Starting a Herb Business
Answered by: Conrad Richter
Question from: Laura Lou Kelly
Posted on: October 4, 1998

I have a 30 foot x 80 foot greenhouse and just bought a 30 foot x 50 foot greenhouse and intend to start a herb business. I have been growing outside in a gro-air 1/2 acre organic garden. We (Kelly LLC) also own a 800 acre irrigated farm, popcorn, corn, drybeans, and wheat. I have grown hydroponic tomatoes for 33 years in Colorado and Nebraska and ran the farm for 17 years so have a strong background in agriculture. I can plant field crops (organic) on the corners of the irrigated circles, using the gro-air system, t-tape buried at 8 to 12 inches, in sandy loam, then using this system for irrigation and for putting air though the lines (no compaction and increased soil-microorganism action, leaving the soil very pliable). I have used this system in the 1/2 acre garden, and in the spring I do not even have to roto-till before planting. I am in a zone 5.

I enjoyed your article in Acres USA [Oct. 1998, on the herb and spice market], as that is what I’m trying to do. What are the best herbs to start with and also where do we sell our products? Sounds as if it would be wise to join the International Herb Association. Can you give me any advice?

With your years of experience and your knowledge of organic principles, you are in a good position to try herbs as a commercial venture. As I say in the Acres USA article, herbs are very different from conventional agriculture and it is not always a sure thing that experienced farmers can succeed in herbs.

The biggest change is marketing. Conventional crops have well established markets where you can show up with your crop and reasonably expect to get an offer to buy. With herbs, selling is considerably more complicated because the market is much more spread out across the country and even around the world. Your buyers are likely to be in Vancouver, California, New York, France and Germany -- not in a nearby town. And buyers are reluctant to discuss prices or contracts until they are sure that you are a reliable grower who can deliver the quantity ordered, at the quality level required, on time. In short, if you can add to your production skills an ability to market your crops to distant buyers, attuning yourself to their needs (price, quality, quantity, on time), then you can do very well in herbs.

There is no doubt that herbs can generate much higher returns than conventional crops. The downside is that the crop sizes tend to be smaller, and you have higher startup costs and greater risks of loss if you are unsuccessful in meeting the quality requirements of buyers. For example, buyers are not interested in St. Johnswort herb that contains less than 0.1% hypericin by dry weight. The hypericin content is subject to environmental conditions and on the harvesting and post-harvest handling, processing and storage. Sometimes you think you have a good crop but when the results come back from the laboratory, you are deeply disappointed to learn that the quality does not meet the buyer’s expectations.

Your interest in organic methods is a big plus. Right now, organic herbs are getting a substantial premium over conventionally-produced herbs. At the Richters Second Commercial Herb Growing Conference, I presented data that show that organic herbs command a premium averaging 115% more than conventional herbs. The full data are in available in the transcripts of that conference (see the online catalogue, in the book section).

To get started I always recommend going slow. Because of the marketing challenges, and because good production data are lacking, it is essential to do some test plots. Many growers will try 3-5 crops planted over one or two acres. It will take a year or two before you work out the methodologies, and before you have the samples buyers want to see before they talk seriously about price or quantity. Usually, growers find that of 3-5 crops only one or two turn out to be viable commercially for them, so it is important to go through this trial phase.

What herbs should you try? This is not an easy question to answer. The herb with the biggest market is American ginseng, generating some $200 million revenue at the farm gate last year. But the price is falling as supply is catching up to demand. Ginseng is still profitable, but many ginseng growers are seeing the writing on the wall and are starting to diversify to other woodland crops that grow under the same shade structures that ginseng needs (such as goldenseal and black cohosh). Echinacea has a huge market and can still generate good returns. St Johnswort is the "hot" crop of the moment with demand exploding since last year when it was touted as a natural "Prozac". However, each of the big market crops run the risk of over supply as hundreds of farmers start growing them.

My advice would be to start with a mix of "big market" and "small market" herbs. You might try St. Johnswort along with catnip, lemon balm, and red clover. These are herbs that are grown for their above-ground foliage or tops. Or, you could experiment with root crops (requiring appropriate harvesting equipment) such as echinacea, valerian and astragalus (also known as "chinese milkvetch"). But these are merely suggestions, and if you can be a bit of a contrarian, to avoid market gluts by not growing just the popular herbs, then that will be a very useful strategy for your herb business.

At this point, you need to educate yourself about the particular needs of commercial herb crops. We offer several on commercial herb growing. For field production of dried herbs, Richard Alan Miller’s "The Potential of Herbs as a Cash Crop" is an excellent primer. It is somewhat dated as it was written in the 1980s, but most of the basic principles and discussion are valid today. Other books worth looking at are "Manual for Northern Herb Growers" by Seija Halva and Lyle Craker, "Herbs for Sale" by Lee Sturdivant, "Culinary Herbs" by Earnest Small (it has market size information), "Growing Your Herb Business" (for smaller value-added herb farm businesses) and even "Profits from Your Backyard Garden" (for fresh herb growers) has useful information. In addition, the transcripts for the Richters commercial herb growing conferences are very valuable sources of information not found in any other books. All these books are available from Richters.

Nothing can compare with attending conferences on commercial herbs. The educational and networking opportunities are huge, and many growers get their first orientation by attending conferences. The Richters conferences are specially designed to meet the needs of commercial growers.

In addition, you can join trade groups. The International Herb Association has annual international and regional conferences, and it puts out a useful newsletter. The web site is at www.herb-pros.com . Another trade organization is the Herb Growers and Marketers Network (www.herbnet.com) which also puts on conferences and publishes a newsletter.

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