Nepal: Herbal Industry & its Market!

Sameer Prasad Dhungel, B.E.

Environmental Engineering

We can observe different types of Eco-system, for example, beginning from tropical, temperate up to the alpine in a short distance in Nepal. Herbs and forests are most important factor in such a rich biodiversity resources which are to be conserved and harvested sustainably.

Due to the lack of awareness, these resources are not utilized in an appropriate way by connecting it to the livelihood of the people depending on the nearby forest to fulfill their needs like fuel wood. Moreover, there should be the prevalence of strict government laws to which the people should obey accordingly and restrict the haphazard collection of these resources. The case of Jatamansii/ Spikenard is just one of the examples.

Other valuable and multi-utility herbs are yet to be identified. Only some herbs which have been researched extensively are been processed or sold as dry herbs but still not a good progress could be observed in further extension and in the marketing of these herbs.

Observing this reality, the prioritized herbs found in typical geological locations can be domesticated and naturalized in situ. It can even be propagated in semi hi-tech nursery, make aware the importance of these herbs to the local people and continue with the extensive cultivation. Later, value addition can be done by processing it to essential oils or extract. (High value low volume)

This identification, prioritizing, conservation, propagation, cultivation, processing and marketing can be implemented in coordination with government and non-government organization(s), communities and private sector involvement in PPP (Public Private Partnership) model. A new concept of coordination is being tried recently by the initiation of some farmers group in Morang, Sunsari, Sarlahi and Dhanusha district for processing essential oil at present and planning for the various grades of herbal extract in near future.

These farmers group provide all the necessary technical knowledge and provide continuous supervision free of cost (from cultivation, harvesting, processing up to marketing), provide seed and saplings at nominal cost, provide 20 % investment in the project with marketing assurance (Buy back guarantee) for organically grown herbs. The forest workers (Private, community or leasehold forest) provide the land and regular update for the cultivated herbs in agroforestry model with minimum 20 % investment, government agencies initiation fund (from department of forest, agriculture, state govt), local or international buyers assuring 20 % investment and INGOs working in this sector can collectively perform the task in effective way. Project run by such a matching fund will definitely be sustainable. The essential oil and extract yielding herbs or simply dry herbs are been cultivated aggressively as an agroforestry extension (withania, asparagus, blue zedoary, musk mallow )as a wetland conservation species  (calamus, rodundus, hedychium and houttuynia) for river training  like vetiver and by contract farming.

This way there will be the continuous supply of quality herbs, stable and projected cost price, and sustainable income source for the related farmers, forest workers, processors and can be supplied to the buyer in the pre agreed cost and at stated time frame. It will support the government somehow to decrease the trade deficit for the country and create job opportunity for more number of people.

The medicinal, aromatic and dye yielding herbs has supported the livelihood of farmers, wild collectors and other related forest workers. In Nepal most of the herbs are wild-collected and now some herbs like Valerian, Paris polyphylla, Taxus wallichiana are being domesticated and naturalized in situ. Few exotic herbs are cultivated organically and conventionally for the production of essential oil and dry herbs. Due to the high demand of wild harvesting herbs, the uncontrolled wild harvesting shows the negative impact on the existing ecosystem which also affects the quality of herb.

The present scenario of dry herbs export data from Nepal entirely depends on Nepalgunj exit point. Previously, these dry herbs were brought at Singhadurbar Baidhyakhana, Kathmandu from all over Nepal by the farmers and collectors who were aware of species they collected since they knew that they should sell the herbs for next year also. The government used to process or make herbal formulations according to Ayurveda for different diseases. In this way, the market was also regular and demanding while the farmers and collectors also used to get the genuine price from the government including their required herbal medicines. They go back to their native places happily buying all the necessary goods required from the city with the money they get upon selling their herbs.

The dry herbs collection center from the eastern side of Nepal like Ilam, Terhathum, Khotang, Ramechhap, Okhaldhunga and Dolakha is not regular except for few items like Chirayita,Manjistha, Cinnamon, Ginger, Turmeric, Black Cardamom and Berberis stem.

