Cost of Production of Ginseng in Ontario

1. Introduction
2. Preparation Costs
3. Annual Cash Costs of Production
4. Harvest Costs
5. Post Harvest Costs
6. Revenue
7. Specialized Machinery
8. Related Links

Introduction

The cost of producing field cultivated ginseng in Ontario varies widely. Overall costs will be affected by the cost of land purchase or rental, by the costs of machinery purchase or lease and by the amount of custom work that is contracted. Interest on borrowed money and machinery depreciation should also be considered. This document discusses the cash costs of producing 1 acre of ginseng for the first time. Overhead costs such as fuel, electricity, management labour, motor vehicles etc. are not included in this estimate. Land costs are also not included because they vary over time and depend on location. Over time the cost of production will decrease on a per-acre basis. When seeds no longer need to be purchased and shade is reused and equipment costs are amortized over time, costs are correspondingly reduced.

Much of the shade material can be re-used as many as three times, or more depending on the condition of the material in question. Machinery costs can be alleviated somewhat by contracted custom work.

The cost of seed has been estimated at $25.00/lb and the selling price of root at $14.00/lb dried. Both of these prices can vary considerably from year to year and can have a major impact on the returns to the grower. The impact of a range of root prices on eventual returns must be considered when planning to grow a ginseng crop.

Preparation Costs

Costs associated with site preparation will vary from grower to grower. Additional costs are associated with consultant fees, liming, site specific nutrient management and tile drainage. The costs outlined in Table 1 are general in nature and represent the base level of preparation. This document does not include the potential interest on borrowed money for the establishment costs or the annual operating costs and these should be factored into the cost of production for each of the years until the loans are paid off.

Table 1. Preparation Costs per Acre

Total seeding and preseeding costs:	$26,660
seedbed preparation	$500
custom seeding	$1,000
manure (30 T @ $17/T)	$510
stratified seed (100 lbs @ $25/lb)	$2,500
pesticides	$400
fumigation	$1,500
fertilizer	$500
straw (28 large bales @ $30/500 lb bale)	$900
soil testing	$350
labour (@ $12.00/hr)	$2,500
shade (cloth) *	$16,000 *

* Cost will vary depending on the material used (type of cloth, wood vs. steel posts etc.). Used cloth or wood shade would have a lower cost.

Annual Cash Costs of Production

Annual production costs will vary depending on the weather. Wet seasons may require more fungicide inputs, while dry seasons may require less.

Deflowering costs are considered to be the same as the cost of picking seeds. Both of these operations are carried out with hand labour. Deflowering of third year plants has been shown to increase root size by 25 - 30%. This may or may not be profitable depending on the selling prices of seed and root (see the OMAFRA website at www.ontario.ca/crops for more information on ginseng production in Ontario). If deflowering is preferred it should be done before the flower stalk elongates.

At the present time there are few herbicides registered for use on ginseng in Ontario. Weeding is a labour intensive operation and depending on the weeds present in a garden, may cost as much as $1,000.00 per acre annually. Many weed problems can be alleviated during site preparation. Weeds enter ginseng gardens on the wind and in the straw used as mulch. Weed pressure in individual gardens varies depending on the proximity of weedy areas and on the weed seeds present in the straw.

Table 2. Annual Cash Costs of Production per Acre

		Year 1	Year 2	Year 3
Total annual costs		$6,700	$6,400	$7,300
Fertilizer		$600	$600	$600
Pesticides		$2500	$2,500	$2,500
Shade maintenance/straw		$600	$600	$600
Ontario Ginseng Growers' Association Fees*		$50	$50	$50
Labour	Weeding	$1,000	$500	$500
	Moving shades	$1,200	$800	$800
	Deflowering / picking seed	---	$600	$1,500
	Spraying (30 sprays x $25)	$750	$750	$750

* The Ontario Ginseng Grower's Association is the representative association for ginseng under the Farm Products Marketing Act and has the authority to collect mandatory acreage fees. All producers growing more than ¼ ac of ginseng are required to register with OGGA.

