China-bound ginseng suddenly in jeopardy
MARATHON COUNTY, Wiconsin: There are ginseng farms in this remote corner of Wisconsin where phones are answered in Mandarin. Others have opened storefronts or retrofitted spare rooms to welcome busloads of Chinese tourists and business people.
This rural area built an important local industry as a purveyor of a premium product for China’s rising middle class, where its ginseng is sold in boxes bearing the American flag and the line, “Something Special from Wisconsin.”
Now trade tensions between the United States and China threaten a niche market that employs hundreds of workers and supports dozens of family farms in a rural community where other options are limited.
The uncertainty surrounding Wisconsin’s ginseng industry exemplifies the unforeseen consequences of President Donald Trump’s trade policies in a complex and globalised economy. It also could foreshadow harms to a range of specialised products across rural America, from lobsters in coastal Maine to macadamia nuts in Hawaii, that cater to China’s expanding middle class.
In central Wisconsin, US brokers are monitoring the Chinese market for a decline in sales after China imposed a 15 per cent tariff on ginseng, part of its response to steel tariffs levied by Trump.
Some say importers already have demanded price concessions at a time when many farms are barely clearing production costs.
Ginseng exports are a US$ 30 million industry in Marathon County, and local economists estimate that each new job in ginseng creates as many as four additional jobs. “Americans are the losers in all this,” said Mike Klemp-North, the director of operations at Hsu’s Ginseng Enterprises, the county’s secondlargest ginseng farm. “This is one product we had, of all the products we trade, that the Chinese really wanted from us.”
At Hsu’s sprawling operation, more than 100 full-time workers bustled around on a recent offseason afternoon - tuning up machinery, packing tea bags into boxes, and “cruising,” or sorting, barrels of roots.
Chinese-language catalogues and calendars flank the entrance to the farm’s retail office. A conference room is decorated with laminated clippings from Chinese newspapers, as well as framed photos of company founder Paul Hsu meeting executives from Alibaba, a Chinese e- commerce giant, and Foxconn, the assembler of
This rural area built an important local industry as a purveyor of a premium product for China’s rising middle class, where its ginseng is sold in boxes bearing the American flag and the line, “Something Special from Wisconsin.”
Apple’s iPhone that last year announced plans for a US$ 10 billion ( RM38 billion) plant in Wisconsin.
Foxconn recently promised to help local growers market ginseng in Asia, a collaboration that developed after chief executive Terry Gou began buying it.
In the past four years, Hsu’s has added four automated field machines worth about US$ 100,000 apiece and a US$ 1.9 million processing facility, allowing the farm to ship more and better product, farm manager Nick Sandquist said.
At 46 years old, Hsu’s Ginseng is among Marathon County’s youngest ginseng farms. Many of the region’s 180 small growers have been built up over four or five generations, largely on the strength of trade with China.
Historically, middle- and upper- class Chinese consumers have given the pricey root as gifts, or used it to brew teas and broths believed to confer a range of health benefits. As the Chinese middle class has grown, however, so has the demand for Wisconsin ginseng - from bitter candies to K- cups.
According to the Ginseng and Herb Co- Op, a local nonprofit cooperative that represents growers, ginseng production has risen at a rate of about 10 per cent for each of the past five years.
But since ginseng became entangled in a budding USChina trade war, that trajectory has grown complicated.
“I’m worried. I’m worried for my son,” said Sandquist’s father, Ron Sandquist, who served as farm manager for 30 years before retiring 10 years ago. “If it all goes haywire, they have a lot of money invested.”
Farmers here say they fear that crisis may be drawing close. On Apr 1, China placed a 15 per cent tariff on American ginseng, along with tariffs on 127 other US products.
The dispute began in March, when Trump announced tariffs on foreign steel and aluminium, later exempting US allies but not China. In subsequent rounds of tit-for-tat retaliations, Trump proposed additional levies on Chinese electronics, aerospace and machinery products, while China targeted ginseng, soybeans, corn, pork, fruit and nuts.
Agricultural groups have warned that the tariffs could significantly damage the farm economy. But the injury may prove especially grievous in a place like Marathon County, where an entire industry depends in large part on trade with China.
In 2017, direct sales to China accounted for US$ 14.1 million, or nearly half, of Wisconsin’s ginseng trade, according to the state department of agriculture. Hong Kong, which acts as a gateway to the Chinese market, accounted for an additional 41 per cent, with smaller sales to Canada, Singapore and Taiwan making up the remainder.
That money doesn’t just end up in farmers’ pockets: A network of farmworkers, brokers and bilingual salespeople has grown around the industry. According to one analysis by economists at the University of Wisconsin at Whitewater, ginseng production generates US$ 43 million in local economic activity annually.
“If you lose even a little bit of demand, it starts falling apart,” said Russell Kashian, the lead author of the UW analysis. — WP-Bloomberg