The total herbal market of Nepal consists mainly of Dry herbs, Essential oils and some fixed oils. Solvent extract processing is not so regular. Major exporters of essential oils in Nepal are HPPCL (Herbs Production and Processing Company Limited), a government owned company and a dozen of private exporting companies and more than one hundred community based processing units at different districts.

When the essential oil processing in Nepal was started by HPPCL in starting, mainly 15 items were promoted and till date only few items are newly included in the list. The selling price of essential oil in Nepal is a reference of HPPCL list which is to be updated for every individual species. The production cost of HPPCL is comparatively low and the cost for individual farmer is more, this inequality is yet to be resolved. Moreover the farmers are not sure of the price of new essential oil produced which are not in the list of HPPCL. Regarding the extraction process of herbs only solvent extract of lichen was introduced in the phytochemical extraction sector (Presently this lichen is not allowed to collect, harvest and extract). Later taxol was extracted in Hetauda by Machhapuchhre herbal (Presently it is not working), then Gajurmukhi herbal in kakarbhitta processing green tea extract (Polyphenol & Caffiene) Mohagony leaf extract (Polyphenol) and Berberine stem extract (Berberic hydrochloride),and in Nepalgunj processing Ginger (Gingerol) and Turmeric (Curcuminoids). These herbal processing industries are not assured of sustainable market and production is not regular.

Not only processing the essential oils from herbs, now the technicians can guide the local farmers, collectors, processors for the quality production of various grades of extracts (Pharmaceutical, food, feed, cosmetic and agro grade) from chamomile, turmeric, ginger, valerian,  rosemary, Yellow zedoary, Artemisia, Wintergreen, zanthoxylum,  Thuja, Mentha and Basil( French and black), which they were been wasted till date. Only pharmaceutical grade production requires heavy investment processing unit. Due to the lack of proper consultancy the resources were being wasted can be used as other product as hydro extract which will cover the expenses of manpower and fuel. This way the processing companies can be able to sell their essential oil in discounted price in international market. Hydrosol/ floral water and mark (herb after processing) can also be utilized properly. Beside essential oil yielding herbs there is good demand of phytonutrients from Cabbage, Tomato, Plantago major, Amygdalyn (Vernonia amygdalyna), Chillies, Manjistha and Gurjo( Tinospora cardifolia) grown organically and sustainable wild harvesting.

The department of plant resource (DPR) has isolated DNA of twenty species including Paanch aunle, Ashwagandha, Chirayita, Ginkgo as well and antimicrobial testing of 66 species in last two years.

The MSDS (Material Safety Data Sheet) is been developed for 20 (twenty) essential oils and other 10 are in the pipeline. Domestication and Germplasm conservation of more than 172 (One hundred and seventy two) species are done at nine botanical gardens of DPR at seven districts covering both tropical and temperate zone. Pharmacognostical research of 20 (Twenty) species were performed in last two years. Every year research is been done in few new essential oil. Biochemical analysis of Rhododendron arboreum leaf extract was performed for anti- diabetes. Last year the Phytochemical and pharmacological analysis of 10 (Ten) species were performed and this year also the detail phytochemical analysis was done for other 10 (Ten) new species. It is also promoting the private farmers as well as leasehold & community forest personnel’s to cultivate the suitable herbs in their wasteland by providing trainings and required saplings. These analysis are encouraging for the related researchers, farmers, collectors and processors which will help them for sustainable market.

