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Herbal Explorations

CHINESE HERB PRICES INCREASE ALONG WITH OTHER AGRICULTURAL GOODS

As you may know or more exactly felt, the prices of agricultural goods are on the rise. The items impacted range from everyday goods like coffee beans to cotton to our beloved Chinese herbs. Although the reasons are wide and varied, there is a common factor: poor weather conditions. This year there seems to be deleterious natural disasters in various parts of the world, from the floods in Pakistan to the drought in Russia to the earthquake in Qinghai. Poor growing conditions combined with these natural disasters have led to smaller than expected harvests for many crops leading to significantly higher prices. For example, coffee futures have increased 44% since June 2010 according to CNN.

Chinese herb prices overall have seen significant upward price pressure due to the poor weather, natural disasters (floods and earthquakes), increase of minimum wage for Chinese workers, currency appreciation, and increased cost of transportation. These reasons are why the price of almost every Chinese herb has increased to some extent. This is even before the increased cost of importation and cGMP compliance are factored in. One of the biggest unpredictable costs is at the border. The herbs must clear customs, United States Department of Agriculture, the Food and Drug Administration, and sometimes Fish and Wildlife. All the government departments mentioned are understaffed and thus taking longer to clear shipments coming through the border, which results in importers paying more fees and herbs costing more.

These are some of the factors that are affecting all Chinese herbs. Additionally the prices for some Chinese herbs are also impacted by an increased demand for them. There are a variety of reasons for the increased demand. For example, the price of herbs such as Jin Yin Hua have more than tripled due to their use in cold and flu formulas, especially those used by the Chinese government to combat the H1N1 virus. In the case of other herbs such as Dong Chong Xia Cao, prices have appreciated due to a booming demand by China´s growing middle and upper classes that have disposable income to spend on this treasured herb.

As you can see, although the weather conditions will improve and the areas will recover from the natural disasters, some of the factors discussed are here to stay. Although the prices of some of the herbs will adjust downward, higher prices for Chinese herbs are here to stay. Despite the higher prices, Chinese herbs are still very affordable, especially when compared to the alternatives.