Producing Botanicals as a Non-Timber Forest Product
Michael Demchik, University of Minnesota Extension Service
Production of botanicals has a long history in North America. Our very first export from North America was arbor vitae (the tree of life). We now know it as a source of vitamin C, a vitamin seriously lacking in the historic winter diets of Europe. Tobacco, ginseng, sassafras, and many others have figured prominently in the history of the United States. Botanicals still have a valuable place in the production of non-timber forest products.
Selling botanicals, like other non-timber forest products, requires a great deal more market savvy than traditional forest products. Because marketing is so important to the production of forest botanicals, this issue will be addressed first. Specifics on production of individual forest products can be determined after the basics of marketing are known.
Botanicals are marketed in two main ways: through a broker or buyer and by direct marketing. Direct marketing is definitely the most difficult. The producer not only has to propagate, grow, harvest, and prepare the botanical, but also has to sell in relatively small units to retail outlets or consumers. While this helps assure that a greater portion of the profits reach the grower, this is far from an easy task. When direct marketing an herbal product, the following issues should be considered (as well as a host of others).
For most people, direct marketing will not be their preferred choice. Instead, many will try to sell to buyers or brokers. These sales fall under two main categories: non-contracted production and contracted production. Non-contracted production is much riskier; however, for a new herb grower, it is essentially the only available option. Processors will seldom, if ever, sign a contract with an inexperienced grower. The usual requirement is at least 10 years of experience in alternative crops, even more for herbals. The usual procedure requires that the producer be able to demonstrate experience and have quality product in hand to demonstrate an ability to cultivate it. Even so, many botanical producers will still require assistance from a marketing specialist to aid in establishing these contacts. While people have had very profitable non-contracted herb businesses, these have almost always been for herbs that were in very high demand and/or very low supply. This may sound unappealing, but the learning curve in growing botanicals is fairly steep. What a person learns in a few years of small-scale, non-contracted production can save him or her a great deal of money and heartache in later years.
Growing botanicals under a contract is one of the best ways to assure a market for a botanical product. Contracts almost always guarantee a specified price. In most cases, although not always, this will be higher than the open market price when the product is ready to market (remember that others have also decided to grow this crop). Earning a contract for production of botanicals is usually the major obstacle to entering this business on a larger scale.
With this information on marketing presented, three examples of botanical markets will be presented to illustrate what can be expected by a person with interest in botanicals. These examples are American ginseng, Echinacea, and medicinal mushrooms.
These three products were presented to illustrate a point: the botanicals market is a highly varied market composed of numerous products with great differences in marketability. Overall, the botanicals market is a great deal more risky than the traditional forest products markets like pulpwood. Indeed, cultivating many of these products involves more risk than any other non-timber forest product; however, good research and marketing skills can result in exceptional economic rewards.
Numerous botanicals have potential for producers in Minnesota, including:
While techniques have been developed for cultivating many of these species, some have had little or no study. Wildcrafting is only suggested for a few of those herbs listed. Cultivation is the only sustainable option for most botanicals. While the presentation at this conference covered cultivation techniques, contacting Michael Demchik, the agroforestry management extension educator at the University of Minnesota, for more information is a good starting point. Contact information is given below.
Botanicals can be an excellent method of increasing income from forest landholdings. While these products have great potential, most markets are fairly small and volatile. Entry into any of these markets is subject to a great deal of risk. It is important to enter "with your eyes open."
Copyright © 2002 Regents of the University of Minnesota. All rights reserved. Copyright is claimed for all materials except for the photos and illustrations provided by non-University of Minnesota Extension Service sources. Although copyright is vested with Extension, permission is hereby granted for the contents of this Web document to be reproduced for noncommercial or for nonprofit educational purposes, provided the source is acknowledged and no alterations are made to the content without prior written permission.
Send copyright permission inquiries to: Copyright Coordinator, University of Minnesota Extension Service, 405 Coffey Hall, 1420 Eckles Avenue, St. Paul, MN 55108-6068. E-mail to firstname.lastname@example.org or fax to: (612) 625-2207.
The University of Minnesota Extension Service is an equal opportunity educator and employer.