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| Australian Echinacea |
Answered by: Richard Alan Miller
Question from: Richard Brent
Posted on: December 18, 1998
I’m hoping you may be able to help me. I have been asked to make some inquiries on behalf of my parents. They recently joined a scheme where they were growing echinacea for a company which was to buy the echinacea from them. The company was to take the fresh product and dry it etc. My parents have planted 3 hectares of echinacea and it should be ready to harvest in about 1 month. From what they have told me they have a high quality yield. Unfortunately, they have just heard that the company has gone into receivership owing monies to quite a few growers and leaving others with crops still growing. My parents approached this venture with only a knowledge of growing, not marketing. They have asked me to have a look on the net and see if I can find any possible information and/or contacts to sell their produce. They live on the mid north coast of New South Wales Australia.
The total number of buyers involved with Echinacea root (all species) is limited to the larger botanical houses on each Coast in North America. In the East, Wilcox Natural Products and MAFCO each buy as much as 400,000 lbs. per year. Most of this is exported to Germany, where the primary buyers and user-manufacturers are located.
These purchases are primarily slanted to the pharmaceutical and medicinal trade. There also now exists a large and growing horticultural (ornamental) market (mostly E. purpurea). While the rotation for this rootcrop is generally 3 to 5 years, the tops, seed, and often the flowerheads are also marketed each year as a bi-product. All three species are now marketed in this fashion.
The problem with E. purpurea (and other species) is that almost every tobacco grower in Canada two years ago cultivated this crop as an incentive away from the subsidized tobacco programs. Tax incentives were offered. What does this mean to you? It means that in the next two to three years, there will be surpluses of this crop, and the prices will drop to substandard par. This has become another crop for control, unfortunately, by the "banker."
Current price for this root (E. angustifolia) have already dropped from $32/lb. to less than $12/lb. this year alone, and the tops have dropped from $4.50/lb. to less than $2.00/lb. (swathed, windrowed, and baled). By this time next year, I suspect that the crop will only be sold at a loss, in attempts to deplete inventories for other crop storage needs.
For a world perspective, Whole Foods Magazine reports sales of Echinacea products in North America are now $80 million annually. This crop represents 10.1% of all herb product sales in North America. And, health food stores now represent about 40% of this industry, so it has been projected that total Echinacea product sales may be as high as $200 million.
North America represents about 12% of the total world herbal medicine market (estimated at $12.4 billion (HerbalGram, 1994). With no significant sales outside European and North American usage, the world market for Echinacea is now estimated at $1 billion, plus or minus a few points. These figures are at the retail level for manufactured herbal products. Farm-gate estimates are only about 2-3% of this retail value, or about $20 to $30 million worldwide.
As for the Australian market, I have no idea of its market share to world trade. Using only population figures as half that of the Canadian market, now estimated at $10 million at the retail level, the farm-gate value in Australia would probably be somewhere between $200,000 to $300,000.
I’m sorry about this "bad news" aspect on the future of Echinacea products. This is why I am very concerned about this crop’s future as a viable small farm venture.