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| High Prices Offered for Echinacea angustifolia |
Answered by: Conrad Richter
Question from: Barb Nelson
Posted on: June 29, 2003
Recently my husband and I came across a market opportunity to grow Echinacea angustifolia organically. We live in southwestern Manitoba and have approximately 14 acres of high ground that is loam/sand mixture, with very good drainage, and can be certified organic. The company in Alberta that we have been speaking to has offered to help market our plants when they are mature, after 3 years of growth. They have quoted prices of $30.00 per pound for certified organic Echinacea angustifolia root. I found that Agriculture and Agri-Food Canada quoted prices of $20.50/pound for certified organic Echinacea angustifolia for January 20, 2003.
Yesterday I ordered two e-books from Richters: Echinacea 2000: Technical Crop Report, and Getting Started: Important Considerations for the Herb Farmer by Richard Alan Miller. The Echinacea 2000 report suggests that the supply of Echinacea now exceeds the demand, and farming it organically would not be profitable.
Do you have any comments on the profitability of Echinacea angustifolia as an organically grown crop? Do you have any suggestions for an alternative herbal crop that would be suitable for our climate (zone 3) and land?
There have been reports of companies in western Canada promising high prices to growers who enter into contracts to buy plants supplied by the buyers. You can read several reports published in the Richters HerbLetter (http://www.richters.com/show.cgi?page=./HL/HerbLett.htm) in 2001 on what some people have described as "echinacea scams".
It is hard to imagine how any company could undertake to pay 50% more than the market price for echinacea angustifolia roots. According to one company’s sales literature, it claims to be vertically integrated -- i.e., involved in growing, processing, manufacturing and marketing of finished products -- implying that it has the margins to afford to pay higher prices to growers. But you have to ask yourself, why would it pay more than it has to?
That these schemes require growers to buy seedlings from the buyers, as opposed to buying seeds or seedlings from any supplier, is not an unusual business model in the herb industry. But this business model is open to possible abuse. So before you agree to such a deal it is prudent to ask why the buyer is making this demand. For some herb crops, genetic identity and purity is a critical concern, which is why buyers will sometimes supply the seeds or plants needed to grow the crop. The buyers may have their own specific strain or variety of echinacea angustifolia that they want you to grow and that could be a valid reason for requiring you to buy their seedlings. But as far as we know there are no improved strains of echinacea angustifolia in commerce at present.
Back in 2000 the supply of echinacea angustifolia outstipped demand and a lot of inventory sat for months, even a year or two. But in 2003 there are indications that the market is reviving and is shifting away from an oversupply situation. It is difficult to predict what prices will do, but we are at least confident that prices have stabilized and are unlikely to drop over the next few years.
Our recommendations for other crops to grow? This is always a tricky question to answer. The herb market, being that it is smaller and more specialized than other agricultural commodity markets, is susceptible to dramatic swings in prices, demand and supply. I prefer to give farmers tools for coming up with their own candidate crops. There are several articles in the Magazine Rack section of our website (under "Commercial Growing") that would be a good start.