In a dirty, dimly-lit room in a backstreet of one of China's poorest rural towns, a trader combs his leathery fingers through a $17,000 bag of caterpillar fungus, lamenting the curse that its value has wrought.

The parasitic fungus, Cordyceps sinensis to science, only exists high on the Tibetan plateau, where it grows through the body of its host -- the ghost moth caterpillar -- killing it and bursting out of the top of its head.

What looks like a small brown twig on the end of a crinkled yellow worm is for its believers a lifesaver, a cure for cancer and a potent aphrodisiac sometimes known as "Himalayan Viagra". For those who toil on hands and knees to collect it, it can mean death.

It has a potent status in traditional Chinese medicine -- making it almost worth its weight in gold.

"It wasn't in demand before, but now we realise its value, we have lots of fights between neighbours," said Zande Gongba, as he sold half a kilogram of the fungus to a retailer in Tongren, a remote town in the northwestern province of Qinghai.

Some of his suppliers were involved in clashes over the rights to collect the fungus that left two people dead in the green, rolling hills around Tongren, known to Tibetans as Rebkong.

Pictures posted online by overseas rights groups showed at least one villager armed with a machete and scores of riot police.

The exiled Tibetan spiritual leader the Dalai Lama himself called for calm and reminded villagers that "violence is contrary to the beliefs and conduct of all who believe in karma and in Buddhism".

Under a picture of the Nobel laureate, Gongba added in Tibetan: "We know this is not a good thing, but this is life, and life needs to go on."

Gruelling process

One of the few organisms to straddle two different scientific kingdoms, the fungus is known as dongchongxiacao in Chinese and yarchagumba in Nepali, both names meaning "winter worm, summer grass".

It is harvested mainly by poor farmers, who comb through the grasses of fields in one of world's most rugged and challenging landscapes on their elbows, at times in subzero temperatures.

The gruelling process -- often carried by young boys from poverty-stricken families -- can earn around two to three dollars for each fungus, depending on the season.

By the time it reaches affluent end users among China's rich it can cost far more, an expensive designer ingredient for well-to-do dinner parties, mainly eaten in soup but also stuffed into roasted game dishes, offering both nutritional value and added social standing for the host.

Millions of other Chinese eat caterpillar fungus for supposed medicinal reasons, or because they believe it will enhance male potency.

"We have patients with stomach cancer and breast cancer, and they are basically cured after taking about half a kilogram of caterpillar fungus," said Yang Mengxian, manager at the Rebkong Culture store in Tongren, the town's biggest fungus dealer.

"Some men have reproduction problems, and they boil the fungus with a chicken into a soup, drink it once a week, and they become stronger, have a great sex life and have no problems creating a baby," she adds.

There is no orthodox scientific proof of such claims, but that does not put off its adherents.

"Chinese people have a theory that caterpillar fungus is a traditional Chinese medicine that can benefit your kidneys," said Shen Tong, an entrepreneur from the eastern province of Zhejiang, who says he has spent $130,000 on it.

Each day, the 49-year-old consumes tea which has been diluted with five fungi for over an hour, a drink which costs around $32.

"It tastes and smells kind of fishy," adds the father of one.

"But you won't get the health benefits if you are only taking it in the short term. You have to take it on a regular basis for a long time, or at least three years, then it will help nurse your whole body."

China's booming traditional medicine industry -- which is blamed for threatening the survival of some endangered species -- produced goods worth 516 billion yuan ($84 billion) in 2012, more than 31 percent of the country's total medicine output, according to the National Bureau of Statistics.

Yang makes her living from supplying the demand, but fears more violence.

"In the past many didn't realise how precious it is and how much it can sell for on the market."

But now, she said: "If they do not have fields producing it in their own village, they will go into their neighbours' villages."

"I have been in a fight myself too," she added quietly.