A new 15 percent Chinese tariff on American grown ginseng has Wisconsin farmers nervous about their harvests this year. Those tariffs are likely in response to new American tariffs on Chinese aluminum and steel. China has also placed tariffs on other agriculture commodities including fruits, vegetables, nuts and wine.
Around one-third of Wisconsin ginseng is exported to mainland China each year, according to Hsu’s Ginseng vice president Will Hsu. “If you include Taiwan and Hong Kong, that number goes up to around two-thirds or even three-quarters.”
Hsu says one difficulty for ginseng farmers is that they can’t really plan for tariffs or other policy changes. “We planted these crops three or four years ago, so in 2018, we’ll be harvesting crops that were planted in 2014 or 2015.” That lag in harvest time has long been a hallmark of growing ginseng, making the crop very susceptible to poor weather or other short-term changes in economic outlooks.
There’s also a lack of price control for ginseng. “We don’t have futures and forwards markets that are exchange traded,” says Hsu, “so it’s very difficult to control price volatility or hedge without having some of the more sophisticated tools that other crops and commodities have.”
As prices increase on Wisconsin and American ginseng, Hsu says consumers in China might turn to sources from Canada or China itself. “Even though the quality may not be as good and may not be as in demand as Wisconsin ginseng, consumers end up choosing often times based on price, not only quality.”
Hsu says the full effect of these tariffs isn’t likely to be known until harvest time this fall.