Report on Cordyceps auctioning, 2013 Page 1

Report on Cordyceps Auctioning, 2013

Background:
As per the resolutions of the Cordyceps stakeholders workshop held on 4
th
April, 2013 at
Thimphu, the mode of Cordyceps marketing for the year 2013 has been decided as auctioning.
For the very first time, the auctions was conducted by respective geogs. The decision of
conducting auctions by the respective geogs has been arrived considering mainly few reasons,
firstly, as it is in accordance with governments policy of decentralization. And secondly, the
service charge(0.65%), which is levied on each transaction will be deposited in geogs account,
which could be used in carrying out developmental activity in the geog. In the future, we are also
looking forward to employment generation opportunities in the geog through such initiative.
As the respective geogs were to conduct the auctions for the first time, the Department of
Agricultural Marketing and Cooperatives conducted an advocacy and capacity building program
to the Gups and Gups representatives from cordycep collection area on 30
th
April, 2013 on
auctioning process. The Department also provided standard formats for Business Transaction
document to each geogs in order to ensure uniformity. Apart from these, the department has also
provided certain necessary market equipments support such as weighing scales, lot cards, etc. for
every geog. The Department has also undertaken the bidder registration task and distribution of
lot cards accordingly. The auctioning guidelines were developed and distributed to all the
stakeholders.
The Cordycep auctioning dates for the year 2013 had to be postponed due to the national
election, unlike in the previous year where the auctions are usually completed by the end of July.
However, this year, the auctioning was started from Bumthang Dzongkhag on 16
th
of July, 2013
and completed on 9
th
August, 2013 at Khoma, Lhuntse.
A total of 43 different companies registered with the Department of Agricultural Marketing and
Cooperatives to take part in the cordyceps auction, which indicated a slight increase compared to
last year where only 38 bidders registered.
This year, few changes have been made in the rules in terms of collectors wishing to directly
export their cordycep and the collectors who want to switch to different auction sites. It has been
made legal to either export their cordycep or switch to other auction sites after paying the royalty
and service charge to the respective geogs.
The various stakeholders involved in Cordyceps Auctioning apart from the respective geog
administration are Department of Forest and Park Services(DoFPS), Bhutan Agriculture and
Food Regulatory Authority(BAFRA) and Department of Agricultural Marketing and
Cooperatives(DAMC).

Report on Cordyceps auctioning, 2013 Page 2

Market Information:
The dates and venue for the cordyceps auction has been announced in media. A total of 12
venues have been selected for 17 different cordyceps collection geogs. The dates and venues for
cordyceps auctioning are annexed with this report.
Quantity of Cordyceps auctioned in various dzongkhags till date:
Sl. No. Dzongkhag Approximate Qty. (kg) Highest Price (Nu.)
1 Bumthang 32.179 8,53000/-
2 Wangdue Phodrang 372.929 11,43,000/-
3 Gasa 101 12,15,000/-
4 Thimphu 144.677 9,70,000/-
5 Paro 31.190 9,07,000/-
6 Trashi Yangtse 2.426 5,64,000/-
7 Lhuntse 0.287 2,21,000/-
Total 684.688
(As DAMC does not have direct access to the datas, hence it will be updated as and when we
receive from the respective geog, BAFRA or forestry officials)
As reflected in the table, this year the production quantity has increased significantly compared
to the previous year. About 684.688 kg of Cordyceps have been auctioned, where as the total
cordyceps auctioned in year 2012 was 235.89 Kg. The total royalty realization has also shown a
significant difference, the total royalty for the current year accounts to Nu. 4.79 Million
compared to Nu. 1.65 Million last year. Although, the price of cordyceps in general has
decreased this year compared to previous year but the highest price remains almost same i.e. Nu.
12, 15, 000/- per kilogram of cordyceps from Lunana, Gasa.
Cordycep transaction trend:
Comparative Transaction Record for Cordyceps from 2004 to 2013
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cordycep
auctioned/transacted 175 200 506.6 140.4 672 594 550 169 235.89 684.688
Export(Kg) 151.35 195.83 432 - - 372 270 242 290.507 NA
Royalty(Nu. In million) 0.63 1.36 2.02 0.98 4.76 3.85 3.8 1.4 1.65 4.77
PriceMin to
Max(Nu. In Million)
0.04-
0.08
0.08 -
0.64
0.02-
0.13
0.02
0.15
0.02 -
0.25
0.015
- 0.35
0.010
- 0.49
0.25-
0.60
0.051 -
1.22
0.067 -
1.21
Average price(Nu. In
million) 0.06 0.36 0.075 0.085 0.14 0.18 0.16 0.43 0.64 0.67
No. of registered
buyers - - 22 24 27 21 28 32 38 43
As DAMC does not have direct access to the datas, hence it will be updated as and when we
receive from the respective geog, BAFRA or forestry officials)
Report on Cordyceps auctioning, 2013 Page 3

