Herbs and Spice Sector Taking Root in Canada
Facing low commodity prices in an increasingly competitive global market, many Canadian farmers have diversified production away from traditional field crops. Some have decided to focus on the high value crops of herb and spice production.
Production in Canada has grown markedly over the past decade, keeping pace with fresh market growth. New crops, improved agronomics and varieties, and better processing are all pushing up levels of production.
According to the provincial ministry of Saskatchewan Agriculture and Food (SAF), the markets for herb and spice crops seem big, as projected global sales of C$500bn by 2010. "If Saskatchewan gets 1% of that market, that's C$500m for the province," says Dr Abdul Jahlil of SAF.
To succeed Canadian producers have to face new markets, learn new business practices and work through new regulations. Connie Kehler from the Saskatchewan Herb and Spice Association (SHSA) admits that the industry is in its early stages, but sees good progress so far. "Canada's competitive edge is a clean climate, and cooperative efforts on R&D," says Kehler. "[We also have] innovative producers who are capable not only of production but are also able to adapt machinery to fit crops' needs."
Kehler also stresses a good governmental support system has helped the industry grow. Other Canadian advantages include large amounts of potential acreage, and, more surprisingly, cold winter weather - winterkilling weeds out plants that are less than hardy and improves quality
These factors have led SHSA members to grow an estimated 30,000 acres of herb and spice crops in the province last year. Ten years ago, this acreage was negligible. Other provincial groups across Canada report strong growth over the last decade as well.
Tapping the potential of organics
To date, significant crops have included caraway, coriander, borage, dill, Echinacea, feverfew, ginseng and many others. Herb crops are often grown via certified organic production methods, while spices are generally not.
Capturing markets is a major challenge. According to Kehler, many producers find marketing to be difficult. But as there is no typical herb or spice producer, there is no typical market.
One big buyer is US- based McCormick and Co. (NYSE: MKC), which attributes the growing US spice and seasonings market to consumers wanting new and bolder tastes. McCormick's - which manufactures, markets, packages and distribute spices and seasonings - reported US$2bn in sales for fiscal end of 1999.
On a smaller scale, Ontario-based Global Botanicals markets and manufactures herbal products across Canada. "Our primary clients are small restaurants and restaurant supply chains," says Joel Thuna of Global Botanicals. His company also makes significant sales in ingredients and in the sales of herbal extracts.
Other market growth is with small food companies, horticulture businesses or even down pathways that lead direct to the consumer, such as farmer markets, or farmgate sales. All together, these small markets are substantial.
Marketing - the farmer's responsibility?
But to supply these niche markets means some of the marketing responsibilities will have to be borne by the farmer. SAF's Jahlil says the herb and spice sector is best viewed as a full business, as herb farming shouldn't end with production. Attention has to be paid to quality, processing and marketing.
Some producers are capturing these value-added opportunities, and are moving into different segments on the supply chain. Commercial growers who perform these added functions will reap higher revenues.
The Internet is also filling a role in finding new markets as more producers get online and business becomes more used to using new tools. One example of a new herb marketing initiative is www.lonewolfherbdir.com.
Nutraceuticals a growing outlet for herbs
Outside the food markets, the nutraceutical sector (including functional foods) is growing fast. While the Canadian nutritional market is estimated at about C$1bn, the USA, with a market estimated to be 25 times that, is far bigger and very attractive.
According to Thuna, the growing market for herbs in Canada is due to a graying population, who want to keep their health and avoid so-called ageing diseases. The other major demographic of herb buyers is women. Similarly, they are also concerned about their health and they also trust natural remedies.
But for all these trends to be made good, much will depend on how new regulations are developed in Canada. With industry groups like the SHSA and the Saskatchewan Nutraceutical Network (SNN), Ottawa's Office of Natural Health Products is working to develop standards and claims for Canada's new natural health industry for 2001. A system of licences will monitor and regulate the industry. If the new natural products package results in a liberation of the marketplace, herb producers will undoubtedly benefit as they will not just be selling commodities, but something with a higher value: health.
Running before they could walk: ginseng glut
Another problem is at the production level, with supply sometimes exceeding the maturity of the market. For example, growers in BC and Ontario grew over 1 million lbs. of the ginseng root in 1998; however, low international commodity prices forced North America's largest buyer of ginseng to seek temporary creditor protection. In a similar story, borage production climbed to 20,000 acres in 1999 but fell down to 3000 acres in 2000
By focusing on more value-added activities, farmers could hope to avoid the boom and bust economic cycle that seems to be as much as a part of farming as the weather.
There is a great deal of opportunity for the Canadian herb and spice industry to supply the growing markets. But this industry is still taking root.
By Arthur Hanks, just-food.com correspondent
Arthur is a Canadian writer who writes on food, fibre and other agricultural issues. He can be contacted by email on: email@example.com
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