Two decades ago, Wisconsin reigned as the world’s leading producing area of cultivated North American ginseng (Panax quinquefolius, Araliaceae) roots. Ginseng sales generated about $125 million annually in gross income to the state’s growers at that time,1 and the state produced approximately 2.4 million pounds of ginseng back in 1992.2 During the last 20 years, there have been two significant challenges to the Wisconsin ginseng Industry: (1) increased competition from Canada and China (where North American ginseng [NAG] seeds have been exported from Wisconsin and planted for commercial production), and
(2) the misappropriation of the Wisconsin ginseng trademark by unscrupulous sellers passing off Asian ginseng (P. ginseng) or ginseng cultivated elsewhere as “Wisconsin-grown.”
These developments have forced around 90% of Wisconsin’s former 1500 ginseng farmers to abandon the market and cease cultivation.1 The state’s approximately 150 remaining ginseng farmers and the organizations representing them have now initiated efforts to revitalize the industry and protect the image and reputation of Wisconsin-grown ginseng from false and misleading marketing practices. Foremost among such efforts was a decision in December of 2006 by the Ginseng and Herb Co-op (GHC) and the Ginseng Board of Wisconsin (GBW), two nonprofit, tax-exempt organizations representing all Wisconsin ginseng farmers, to enter into a contract with Eu Yan Sang International Ltd (EYS), the venerable 128-year-old Singapore-based traditional Chinese medicine company. The contract guarantees that EYS will purchase a significant share of Wisconsin’s ginseng crop each year and grants EYS exclusive rights to the Wisconsin Ginseng Seal®.3
The GBW operates under a state market order, which requires all members of the Wisconsin ginseng industry to contribute a percentage of their sales to a marketing fund (B. Weege, oral communication to C. Cavaliere, October 30, 2006). The GBW is responsible for using those funds to develop new market channels for Wisconsin ginseng and its products, support plant pathology research, and provide NAG products for medical research studies aimed at identifying the therapeutic benefits of using Wisconsin ginseng.
The GHC was created through the GBW for the purpose of selling pure Wisconsin ginseng throughout the world (K. Drath, oral communication to C. Cavaliere, January 26, 2007). All Wisconsin ginseng farmers are eligible to sell their ginseng through the GHC, but not all participate.
The GBW developed the Wisconsin Ginseng Seal Program in 1991 to officially identify ginseng and ginseng products that contain 100% pure, authentic Wisconsin-grown NAG roots. The seal (see Figure 1) is intended to be seen as an indication of the product’s quality, as NAG grown in Wisconsin is internationally revered for its “potency,” at least according to sources in Southeast Asia (R. Eu, e-mail to C. Cavaliere, February 28, 2007). During the early 1990s, there were at least 250 members of the Wisconsin Ginseng Seal Program, but this number had dwindled to around 50 by 2006 (B. Weege, oral communication to C. Cavaliere, October 30, 2006). The recent contract with EYS has now caused the membership of pre-existing companies to permanently expire and limited the program to only one member—EYS.
“There’s been so much contaminated ginseng coming into the market and so much fakery out there,” said Keary Drath, of the GHC. “We wanted to make sure that consumers are able to reach true Wisconsin ginseng.” According to Drath, the new arrangement with EYS will provide stable working conditions for Wisconsin ginseng farmers and eliminate some of the competition from mislabeled ginseng falsely marketed as “Wisconsin-grown.” Farmers will also have assurance that testing and quality standards are in place and being employed.
“We believe this is a great opportunity for the industry,” said Merle “Butch” Weege, executive director of the GBW (oral communication to C. Cavaliere, January 30, 2007). “We’ve found a reputable long-established firm that has a good reputation for product quality, and they promote to high-end clientele. I think our farmers, in the long term, should be happy with this.”
The GHC has entered into a 3-year contract with EYS with an option to renew in 3-year blocks, which guarantees that EYS will purchase a certain minimum quantity of ginseng from the co-op each year. Through this contract, EYS will acquire a significant share of Wisconsin’s ginseng crop but not the entire crop, since ginseng farmers do not necessarily have to sell their NAG roots through the GHC. “A grower still has the choice to market his product directly or through an older distributor that [the grower is] comfortable with,” said Weege. Farmers that sell their ginseng through other distributors, however, will not be able to identify their product with the Wisconsin Ginseng Seal, as they had the option of doing in the past through contracts with GBW.
EYS has commented that the new arrangement should benefit both the company and Wisconsin ginseng farmers. “We’ve been trying to align ourselves with the most premium product in each category,” said Richard Eu, group CEO of EYS (oral communication to C. Cavaliere, February 24, 2007). According to Eu, Wisconsin-grown American ginseng is widely considered the finest available NAG and is highly valued in Asia, so the exclusive distributorship of officially-recognized Wisconsin ginseng should help EYS fulfill its company mission and validate its role as a global healthcare player.
