Canada Discovers a Root to Wealth : Arguably the Most Lucrative Legal Harvest Worldwide and a Lure to Entrepreneurs, Ginseng is British Columbia’s Hottest Crop
Farmer Ron Lefebvre wheeled his Ford pickup along the gravel road uphill from the freshly planted field and recalled the precise moment of his career epiphany.
“What caught my eye was a newspaper ad headline: ‘Tax Assisted Investment Opportunities,’ ” he said sardonically. “That was my sole motivation.”
No romantic notions about the nobility of a life anchored in the land for him, just visions of accumulating cash. And so, last year Lefebvre walked out of the well-paid office job he had worked for 13 years and on to 15 acres on the south fork of the Thompson River. There, he, his wife, their five children and his parents plunged into new lives as farmers of ginseng root.
That’s right, ginseng root--reputed in Asian folklore to restore energy, reduce stress, lengthen life, hold off senility and revive sexual prowess. It’s the hottest crop on Canada’s West Coast, arguably the most lucrative legal farm harvest in the world and lure to a new wave of Canadian agricultural entrepreneurs such as Lefebvre.
Canadian ginseng production increased an estimated 325% from 1990 to 1994. By next year, it will be second only to China in the world, according to a July analysis by Brink, Hudson & Lefever Ltd., a Vancouver investment firm.
In British Columbia, where ginseng farming is expanding most rapidly, the number of acres under harvest is expected to nearly triple in the next four years, the provincial agriculture ministry says.
Despite such growth, North America’s ginseng farmers, scattered across two Canadian provinces and Wisconsin, remain a small, tight-knit, but mutually suspicious clan. The trade is dominated by two publicly traded Vancouver corporations, a handful of multigeneration family growers and slightly more than 100 ambitious but inexperienced Canadian newcomers.
Distribution is controlled by a small cartel of Hong Kong-based brokers who buy the root every autumn and market it internationally, mainly into China and Southeast Asia. Most is sold to consumers as dried root. But ginseng also is retailed in capsules, tonics, candy, lotions, shampoos, soft drinks and even cigarettes.
British Columbia’s growers are concentrated around this community of 67,000 in an interior valley abut 220 miles northeast of Vancouver. Dozens of ginseng farms--or “gardens” as they are known in the trade--are tucked into patches of flatland along the two rivers that converge here and in adjacent valleys.
Cruising along the Trans-Canada Highway on a crisp and cloudless fall afternoon, his golden retriever Jenna leaning out the truck bed into the wind, Lefebvre can identify by name the owner of almost every acre of ginseng crop within sight of the road.
The farms are easy to spot. This time of year, they are sheltered by dark polypropylene covers suspended from eight-foot pylons. Ginseng needs shade; the covers simulate the hardwood forest canopy under which ginseng grows in the wild.
Educated as a civil engineer, Lefebvre, 41, had no farming experience and had barely heard of ginseng when he picked up that paper ad five years ago. He entered the industry carefully, first investing in Canadian Imperial Ginseng Ltd., one of the two major corporate farmers in Canada. He then purchased some seed and had it planted by Ray Dunsdon, a retired Royal Canadian Air Force fighter pilot who began growing ginseng here in 1986.
Lefebvre’s father, a retired mechanic who grew up on a farm, initially tended to the ginseng business. But by 1994, “I figured it was time to step off the wharf,” Lefebvre said. He now has six acres planted in ginseng on his farm and 15 acres more on lease in the area.
Ginseng farming demands an exacting attention to detail, considerable capital and patience. Western Canadian ginseng is not harvested until four years after planting and the root is notoriously vulnerable to fungus and disease.
Like many small farmers, Lefebvre supplements his income while waiting for most of his crop to mature. He contracts with other growers to do their seeding and soil preparation. “You’ve got to have some coin to sit at the table and play--the ante is pretty big,” Lefebvre says. “But, if there wasn’t a potential payoff, I wouldn’t be into it.”
That payoff can be considerable. The Brink, Hudson & Lefever analysis terms ginseng the most valuable legal crop in Canada by a factor of 10 on a per-acre basis. There are also tax breaks and investment incentives supplied by the Canadian and provincial governments to encourage farming and export.
Understandably, the recent appearance of so many small growers with big ideas has been treated as gate-crashing by long-time members of the club. Veteran farmers in Ontario and Wisconsin aren’t known for sharing expertise with each other or the British Columbia upstarts, and reportedly have burned excess seed rather than sell it to a potential competitor.
A sharp drop in wholesale prices for last year’s crop aggravated concerns about oversupply and also depressed the stock price of the two publicly traded companies, Canadian Imperial and Chai-Na-Ta Corp., which describes itself as the largest privately-owned ginseng producer in the world.
Chai-Na-Ta and Canadian Imperial each have joint ownership projects with the Chinese government in China, looking to bypass the Hong Kong brokers who virtually control wholesale prices. In fact, talk of “vertical integration” and “value added products” are the trend among ginseng farmers these days.
Even a grower such as former fighter pilot Dunsdon, with 80 acres under cultivation (compared to almost 1,400 acres for Chai-Na-Ta), has a warehouse where he grinds dried root and packs it into capsules. Dunsdon still sells most of his root to Asian brokers, but he’s eyeing a new foreign market for his capsules: health food stores in California.
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Ginseng Production
In North America, ginseng is grown in Wisconsin, British Columbia and Ontario. Production, in tons:
1996
Canada: 1,880
Wisconsin: 760
Note: 1994 figures are estimates; 1995 and 1996 figures are forecasts
Sources: Agriculture Canada, Wisconsin Department of Agriculture
