From the July 1998 issue of Startups

Herbs are hot. From echinacea to ginseng, herbal remedies once considered on the fringes of medicine are popping up in pharmacies everywhere. Consumer demand for medicinal herbs is growing phenomenally, culinary herbs are growing strong, and herb farms are springing up across the country to meet the demand.

"The driving force right now [in the herb market] is the interest in alternative health-care products, herbal supplements, herbal medicinal products and dietary supplements," says Maureen Rogers, director of the Herb Growing and Marketing Network, an industry association in Silver Springs, Pennsylvania.

Besides processing herb plants, fresh-cut herbs and dried herbs, some growers also formulate and manufacture their own herbal products (e.g., shampoos and skin creams), which are sold by mail order or at retail stores on the farms.

An herb farm start-up faces the same risks as any farming enterprise, but if you're comfortable with the long start-up phase and the often significant capital investment, the rewards can be considerable.


Marcie Geffner is a freelance writer in Los Angeles who reports on small business and real estate.

Planting The Seeds

Tammi Hartung, 37, and her husband, Christopher, 36, purchased their 10-acre farm in Colorado in December 1995. The start-up costs for Desert Canyon Farm and Learning Center amounted to nearly $300,000, including a home on the property.

Some $17,000 went to securing water rights. "You have to go where the water and soil are good," says Tammi. Buying certified organic farmland--which means the grower uses no synthetic pesticides, herbicides or fertilizers--was also key, she says, because the natural-products companies she sells to demand it. (Certification may be handled by a state agency or a private organization, depending on your state.)

Today, the Hartungs' farm is a thriving operation; it brought in $120,000 last year. It's also a case study in maximizing the year-round productivity of an herb farm. "In the summer, we grow medicinal herbs that are harvested and shipped fresh to manufacturers of herbal products. We also do small-scale seed production for companies looking for native or organically grown plants," says Tammi. "In the winter, we use our greenhouse to do our own [starter plants]. We sell potted herbs to garden centers and nurseries."

The Hartungs' success can be attributed in part to their 20 years of experience with herbs and plants. Before starting the farm, Tammi worked as an herbalist and her husband managed an arboretum.

Ready To Harvest

Paul Bellezza, 46, planted his first crop at Bellezza Vista Farms in Parksburg, Pennsylvania, about two years ago. He expects to harvest the crop this fall. So far, 14 acres of his 33-acre property are planted or being planted with ginseng and echinacea. He's financing further planting with income from the sale of herb seeds.

Bellezza anticipates revenues of $20,000 to $40,000 per acre from wholesale brokers, but he's quick to point out the uncertainties inherent in herb farming: "I have letters of interest for the herbs," he says, "but they aren't ready to harvest yet, and we won't have any money in our hands until they are."

To drum up interest, Bellezza called potential buyers and listed his crops in the Herb Growing and Marketing Network's classified ad section. Eager customers are already calling to ask about his soon-to-be-harvested crop.

Bellezza and his wife, Mary, also 46, invested about $200,000 of their personal savings to buy farmland, a used tractor and most of the seeds for the first crop. Before planting, Paul researched which plants would be easiest to grow in the local climate and soil. "We grow herbs that are drought-resistant and require little care," he says. "[The goal is] to pick things that naturally grow in your area."

How Does Your Garden Grow?

Tara Orlando, 38, launched 35-acre Riddle Mill Organic Farm in Lake Wylie, South Carolina, in 1989, after a three-year search for certifiably organic property. The business grew rapidly; at one time, she sold close to $500,000 of herbs annually and had about 30 employees.

Orlando recently decided to downsize to make the farm more manageable and profitable. Today she generates $80,000 in annual revenue single-handedly. Her crops include both culinary and medicinal herbs; she also manufactures and sells herbal skin dressings and natural organic bath salts.

As the herb market has changed, so has Orlando's customer base. Riddle Mill's original customers were restaurants that used fresh culinary herbs. Today, she says, more business comes from retail sales of medicinal herbs.

Reaping What You Sow

Patience is vital: It typically takes a year or two before you can harvest and sell your first crop. Rogers estimates 2,000 to 3,000 people start commercial herb-growing businesses every year, but only about 25 percent survive the first 24 months.

To ensure you're not one of those casualties, you need to know something about farming, advises Rogers. "People think because they can grow plants in their backyard, they can [run an herb farm], but farming is totally different," she says.

Some risks--such as bad weather and insect infestations--come with the territory. New growers need to learn everything they can about planting and harvesting techniques, pest control, irrigation systems and more.

Another key to success is planting crops with a ready market. Think long-term: Just because an herb is popular today doesn't mean there will be a buyer for it at harvest time, two years down the line. "Lots of people start putting a crop in the ground because they heard it's a hot-money item, but they have no idea who they're going to sell it to," says Rogers. "You need good marketing techniques, a list of people who are buying medicinal or culinary herbs, and [knowledge of the] prices you can expect to get." You also need to know whether your intended customers want to buy plants, fresh-cut herbs or dried herbs.

To avoid getting stuck with slow-moving inventory, stay informed about herbal trends, line up interested buyers before planting, and be creative in seeking alternative customers if those buyers don't pan out.

Domestic herb growers face fierce competition from imported herbs as well as local farms. "You're competing with people in China, India and other countries where labor is cheap," says Rogers. Competing against low-cost imports starts with planting the right crops. Be aware of which herbs are being imported at unbeatable prices. "Don't try to go head-to-head with a crop you know is coming [into the country] cheap," says Rogers.

If you concentrate on high-quality or organically grown herbs, you'll get a better price from the smaller manufacturers that want those crops. (Big manufacturers tend to buy based on price.) An herb broker can give you tips about what's in demand and the likely price for your crops.

Success takes more than a love of natural living and a green thumb. "There's a romanticized view of herb farming and greenhouse work," says Hartung, "but when people realize they're going to spend 80 percent of their time on their hands and knees, it's a whole different thing." If you enjoy getting your hands dirty and can deal with the uncertainties farming brings, you may have what it takes to grow a prosperous herb farm of your own.

Resources

Trade Associations:

  • International Herb Association, P.O. Box 317, Mundelein, IL 60060, (847) 949-4372
  • Texas Herb Growers and Marketers Association, Route 8, Box 567, Brownsville, TX 78520, (956) 399-9510

Books:

  • Lists and reviews of herb books can be found on Herb Growing and Marketing Network's Web site and the American Botanical Council's Web site.
  • Order the business start-up guide Herb Farm (#1282, $59) from Entrepreneur Media Inc., 2392 Morse Ave., Irvine, CA 92614, (800) 421-2300.

Newsletters:

  • The Herbal Connection, published by Herb Growing and Marketing Network
  • The Business of Herbs, published by Northwind Publications, 439 Ponderosa Way, Jemez Springs, NM 87025, (505) 829-3448
  • HerbalGram, published by the American Botanical Council
  • AHA Quarterly, published by the American Herb Association, P.O. Box 1673, Nevada City, CA 95959, (916) 265-9552

For more information, visit Entrepreneur's Startup Kits.

Contact Sources

Bellezza Vista Farms, (610) 857-2162, pabe@chesco.com

Desert Canyon Farm and Learning Center, (719) 275-0651, fax: (719) 275-0815

Riddle Mill Organic Farm, 1098 Riddle Mill Rd., Lake Wylie, SC 29710, (803) 831-2506