Marketing HerbsHERBS: How the market works.
By Ian Dunbar
Guess what? You have to start at the bottom, just like anyone else whose Daddy didn't leave them the business. The marketplace owes you no favors. You must meet its demands; those are the requirements. You need to compete in a global economy, from a local level.
First things first, study the market. A first list should be made of plant products which are in demand. What you can supply will need to be on a second, more difficult list. Demand can be ascertained by a shopping trip, touring health food stores, pharmacies, food preparation specialists, and bulk botanicals dealers. Also, in some regions, craftspeople are looking for supplies of natural materials, herbal or otherwise. You may draw some stares as you busily list supplies and ingredients in these outlets, but it is well worth it, as a surprisingly substantial list may be garnered. Look at the prices, are you an overnight millionaire? Now think about it, you may get between 1/10 and 1/20th of that total, maybe even less.
There will be restraints at all levels, usually based on quality, purity and cleanliness. There will always be a demand for the freshest and highest quality products. Prices of course will be related to whether the third world can produce these materials at very low cost. The refinement of the second list (that which you can supply) will consist mostly of the following modifiers. Primarily, what are the most prolific species in your neck of the woods?
A minimum harvest of 500 lbs. is the lowest amount that should be considered, and this is dry weight for most herbs. A volume of 2000 lbs. should be available as an additional backup if you are dealing with serious buyers. You must be willing and able to supply these amounts in order to make it worthwhile, and to retain credibility in the marketplace. In addition you must be prepared to send samples before starting a serious harvest.
Be absolutely certain of the following: Latin name, the plant parts required, unquestionable cleanliness, no bits and pieces of other species may be included. This is true of both samples and full shipments. Remember, as a western producer, your "ace in the hole" is quality and purity and sanitation standards. Big name buyers can get cheap goods, of questionable origin and quality worldwide, they don't need also ran product from sloppy operations. Your purchasers pay top dollar for the best product and should receive nothing but the best product.
The best place to start is with a local broker, if you can find one. A broker is someone who puts buyers and sellers together, a knowledge of the market forces, prices, supply and demand and the contacts to get things rolling is a great benefit to the novice, and the broker will arrange a great deal of the paperwork involved in any transaction. Your broker will tell you what when and where to ship, who to ship through, and arrange for billing and collections. He or she will be come a "friend in the business" who can make or break your profitability.
Choose wisely. The pitfalls and unknown territories you are about to encounter can be extremely hazardous.
A final bit on brokers and the place they hold in the herb market, is that they can gather up a number of small producers, and with the cumulative total, wield a large influence on the larger wholesalers and manufacturers. They know all the specifications of size, water content, primary handling packaging methods, price ranges, storage specs, and a myriad of other factors that effect the marketplace, and the producer. The above concerns are common to grower and wildcrafter alike.
Avoid wasting the time of those who would be your benefactors. Make absolutely certain that you can supply an adequate quality, and quantity of product before you even contacts a potential purchaser. It is not their business to advise you on whether or not you can pass muster, and be successful in the herb business. That is your decision and your decision alone.
However, when you have ascertained that you can enjoy a certain level of success with any given product or group of products inquire about such things as price, demand, shipping, timeliness ,product form, minimum and maximum shipments, maximums won't be a likely problem, but it will indicate whether or not to expect to be able to expand this sector of your market.
How you will be compensated is another important consideration [probably the most crucial question to most readers]. Will it be by cash, check, money order, bank draft, or other method? How long will it take to get into your hot little hands? Immediate, C.O.D., 15 days, 30 days, divided payments and whom is to pay the original shipping: these are all things that need to be worked out up front. Will shipping costs are they to be billed on the invoice or is the bill paid at the destination? All good questions. Don't expect any breaks until the purchasers gain confidence in your ability to deliver good product regularly. Some brokers will come to you, but they are rare.
What happens to the products after delivery to your customer? For many, this is a question that needs no answer. suffice it to say that there are only a few really large processors, and many more re packers. A large number of popular brand names do no processing at all. They buy the quality of product in the blend that is right for a marketing plan, and pack it into retail sizes, label it and distribute it to the retail market.