The prices paid for caterpillar fungus, believed to possess remarkable medicinal properties, have increased tenfold since 2003. Data from a website trading in the fungus, Xizangshop.com, shows that in July this year the best quality fungi were selling wholesale for 260,000 yuan (US $41,000) per kilogram.

Retail prices are even more astounding. In Beijing’s Tongrentang pharmacy quality caterpillar fungus sells for up to 888 yuan (US $140) a gram – three times as much as gold, which sells for 338 yuan (US $53) a gram.

Caterpillar fungus is created when Ophiocorcydeps sinensis germinates in the larva of the ghost moth, mummifies the insect and then grows from its body. The infected larva bury their way to two or three centimetres from the surface and die – but the fungus continues to grow. In late spring and early summer a red grass-like fungus sprouts from the head of the insect, reaching between two and five centimetres in length.

Declining caterpillar harvest

The caterpillar fungus is mainly found at between 3,500 and 5,000 meters of altitude. Although it can be found in Tibet, Qinghai, Sichuan, Gansu and Yunnan it is mainly collected in Naqu and Changdu in Tibet, and Yushu and Guoluo in Qinghai.

The collecting season is between April and June. It needs to be picked within 10 days of reaching maturity, or its medicinal properties are greatly reduced.

For years annual harvests of the fungus have been stable between 80 and 150 tonnes. Assuming an average price of 150,000 yuan per kilogram, the market is worth over 12 billion yuan (US $2 billion) annually. But this year, things are looking bleak.

On 25 July, 2012, Tibet’s Agriculture and Herding Office said that the 150,600 people collecting the fungus in Naqu harvested 16.3 tonnes – 3.7 tonnes less than the year before. At the current market value of 120,000 (US $19,000) per kilogram, that was worth 1.956 billion yuan.

In June, the office had predicted that dry weather and low temperatures during the harvesting period would result in lower yields. Harvests in Naqu and Changdu were expected to drop by an average of 20%. But Xizangshop.com predicted that harvests would drop 50% in Changdu and 30% in Yushu and Guoluo, with harvests overall being just 60% of a good year.


The medical benefits of caterpillar fungus

There are still no clear answers on the actual effects of the fungus. According to the Chinese Pharmacopeia it is good for the kidneys and lungs, staunches bleeding and reduces phlegm, can be used for persistent coughs and shortness of breath, heavy coughing and spitting blood, impotence and nocturnal emissions, and aches in the waist and knee. The Chinese Materia Medica says it can be used to treat hepatitis, impotence, tumours, viral myocarditis in young children and respiratory diseases. The only consensus is that it boosts the immune system.

As it is so expensive it is usually used in small quantities – 4 to 6 grams. But even so, ordinary people cannot afford to pay prices of several hundred yuan per gram.

Liu Jun is a trader, buying caterpillar fungus at Xining’s Qinfenxiang market. “At the start it was ten or twenty thousand yuan a kilogram, and you’d get sixty or seventy thousand for it on the coast,” he recalled. When SARS broke out in 2003 demand in places like Guangdong, Jiangsu and Zhejiang rocketed. Prices doubled by the end of the year and Liu was paying 30,000 yuan (US $4,700) a kilogram. The profits to be made attracted more people to the trade. But as prices increased coastal merchants started coming to buy their products at source.

Liu says there aren’t many actual speculators – at the most people stockpile it for several months while waiting for better prices.

“It’s a medicine, it doesn’t last forever. If you keep it more than a year the new stuff comes on the market and then you won’t get the same price. Even if you are saving it up, you need to get rid of it around Chinese New Year, or you’ll struggle,” explained Liu. “You can’t make massive profits on it. Like in early 2009, when prices dropped by half – those with stock were kicking themselves.”

A collector can, with some luck, harvest over a dozen fungi a day, earning 20 yuan for each and making over 200 yuan a day. But in most places the harvest only lasts for a couple of weeks and in reality there isn’t that much money to be made – perhaps four or five thousand yuan a year.

Assuming 2,000 of the best quality fungus in a kilogram, a kilogram will cost only 40,000 yuan US $6,000) when bought from the collectors. At wholesale markets that price multiplies – you won’t get anything for less than 200,000 yuan a kilogram.

“Us outsiders can’t buy it locally. We don’t speak the language, and we don’t have contacts. The bulk of the profits go to local traders,” said Liu. “We just make a bit of profit in the middle.”


Ecological disaster in Tibet

One survey found that the main source of income for one-third of farmers and herders in Tibet is caterpillar fungus. In 2004 in the counties of Jiali and Chaya, two of Tibet’s poorest counties, income from collecting the fungus accounted for 70.55% and 82.36% of farming and herding incomes respectively. In areas where the fungus is found in Qinghai 80% of herders rely on it for income – it accounts for 50% to 80% of total income. It is a major, if not the only, non-herding source of income.

But the widespread collection of the caterpillar fungus has already created an ecological crisis. “In the past you could find it above 3,500 meters in Qinghai, but now it’s only found above 4,500 meters. Twenty-five years ago you could find up to 20 to 46 fungi in a square meter, now you only get between one and five,” said Lu Shunyuan, an assistant researcher at the Qinghai Academy of Social Sciences.

In the past Tibetans used to joke that their cows and sheep grew up on caterpillar fungus – but not any more. Lu explained that, “in the past herders just ignored smaller fungi, but now they dig up anything that looks like one. The small ones, broken ones, they’re all worth money.”

Digging up one fungus will disturb at least thirty square centimetres of earth. If the harvest lasts 50 days, an individual collecting 20 fungi a day will break up tens of square meters of soil, and over a year millions of square meters of alpine meadows are damaged.

“It’s not just the picking – all the human activity has a bigger impact,” Lu pointed out. “The collectors going up into the mountains will light fires to cook, they take cars, lots of rubbish and fumes from the fires.” Lu said that increased collection has damaged the environment the fungi grow in, causing both quantity and quality to plummet – which has pushed prices up, which has in turn attracted more collectors. “It’s a vicious circle.”

Caterpillar fungus, worth more by weight than gold, has created its own gold rush. 60,000 people have moved into Guoluo to collect the fungus. They do not treasure the environment like locals, and cultural differences can easily lead to conflict.

To protect the interests of local farmers and herders, in 2005 both Qinghai and Tibet started issuing permits to collect the fungus, hoping to limit the number of collectors. But this has had very little effect. “Management costs are too high, these are vast areas… the government doesn’t have enough people to guard the mountains,” Lu said.

Cui Xuan, Time Weekly reporter

Originally published in the Time Weekly of July 26, 2012

Homepage image by Time Weekly

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