Marathon County ginseng faces critical threat in pandemic; Experts predict 30% of farms could close
The snow blanketing ginseng fields across Marathon County this week isn’t a bad thing, farmers say. It’s protecting the plants from waking up from the winter too soon, before workers can unroll the cloth shades that shield plants from the sun throughout the summer. Protection, however, for the farmers themselves is a scarce commodity as the COVID-19 pandemic shuts down prime export markets around the globe and threatens revenues already stretched thin after two years of trade war with China.
Will Hsu, owner of Hsu’s Ginseng Enterprises in Wausau, says he laid off 20% of his office and production workers on April 3, after three weeks of paying them full wages to cover partial hours. The remaining employees—and Hsu himself—have taken pay cuts. He’s applied for payroll protection, but there’s no guarantee there won’t be more cuts in the future.
“It was tough. Telling people who have worked for the company for ten, fifteen years that there’s just not enough business given everything else that’s going on,” Hsu said, whose company both grows and produces the ginseng into specialty items. “There’s not enough demand, there’s not enough sales to really give us a reason to keep staff around.”
In addition to major ginseng markets in China and other countries in Asia, Chinatowns across the United States in major cities like New York and Chicago form a significant portion of the market for ginseng products. The plant is a key ingredient in traditional Chinese medicine, according to the website for the Ginseng Board of Wisconsin, as well as popularly used in the West as a dietary supplement.
“Any major Chinatown across North America, you will find American ginseng products from Wisconsin. Those markets are being inordinately hit by coronavirus,” Hsu explained.
The pandemic is the latest in what Bob Kaldunski says has been a ‘perfect storm’ of threats for Wisconsin ginseng in the past two years, a problem compounded by a crop that takes an average of three years to mature. Edgar farmer and president of the Wisconsin Board of Ginseng, Kaldunski says two years of trade wars with China and unreliable weather has left the ginseng industry with a production cost that exceeds market prices. China has lowered or removed tariffs on many products, but ginseng—one of the first to be targeted by tariffs—has yet to see a reprieve, Kaldunski noted.
The COVID-19 outbreak now threatens the industry’s bottom line: both Hsu and Kaldunski predict as many as a third of the farms in Marathon County won’t survive the pandemic. Others may need to downsize production, which could leave Wisconsin ginseng farmers with an increasingly dwindling global market share.
In the 1990s, Marathon County was home to more than 1,000 ginseng farms producing the majority of the world’s supply. Today, most of that production has been lost to Canada and China, with about 170 farms remaining in Marathon County—which grows the vast majority of American ginseng. The United States is now only responsible for somewhere between five and ten percent of the global supply, Kaldunski said, despite the Wisconsin product being one of the most sought-after in the market.
“Eventually there comes a price point where consumers feel it’s not worth it anymore, or it becomes so much more expensive relative to what you can find more readily available that you just buy whatever’s cheaper,” Hsu said, explaining that higher standards for quality, environmental impact and labor mean a premium product with a higher price point. “Eventually, that market gets small enough and that supply gets small enough that we won’t be a meaningful amount. And then your buyers will stop coming, and then the market’s dead.”
Kaldunski says there’s some hope on the horizon as the industry invests in scientific research to expand the market and available products.
"We’ll be stronger than ever after this is through," he said. But he also admits that for a primarily aging workforce ready for retirement rather than weathering the storm, it may come too late for many. “There doesn’t seem to be any light at this point,” he said.
Recovery for the industry on the whole may not come earlier than 2021, Hsu told NewsChannel 7 on Wednesday. “[Laying off staff] is probably one of the toughest things we’ve had to do—if not in the entire history of the company, at least the last twenty years.”
"This is just another nail in the coffin, potentially."