Jatamansi / Spikenard (Nardostachys grandiflora) is one of the most demanded essential oil from Nepal. Unable to meet the CITES requirement of sustainable harvesting required by the buyers and  from the inherent site due to haphazard collection without approval of  district forest office finally stopped the opportunity for exporting this high value oil. Similarly in the case of paanch aunle dry root, the farmers and forest workers interested to domesticate near the inherent site is also not provocative since according to the present forest law the person carrying a single root is to pay the fine of Rs. 5,000/. Hence due to lack of sustainable domestication and harvesting, proper forest rules and regulations, uniform quality product, appropriate processing and sustainable market, the farmers and forest workers involved are uncertain about the development in this herbal sector. Due to shortage of Jatamansi essential oil, the international market is using Valeriana jatamansii (Sugandhawaal/ Valerian) as an alternative. The component Valeranone (Synonym Jatamansone) is found both the herbs and is used as tranquillizers (for good sleep) for patients suffering from insomnia and other nervous system disorder as well as antipyretic (reducing fever).This herb is easier to domesticate and extend the wild cultivation inside the community forest in temperate zone. Valerian is been promoted by the department of plant resource to encourage the farmers and forest workers in herbal sector. The hydro extract of valerian is also in good demand which the processors are wasting till date due to lack of technical knowledge. Solvent extract as a pharmaceutical grade can be sold in pharmaceutical industry itself in Nepal, other grade of extract can also be consumed in the domestic market.

Pyuthan and other nearby districts in the west are now harvesting white Sandalwood which they had planted 20-30 years ago in their own private land. Some places in Jhapa, Morang and Sunsari are also reported to have matured sandalwood, agarwood and red sandalwood trees.( the writer has verified in the field personally). The saplings of these plants were brought from India (Mainly Assam and south India) and planted in Nepal from last 25-30 years. The proper documentation and field tracing is not complete in the related district forest office. The record is only of those who have approached the department, hence new trees are been identified.

Sandalwood is a parasitic plant and requires a nitrogen fixing plant to develop the good quality and more heartwood. The difference is been observed in few trees at jhapa and sunsari. The farmers in lack of this knowledge are unable to get the proper price for their harvest.

Similarly for more than 60 matured agarwood trees at Morang and 80 at Paanchthar district, without fungal inoculation or other Chinese traditional way of infecting the trees, the farmer could not get the proper price of harvesting. Proper fungal inoculation technique is to be introduced to the presently available trees for the value addition and department of forest has taken initiative regarding the matter. Gulmi and Tanahu are other sites where agarwood was initially planted 15 years before and is now ready for the treatment of more than 1,000 matured trees. Agarwood planters are unable to bring the source of origin of saplings from India (which is not so easy) which is hindering the process since Nepal government effort is also required to ease the process for nearly exporting high value agarwood chips and essential oil from Nepal. The saplings germinated from the seeds of first generation agar which grows  naturally beneath the mother plant as second generation agar saplings are now been planted by the new planters. This second generation agarwood saplings are demanded by the US growers from Nepal after the documentation approval by the Nepal Government. The importing buyer has already taken the CITES permission related to the agarwood plants or products to be imported in US. Our team is planting more than 10,000 Agarwood large saplings since three years and will be likely to be inoculated after three years.

The major challenge is to make the low value wood of white agar to high value by one of the means of infecting the tree so that the tree will be forced to prepare the antibody and meantime is the process of forming agar. This process is done naturally in deep forest of Cambodia, Vietnam, Laos or Indonesia through wind broken branches and later infected by insects mainly ants and other fungus, but this process takes minimum 50 to 100 years or even more and uneven distribution of agarwood in tree but the price is very high. To make the processing fast, this may be done either by drilling the tree and inoculating the fungal solution (disease) artificially which will make the tree to harvest after three years once the inoculation is started in 7 years plus matured tree. This inoculation technique is proven and the formation of agarwood will be from the tip of the shoot to the tip of the root as heartwood but the average cost of inoculation is approx. 200 USD per tree and the harvesting price would be minimum of 1 to 2.5 lakhs (and plus depending on the size of the tree) for the growers. Extra charges of government royalties, chips segregation, certification, packaging and cargo charges are excluded which is all arranged by the authentic local buyer responsible for the documentation, certification, inoculation and quality assurance up to marketing.

