Yartsa gunbu (Ophiocordyceps sinensis) has been listed as “Vulnerable” in the IUCN Red List. This is worrying for mountain communities and other traders who depend on it for their sustenance. (Photo: Jitendra Raj Bajracharya/ICIMOD)

The collection and trade of yartsa gunbu has become an important livelihood strategy for mountain communities in Nepal and contributes significantly to household, local, and the national economy.  The trade has become so lucrative that a vast network of people are involved in – and dependent on – the collection, distribution, transportation, and marketing of the caterpillar fungus. The highly unregulated large-scale and increasing harvesting of yartsa gunbu – fueled by high demand and increasingly high prices – has meant that this species was in July 2020 added under the “Vulnerable” category in the International Union for Conservation of Nature’s (IUCN) Red List.

With the availability of the caterpillar fungus dwindling, how do actors in the yartsa gunbu supply chain interact with each other, and how does the power dynamics perpetuate inequalities? Understanding this may help make the trade more sustainable and enhance equitable benefits across the supply chain actors, particularly for harvester communities that are highly dependent on yartsa gunbu trade.

We conducted a study to discern power relations in the supply chain in Darchula District, far-western Nepal, which is the largest supplier of yartsa gunbu in Nepal after Dolpo.

Open and closed supply chains

In Darchula, the indigenous Shauka community still maintains the customary trade route to Tibet, exporting local products (including non-timber forest products) and importing goods to maintain their daily livelihoods. This community has control over a particular pastureland to collect yarsta gunbu and sell them in Tibet. This trade is a closed supply chain since all actors – collectors and traders – are from the Shauka community. The mainstream yartsa gunbu market – the open supply chain – involves the transportation of the product to Kathmandu before export to the international market. It comprises more actors: non-Shauka collectors, contractors, and district- and national-level traders.

Inequitable distribution of benefits

So who holds the power in the yartsa gunbu chain? Simply put, it is the actors with capital-holding capacity, market information, risk appetite, networking, and social ties. We found that in the open supply chain, bargaining power increases for actors far from the source (upper-level actors). This is because collectors borrow money from upper-level actors (such as traders) to cover extraction costs and enter into informal agreements to supply yartsa gunbu. As a result, the collectors are often obliged to sell to the contractors at a lower price. Very often, the collectors fall into a debt trap. Profit disproportionately accumulates in the upper levels of the supply chain.

On the other hand, the customary trade practice strikes a balance in the bargaining power between the collectors and traders. Shauka collectors sell their commodity to Shauka traders at the district level, who in turn sell these products to Chinese traders in Tibet Autonomous Region (TAR). Since they are from the same community and have strong mutual trust, their is a relationship that goes beyond capitalistic exploitation. Benefits are more equitably distributed across the supply chain. And although this system fails to accommodate a larger number of actors, this certainly lessens limits yartsa gunbu extraction and benefits pastureland health.

A fairer, more inclusive, and more sustainable yartsa gunbu trade

Government intervention is required to enhance the bargaining power of open supply chain actors, particularly of collectors who languish in the lower levels of the supply chain. Taxing the purchase and sales of yartsa gunbu can help improve market distortion (in terms of profits and flow of information) and bring transparency in transactions. Government regulation can also help manage pasturelands for the sustainability of the trade, helping mitigate land degradation and halting biodiversity loss.

Bhutan has been exemplary in pastureland management and yartsa gunbu trade management. Its government regulates transactions through auctions, which provides an equitable distribution of profits across the supply chain and also provides security to the collectors and traders. The state government of Uttarakhand, India, also regulates yartsa gunbu collection and pastureland management. In contrast, any number of collectors can acquire collection permits in Nepal without considering the carrying capacity of the pastureland.

It is important to improve the access and benefits of the lower-level actors without compromising the net social benefits or drastically limiting the actors involved. We suggest better security for the traders, particularly during the transportation phase, to lower the risk of doing business. It reduces the transaction costs of traders, and this can in turn be transferred as benefits to collectors. Likewise, improving collectors’ and contractors’ access to finance can reduce their dependency on upper-level actors and can shorten the supply chain. Better flow of market information during the collection period would also help increase the bargaining power of the lower-level actors.

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Basant Pant

Sushmita Kunwar

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