WAUSAU — Wisconsin’s ginseng farmers are uniquely positioned to bear the brunt of the trade dispute between the U.S. and China, according to Will Hsu of Hsu’s Ginseng in Wausau.
Each year, Wisconsin farmers grow more than 1 million pounds of ginseng, and about 85 percent of that is exported to China, which in turn brings between $30 and $50 million back to Wisconsin farmers.
But as Chinese tariffs on ginseng imported from the U.S. drive up the price of a product that can already cost more than $50 per pound, Hsu said the industry is feeling push-back from Chinese consumers.
“Any time you walk into a store, you know, roughly, what the price of something should be,” Hsu said June 18 during a panel discussion about U.S.-China trade relations. “One of the reason ginseng farmers are taking the hit right now is customers have gotten used to the pre-tariff price.
“They still want that same price for the same product.”
Hsu said tariffs on ginseng in 2018 were about 8 percent. Today, tariffs have hit 38 percent and are growing, he said.
“What that does is dampen demand for the product here,” Hsu said. “In some cases, the buyers are saying, ‘The farmers should take the hit from the tariff.’ They’re basically asking the farmers to take a 30-percent decrease in price.”
Wisconsin farmers began cultivating American Ginseng in the 1800s, according to the Ginseng Board of Wisconsin. Today much of the Wisconsin ginseng industry is found in Marathon County, and Wisconsin farmers provide 95 percent of the total American ginseng crop.
Ginseng is a key ingredient used in traditional Chinese medicine as a supplement to increase energy and relieve pain.
“Wisconsin-grown ginseng probably makes up less than 10 percent of the global production of all American ginseng,” Hsu said. “It is the most highly prized and it is the highest priced. When you are something like that, you have to protect your brand and identity.”
But despite the reputation of Wisconsin-grown ginseng, Hsu said the tariffs are making it more economical for farmers in China to increase production or for imports from Canada to increase.
“You’ve seen the price paid to Wisconsin farmers decrease over the last two or three years by well over 30 percent,” he said. “That makes it difficult to pay your bills; it makes it difficult on farmers to continue this type of livelihood; and it creates a shock to the system in terms of amount of product you can produce or sell.”
Hsu said there were more than 1,000 ginseng farmers in Wisconsin in the mid-1990s, and that number has dwindled to fewer than 150 now, mostly in Marathon County. Long term, Hsu said, continued tariffs could lead to even fewer ginseng farmers in the state.
“No one is going to want to continue to grow these products if you can’t make a living doing it,” he said. “It’s a shame because this is the heart of ginseng country.”
Don Radtke of the Wisconsin Farm Bureau and a Marathon County dairy farmer said tariffs on milking equipment and other made-in-China products that are required to keep farms running are being felt by dairy farmers already struggling with low prices on what they are producing.
“The dealerships are having to pay a tariff to get those products into the U.S., and we the farmers are ending up having to pay for that,” Radtke said. “What happens in Beijing affects us at our farm gate. We’re losing those markets, and by losing those markets, how long and what is it going to take to get those back? And how much are we going to continue losing until we get those back?”
For the first quarter of 2019, Wisconsin dairy exports to China are down by 50 percent compared to the first quarter of 2018, according to Wisconsin Department of Agriculture, Trade and Consumer Protection Secretary-designee Brad Pfaff.
The recent tariffs have compounded issues much of the agriculture industry has been facing through several years of depressed commodity prices, according to Trisha Wagner, UW-Extension Farm Management Outreach program manager.
“There’s a lot of chronic stress that farmers have dealt with over the last few years, including before the tariffs, but the tariffs haven’t helped,” Wagner said. “That stress has been felt in rural communities through economics and relationships with families.”
Pfaff said Wisconsin officials are continuing to stay in touch with officials in China in an effort to keep markets open in the event the trade dispute is resolved.
“Wisconsin agriculture has invested a lot of time, a lot of money, into developing relationships with different countries, government officials, agribusiness partnerships around the world,” said panel moderator Pam Jahnke of Wisconsin Farm Radio Report.
President Donald Trump wrote on Twitter June 18 that he and President Xi Jinping of China would have an “extended” meeting at the Group of 20 meeting this week in Osaka, Japan, raising hopes that an end of the dispute could be near.
“When countries get together on relatively even terms, they specialize in ways that improves the productivity of those countries and benefits consumers as well as producers in those countries,” said Dr. Ian Coxhead of the UW-Madison Department of Agricultural and Applied Economics.
Coxhead said tariffs imposed by the U.S. take from the bottom line of farmers by increasing costs and tariffs imposed in retaliation come off the top line by lowering the price paid to farmers for the goods they produce.
“That squeezes profits from both sides, so it’s a real big pain,” he said. “If you’re going to have a tax that eats into the bottom line and cuts off the top line as well, there better be some benefits, as well.
“Farmers need to ask, ‘Where are the benefits, and how long do I have to wait?’”
Both Coxhead and Pfaff agreed that China needed to be reined in on several fronts regarding trade but that there should be ways to accomplish that other than trading tariffs across the board.
“China is a bad actor on intellectual property rights; they’re a bad actor on subsidies to their state-owned corporations; they’re a bad actor on two or three other areas, as well,” Coxhead said. “Those impact the global trading system because China is the world’s largest trading power.
“But what we’re doing by applying tariffs right across the board on every product coming from China and, in turn, inviting retaliation from China on just about every product sold by the United States is equivalent to my wife and myself disagreeing about who does the dishes and I say, ‘OK, forget it, I’ll burn down the house.’ That has long-term consequences.”
“The Chinese should not be stealing United States’ intellectual property,” Pfaff said. “But how did agriculture get to be collateral on that? We should not be collateral on the fact that we need the Chinese to stop stealing U.S. intellectual property.
“I do not believe food should be used as a negotiating tool.”
Hsu said that no matter the outcome of the U.S. trade dispute with China, consumers should play the biggest role in the future of the agriculture industry. Hsu said his challenge is convincing consumers in China the value of ginseng that is grown in Wisconsin. For farmers of other Wisconsin products, the job would be to convince consumers closer to home of their products’ value.
“We have to ask ourselves as consumers some very real, hard economic questions,” Hsu said. “We make these choices as consumers every day. (We have to get consumers to) care about the farm they are buying from.
“The most dramatic economic impact American consumers can have on family farms is figuring out where your food comes from and actually caring and then choosing to buy.”