Presently the Acacia catechu is in CITES list and restriction of harvesting from government forest, but the supply from private forest and sustainably harvested from community forest has flourished some processors to produce Catechin and exporting to India. It is said by the Catechin processors that is not allowed to export except India due to the trade barrier, which is yet to be clarified since it has great demand in other countries as pharmaceutical well as cosmetic ingredient.

The rules and regulations of government is easier in case of White Sandalwood, Red Sandalwood and Acacia catechu to be harvested from the private land after registering in private forestry at the related district forest office and is much easier due to latest updated government regulation. The CITES, FSC and Wildlife friendly along with Organic certification will also ease the process for selling the quality products in international markets at good price in bulk quantity. Bijayasaal and Satisaal is not allowed to harvest in any case.

Dabur Nepal when initiated to collect taxus wallichiana leaf and small stem in dry from Nepal, it was exported to US based companies as raw herb to further process and extract Taxol and 10-DAB-III. Later after 10 years the processing was started in India and when the processing started in Nepal by Machhapuchhre herbal in Hetauda, for few years it was satisfactory and the taxol was of excellent quality, later due to uncertainty of this processing company and no other processors for this herb in Nepal and after bulk production of raw herb through commercial cultivation and department of forest initiative , the farmers and forest workers are now not sure to whom they can sell their dry taxus. It is good news for farmers and forest workers who have cultivated and collected taxus walliciana since recently Times pharmaceutical company has started processing 10-DAB-III from Taxus wallichiana in Hetauda. We as a technician can process other grade of extract beside pharmaceutical grade at the harvesting site in low cost processing unit under good supervision and make use of the product itself in Nepal. The international market demand of solvent extract of Gingko biloba and Podocarpus is in demanding trend but the project cannot be initiated unless there is sustainable income source of farmers and forest workers through exporting solvent of Ginger, Curcuma, Chirayita and Nepali chilies. Madder/ Rubia manjistha can also been extracted for the production of anthraquinone. Quinine is been used in pharmaceutical industry as anti-malarial drug.

Observing the market trend of paris polyphylla (Satuwa), it started with NRS. 380/kg dry root initially paid to collectors before 9 years, it increased drastically up to 12,000/kg dry root two years before and final price after last year’s harvest increased up to 17,000/kg Kathmandu delivery with forest approved documents. China is the major buyer of this herb and due to uncertainty of regular authentic buyers, the new farmers and forest workers are less interested for promoting even through sustainable cultivation at same range or wild permissible collection. The price may even go up next year. Exporting this herb cannot be easier only by dealing with the collectors as seen presently. The authentic regular buyer and farmers/ forest workers is also to be coordinated for assurance of sustainable cultivation, wild harvesting and market assurance.

Observing the market trend of zanthoxylum armatum (Sichuan pepper/timmur) in 2010, there was a halt in exporting this dry spice due to unknown reasons. It had been stored since 2008 and the price for collectors was down to Rs. 80/kg. Gradually the export to India started and then the price increased to 180/kg and then yet higher to 280/kg and finally 800/kg and even more during 2018 harvesting, now it is still increasing up to 1,500/kg A grade with less seed and more seed coat. There is no assurance and pre information to farmers and forest workers whether the price will go up or down. This is all due to the lack of pre agreement between the farmers and buyers (Processors or spice traders). In this scenario the increase in price of dry spice of zanthoxylum the export of essential oil is also not certain.

Similar is the case with Chirayita which is being stored in bulk by collectors. Up to 2016, it was exported to china for good price from the north border districts of Nepal, it was demanded by India also at same time but after next year till date the farmers, forest workers and collectors could not sell a single kg. It is high time for the government of Nepal to think about the provocation to the herbal processors for its value addition and export or make use of different grades of extracts in Nepal. The market will always explore the alternative of the high value and less available or uncertainty of raw herbs. In India now vinca rosea is one of the alternate of chirantine/ bitter principle and is been commercially cultivated in tropical area for production of Vinblastin. Amygdalyn is also other alternate of chrayita which can be extracted from Vernonia amygdalyna. This Amygdalyn was introduced in Nepal from Haridwar, India by some diabetes patients which propagates easily from cutting and through seed dispersal. This plant came from South Africa with the initiation of Mr. Balkrishna at Patanjali Ayurved, Haridwar. This plant is highly invasive and may create problem in ecosystem after 15 years (the symptoms are being observed in some parts of Morang and Sunsari districts). This problem may be converted to the opportunity by controlling the spread from the initial time and use the leaf for extracting different grades of extract. The bitterness of some other nepali indigenous plant in tropical and temperate forest are presently used as fodder also identified and is available in bulk which can be suggested as other alternative of chirantine with further research initiation by the government and the processors.

