Coop model offers path to increasing supply of high quality US grown herbal raw material

It has been a number of years now since experts in the herbal supply business have prophesied that buyers of botanical raw materials would start to look for more suppliers here in the United States ​to forestall the potential issues with overseas sources, including adulteration and contamination.  In the intervening years transparency and traceability have become watchwords in the industry, driven partly perhaps by the high profile investigation of botanical supplement manufacturers initiated by New York Attorney General Eric Schneiderman.

Jeff and Melanie Carpenter, founders of the Vermont Herb Growers Cooperative (VHGC), believe they have a model for the industry that could help address some of these concerns,  The couple, who for 15 years have been the proprietors of Zack Woods Herb Farm​ in Hyde Park, VT, gave a presentation about their cooperative at the American Herbal Products Association’s annual Botanical Congress held in Las Vegas, NV on Friday.  During the years they have been growing medicinal herbs they had gotten to the point where they had started to consistently turn away business.

“We had to decide if turning away business was a good business model,”​ Melanie Carpenter said.  “We had to decide if we wanted to get bigger.”​

The decision was taken instead to get more growers involved in the effort.  One of the issues with dealing with small scale, artisanal growers is just that—the scale.  There are lots of potential upsides such as greater care in the growing and harvesting of the plants, potentially translating into higher quality. But small scale farms might have difficulty covering the inevitable vagaries of agricultural processes and ensuring adequate supply.  And a buyer interested in sourcing high quality raw materials like these would have to develop relationships with dozens or hundreds of farmers.  With the cooperative, the Carpenters believe they have a model that can both ensure high quality and traceability but that also help smooth out the purchasing process as well as help ensure consistent supply.

Coop model that pools expertise, not infrastructure

The cooperative started with applications from more that 100 farmers who wanted to join, said Jeff Carpenter.  Of these they chose six: Three were existing certified organic vegetable farms, two were already certified organic herb growers, and one is a new farmer.  Carpenter said that VHGC is different from many other agricultural cooperatives in that it is a bare bones operation; it does no processing, packaging or warehousing for its members.

“​VHGC currently serves solely as a sales and marketing agency for its member farms that perform these other services on their own,​” Carpenter said.

The coop itself has a board of directors that sets policy, manages the crop bidding process and manages finances.  VHGC currently has two employees, a sales coordinator and a bookkeeper, added Carpenter.

“​The sales coordinator (SC) is essential to the success of the co-op and is one of the key benefits that farmers gain when working in the cooperative. The SC is the liaison between the farmers and the buyers. She receives orders from the buyers, coordinates and documents the bidding process by which farmers bid on orders, and she maintains the lot tracking documentation and testing requirements from seed to sale,​”​ he said.

“​Another key aspect of the SC position is communicating specs from the buyers regarding the crops (testing thresholds, mills specs, dates for delivery , etc.)  and also monitoring the health of crops on individual farms.  If there are any crop failures or projected shortages, she works with other growers in the cooperative to cover these sales. In a nutshell, the SC does all the networking and clerical work that so often farmers don​’​t like to do or have limited knowledge about,​”​ he said.

Carpenter said that it seems the cooperative idea has caught a favorable point in the history of herbal supply. With increasing scrutiny on how ingredients are sourced, coops such as VHGC are well positioned to fill that gap.

“​Consumers are becoming increasingly well-educated as to the importance of food safety, lack of botanical adulterants and potency in their herbal supplements which means they are more likely to choose a domestically sourced and manufactured product over one made elsewhere.  Manufacturers will find that issues around traceability and food safety standards are mitigated by working with domestic suppliers. Agriculture is one of the largest industries in the US and it​’​s time we start growing more of our own herbs rather than importing so many of them from far-off places,​”​ he said.

The price/quality question

Carpenter also said that coops such as VHGC can help make the case for higher price points for domestic herbs that are carefully grown and whose potency has been verified.  GMP requirements within the dietary supplement industry have forced some companies to revert to contract manufacturers, some of whom are more focused on price points than on overall quality.

“​Persuading these contract manufacturers to allow these companies to do their own raw materials sourcing or for the contract manufacturers to source higher quality materials in general has proven to be challenging in most cases because the prices for these herbs are generally a bit higher.  We are trying to educate the market that the much higher concentrations of bioactive compounds in our herbs in comparison to the slightly higher prices means they are actually getting more value for their money.  We have found that the consumer is willing to pay more for higher quality herbs,​”​ Carpenter said.

One win along the way has come with the coop’s relationship with Mountain Rose Herbs.  Carpenter said that company has found success is offering a premium, domestically grown product at a higher price.

“​We have had many conversations over the years about this ​‘​consumer question​’​ with companies like Mountain Rose Herbs. We encouraged them to carry domestically grown herbs, even if they're a bit more expensive because we believe consumers are willing to pay more. It has been very encouraging to see that in the past few years, Mountain Rose Herbs has begun offering two purchase options for many of their herbs--one for mass market/often imported herbs (cheaper price point)  and another option for domestically grown herbs/often higher quality (higher price point). This seems like a really positive indication of what consumers are looking for and encouraging for coops like ours,​”​ he said.