With better price in the black market, govt. could lose revenue from royalty

Royalty: The government could lose hundred of thousands of Ngultrums from royalty imposed on cordyceps if legitimate collectors are skipping the auction to evade royalty.

Each kilogram (kg) of cordyceps sold illegally without declaring is loss of Nu 8,400 in royalty.  Annually, the government on an average collects over Nu 2.8 million from royalty.

The department of agriculture marketing and cooperative (DAMC)’s cordyceps marketing report, 2014, expressed concerns of collectors refusing to declare their yield at auctions. The report stated that of the total 3,539 collectors with permits across the country, only 2,111 participated in auctions.

Remaining 40 percent or 1,428 collectors didn’t participate. This means 40 percent of cordyceps collected went undeclared depriving government of at least Nu 0.99 million (M) in revenue even if one collector evaded with just 100 grams.

The DAMC’s report outlined the need for gewogs and forestry officials to seek explanation from collectors failing to participate in auction after discovering auction turnout in some gewogs to be just around 30 percent.

This year in Chokhor, only 360 cordyceps collectors, out of 930 with permits participated in the auction. No collectors turned up for auction from Chumey or Tang where collection permits were also availed.

Only 24kgs of cordyceps worth over Nu 5M was auctioned despite Chokhor reporting bumper harvest in June. Last year they auctioned 78.35kgs when harvest was considered poor.

Only 11.86kgs of cordyceps was auctioned on July 27 and 28. About 12.1kgs were withdrawn because of poor price from the bidders.

Revenue from royalty in Bumthang also fell by half from over Nu 0.54M in 2014 to Nu 0.25M despite revising the royalty to Nu 8,400 a kg from Nu 7,000 in 2014.

Bidders and officials suspect that collectors were selling the larger amount of fungi illegally.

If bidders’ estimate is anything to go by, Bumthang approximately produces around 160kgs of cordyceps when harvest is good. “If every 800 collectors collected a minimum of 200 grams each, Bhumthang would easily produce 160kgs,” a bidder from Thimphu said.

If Bumthang really did produce 160kgs of cordyceps, 136kgs went undeclared incurring minimum loss of Nu 1.14M in revenue.

Collectors from Chokhortoe also shared of more cordyceps being sold illegally than in auction. They also admitted of bringing only the inferior quality to the auctions.

“Collectors normally bring insignificant quantity of cordyceps to auction just to get collection permit next year,” Dhendup from Chokhor said, adding good quality and larger amount of cordyceps are sold illegally because of better prices.

WCNP chief forest officer (CFO), Tshering Dhendup attributed the drastic decline in cordyceps at auctions to the absence of collectors from Chumey and Tang and middleman clandestinely buying it directly from the villages before the auction.

“The decline is also because of stricter auction rules barring cordyceps from middleman in auction, which could have been bought illegally,” Tshering Dhendup said.

Tang and Chumey gewog officials attributed absence of collectors in auction from their respective gewogs to poor collection.

The CFO however also said that no amount of cordyceps would go undeclared even if sold illegally. “Unless people try to trek over the mountains to sell it illegally, exporting undeclared cordyceps will be difficult,” he said.

Selling cordyceps illegally within the country however incurs loss of revenue, Tshering Dhendup said.

Tempa Wangdi, Bumthang