1.5 Kg) 0.7% (3.5 Kg)
Time required 12 hrs 11 hrs
Quality Need further treatment Pure
with oxalic acid, oil
prone to corrosion
Others - Have chain pulley and
boiler

12. Socially inclusive enterprise model
• The asset of all the distillation unit is around
USD28,392 ; of which
• Deudhunga Multiple Co-operatives own 30%
share; 10% HBTL
• community forests own and Pro-poor groups
own 30% each.
• The share of pro-poor group was invested by
Nepal Swiss Community Forestry Project

13. Certification
• For the first time in Nepal FSC issued Group
certification to FECOFUN, which include
certification of 18 community forests having
area of 6545ha in 2005 for 5 years.
• FSC also issued CoC for essential oils.
• Together the cost is around USD30,000 with
annual audit charge of USD3800. The process is
initiated by ANSAB and supported by USAID.
• Organic certification costs around USD1300 and
certified 17 essential oils and 44 items of crude
NWFPs.

14. • Annual certification cost around 300,000 and
organic certification cost around 150,000 is now
borned by Himalayan Bio Trade Limited (HBTL)
• Essential oil produced by DMC is purchased by HBTL
• HBTL also provide loan to establish distillation unit,
Total distillation unit in Dolakha has reached 25
• HBTL also provide technical support in establishing
16 distillation units in other 11 districts.

15. Certification Vs Trade
Name of MAPs Quantity Quantity
certified exported(Kg in
(Kg/ yr) 2008-2012)
Wintergreen (Gaultheria fragrantissima) 5000 5210
Juniper (Juniperus communis 2000 85
J. indica) 3500 950
Anthopogon (Rhododendron 500 109
anthopogon)
Silver fir (Abies spectabilis) 300 87
Jatamansi (Nardostachys grandiflora) 500 143
Mugwort (Artemisia sps) 200 50
Nepalese pepper (Zanthoxylum armatum) 2000 80
Total 14,000 6714

16. The cash flow (NRs) and Market
2008 2009 2010 2011 2012 T0tal Net
profit
Payment 5,500,000 2,730,000 5,512,500 6,020,000 7,620,000 27,002,500 10-15
to DMC
Sales 6,989,250 1,500,000 3,439,700 8,630,000 5,523,500 26,082,450 15-20
No of 1 3 5 10 19
foreign
buyers
No of 1 3 4 6 14
countries
Essential oils are in stock in HBTL and domestic sales records are not included.

17. Acknowledgement
• Deudhunga Multipurpose Cooperative (DMC), Dolakha
• Himalayan Bio Trade Ltd (HBTL)
• Community Forest User Groups of Dolakha
• Mr. Parbat Gurung, Mr. Khilendra Gurung and Ramesh Lama

18. Thanks to all of you !!!