Archive for Sunday, June 30, 2002

Association rooting for business to sprout

June 30, 2002


— In today's economy, Steve Moring figures he's better off digging a hole and burying his retirement plan than investing in the stock market.

So that's what he's begun to do on his rural Oskaloosa herb farm. Moring already has planted a quarter of an acre of the herb echinacea and is experimenting with growing other herbs such as St. John's Wort and ginseng.

"The way I figure it, a ginseng crop could be better than a mutual fund," Moring said.

That's because a ginseng farmer can fetch between $200 to $400 a pound for his crop, with a crop yielding 250 to 500 pounds an acre, Moring said.

But there is a catch. Ginseng is not a crop that can be harvested the same year it is planted. Instead, it usually takes about 10 years for the roots  which are the most valuable part of the plant  to mature into a high-dollar commodity.

Actually, that is just one of the many catches that come with growing herbs as a business. That's why Moring and about 20 other people from across the region recently formed the Great Plains Herb Growers Assn. About 150 people receive the association's newsletter.

"I think it is a business venture with some good potential, but it is the type of deal you can invest $5,000 in it and not put the crop in the right place on your farm and not get a crop at all," said Moring, who is co-chairman of the association. "It takes some experience and some knowledge and that's what we're trying to share with each other through the association."

Still learning

There's plenty that the association, which began in March 2001 with 10 people, doesn't know about the business of herb growing. Rhonda Janke, an associate professor of horticulture at Kansas State University and treasurer of the association, said there were plenty of hurdles.

"When I'm asked what the major challenges are, my first thought is usually everything," Janke said. "You have to figure out what to grow, where to grow it, how to harvest it and then how to sell it.

"We've been working on figuring that out for several years, but we still don't have all the answers. I can tell people what grows on our test plots, but I can't tell them with any certainty what it would sell for or whether it would grow on their particular farm."

Despite the questions, both Janke and Moring said they thought commercial herb growing could become a profitable business for Kansas farmers.

"I believe it is a potential business for somebody, but it is not a get-rich-quick business," Janke said. "People have to approach it with a very business-like manner and pencil everything out, or else you could get burned by it."

It's not likely commercial herb growing will convince large numbers of Kansas farmers to abandon their traditional crops, like corn and soybeans.

"I think down the road, people who have done their planning well and invested smartly will be able to make a full-time living at it, but not hundreds and hundreds of farmers," Moring said. "It will maybe be 25 to 50 growers who are doing it full time."

But Moring said there could be several hundred other traditional farmers who might want to dabble in herb growing on the side.

"For somebody who is trying to survive and make a living with traditional agriculture, this might be a good way to diversify," Moring said. "I think the herbs could be a real, real nice cash crop to help even things out a little bit."

New farming

Farmers interested in getting into the herb business will have to learn a new way to farm, Janke said. She said commercial herb farming was generally more labor intensive than traditional farming.

She said some herbs  like echinacea, which seems to be one of the herbs best suited to the Kansas climate  could be planted with modified seed drills and other agricultural equipment common on Kansas farms. But other herbs, such as the ones suggested to be planted in woodland areas, have to be planted by hand, which means it could take days to plant a single acre.

Harvesting the herbs, however, may be the toughest part. Unlike wheat or soybeans, farmers can't simply combine their crop. That is because with herbs like echinacea and ginseng, the root is the most valuable part of the plant.

Instead of harvesting with a combine, farmers must use a modified plow that uproots the plants. They must then manually gather the roots. After the gathering, the roots must be washed, split, then dried for as long as two days.

"I'd say your biggest expense will be labor," Janke said. "You're probably going to have to hire some help during harvest. I suppose somebody could do it on their own if they didn't have a lot of other crops requiring their attention. But it might take them the whole month of October."

Price challenges

One aspect similar to traditional farming is that prices can be volatile. Echinacea, for example, has sold for anywhere from $30 per pound to $5 per pound during the past five years, Janke said.

But unlike traditional farming, finding the current price for a product can be difficult. Janke said there were only a handful of herb processors in the country, and unlike grain elevators they do not list the prices in the newspaper.

"They (processors) can control the prices at times," Janke said. "Finding the darn price they're offering can be tough. You call them, and if they aren't familiar with you, they might not tell you. The deals between producers and processors are really individual business relationships that get built up over time."

Moring said that was one of the reasons the association hoped to someday grow into a cooperative. Moring said a co-op could become a local buyer for many of the herbs grown in the area. The co-op then would sell the crops to the large processors.

"Instead of individual growers trying to sell 25 pounds to a processor, they could sell it to us, and then we could sell 500 or 1,000 pounds at a time to a processor," Moring said. "Hopefully that will give the little guy a little more assurance that they'll have a buyer for their crop. It might make people less skittish about getting started in the business."

Growing demand

Moring, who previously was a researcher on a medicinal herb project at Kansas University's Higuchi Biosciences Center, said he thought a growing demand for herbal products would help more people enter the industry as well.

A 1998 study published in the Journal of the American Medical Assn. estimated consumers spent about $5.1 billion in herbal products a year. Other studies list the market in the $4 billion range. During the late '90s, the industry experienced an annual growth rate of about 25 percent.

Moring attributes the growth to people becoming more health conscious and looking for alternative forms of medicine. For example, echinacea is often used by people looking to ward off colds or boost their immune systems.

But Moring admits the growth of the industry has stagnated during the past couple of years as the economy has slowed, and as herbal remedies have received some bad press regarding their quality and effectiveness.

He said consumers had begun to raise quality questions related to herbal products, but he thinks the industry has begun to satisfactorily address the questions. For example, he and his business partner, Oskaloosa resident Rob Marshall, have developed a small-scale laboratory used for testing the quality of the herbs they and other farmers grow.

"It should help us compete because we'll be able to document the quality," Moring said.

Moring said he expected the growth of the herb market to begin accelerating again in the near future.

"We've experienced a little hiccup over the past couple of years, but with the health care situation like it is in the country, I think the growth will continue for a long time to come," Moring said. "The cost of pharmaceuticals is just increasing so much that people are going to start turning to herbs more to help prevent them from getting sick."

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