NEWS for North Dakotans
Agriculture Communication, North Dakota State
University
7 Morrill Hall, Fargo, ND 58105-5665
March 26, 1998
[Editors: Please include byline when printing this story.]
by Ronald C. Smith
NDSU Extension Horticulturist and Turfgrass Specialist
One frequently asked question is, "Can I make money growing medicinal herbs?" With all the press that Echinacea and St. John's Wort have been receiving, and considering their availability in the most mainstream of markets, who can blame farmers for inquiring?
Given that herb supplements will exceed $5 billion in national sales before the year 2000, it appears on the surface as if demand is bottomless. But herbs are definitely a finite market, in spite of the exploding growth taking place now.
Many farmers inquiring about the possibility of raising herbs are used to small grain production, where sections of land can be dedicated to a particular crop of corn, soybeans or wheat, and where a ready market exists. This is not the case with medicinal herbs. No one should get into serious production of any herbs without a contract.
Getting a contract will not be easy, as buyers will not sign up new growers until they have proven that they can be depended upon for a high-quality product. That simply means growing herbs on speculation until you've established yourself as a good herb grower.
Three primary markets exist for the medicinal herb grower:
To contact potential buyers, it is best to attend the national Natural Products Expo and talk to the many herbal companies that will have booths at the trade show. Two Expos are held each year, one in Anaheim, Calif., and the other in Baltimore, Md. For more information about the shows, contact New Hope Communications in Boulder, Colo., at (303) 939-8440.
Being a backyard and experimental herb grower, I can provide basic cultural information on growing herbs. However, I lack information on growing herbs on a large scale for commercial production. This leaves the beginning farmer left to solving the biggest problems in any operation—labor management in planting and harvesting. Herbs are difficult to work with on a large scale—Echinacea has a stratification requirement and is harvested much differently than, say, Chamomile flowers.
Frustrations are likely to come when a potential herb grower goes to the bank to obtain a loan for a major herb crop. Figures for income and profit are all over the spreadsheet. For example, a consultant in Boulder, Colo., attempted to compile a list of prices and was quoted prices that varied as much as 400 percent for a given herb. Fenugreek seed was found to range from $4 a pound to $8.60 a pound for organically grown seed, to $2.20 per pound for non-organic sources.
A Kansas State University agronomist developed a cost/return analysis for Echinacea despite all the gaps that exist for production inputs and potential return on sales. She based her analysis on the lowest yield and pricing information she received and came up with the following: 17,525 plants/acre at 20 roots per dry weight pound = 876.2 pounds/acre yield x $15/lb. = $13,144 gross. However, it takes about 3 years to produce a marketable Echinacea crop, so when divided by 3 the gross averages out to $4,381/acre/year.
Clearly, there are risks, frustrations and problems associated with herb growing on a commercial scale. Make potential market contacts, get growing experience on a scale that can be treated as a hobby, do your homework on the herbs under consideration and gather as much information from as many reliable sources as possible. Look for a niche to fill, and keep looking for others, as the market is a continuously moving target, where if you strike it rich, you were in the right place at the right time!
For more information on resources for possible commercial herb production and marketing contact Ronald C. Smith, NDSU Extension Horticulturist, Department of Plant Sciences, Box 5051, Fargo, ND 58105-5051.
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Source: Ronald C. Smith (701) 231-8161
Editor: Barry Brissman (701) 231-7866
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