Herbs: Marketing

Marketing of Herbs

The marketing of herbs is becoming increasingly competitive world-wide and prices can be very volatile. Saskatchewan growers have seen price drops in ginseng, echinacea and St. John's Wort. Most, or all, ginseng growers have ceased production in Saskatchewan because of the difficulty in competing in the global market. The number of echinacea growers has also sharply dropped.

New growers should carefully investigate markets before deciding which crops to grow. Some promising new crops, particularly perennial ones, may not seem so promising in a few years if too many new growers enter the market at the same time. Since marketing of raw or dried product provides the lowest return, growers should also consider whether they should produce a value-added product, which involves processing or packaging. Growers do not necessarily have to produce their own value-added products, but may opt to contract to commercial firms who return the finished product for sale and distribution.

After determining which market segment is the most appropriate (medicinal, culinary, wildcrafted, oils) and the scale of production, potential growers should examine where the markets are located.

Types of Herb Markets

Culinary herbs: Producers could check nearby restaurants to see if they use herbs and, if so, whether there is a market there. It must also be determined if the producer can adequately supply quality product, in timely shipments. Farmers' markets, supermarkets and institutions are other outlets for fresh and dried culinary herbs; mail-order and websites should also be considered.

Medicinal plants: Medicinal markets are limited in Saskatchewan and exporting is usually required. Existing companies may obtain exporting expertise and assistance through federal government programs. Many manufacturers and distributors are reluctant to change suppliers; however, smaller companies may be interested. Local herbalists or aromatherapists may also be interested in new suppliers, and health food stores are other possible outlets. Most growers market to manufacturers and may enlist the services of brokers.

Essential oils: These herbs are marketed through international brokers. There are only a few Saskatchewan companies that are manufacturing herbal products, but some of them may provide contracts to new growers from time to time.

Growers should examine national and international markets. They should be prepared to devote considerable time to market their products. It is often stated that successful producers spend more time marketing than growing their crops. They should know who the rest of the players are in the herb industry and consider joining a producer association, such as Canadian Herb Specialty Agriculture and Natural Health Products Coalition. Working alone may not always be desirable – working with a trader or a co-op to pool product may make markets more accessible.

Many large companies are interested only in large quantities of herbs. Samples are usually required so the company can determine the quality. Documentation from the supplier, as to the validity of species and quality analysis, may also be requested.

Growers should find out what quantity the company needs and then determine if it will be possible to fill that requirement, once full-scale production is underway. It may also be advisable to investigate the integrity of the company, as some have marketed samples from many growers without actually purchasing the product. Growers should beware of companies promoting and supplying plants at low cost with dubious promises to buy back the product in a few years time.

Herb Quality

The issue of herb quality is becoming increasingly important. Manufacturers are becoming more demanding in obtaining high quality raw materials. Guidelines such as good agricultural practices have outlined acceptable practices in raising crops.

On-farm quality assurance programs require growers to document their production so each lot can be traced back to its origin and method of production. While these programs are not yet mandatory, growers who do not conform to these programs may have greater difficulty in marketing their products in coming years.

The Natural Health Products Directorate under Health Canada has established regulations that regulate manufacturing and labelling of processed herb products. These regulations deal with health claims that can be made on the labels of products destined for consumers. This agency also prohibits the sale of herbal products that are considered dangerous. For more information, see Natural health products legislation and guidelines online.

It is very important that herb growers are certain of the botanical identification of their crop. A number of years ago, there was considerable mix-up in Echinacea species seed, so what was thought be Echinacea angustifolia turned out to be E. pallida or hybrids of the two. Buyers of seed may wish to insist on a certificate of authenticity before purchasing seed from a new source. This is of less concern where there is only one species normally marketed.

A number of medicinal herb buyers have specifications regarding desired levels of active ingredients or marker compounds for identity verification. The level of active ingredient can vary according to seed source or variety, cultural practices and weather conditions, as well as to post-harvest handling methods. Growers may wish to have their test plots analyzed before proceeding to larger scale operations in order to determine if minimal requirements can be met. There are laboratories in Canada that can offer this service.

Medicinal and Essential Oil Herbs

Essential oils are commonly removed from plants by steam distillation or solvent extraction, but steam distillation is the most common method. Depending on the plant, different parts may be used, including the:

• petals;
• bark;
• seeds;
• stems; and
• leaves.

The oils are marketed to the food industry as flavourings; to the cosmetic and perfume industry for perfumes; and to the pharmaceutical industry. There is also an increasing demand for essential oils by herbalists who practice aromatherapy.

Essential oils can be produced not only from herbs but also from trees such as spruce. Other potential herbs are:

• angelica;
• fennel;
• monarda;
• basil;
• parsley;
• sage;
• thyme;
• tarragon;
• garlic;
• evening primrose;
• calendula;
• wormwood; and
• yarrow.

There is a large demand for rosemary oil, but it is not hardy here, so production would be limited as a field crop. Some studies have been conducted in Alberta to assess the feasibility of growing rosemary as an annual field crop.

Entering the essential oil market is not easy as companies tend to remain loyal to suppliers that provide consistent supply and quality, and international competition is stiff. Quality analysis documents are valuable in finding markets. Aromatherapy markets may be more accessible to small-scale producers.

Distillation equipment can be very expensive. Smaller, portable field distillation units have been developed that may be of value to growers wishing to enter this market. Prairie Agricultural Machinery Institute (PAMI) located at Humboldt, Saskatchewan, has done some research on distillation equipment.