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Close to 40,000 people derive economic benefits from essential oils harvesting, trade and processing in Nepal.
Essential oils are a subset of the natural products sector, also know as nontimber forest products in Nepal, which generated over Rs. 2.5 billion (about US $34.2 million) in trade for Nepal in 2004. Over the last decade the Nepal natural products sector has undergone significant changes with the increase in community forest user rights and increased local processing. This has given Nepal an opportunity to expand beyond its dependence on Indian markets, but also highlighted how much more work Nepal needs to become competitive in world markets for natural products while sustainably managing the unique biodiversity of the natural products harvesting areas.
The FRAME sponsored study, a program of USAID, surveyed actors throughout the Jatamansi and Wintergreen value chains, in representative production, trade and processing areas of Nepal. Jatamansi and Wintergreen are aromatic natural products that are processed into essential oils for perfumes, personal care, and medicines.
The study mapped the nature, wealth and power dynamics of the essential oils sector in Nepal using Jatamansi and Wintergreen as example products within the product class of essential oils and the larger sector of natural products. Jatamansi and Wintergreen provided a contrast in export and domestically consumed natural products and demonstrated that there is potential for essential oils in both markets.
Raw Jatamansi and oil are an export product for Nepal. The value chain dynamics have changed significantly in the last decade from over 90% traded illegally in raw form to India, to 75% now processed into essential oil in Nepal. Wintergreen has 100% processing in Nepal with 90% of the oil sold on the domestic market.
Study results were presented to a cross section of the non-timber forest product (NTFP) actors at a workshop in Kathmandu in December 2005 and the following were the top recommendations to improve the sector’s performance.