Industry overview

Grow Your Own Herb Garden

Grow Your Own Herb Garden

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New producers interested in the organic greenhouse herb business should take the following into consideration.

The organic premium in wholesale markets seems to be running about 33%. However, the market is segmented to such a degree that direct-marketed fresh-cuts can bring an organic premium of 400% or more.

USDA Agricultural Marketing Service (USDA/AMS) reports weekly wholesale prices for conventionally grown culinary herbs at 18 U.S. terminal produce markets. (See www.ams.usda.gov. The Web site has in spring 2005 become more user friendly.) The Web-based e-zine New Farm now reports weekly prices for organic herbs and, through its network of volunteer reporters, plans to report information on farmers' market prices for organic herbs. On March

1, 2005, the only organic product reported through wholesale terminal market reports was basil, with conventionally grown basil selling for $9.60 (per dozen bunches), compared to $13.25 for organic basil (per dozen bunches) at the Seattle, Washington, terminal. (The New Farm site does not archive organic prices for comparison.)

The National Agricultural Statistics Service reported that, as of 2002, certified organic accounted for 30% of all U.S.-grown fresh culinary herbs in regular commercial channels. The Organic Price Index published on-line by New Farm (www.newfarm.com), compares organic and conventional fresh culinary herb prices, using USDA organic

Potted herbs for sale at the USDA Farmers' Market in Washington, D.C. Photo by Bill Tarpenning, USDA.

Potted herbs for sale at the USDA Farmers' Market in Washington, D.C. Photo by Bill Tarpenning, USDA.

Potted Herbs For Sale

data "gathered by AMS [USDA/Agricultural Marketing Service] employees" but reported separately from the National Wholesale Herb Report. Price comparisons over time (for conventional basil only) reveal that in November 1999, at the Philadelphia terminal, 15 bunches wholesaled for $13.00, and at the same terminal on June 3, 2002, for $10.00, or 11.00 to $13.00 airfreighted from Israel. On March 1, 2005, at the Philadelphia terminal, comparable amounts were $12.00 airfreighted from Israel and $12.00 from Florida. This demonstrates level or decreasing wholesale prices for fresh-cut herbs since 1999, despite slow increases for most food prices, due to inflation.

According to a West Coast organic wholesale produce vendor, the organic herbs coming through the Seattle Produce Terminal are from two sources: Herbco, a 45-acre certified organic farm in Washington state, and Jacobs Farm, a 300-acre certified organic farm in Pescadero, California. Jacobs Farm also sells for the 250-member Del Cabo Cooperative growing certified organic basil year-round in Mexico (Baja Sur).

Prices for the same herb the same week can vary among terminal markets. An unexplained anomaly is that an herb from Israel can sell for more than twice as much at an East Coast terminal than at a California terminal. West Coast terminal prices, under pressure from Mexican and Central American supplies, have decreased dramatically since 1999.

On March 1, 2005, at Boston and Philadelphia, the only organic herbs available were cilantro and parsley. At the San Francisco terminal, organic herbs available did not include basil but did include marjoram, oregano, tarragon, and chives. In Seattle, besides basil, herbs included lemon thyme, marjoram, oregano, peppermint, rosemary, sage, tarragon, chives, sorrel, spearmint, and thyme. USDA/ERS has just begun publishing organic prices (and corresponding conventional prices) for some produce from the Boston and San Francisco wholesale markets. Herbs could be added in the future. (See www.ers.usda.gov/data/organ-icprices.)

Grocery distributors depend heavily on wholesale sources for herbs. Food manufacturers rely on intermediate products such as essential oils, herb pastes and essences, and herb blends to season consumer products. Upscale urban restaurants meet their needs for the Mediterranean herbs (thyme, marjoram, summer savory, French tarragon, Greek oregano) from terminal markets, though they sometimes find the quality of local organic herbs very attractive. The prepping of herbs used as a food ingredient in meals served by restaurant chains and large institutions typically occurs far from the premises. Most public schools do not do food prep and cooking on site anymore. Due to concerted efforts by farmer groups in some states, some school systems have been re-educated about the advantages of buying produce from local sources. Farmer groups then must set up food preparation centers and deliver produce according to specification (washed, pre-cut, bagged, etc.).

The two top U.S. fresh-cut herbs year-round—parsley and cilantro—come from large, high-tech greenhouses in California, Mexico, and the Caribbean. Countries airfreighting fresh herbs and related specialty crops to the U.S. now include Mexico (lately Baja Sur), Peru, Costa Rica, Colombia, The Philippines, Canada, and France, as well as Israel, where dry desert air and mineralladen water provide a competitive advantage for Mediterranean herbs. Peru has the advantage of a complementary season. California, Florida, and Hawaii lead among U.S.-based suppliers—although an undetermined share of California production may be repackaged herbs from Mexico and Central America.

The New Jersey Department of Agriculture, in cooperation with Rutgers University, devoted significant time and money in the mid-1990s to development of a greenhouse herb industry, and for a time New Jersey greenhouse growers wholesaled horseradish, mint, cilantro, and basil to East Coast terminal markets. Now year-round herb farms have turned to direct marketing (see www.plochfarms.com), and Rutgers (the state university of New Jersey) has turned its attention to the economics and production of greenhouse flowers. See http://aesop. rutgers.edu/~farmmgmt/green-house/green-house-index.html. The New Jersey Fresh program lists (by county) twenty farms with greenhouses offering herbs through roadside markets and one pick-your-own herb farm with a greenhouse. None are certified organic. See www.state.nj.us/jerseyfresh/ index.html.

It is estimated that a city the size of Kansas City, Missouri, would need only one three-greenhouse operation to supply all of its culinary herb needs year-round—if the metropolitan area depended totally on local production. As in other aspects of herb raising, when the wholesale market expands, existing growers get bigger; improvements in transportation have facilitated imports of fragile crops from distant locations. However, volatility in oil prices is an unknown factor in projecting future markets for locally produced greenhouse herb crops.

New Farm is building a network that can report direct-marketed weekly organic produce sales (including fresh herbs). For updates, go to www.newfarm.com and follow the dashboard links. New Farm estimates that alternative marketing methods account for at least 50% of sales of organic fresh herbs. For an overview of direct marketing methods, see the ATTRA publication Direct Marketing.

Key success factors

  • Industry research (as reported in the media, including cookbooks that influence consumer awareness) will continue to dictate the market environment and determine the popularity and sales volume of individual herbs.
  • Grower development of marketing and research must be pursued diligently in order to identify changing environments and emerging opportunities.
  • Growers must be able to produce and handle multiple products, preferably from a variety of crops, in order to reduce dependence on market fluctuations for any single crop.
  • Developing a sales network of multiple buyers will reduce dependence on any single purchaser and increase the producer's relative bargaining power.
  • Due to labor-intensive practices of small operators—who cannot afford the high-tech, computerized greenhouses characteristic of foreign competitors in greenhouse production— growers must be able to secure a consistent labor supply at relatively low cost.

Adapted from Watts and Associates. 2002. Market Opportunities and Strategic Directions for Specialty Herbs and Essential Oil Crops in Montana. Prepared for: Montana Department of Agriculture, Billings, MT; USDA Federal-State Marketing Improvement Program, Washington, D.C. p. 42.

www.ams.usda.gov/TMD/FSMIP/FY2000/MT0294.pdf

Marketing Herbs Farm Market
Herbs for sale at the Crescent City Farmers' Market in New Orleans, Louisiana. Photo by Bill Tarpenning, USDA.

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