Tariffs, China and American Ginseng: A Case Study in Wisconsin

Driving through central Wisconsin, it’s impossible to miss the shade structures that go on for acres through this somewhat remote part of America’s heartland. After miles and miles of livestock and corn, the farmland here looks different. Wooden stakes hold up mesh fabric to create the 80 percent shade that ginseng needs to grow. Originally foraged in forests, this niche crop is cultivated by recreating the tree cover environment in which it thrives.

In central Wisconsin, Marathon County is ground zero for the American ginseng industry, growing 98 percent of the country’s crop. Highly sought after in East Asian markets, ginseng has been cultivated in this area for more than 100 years. But that may be in jeopardy if buyers start to walk away from deals or demand lower prices in response to Chinese import tariffs.

In April, China assigned a 15 percent tariff to ginseng imports in response to tariffs on U.S. imports like steel and aluminum that U.S. President Donald Trump signed off on in early March. Since then, additional tariffs have been levied against $34 billion worth of American products, including many other agricultural products, from soybeans and cotton to beef and pork. While larger industries have more lobbying power and clout to enact change, smaller agricultural interests like the ginseng industry are concerned about becoming collateral damage in the ongoing tariff wars.

It’s worrisome for Marathon County, which has been bouncing back from an oversaturated market and a late May snowfall in 2010 that devastated the harvest. Since then, it’s seen increasing yields and production numbers approaching their previous highs, says Jeff Lewis, general manager of the Ginseng & Herb Co-Op in Marathon City. Outlooks were as good as they had been in years.

To understand why Wisconsin ginseng is so valued, think of it like wine, says Will Hsu, vice-president of operations at Ginseng Enterprises, Wisconsin’s oldest ginseng company. Just as the same grape grown in different areas will have different flavor characteristics, ginseng is also affected by the soil in central Wisconsin.

“It’s terroir — the unique characteristics of the soil, water and minerals here in central Wisconsin and the fact that we grow at a higher latitude,” says Hsu. “All those different factors — geography, geology and climate — affect taste. It’s no different than wine.”

It isn’t so much about the seed’s specific genetics as the location in which it’s planted that has the biggest effect on overall taste. Ginseng is a root vegetable, but there is an above-ground crown that develops berries as part of the maturation process. The roots can begin to take a human-like shape, with protrusions that look like arms and legs, each with long, stringy bits that reach out into the soil. It’s a bit like a mix between a carrot or turnip and the above-ground part, which looks like a strawberry plant.

The combination of a short growing season, mineral-rich temperate soil (due to glacial deposits) and a century of knowledge and experience growing ginseng in Wisconsin has created a root that’s smaller than those grown elsewhere but packed with concentrated flavor. “The flavor is affected in ways you don’t think about on a day-to-day basis,” says Hsu, “but over a span of three to five years, it can have a dramatic impact.”

Known for energy and vitality, ginseng provides a pick-me-up, with none of the extreme vacillation between stimulants and depressants (caffeine and alcohol) that we tend to have here in North America. In East Asian countries, ginseng tea is consumed morning, noon and night and provides that balanced dosage of energy and calm. The benefits of ginseng come from consuming it daily, so it becomes a permanent, ongoing part of a person’s routine, says Hsu.

Ginseng has a bitter, earthy flavor that can sometimes have an astringency to it. In Wisconsin ginseng, that flavor is extra-potent. There’s a bit of earthy sweetness, almost like carrots. It is strong and pungent and will linger in the mouth. It’s a bit of an acquired taste, but Hsu maintains that it’s not any different than what we already drink in the U.S.

“A lot of people say ‘How do you develop a taste for it?’” says Hsu. “It’s no different than how you develop a taste for coffee or beer. You have to taste a beverage multiple times and believe there’s a reason to drink it. It’s caffeine for coffee, alcohol for beer, and health for ginseng.”