One of the reasons Wisconsin-grown ginseng is so highly prized in Asia is based on the Chinese concept of didao (meaning “genuine” or “of native origin”). “Didao is the idea that a plant that grows in its place of origin (where it is naturally found) is better in its quality—we would say, it has better qi—than if it were to be cultivated somewhere else where the conditions are different (soil, moisture, sunlight, weather patterns, etc.),” explained Subhuti Dharmananda, PhD, director of the Institute for Traditional Medicine in Portland, OR, and a widely recognized authority on traditional Chinese medicine (e-mail to C. Cavaliere, March 23, 2007). He noted that it is a common practice to transplant and cultivate plants for commercial production over a wide geographical area, including places that are not a plant’s natural habitat. According to Dr. Dharmananda, some transplanted crops may be just as good as those grown in their native range, whereas other transplanted plants may grow poorly in a non-native environment and appear obviously inferior to herbs or crops grown in their native areas. He added that the concept of didao sometimes has practical implications in China, in that a didao herb may be sold for a higher price than the same herb grown in a non-native area. “Whether or not the more costly herb is medicinally better is another story. But, if it grows big, firm, and sweet (in the case of codonopsis [Codonopsis pilosula, Campanulaceae]), that would show that it grew in the ‘right’ place,” he explained.
According to Clifford Eu, group managing director of EYS, research in China indicates that there are also chemical differences between didao-grown and non-didao-grown herbs, which can be verified with established and emerging analytical technologies (C. Eu, e-mail to C. Cavaliere, April 5, 2007). He stated that a major reason for the higher price of didao herbs is the idea that “traditional formulas and dosages are based on didao herbs, so using non-didao herbs would not have the same effect as documented in the classical texts.” NAG grown in China, western Canada, or areas of the United States outside its native range—even if the ginseng seed originated from a native area such as Wisconsin— could therefore be considered inferior to Wisconsin-grown ginseng by some consumers, under the concept of didao.
According to a press release from EYS, the company expects revenue in the first year arising from the distributorship to be in excess of $10 million (Singapore dollars, approximately $6.5 million USD), with the potential to grow to more than $40 million (approximately $26 million USD) in the next 3-5 years.3 In March of 2007, the company celebrated the launch of new quality assurance and processing facilities in Hong Kong, specifically for the fingerprinting and testing of Wisconsin-grown American ginseng.4
Eu pointed out that the contract should be a boon for Wisconsin ginseng farmers as well. “The farmers in Wisconsin have been losing market share over the years. The reason is that other countries grow American ginseng and sell it at a lower price, and much of it is being passed off as ‘Wisconsin ginseng’,” he said. “By giving exclusivity to one distributor, they feel that they can better control the market and maintain their image and market share.”
The relatively large membership of the Wisconsin Ginseng Seal Program in past years proved difficult to manage by GBW and was prone to abuse. According to Weege, there were at least 250 members of the program in the early- to mid-1990s, many of whom were root resellers and producers of NAG-based value-added products located outside the United States (B. Weege, oral communication to C. Cavaliere, October 30, 2006).
“We introduced the program in Hong Kong because China has always [been] and continues to be our primary market,” said Weege, referring to ginseng’s widespread use and popularity in China and Southeast Asia. The program, however, proved extremely difficult to monitor overseas. What Weege calls “unscrupulous” business people began to realize that they could profit by pirating the Wisconsin seal and that the GBW was largely incapable of policing them from abroad. Weege and GBW President Joe Heil served as delegation members on a mission to promote trade with China in March of 2004. “It was our first travel to China and it immediately became apparent that the abuse of our [trade]mark was blatant and rampant. In every town we went to, from Beijing south to Hong Kong, the Wisconsin seal was there. Ironically, we no longer had any international-based seal members at that time,” Weege said.
Before limiting the program to EYS, the GBW had around 50 domestically-based members in the program. The GBW would monitor these members through unannounced onsite visits and by purchasing and testing products bearing the seal to verify that they were accurately identified. GBW would test primarily for fungicide residues, which can be indicative of geographical origin, as regulations in various countries allow differing agricultural chemicals to be used on ginseng. Because ginseng is cultivated under 75% shade to simulate the natural forest canopy light conditions, and requires considerable moisture, these conditions produce an environment that is conducive to the occurrence of fungi that attack the roots, producing the common “root rot” that has historically decimated many cultivated ginseng fields.
The GBW would also embark upon investigations across the United States and in other countries to stop sellers without contracts from illegally marketing their products under the Wisconsin seal. The organization would issue cease-and-desist orders to violators and pursue further legal action if the abuse continued. In many cases, falsely-marketed ginseng is not even NAG but Asian ginseng, which is chemically different, claimed to produce different pharmacological effects, and historically has cost less than NAG.5 According to Drath, because of rampant product mixing and mislabeling, many consumers were losing confidence in the ginseng being sold in Chinatown shops as well as in the old distributors that carried the Wisconsin seal.
The government of the People’s Republic of China began to show some interest in stopping sales of imposter NAG and the piracy of the Wisconsin seal in China last year.1 According to Weege, complaints of ginseng quality standards and piracy of the Wisconsin seal were raised by a Chinese citizen during an open government initiative on March 15, 2006, wherein citizens were encouraged to freely voice their concerns to government representatives (B. Weege, oral communication to C. Cavaliere, October 30, 2006). The government then began to assist the GBW in its efforts by seizing infringing products and issuing fines for illegal use of the Wisconsin ginseng seal.
