Rural Industries Research & Development Corporation

The New Rural Industries
A handbook for Farmers and Investors

Medicinal herbs

Introduction

Herbal medicine and natural pharmaceuticals are moving from fringe to mainstream, with greater numbers of people seeking remedies and health approaches free of the side-effects caused by synthesised chemicals. This is now considered one of the most vital and high growth industries of the 90s and is set to expand even further into the next century.

This trend for the increasing acceptance of herbal medicines in Australia is well supported by trends around the world. In Germany and France which together represent 39% of the $14 billion global retail market (Nutrition Business Journal), herbal remedies known as phytotherapeutics are well established, with the costs for therapeutic use covered by health insurance systems, and the quality criteria applied to regulation and manufacturing comparable to those for chemical drugs.

Markets and marketing issues

The crude botanical raw materials for this industry have long been grown and traded in many countries around the world. As the Australian market for herbal medicine develops, opportunities are arising for raw materials to be grown in Australia, both for the local and export markets. Access to export markets may be facilitated by the `clean green' image that Australian agriculture presents to the world.

Botanical raw materials are comprised of dried plant materials in the form of roots, barks, herbs, flowers, fruits, seeds, and resins. These materials are traded in a whole form or, more commonly, are cut and sifted to a consistently even particle size.

Market prices for raw botanical materials are usually determined by supply and demand, but generally tend to be stable.

Most traded European materials are priced at source in the range of $2.00 to $6.00/kg. Prices for certified organic produce can be anywhere between $10.00 and $30.00/kg. This supply market is very limited, hence the high prices. Prices for difficult-to-grow, wild-harvested, or certified organic materials, usually North American botanicals, can range in price from $20.00 to
$120.00/kg.

The principal primary market for these raw materials is to industry which manufactures:

• essential oils

• liquid extracts and tinctures

• herbal teas

• concentrated soft extracts (for further industrial application)

• concentrated dry extracts (for further industrial application)

• plant-derived pure pharmaceutical drugs.

There are currently at least seven Australian manufacturers with the capacity to produce herbal extracts from crude botanicals, one manufacturer able to produce concentrated dry extracts, and five tablet manufacturers producing herbal tablets.

The figure on the following page (not available in this html versions) simply illustrates the market chain which is characteristic of this industry.

Market size. The global retail market for herbal medicines is valued at US$14 billion (1997) as shown in the table below - not available in this html versions- : (Nutrition Business Journal Jan/Feb 1997).

There are at least eight major European manufacturers, one of whom processes 4500 t of raw dried botanical material per year.

Australia

Estimate of the current herbal medicine market (1996-97).

Manufacturer $40m

Importer $40-50m

Retailers $160-200m

Production requirements

Most medicinal herbs from Europe of North America will do best in temperate climatic regions. Within a climatic region there will be an optimum microclimate site for a particular plant species.

Medicinal herbs generally do best in moderate to highly fertile, light-textured soils with good moisture retention and drainage. Heavy soils may be acceptable for some herb crops but tend to be unsuitable for most root crops because of the extra difficulty (and hence the cost) in harvesting and cleaning.

The various geographical and climatic regions in Australia will offer the growing conditions required by most medicinal plant species in demand, although almost everywhere in Australia herb production will need irrigation. Certain herb crops may be unsuitable for summer growing in some areas because of heat, lack of rain or, conversely, the intensity of summer rain.

Agronomy

In general the market requires that medicinal plants test negative for any residues of pesticides, herbicides, heavy metals or radioactive contamination. Regular testing or such residues is routinely undertaken by manufacturers.

To achieve this there is a high demand for medicinal herbs produced under an organic-crop production system or at least a system with minimal use of chemicals.

Harvest and handling

The quality requirements in the acceptance process of all plant materials for therapeutic use are controlled by the Australian Therapeutic Goods Administration (TGA) through the Code of Good Manufacturing Practice. The three key standards against which raw materials are assessed are:

Identification—through macroscopic and microscopic examination of plant parts, organoleptic assessment (appearance, odour and taste) and chemical fingerprint analysis through Thin Layer Chromatography (TLC) or High Performance Liquid Chromatography (HPLC);

Purity—assessed against four standards: the presence of extraneous materials; an assessment that the material is sufficiently dry (if it is supposed to be dry material); the presence of any microbial contamination, in the form of pathogens, yeasts and moulds or aflatoxins; and the detection of any residues (herbicides, pesticides, heavy metals or radiation); and Potency—the presence of a required level of active chemical constituents is determined by TLC, HPLC, Gas Chromatography and Mass Spectrophotometry.

To ensure that botanical raw materials for therapeutic use meet with these specifications the Code of GMP requires all suppliers of raw materials to meet conditions of supply which typically cover some of the following areas:

Identification. A Certificate of Identity must be supplied for each product with the material identified by botanical name, plant part and batch number. All product supplied must be identified by this same batch number.

Samples. Any purchase will depend on acceptance of a fully representative pre-shipment sample. All material supplied must be from the same batch as the sample, and conform with the analysis results of the sample.

Extraneous material. There must be no extraneous animal material or soil. Dead leaves and other plant material should be excluded. The tolerance limit for organic/inorganic extraneous materials is 1% by weight.

Drying. Plant material must be shade or indoor dried, with a maximum drying temperature of 45ºC. The temperature must not exceed 35ºC for herbs containing essential oils. There must be no mould or fungal growth during the drying process. Material is considered dry after the moisture content is 8-10%. At this point leaves will crumble when rubbed and stems will snap when bent.

Packing. Items should preferably be packed into new clean, lined, woven poly bags.

Comminution. Depending on the specification, herbs may be supplied in whole form, cut and sifted (to remove fine dust), or rubbed through various coarse screens to remove woody stalks.

Status. Where applicable, certification of organic farming practices should be supplied. Produce supplied from new organic suppliers is always checked for pesticide residues. Where herbs are grown using chemicals, details of chemicals used are required. Wild-crafted herbs are checked for pesticide residues and must meet other acceptance criteria e.g. suitability of the harvest location.

Economics of herb growing

The economics of medicinal herb production varies with the species. To take Echinacea purpurea as an example, at a planting rate of 50,000 plants/ha, a yield of 1.2-2.0 t/ha dried root may be achievable, based on dry root mass per plant of 20-40 g, in the second season. Flowering tops, harvested in the first season, may yield up to 5.0 t/ha, based on dry plant mass of
100 g/plant.

The Queensland DPI has recently prepared a draft discussion paper Echinacea—a Commercial Overview. In this paper the total costs of production for Echinacea were assessed at over $14,000/ha. This figure was arrived at after considering input costs for land preparation, mulch and irrigation, planting, fertiliser, weeding, harvesting and drying.

Key contacts

Key References

Fletcher, Kim Australian Herb Industry Resource Guide

Whitten, Greg Herbal Harvest—Commercial Production of quality dried herbs in Australia

Woodward, Penny An Australian Herbal Hyland House

Grieves, M. A Modern Herbal (two volumes) Penguin Books

Switala, John Echinacea—A Commercial Overview (Draft) Queensland Department of Primary Industry (Rural Parnership Unit)

Richardson, Brian Licorice—A Commercial Overview (Draft) Queensland Department of Primary Industry (Rural Parnership Unit)

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