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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).

• Is this legal to sell? (It may be an endangered or controlled plant.)
• Am I allowed to process this product?
• Can I make any health claim legally (e.g., "Rose hips contain vitamin C")?
• Do I need to be a licensed herbalist?
• What are the liability issues?
• Can I market this to herbalists?
• Can I market this to herb users?

Mushroom. (photo by Mike Demchik, University of Minnesota Extension Service)

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.

Ginseng. (photo by Mike Demchik, University of Minnesota Extension Service)

Ginseng. (photo by Welby Smith, Minnesota Department of Natural Resources)

1. GINSENG---Ginseng is an herb that has a very long harvest history. Asian ginseng has been harvested for thousands of years. American ginseng harvest began in 1716 in Canada. Since this time, ginseng harvest has provided a significant source of income for "wildcrafters" (people who harvest wild plants). Cultivation of ginseng began not much more than 100 years after the first concentrated harvest efforts and was well established in the late 1800s. Indeed, many of the "native" stands of ginseng are doubtlessly of planted origin on old farmsteads.

2. This product has enjoyed nearly 300 years of very good market conditions. These years of good prices have resulted in intense wildcrafting pressure and has resulted in the near extinction, at least commercial extinction, of wild ginseng in many parts of the country. Field cultivation of ginseng, in place since the 1800s, has not replaced the wild root market. Wild roots (and roots that are cultivated in a manner to appear wild) still command much higher prices than field-grown roots. In fact, wild ginseng is currently marketed in much the same way (although with some obvious modern twists) that it was marketed 200 years ago. Fur buyer and trading companies, the original ginseng brokers, still purchase and resell ginseng. Wild and good quality domestic roots are still primarily sold to Asian countries (now much is sold through Hong Kong). Now, however, the harvest of roots is very regulated and systems are in place to provide a method of tracing the roots to the source.

   For these reasons, ginseng is the product that first comes to mind when botanicals are mentioned.

3. ECHINACEA---Echinacea has a long history of use by many Native American tribes. However, broad-scale adoption of this product by people other than those involved in herbal or native medicines did not occur until the 1990s. After this product was shown by some researchers to have potential in boosting immune system function (as well as being the subject of widespread rumors claiming other perceived effects that have since been shown to be false), this product was in great demand. This resulted in escalating prices (in many cases over $30 per pound) and widespread wildcrafting of the species. After a demand was demonstrated for this species, many farmers began to cultivate this crop.

4. This species takes about three years to go from planting to harvest. With the increasing harvests of this plant from cultivated sources, the price paid has dropped dramatically. Much of next year's domestic crop will probably go unharvested due to overproduction.

5. MUSHROOM---Wild (and wild-looking) ginseng has had and continues to have a good foreign market (but no one knows for how much longer). Echinacea has had a peak in price followed by immense overproduction. Medicinal mushrooms have not really seen either of these conditions (unless you consider shiitake, a noted edible mushroom, to be a medicinal). Medicinal mushroom production may always be for a small market, or as with other botanicals, the market may boom and then wane. Medicinal mushrooms, for the most part, will have to be marketed directly to a retailer or consumer. This will involve dealing directly with the ethnic populations here and/or abroad that use these products. This will be a hard market to enter and will involve a great deal of research in production and marketing; however, the results may be intensely rewarding.

Field of echinacea plants. (photo by Mike Demchik, University of Minnesota Extension Service)

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:

      Ginseng
      Echinacea (Field)
      St. John's Wort (Field)
      Slippery Elm Bark
      Cherry Bark
      Mayapple Root
      Blood Root
      Trillium
      Willow Bark
      Wild Ginger
      White Oak Bark
      Certain Fungi
      Certain Lichens
      Certain Ferns

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."

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