“The Chinese government has of late been more responsive to taking actions against fraudulent traders in China for many products, including fraudulent medicines and ginseng products,” said Eu (R. Eu, e-mail to C. Cavaliere, February 28, 2007). “No figures on seizures are available, but it is expected that complete misuse of the seal and [false] product labeling will take some years to eradicate. With our Eu Yan Sang’s brand reputation to offer consumers nothing short of quality and authenticity of our products, we aim to offer consumers more assurance when purchasing these valuable roots with the seal-imprinted packaged products under our brand name.” (See Figure 2.)
According to Weege, the now-restricted membership in the Wisconsin Ginseng Seal Program should improve the GBW’s efforts to monitor officially recognized Wisconsin ginseng product and prevent seal piracy (B. Weege, oral communication to C. Cavaliere, January 30, 2007). Weege stated that the GBW will continue to be vigilant for illegal use of the seal and that it would have an ongoing obligation to monitor its seal member. The GBW is also involved with multiple projects to enhance the production and image of Wisconsin ginseng. The GBW has been working with the US Environmental Protection Agency (EPA) in developing and testing safe pesticides for NAG crops as part of a 10year strategic pest management program with the University of Michigan (B. Weege, oral communication to C. Cavaliere, October 30, 2006). In addition, the GBW has been collaborating with the United States Department of Agriculture (USDA) to develop grade standards for cultivated NAG. GBW is also working with the University of Wisconsin at Madison to develop a “fingerprinting” technique to assess and determine ginseng root origin (by testing for the medium in which the plant was grown, i.e., absorption of properties from soil that would indicate geographic origin, as opposed to DNA fingerprinting).
The industry still faces major challenges, particularly in regards to foreign competition. In the early 1980s, growers in Canada (primarily in British Columbia and southern Ontario) began purchasing Wisconsin seeds and cultivating American ginseng. In Ontario, much of this ginseng cultivation is performed on former tobacco farmland, while much of the ginseng grown in British Columbia is cultivated on former hay fields. NAG seeds were later sold to China.2 According to a 2006 article in the Wall Street Journal, Wisconsin has been producing around 500,000 pounds of ginseng a year, which is a sharp drop from the 2.4 million pounds it produced in 1992. Canada, on the other hand, now produces around 5 million pounds of ginseng each year. The Canadian public company Chai-Na-Ta Corp, based in British Columbia, has become the global leader in the production and export of NAG, with 1500 acres under cultivation and an annual harvest of up to 1 million pounds.6
Moreover, despite the long-standing reputation of Wisconsin ginseng as being of superior quality, evidence indicates that the NAG grown in Canada is chemically identical or very similar to that grown in Wisconsin.5 “The British Columbia ginseng industry was developed from seed acquired from Wisconsin. We have always held that the chemical profiles of Wisconsin ginseng and that grown in British Columbia are very similar,” explained Dennis V.C. Awang, PhD, president of MediPlant Consulting Inc. and a former member of Chai-Na-Ta’s Board of Directors (oral communication to C. Cavaliere, November 7, 2006). Studies have demonstrated that Asian ginseng, on the other hand, is chemically different than NAG, as NAG contains different levels of certain ginsenosides than Asian ginseng and lacks the ginsenoside Rf.7,8
According to Harry HHS Fong, PhD, professor emeritus of pharmacognosy at the University of Illinois at Chicago, the Hong Kong Department of Health is developing standards of quality for herbs sold in Hong Kong (the “Hong Kong Chinese Materia Medica Standards” [HKCMMS]). Dr. Fong, who is a member of the HKCMMS International Advisory Board, said that the project plans to test samples of NAG from British Columbia, Ontario, Wisconsin, and China to develop the quality standard for this herb. After this analysis is concluded, the assay data may provide evidence as to whether there are chemical differences among them. However, this research could take up to a year, or longer, and will probably start later this year. Dr. Fong said that when this research is completed, researchers should have a better idea of the intrinsic chemical differences in the NAG grown in different geographical regions (H. Fong, oral communication to C. Cavaliere, December 7, 2006).
According to Weege, ginseng grown in the United States and Canada is still dissimilar for other reasons, particularly since pesticide residue standards are different for the two countries. The fungicide MAESTRO 80 DF (captan), for instance, received an emergency registration for use on ginseng in Ontario in July of 2006 from Canada’s Pesticide Management Regulatory Agency, for use in combating Phytophthora root rot due to the year’s extremely wet weather.9 However, in a ginseng crop report released by the Ontario Ministry of Agriculture, Food and Rural Affairs, growers intending to export their ginseng were warned that there is no acceptable residue limit for captan on ginseng in the United States.9
“As an industry, we’ve experienced some tough times of recent, some due to our own errors, others due to unfair trade practices, but there’s now a very dedicated group of hardcore growers who want to right the ship,” said Weege (oral communication to C. Cavaliere, October 30, 2006). “Our objective is to restore profitability to the industry and respect in the marketplace. We want to assure demanding consumers that when they see our trademark, they know they’re acquiring the best quality ginseng and that its origin is Wisconsin.”