There are those who just chew on the root or use ginseng in their cooking, but typically ginseng is consumed as tea. Older generations have specific ginseng rituals, and people in different regions and countries have different preferences for how they prefer to take their ginseng root. Some start with a whole root, while others prefer slices. For older generations, it’s traditional to brew and steep ginseng from a fresh root. But younger generations are much more open to alternative means that are ready to use, whether it’s a ginseng tonic that can be added to almost anything or already prepared tea bags.

The use of ginseng in East Asian cultures dates back at least several thousand years, says

Steve Given, dean of clinical education and director of academic assessment at the American College of Traditional Chinese Medicine at the California Institute of Integral Studies. “In the Ming dynasty, the first written record that focuses on one herb only is Ren (Jen) Shen, Note on Ginseng by Li Yen Wen,” he says. “It was published in about 1500 ACE. It’s categorized as a qi, or chi, tonic and builds up the body’s energy.”

The potency of Wisconsin ginseng is what makes it so appealing to those who consume it daily. It’s considered a premium product in overseas markets and able to command a higher price. In best-case scenarios, Wisconsin ginseng can bring in $60 to $90 a pound, but the average is $30 to $50 a pound, which is still profitable, says Kirk Baumann, president of Baumann Ginseng, Wisconsin’s largest producer.

“Sales have been good for the whole industry,” said Baumann on March 2. “If it keeps up at this pricing, there will be more growth here.”

However, six weeks later, everything changed.

The plant known as American ginseng (Panax quinquefolius) can be grown anywhere. Canada, Hong Kong and China plant American ginseng, but none of them has been able to match the quality and flavor of the root grown in Wisconsin, says Baumann. However, with additional costs being levied on the already premium prices of Wisconsin ginseng, buyers may be willing to look elsewhere for roots that may be less potent but more affordable.

Agriculture and Agri-Food Canada reported that Canada exported nearly six million pounds of ginseng, worth more than $235 million, in 2016. That number could continue to grow as consumers walk away from Wisconsin suppliers and their increased price tags.

Baumann declined to talk about how tariffs may affect the ginseng industry, as anything he says could “affect current or future shipments of roots to China.” In July, he told the Milwaukee Journal Sentinel, “We had one brand-new customer lined up and a signed contract and they walked away from it the day that 15 percent tariff was tagged on.”

Ginseng is, by far, Wisconsin’s most lucrative crop per acre. In 2014, 720,000 pounds of ginseng, worth $52 million, was harvested, according to the state’s Department of Agriculture Trade & Consumer Protection. Much of the state’s harvest is exported to China — a total of $14 million in 2016–17.

In a news release issued just before the tariffs were announced, the Ginseng Board of Wisconsin reported, “This duty could be detrimental to our industry, as many Chinese distributors have expressed concern that they may have to shift purchases to Canadian ginseng.” One way that Hsu, Baumann and the rest of the Marathon County ginseng farmers hope to weather the tariffs is by diversifying their offerings — and hopefully their buyers. A 2013 study by researchers at the Mayo Clinic and North Central Cancer Treatment Group found that Wisconsin ginseng is effective at combating fatigue in cancer patients. Yet, the plant hasn’t been widely adapted by Americans for daily use. It would be easier — and more profitable — for all growers if they could have even the smallest foothold in the U.S. market.

To that end, Hsu Ginseng Farms has developed ginseng pills, ginseng whiskey and a number of other products aimed at the American market. Hsu estimates that the audience for his products in the U.S. amounts to three percent of the population, nearly all of whom have family roots in East Asia. To be able to reach even three percent of non-Asian U.S. households represents a massive market potential that would allow Wisconsin’s ginseng farmers to rely less on exports.

The future of the ginseng market is far from assured. There’s little security in this high-risk, high-reward crop, but having the use of ginseng become more mainstream here in the U.S. would go a long way toward stability for Wisconsin farmers.

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James

4 years ago

Article isn’t factual. That’s cultivated Ginseng. Very little active ingredient. The best Ginseng is wild Ginseng. It’s best grown via wild simulated or harvested wild in the Appalachia mountain region. In that area the best comes from upstate NY and Western North Carolina.

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