Wisconsin ginseng growers worry about new Chinese tariffs
A brief look into who began the cultivation of American ginseng in central Wisconsin and what made Marathon County the number one producer in North America.
WAUSAU - Ginseng growers in Wisconsin are worried about the future of their business after a tariff went into effect overnight in China.
The tariff places an extra 15 percent charge on top of the price of American ginseng in China, in response to the Trump administration's newly imposed tariffs on steel and aluminum entering the U.S.
China also is imposing tariffs on other products such as pork, fruit, nuts and wine.
The Chinese government suggested the tariff last month and originally planned to wait 60 days before it was enacted, but the process was accelerated and the tariff went into effect early Monday morning, said Bob Kaldunski, the president of the Ginseng Board of Wisconsin, based in Wausau. China is the largest consumer of American ginseng.
Kaldunski said he was surprised by China's quick implementation and believes that the tariff will have detrimental consequences for Wisconsin's industry. Wisconsin is home to 95 percent of the American production of the plant.
The American root is regarded as the best ginseng in the world, Kaldunski said. Recently, ginseng has been proposed as the Wisconsin state herb and was even a part of the Foxconn development proposal, which would boost local growers by distributing the root more widely, and in different forms.
Chinese consumers may opt to buy Canadian ginseng because of larger price differences that result from the tariff, Kaldunski said.
"Wisconsin ginseng is already demanding a higher market price," he said. "Another 15 percent and the consumer will shy away."
President Donald Trump signed off on a new U.S. policy in early March that imposed a 25 percent tariff on steel and 10 percent on aluminum. As soon as the papers were signed, other countries threatened to retaliate with tariffs of their own, including China and the European Union.
Farmers had no way to predict an event like this in the ginseng market, said Will Hsu, vice president of operations for Hsu's Ginseng in Wausau. It's a unique situation because most of the crops that will be harvested and sold this year were planted in 2014 or 2015.
"These crops were planted three to four years ago when the market was high," he said. "We couldn't plan for this. It's not like I can choose to plant less this spring and harvest less this fall, but that's the risk of farming and growing ginseng."
Hsu said that there's also less protection against steep price drops for ginseng farmers. There are no futures markets for the root crop, like there are for beans, corn, pork or dairy, he said, which makes the crop more of a risk.
The Wisconsin ginseng industry likely won't see an effect right away, but once fall arrives and farmers start to harvest, Kaldunski said growers will feel the downward pressure on the market. In the meantime, growers are encouraging state and national legislators to take action and protect Wisconsin's agricultural industry.
"Wisconsin has a very agricultural economy," he said. "Overall, yes, these tariffs are going to have an effect on our economy."