As reflected in the table above, this year the maximum quantity of Cordyceps have been
transacted since the legalization of cordyceps in 2004. As per the record, the minimum quantity
transacted was in the year 2007 where only 140.4 kg of cordyceps were transacted through
auction where as this year, the total quantity transacted was 684.587 kg. There has been
increasing number of bidders over the years to take part in Cordyceps auction. With the
increasing number of bidders, the price for cordyceps has also increased gradually. In 2004, the
average price per kilogram of cordyceps was Nu. 0.065 million where as this year, in 2013 the
average price is Nu. 0.67 million per kilogram of cordyceps.
Observations:
i.Presence of foreigners:
There is an issue with regard to presence of foreigners at the auction sites. As some of the
registered bidders complain with regard to foreigners influencing the price of cordyceps at the
auction, hence from the following year it should be mentioned clearly in the rules regarding this
particular issue.
DAMCs recommendation: The Department seriously feels that this issue should be addressed
at the earliest possible. For the current season, the foreigners were not allowed at the auction
sites, considering that they are not registered with DAMC for taking part in auctions. DAMC
will try to study the implications of allowing foreigners at the auctions and present to the
stakeholders before the next season starts.
ii. Withdrawal of produce from auction:
Although there is flexibility in law with regard to switching to different auction sites before they
register in the particular geog auction but the collectors expressed their concern that they should
be allowed to withdraw their produce from the auction after registering, if the price is not
satisfactory.
DAMCs recommendation: For the current season, the DAMC allowed the collectors to
withdraw their produce if they were not satisfied with the price, but from the following year
DAMC intends to come up with a proper modality to tackle this issue.
iii. Post harvest practices and packaging:
Although some of the collectors are aware on certain post harvest practices however few of them
still lack proper post harvest practices leading to deterioration of product quality. It ultimately
leads to decrease in price. Even the packaging materials used to pack cordyceps are torn plastics,
small cloth materials, etc. and only few collectors manage to bring in proper containers.
DAMCs recommendation: From the following year, the Department feels that an awareness
campaign on proper post harvest practices should be conducted along with experts from National
Post Harvest Centre on the proper post harvest practices before the collection season begins.
Report on Cordyceps auctioning, 2013 Page 4

v. Grading of cordyceps:
The grading of cordyceps continues to be challenge for the visual sorting committee. The lack of
information or knowledge about the proper cordycep specification value in excountry market
makes it difficult while grading.
DAMCs recommendation: With regard to the grading of cordyceps, the department seriously
feels that either an expert from a renowned institute should be invited to conduct a capacity
building/awareness on different cordycep grades to the visual sorting committee or the
committee should visit few markets to check the parameters of pricing for cordycep in the
market.
vi. Registration of Collectors: Although the cordycep auctioning guidelines clearly specifies
that the collectors should be registered well in advance by the geog administration, but for the
current season, the registration is being done simultaneously with the auctioning which leads to
delay in the whole process.
DAMCs recommendation: The department feels, these are some teething issues, which is
going to be addressed from the following year with proper communication with geog
administration.
viii. Other observations: It was observed that the certificate of origin is being implemented in
most of the auction sites. The implementation has improved compared to previous years. The
DAMC feels that, certificate of origin being an important tool to curb illegal transaction; it
should be implemented in order to ensure a smooth marketing/auctioning process.
Apart from the geog administration, the respective Dzongkhag rendered their full support for the
entire cordycep auctions in terms of providing logistics, security and in some cases, the senior
dzongkhag officials were present personally to ensure smooth auctioning process which proved
very healthy for the whole auctioning process.
Conclusion:
With the respective geogs undertaking the cordyceps auctioning, there has been major
improvement in the overall marketing of cordyceps in terms of logistics, organization of auction
and delegation of responsibilities. Although few teething issues such as proper documentation,
bidding process, etc., were observed but it is deemed to improve from the following year. All the
stakeholders including the respective dzongkhag admintration has been extending their full
support during the auctioning process.
(Note: The Department of Agricultural Marketing and Cooperatives will be generating a
comprehensive report on Cordycep marketing process and export until 2013, at the earliest
possible)
Report on Cordyceps auctioning, 2013 Page 5

Annexure 1:
Date and Venue for 2013 Cordycep Auction:
Cordyceps Auction Dates & Locations For the Year 2013
Sl
No
Dzongkhags Gewog Place of Auction Date
1 Bumthang
Chokhor Chokhor Gup Office 16 & 17-July-2013
Chumey Chokhor Gup Office 18-Jul-13

2 Wangdue
Sephu Sephu Gup Office 20 & 21-July-2013
Gangtey Gangtey Gup Office 22-Jul-13
Dangchu Dangchu Gup Office 23-Jul-13
Kashi Damjithang 24-Jul-13
3 Gasa
Laya Gasa 26/July/2013
Khatoe Gasa 27-Jul-13
Khamey Tashi Thang 28
th
-Jul-13
Lunana Tashi Thang 29-Jul-13
4 Thimphu
Lingzhi Dodena 31-Jul-13
Naro Dodena 1-Aug-13
5 Paro
Soe Tshento Gup Office 3-Aug-13
Tshento Tshento Gup Office 3-Aug-13
Dotey Dotey Gup Office 4-Aug-13
6 Trashiyangtse Bomdelling Bomdelling Park Office 7-Aug-13
7 Lhuentse Khoma Bomdelling Park Office 8
th
& 9
th
-Aug-13