Markets and marketing

Medicinal herbs have been traded around the world for many years. The botanical (herbal) raw materials are the plant parts— roots, barks, leaves and stems, flowers, seeds fruits, and resins. These materials are presented in a whole or cut form and sifted to a consistently even particle size.

Market prices are usually determined by supply and demand but generally tend to be stable. Most traded European herbs are priced at source in the range US$2.00 to US$6.00/kg. However, prices paid by end users of raw materials (manufacturers) would vary according to where in the supply chain the material is procured. There could easily be two middlemen between

the source of raw material and manufacturer of raw material. Middlemen can simply be trading herb material sourced from various growers and collectors or in addition can add value by sorting, cleaning, cutting and testing materials for supply to manufacturers. Prices for imported organic medicinal herbs can range from US$10.00 to US$20.00/kg, due to the more limited supply market. Prices for difficult-to-grow or rare herbs, can be US$120.00 (or more) at source.

The principal primary market for these raw materials is industry which manufactures:

  • essential oils
  • liquid extracts and tinctures
  • herbal teas
  • concentrated extracts (the form required for the manufacture of tablets)
  • plant-derived pure pharmaceutical drugs.

Leaving aside the essential oil and pharmaceutical drug markets, there are at present in Australia, about six manufacturers directly using dried herbal raw materials for the manufacture of liquid extracts. A number of manufacturers use mostly imported concentrated extracts for the manufacture of tablets, functional foods and personal care products. There are also a number of herbal tea manufacturers using both imported and Australian-grown herbs for various ranges of herbal teas in mass and boutique market channels. An example of the supply chain is provided in Figure 1.

As the expected Australian domestic and export market for herbal medicine develops, opportunities will arise for the development of a primary industry to supply and support the growth of this market. Access to export markets can be facilitated by the clean green image that Australian agriculture presents to the world.

Three other factors, which if considered in conjunction with the increase in demand for herbal medicines, also suggest that there will be future opportunities for the development of an Australian herbal primary industry.

• Wild harvesting is becoming increasingly unsustainable. Until the late 1990s probably close to 70% of traded medicinal herbs (by number of herbs) were harvested from wild plant populations. Some harvesting practices known as "wildcrafting" are defined by accepted harvesting protocols to ensure continuing viability of plant populations. However, many herbs are just gathered, without regard to a sustainable

Figure 1. Supply chain example for various ranges of herbal teas in mass and boutique market channels

future supply. In the situation of an ever-growing world demand for medicinal herbs, sooner or later various plant species will become "endangered". Examples of enforceable prohibitions already applied to the trade in wild harvested plant species are: Prunus africanum (pygeum) and Hydrastis canadensis (golden seal).

  • As the market grows for herbal medicine, so too will the market and regulatory requirement for herbal raw materials to meet quality standards of safety and efficacy. The international trade of sub-standard raw materials has long been a feature of this industry, so there will be a greater opportunity for a primary industry in Australia to lift the bar on the quality of raw materials available.
  • The Australian quarantine regulations for importing raw herbal materials are a significant barrier. It is now getting to the stage where it is very difficult to import raw botanical material without some form of quarantine-prescribed treatment. This results in an increase in costs, time delays and possible compromise to the quality of the raw materials. In the situation of an expanding market, this again suggests a greater opportunity for an Australian import-replacement primary industry.

In supplying a consignment of herb to a manufacturer, a herb grower must follow certain steps, as follows:

• All packaging must be clearly labelled with herb botanical name, batch number, gross/net weight, name of supplier.

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  • The contents of all bags of herb from one batch must be of uniform colour and appearance.
  • All herb supplied must be properly dried and free of extraneous material. The Code of Good Manufacturing Practice prescribes that there be no more than 1% extraneous vegetable matter and no soil or animal matter.
  • A certificate of identity must be supplied with each product, with material identified by botanical name, plant part and batch number. This certificate should state whether the herb is organically grown (details of organic certification should be supplied) or details of any chemicals used.

Acceptance of a herb consignment by a manufacturer is contingent on the herb consignment conforming to specifications. These typically cover the following:

Identity: Does the herb comply by macro-identification assessment, thin layer chromatography (TLC) fingerprint analysis, or high performance liquid chromatography (HPLC) profile?

Purity: Is the level of extraneous matter within specifications?

Efficacy: Determination of the presence and quantification for the active chemical constituents or marker compounds, through analysis such as HPLC, gas chromatography, mass spectrophotometry.

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