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Tariffs put Wisconsin ginseng crop in jeopardy

Posted at 6:26 PM, Aug 30, 2018
and last updated 2018-08-30 19:26:02-04

While everyone knows Wisconsin is known for dairy and cranberries, there is one crop where Wisconsin reigns supreme. Wisconsin is responsible for 95 percent of American ginseng.

It is popular in Chinese culture for providing herbal benefits. However, the ongoing trade war with China could bring an end to Wisconsin's reign as America's top ginseng producer. 

"Does anyone really win a trade war?" Will Hsu of Hsu's Ginseng Enterprises said. "I guess we'll find out based on the outcome of what happens between these negotiations."

Hsu is proud of the crop they produce. With his family's help and roughly a century of practice, Wisconsin has become renowned for the quality of its ginseng across the globe.

"The good news about Wisconsin ginseng is it's some of the finest in the world," Sen. Ron Johnson said. "I think if we can conclude these trade deals, those markets will open back up and be moving forward in the right direction."

Because of tariff talks, China has increased tariffs on ginseng by nearly three times the amount they were at. It's put Hsu in a tough spot to figure out the future of the farm. 

"The issue for ginseng that makes it worse for us is our harvest isn't for three or four years," Hsu said. "You don't know what the price is going to be in three to four years."

Ginseng is notoriously difficult to cultivate. The crop takes years to mature and it is finicky.

Shading in the fields simulate the forests where it grows naturally, only allowing 20 percent of the sun's exposure to hit the plants. In 2010, heavy snows collapsed some of these coverings, crushing their production for the next few years. 

"In 2011 and 2012, those were the lowest years for production," Hsu said. "We were about 400 to 500 thousand pounds. Last year, we were closer to a million pounds."

But now the future of the crop is at stake. Hsu says the tariffs implemented by China are nearly 23 percent. So they have to make a tough decision on whether to lose out on profits, our place the burden on the customers and likely ruining decades-old relationships. 

"While there will always be some consumers looking for it, what you worry about is losing an entire generation of consumers who can't find it or aren't able to afford it," Hsu said. "Then, all of a sudden, the industry in Wisconsin isn't meaningful."

"There is definitely damage being done right now," Johnson said. "Hopefully, most of it is not permanent. Hopefully, it's short-term pain for long-term gain. From my standpoint, we can't conclude the negotiations on these trade deals soon enough."

While more than 60 percent of Wisconsin ginseng went to China last year, the impact could be felt all across the state if the industry takes a hit because of tariffs. 

"Trade benefits nations that engage in it," Johnson said. "When we start becoming more protectionist, you have less trade, less exports, less jobs, higher prices. That's the effect on every day Wisconsinites. Higher prices, fewer jobs and opportunities."

"You can speculate and hope for better conditions and plant more or be pessimistic and think it's only going down and you plant less," Hsu said. "It's a bit of a gamble. Prices [for ginseng] haven't gone up in 20 years but all of our other costs have gone up. Cost of land, labor, machinery, all this input costs have gone up. Now, you have to factor in tariffs. But that's farming."

Earlier in the week, President Donald Trump announced a United States-Mexico Trade Deal and Senator Johnson says they've made a truce with the EU. So now, the focus is on China to either negotiate lower tariffs or eliminate them all together.

"We're supporters of the free trade regime," Hsu said. "We feel free trade and free movement of goods helps us create jobs in the local economy. If we couldn't sell all this product, we couldn't employ the number of people we employ here. When the playing field is level and everyone has the same level of tariffs placed on them, we know from a marketing standpoint this is a fight and a war we can win. But when the playing field isn't level and there are retaliatory tariffs placed on ginseng grown in Wisconsin, we know that's not a war that's going to be easy for us to win."