Due to high demand of Asparagus (Asparagus racemosus) root, Ashwagandha (Withania somnifera) root, Sarpagandha (Rauvofia serpentina) root by the patanjali ayurved, the farmers are interested to grow these herbs. There is great demand of Withania somnifera root extract. Ayurvedic doctor at kapilvastu/Bhairahawa has initiated to plant this herb in wasteland of community forest. It is being processed in milk by the ayurvedic procedure in small scale processing units and is in high demand in neighboring Indian herbal companies. They come to the site themselves to get the extract and buy all the product. The company is unable to supply the demanded quantity. The buyers have assured of buying more quantity following year in additional price also. This has encouraged the individual farmers and forest workers to extend the cultivation in buy back guarantee basis. This is the typical good example of planned way of cultivating the herbs in Nepal.

Before Withania, the same group had went to Haity and brought the Vetiver (Andropogon muricatus) slip and started cultivation before 6 years and from last year it was introduced in province 1, Morang district at Bagdevi community forest which is ready to harvest this year (grown in sack for easier harvesting). It is scheduled to extend the cultivation in other provinces also.  Haity variety vetiver is one of the top demanding essential oils in world following sandalwood and Patchouli. We can produce essential oil, hydro extract, hydrosol/floral water and mark or simply the dry root which is also in good demand as high value spice, herbal formulation and incense (as alternate of sandalwood, due to similarity in smell). It is good for erosion control (if root is not used) in newly constructed uphill and downhill as soil stabilizer in road construction since its root go very long and is fiverous.  The aerial grass can be used as a good thatch for roofing the house and is demanded in poultry sector also. There is no doubt from next year the haity variety vetiver essential oil we will be added in the list of essential oils exported from Nepal.

Litsea cubeba and Persia odoratissima (Laurel) berry as well as leaf essential oil, Evodia fraxinifolia fruit essential oils are few potential oils from Nepal. The aroma of litsea leaf essential oil is similar to bergamote and hence good alternate in cosmetic ingredients especially in soap and after shave which is approved by the local buyers in Nepal. The distillation units were idle after harvesting wintergreen for a long time (6 months to one year), hence we recommend to make the essential oils which are available in the same site but unexplored till date. Now the community processors are encouraged to make other essential oils as well as respective hydro extracts (as a byproduct) from the herbs they distill including Wintergreen, Artemisia and Thuja. Now they can sell the essential oil in discounted and competitive rates since the manpower and fuel cost is covered by the hydro extract which can be used in Nepal itself.

Ginger export to India in 2018 was completely interrupted and the wholesale price went down to Rs. 20/kg (Fresh ginger). This year at the mid time of harvesting, the two year old mother plant ginger went up to 200/kg and one year old is 100/kg. When the production goes up, the market is still uncertain for the farmers and collectors. Ginger is consumed in domestic market as well but the major market is exporting to India, Bangladesh and even recorded to have been exported to The Netherlands. Essential oil of ginger is in demand in pharmaceutical as fat burning herb and cosmetic industry (Especially hair care). Maintaining the quality of essential oil and extract this spice has sustainable international market which the Nepali ginger processors are still in search of regular and genuine buyers. The extracts are pharmaceutical grade, food grade, feed grade/Veterinary grade and commercial agriculture grade with different quality, price and use. The processors can produce according to their ability for different grades and sell in corresponding international markets. Moreover, Ginger is one of the components for insect repelling properties and can be used as insect repellent in commercial agriculture farm by blending with other potential herbal extracts. This grade of extract has great demand in Nepal itself in organic farming.