Harvest Costs

Before harvest, ginseng beds are scraped clean of straw and plant debris.

Ginseng roots can be harvested entirely by hand digging and picking into baskets. This method is labour intensive but may be suitable for small gardens. Most commercial root is dug by modified potato diggers. The exposed roots are then picked up by hand and put in baskets. The diggers may run over the garden as many as three times to ensure all of the root is removed from the soil. Some growers use fully automated equipment. With this method the root is dug, passed over a conveyor belt and immediately placed in containers for refrigeration. Growers can buy or lease equipment for harvest or they may choose to have a custom operator harvest the root. Obviously there can be a wide range in the cost of these various operations.

Table 3 is a basic outline of costs incurred when root is dug by a custom contract.

Table 3. Harvest Costs per Acre

	Year 1	Year 2	Year 3
Total Cash Costs Associated with Harvest	---	---	$2,700
Shade removal	---	---	$1,200
Custom digging*	---	---	$1,500

* Custom digging can be replaced with digging labour ($1,000) and harvesting equipment

Post Harvest Costs

Table 4 lists post-harvest costs associated with ginseng production. This table does not include the costs of the washing and grading line. Drying and refrigeration costs are highly dependent on the current energy costs and can vary widely from one year to the next.

Table 4. Post Harvet Costs per Acre

	Year 1	Year 2	Year 3
Total Post-Harvest Costs	---	---	$7,100
Custom drying / refrigeration ($2.75/lb x 2400 lbs)	---	---	$6,600
Container insurance	---	---	$500

Revenue

Revenue from both roots and seed can vary widely from year to year. As with many other crops, the price of ginseng is affected by supply and demand (see the OMAFRA website for information on the marketing and export of ginseng). The overall revenue from a garden is affected by root quality. Quality in ginseng involves not only shape but taste, texture and colour. Shape and taste are primarily properties imparted by the growing environment of the root. Texture and colour are affected by post-harvest treatment. Different markets in the Orient demand different shapes and sizes and value these parameters differently. Root quality can also be affected by root disease and nutritional and environmental stresses.

Most growers sell their root to designated buyers who deliver it directly to Asian markets. Some new growers market their root through experienced growers who offer it to buyers on their behalf.

In the revenue table below, the yield of seed has been set at 500 lbs/acre. This is seed harvested in the third year and stratified until the fourth year when it is sold. It has been assumed that no seed has been harvested in the second year. This is not because ginseng does not set seed on 2 year old plants - it is because it is a better production practice to remove seed from 2 year old plants. Seed prices in the past have ranged from $25/lb to $200/lb depending primarily on availability.

Root harvest has been set at 2,400 lbs/acre. This is a conservative average and 4,000 lbs/acre is possible under ideal conditions. Root disease can seriously affect yield and has been known to reduce yield to 100 lbs/acre. Table 5 provides estimated revenue per acre.

Table 5. Revenue per Acre

	Establishment	Year 1	Year 2	Year 3	Year 4
Total Expenses (without machinery)	$26,660	$6,700	$6,400	$17,100
Total Anticipated Revenue	---	---		$33,600	$12,500
Stratified seed (500 lbs @ $25/lb)	---		---	---	$12,500
Dried root (2,400 lbs @ $14/lb)	---		---	$33,600	---

Specialized Machinery

Table 6 provides a list of specialized machinery that addresses the basic needs for ginseng production. The machinery with an " * " after the price can be replaced by custom work. Custom work replacing these items has been listed in the other sections of this document.

Table 6. Specialized Machinery Costs

Total cost of specialized machinery	$105,000
sprayer (boom)	$15,000
digger (modified potato digger)	$25,000 *
bed plow / groomer	$10,000 *
big bale spreader/chopper/wagon	$36,000 *
air seeder	$25,000 *
modified tractor (new)	$40,000
seed depulper	$4,000
washer (drum style) + wash line	$10,000 *
dryer	$25,000 *

Related Links

• Ginseng Production in Ontario
• Marketing and export