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How Wisconsin Lost Its Big Advantage In the Ginseng Game

Wall Street Journal
March 8, 2006
By JANE ZHANG

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FLUSHING, N.Y. -- In a cramped shop filled with stale aromas of Chinese herbs, Keary Drath, a stout Wisconsin farmer and self-appointed ginseng sleuth, picked up a dry, wrinkly ginseng root, broke it in half and chewed it.

Clerks and customers of Ginseng City Trading Inc., stopped haggling in their rapid-fire Mandarin and stared. "From China," he declared. "Not Wisconsin."

"What's the difference?" asked a shocked customer, Max Chen, who has used ginseng for 20 years. "They all say it is Wisconsin ginseng. I know Wisconsin's is superior."

Mr. Drath, 42 years old, wishes he had an easy way for Mr. Chen and millions of other ginseng buyers in Asia and in Chinatowns all over the world to make the distinction. The future of Wisconsin's century-old ginseng farming business, now under attack by global rivals, depends on it.

The root has been worshiped as an energy-balancing folk medicine for 5,000 years. Ginseng -- or Ren Shen, meaning "Man Root," in Chinese -- has two types. American ginseng (Panax quinquefolius) has a cooling effect. Asian ginseng (Panax ginseng) provides a hot rush of energy.

With its rich loam, sunlight and cool summers, Wisconsin -- especially Marathon County in the central part of the state -- produces premium American ginseng. It is more potent and more bitter than American ginseng grown elsewhere.

To an untrained eye, dried Wisconsin roots look the same as those produced in great quantity in Canada and China. Mislabeling and product mixing abound.

And that is threatening the livelihood of Wisconsin's ginseng farmers, whose roots trace back to the early 1900s when the four Fromm brothers began cultivating ginseng in Marathon County. Ginseng isn't easy to cultivate: It takes four to five years to grow ginseng under wood or fabric canopies.

"Kids are easier to raise than ginseng," says Stephen Kaiser, 59, of Rozellville, Wis., who has been grown ginseng since 1977. "Kids only get colds, flu or pneumonia, but ginseng, it tends to die very easily."

Mr. Drath's family, of Ogdensburg, population 215, has been growing ginseng for 35 years. For most of that time, Wisconsin ginseng and American were synonymous, and Marathon County was the ginseng capital of the world. In 1992, Wisconsin produced 2.4 million pounds of it, more than half of all American ginseng sold world-wide. Without marketing, Wisconsin farmers had traders from Hong Kong, Taiwan, Malaysia and Singapore clamoring for their ginseng, which is commonly used to balance energy, prolong youth and enhance virility.

Those days are gone. Wisconsin is now producing only 500,000 pounds a year, compared with Canada's five million and China's estimated three million. The ranks of Wisconsin ginseng farmers have shrunk to 200 from 1,600 in the early 1990s. Traders rarely visit. Most of the remaining ginseng farmers are losing money.

"There was ginseng next to the highway. There was ginseng in the hills there. There was ginseng everywhere." says Kelly Kieffer, 47, of Wausau, Wis., who is getting out of the growing business after 26 years. At one point, Mr. Kieffer employed seven full-time workers on his ginseng farm and at a retail store that sold canopies and other equipment for growing ginseng. He closed his store in 2001 and stopped planting ginseng last fall. "I think there's life after ginseng," Mr. Kieffer says. "I'm not sure what it's going to be."

What went wrong? It's a classic tale of a complacent American industry blindsided by aggressive foreign competition. In the early 1990s, Canada purchased Wisconsin seeds and converted tobacco farms to growing ginseng. American ginseng prices fell. Then Canada sold surplus seeds to China. It wasn't until 1994, when world ginseng prices had plummeted by 50% to about $15 per pound, where they have stayed, that Wisconsin farmers realized their livelihood was threatened.

"When the money was good, nobody cared," says Merle "Butch" Weege, executive director of the Ginseng Board of Wisconsin, a nonprofit marketing agency. "It was the fat-cat days."

The state of Wisconsin hasn't been much help. It introduced wild turkeys in Marathon County in 1991, and sold licenses to hunt them. The birds scratch the herb and wreak havoc. "Once the bird gets the ... taste of the crop, it will not change," says Joe Heil, 33, an Edgar, Wis., farmer and current president of the Ginseng Board. With state aid, Mr. Heil put up fences, but the birds fly over them. The state reimburses each farmer up to $15,000 a year for turkey damage.

Some farmers complain turkeys have more rights than farmers. "If I see him, I shoot him. Hasn't been really successful, but it scares 'em," says Randall Ross, 51, one of the biggest ginseng growers in Marathon County. He says he is hoping for bird flu.

So, as American farmers often do, the ginseng growers turned to Washington, but unlike farmers of major crops such as corn and soybeans, ginseng farmers don't receive federal subsidies -- or much attention. Ginseng is often smuggled into the U.S., mislabeled as dried vegetables, spices or even bamboo. But the Food and Drug Administration -- which inspects only 2% of imported food -- has told the growers that the agency has higher priorities.

The ginseng growers have had one minor lobbying victory: a provision in the 2002 farm bill that bars the use of the word "ginseng" from products made from anything other than Asian and American ginseng. The target was a cheaper herb popularly known as Siberian ginseng, which isn't in the Panax family. Tea and other products made from this herb are now marketed as Eleuthero, the Latin name for Siberian ginseng.

Delegations of Wisconsin ginseng growers have gone to China three times in the past two years hoping to expand markets and search for potential partners among Chinese pharmaceutical makers. In elevators and taxis, the mention of "Wisconsin ginseng" made them instant celebrities. But it didn't help them thwart vendors who were slapping the "Wisconsin" name on Chinese-grown ginseng.

The Ginseng Board is also pressing Agriculture Department officials to set standards for grading ginseng. It got $100,000 from the USDA to fund trade missions to China and hire a marketing representative in Shanghai. It's now seeking venture capital to promote the brand and control the process from production to sales.

What brought Mr. Drath to Flushing, in the New York City borough of Queens, is an effort to police the use of a seal, created 15 years ago by the Ginseng Board, to identify genuine Wisconsin-grown ginseng. The board is enlisting volunteers to visit shops from New York to San Francisco, buy samples and report stores displaying the seal on ginseng actually grown elsewhere.

Mr. Drath and another grower, Tom Hack, stood out among the Chinese clerks and customers in Queens's Chinatown. In one store they visited, clerks were putting ginseng grown elsewhere into boxes that displayed the Wisconsin seal.

Mr. Drath made only minor headway at Ginseng City Trading. After he declared that the store's bulk American ginseng is from China, sales clerk Peter Wang took down from the wall a Wisconsin Ginseng Board certificate that expired in 2002.

But Mr. Wang was hardly surrendering. "It's all Wisconsin ginseng," he insisted to his customers in Chinese, pointing to barrels of dry roots labeled, in English, "American Ginseng."

Write to Jane Zhang at Jane.Zhang@wsj.com

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