Curcuminoid found in turmeric (Curcuma longa), Yellow zedoary (Curcuma aromatica) and yellow zedoary (Curcuma zedoaria) is proven to have anti-cancer property in Allopathy medicine also. The solvent extract is expensive and only large industries with heavy investment be able to produce this quality but the medium and small scale processors can produce food grade and feed/ Veterinary grade hydro extract by consulting with the technicians and produce hydro extract samples from other spices like coriander, garlic and ajowain and send it to the buyers with authentic test report. It will help the processors to market their products before starting commercial cultivation. For processing the herbs, spices and agriculture items into essential oils and extracts beside department of forest and International INGOs, The department of agriculture and state government(s) has also initiated to promote the small and medium cultivators and processors in their capacity building. The Government has not included the herbal cultivation as agriculture commodity which would ease the process of documentation and incentives provided by government in agriculture sector.

The new potential essential oil identified in Nepal recently is Orange grass (Cymbopogon khasiana as found in literature but yet to be identified taxonomically in Nepal). This is good fodder for cattle. As the name implies the smell of grass is similar to the orange peel. Though orange peel essential oil contains Lemonene/synonym dipentene, it is cheap but when orange grass is distilled, the GCMS report of Department of Plant resource showed the presence of Elemycin 46 % , second compound of nutmeg essential oil after myristicin which can be used as tranquillizers (for good sleep).

New encouraging exotic herbs are Cinnamon (Cinnamomum zeylanicum) ,Clove & Black pepper Sri Lanka variety, rose geranium (Pelargonium graveolens),Yarrow (Achillea millefolium),Sage (Salvia officinalis),Lavender (Lavendula officinalis),Celery ( Apium graveolens ),Thyme (Thymus vulgaris),Calendula (Calaendula officinalis) , Tea tree (Melaleuca alternifolia), Green tea tree, All spice (Pimenta racemosa), Frankinsence (Boswellia cerrata), Thuja (Platycladus orientalis), Vanilla, Ixora coccinea, Saraca indica (Ashoka), Gloriosa Superba,Wild marrigold (Tagetes minuta), Murraya paniculata, Bixa/Anatto,Gingergrass and Gymnema sylvestris. All the abve mentioned herbs are being propagated in the nursery with our initiation in Morang district belbari and sunsari district Dharan.

Similarly auspicious indigenous/ endemic herb for essential oil and extract are Musk mallow/Ambrette (Abelmoschus moschatus),Blue zedoary (Curcuma zedoaria), Nepali oregano/Royal mint (Oreganum vulgare), Fish mint (Houttuynia cordata) with 22 % myrcene and 30 % beta-ocimene as tested in GCMS headspace analysis , Orange grass (Cymbopogon spp), Nepali patchouli (Pogostemon benghalensis), Nepali star anise (Evodia fraxinifolia), Black basil (Occimum  tenuiferum), Epazote/Wormseed (Chenopodium ambrocioides), Costus root (Saussaurea lappa with 34 % rhodium contest is been tested), Dill (Anthone graveolens), Sur Chandan (Cinnamomum glanduliferum), Sisi (Cinnamomum subavenium), Pink luculia (Luculia gratissima), Bluegrass (Cymbopogon jwarankusa) whole plant with 21 % allo occimene, Paederia foetida, Perilla frutescens,Cedarwood (Cedrus deodara), Elsholtzia fruticosa, Nagarmotha (Cyperus rotundus), Plumbago zeylanica, Carrum carvi, Spilanthes calva and Palans (Butes monosperma), Viola (Viola odorata), White himalayan rue (Thalictrum foliolosum) and Bhumi champa (Kaempferia rotunda). We are in update with the mother plant, seed or saplings of all the species mentioned in the list.

The writer could be reached at sammyzbox@gmail.com