Farmers hope 'grown in Wisconsin' sells in China

AP News
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Posted: Jan 01, 2010 12:44 PM

Wisconsin farmer Butch Weege has never met Sun Dan, a 34-year-old makeup artist who lives in Beijing, but his business depends largely on affluent Chinese like her who take ginseng grown in his state to cope with their hectic urban lives.

Tons of Chinese exports, from computers to catfish and cashmere, are shipped west every year, but Wisconsin ginseng goes the other way, flowing against that mighty tide of trade. U.S. ginseng growers rely almost exclusively on sales to China, and after years of declining profits due to new competition from Canadian and Chinese farmers, those in Wisconsin are defending their brand and hoping to tap a growing Chinese middle-class market.

Ginseng is prized in China, Korea and other Asian countries by consumers who say the bitter root, typically sipped as tea or added to soups, eases stress, fatigue and insomnia.

At a bustling pharmacy in downtown Beijing, Sun is bundled against the December cold in a fashionable down parka and leather boots. She says she steeps slices of the root in hot water and sips the brew when she's anxious or can't sleep.

"It tastes kind of bitter but also sweet," she said. "I don't take it all the time, just when I think of it, and it seems to work. I often feel better the next day."

Wu Miao, a 22-year-old journalism student, said his parents bought him a bottle of pre-cut ginseng root he likes to steep in grain alcohol. He takes a shot in the evening to help him relax before bed.

Neither customer knew where their ginseng came from and neither had heard of Wisconsin. That's a challenge for U.S. farmers trying to build and protect their brand from the other side of the globe.

"Half a world away you can't get out and police individual shops, check their records, make sure it's Wisconsin ginseng going into those packages," said Kirk Baumann, the director of the Ginseng Board of Wisconsin. "It's just overwhelming."

Once the market leaders, Wisconsin ginseng farmers are battling Chinese counterfeiters who slap the Wisconsin seal on inferior ginseng to boost its price. They've also had to fight the perception that Canadian and Chinese ginseng are of equal quality, even though they're often tainted with pesticide residue.

For mild ailments and everyday use, most Chinese request "Xiyang shen" or "Western ginseng," but this is a catchall category that includes Wisconsin root, Canadian imports and varieties of North American ginseng now cultivated in China.

Bottles crammed with nickel-sized slices of so-called Western ginseng line the shelves of specialty pharmacies in Beijing, selling for about 300 yuan ($44) apiece.

The Ginseng Board of Wisconsin has launched efforts to get Chinese consumers familiar with its products, labeled "Huaqi Shen," or "Flower Flag Ginseng." Its key strategy was clinching a deal in October with a Chinese pharmacy that is now its exclusive distributor in China.

Under the terms of the deal, Tong Ren Tang, a 360-year-old apothecary that once served China's emperors, has the exclusive right to sell 400,000 pounds of Wisconsin ginseng in its more than 1,000 stores over the next five years.

"That's a big deal for us," said Weege, the board's executive director. "We're partnering with a high-end company that deals with higher socio-economic levels of people. So they'll be willing to pay a better price to have genuine Wisconsin ginseng coming into their stores."

Tong Ren Tang says it will position Wisconsin root as a premium product.

"We believe in the quality of Wisconsin ginseng and are confident that it will help bring more customers into our stores," said Ma Xiaosun of Tong Ren Tang Pharmaceutical, the subsidiary that signed the deal with the U.S.-based board.

The Wisconsin root is prized over ginseng grown across the border in Ontario because it doesn't have the DDT residue left in the Canadian soil from pesticides applied decades earlier. Also, Canadian ginseng roots tend to be longer and more tubular, while Chinese consumers seem to prefer the short stubby roots native to Wisconsin.

U.S. ginseng sold for $40 per pound in the late 1970s. But so many U.S. and Canadian farmers jumped into the business that prices dropped into the single digits by the late 1990s.

"A lot of (ginseng) farmers got out when that happened," Baumann said.

Wisconsin had 1,400 growers in the early 1980s. Now, it has about 150, according to the board. They produce about 90 percent of the 650,000 pounds of ginseng grown in the U.S. each year.

Prices gradually crept back up to the mid-$20 range but in 2004, Wisconsin farmers on a trade mission to China found their state's prized seal on countless ginseng products even though no Chinese vendors were licensed to use it.

Chinese officials began confiscating products with the label and fining the vendors. Still, there were concerns the Wisconsin brand had been tarnished.

The deal with Tong Ren Tang was a smart way to reverse the damage, said Peter Carstensen, a University of Wisconsin-Madison law professor who specializes in agricultural marketing issues.

"It won't be seen as an American company coming in and picking on Chinese vendors _ it will be a Chinese company protecting itself," Carstensen said.

Baumann said there's an element of pride in selling U.S. ginseng to China.

"I don't like how dominating China is in terms of manufacturing, with all our dollars going over there," he said. "I'm happy we're able to bring some back home."

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Ramde reported from Wausau, Wis.

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On the Net:

Ginseng Board of Wisconsin: http://www.ginsengboard.com/

Ontario Ginseng Growers Association: http://www.ginsengontario.com/

Tong Ren Tang: http://www.tongrentang.com/