The market for Chinese herbs has experienced tremendous pressure over the past three years. In previous blogs, we explored the initial impact of the pandemic on the Chinese herbal market in America. Three years later, new trends have emerged as the pandemic continues to affect both practitioners and their herbal suppliers.
In Asia, the Chinese herbal supply chain was strongly affected by the pandemic. Periodic factory closures, congested ports, increased demand for herbs, and regional surges in cases have all contributed to production delays, price fluctuations, and shortages. In the USA, these factors have been further complicated by enduring tariffs, increased shipping costs, and overall inflation, creating pricing headaches for practitioners and suppliers alike.
Part One: Supply Issues
The pandemic hit the USA relatively early on, which led to shortages of many individual herbs starting in the spring of 2000. Commonly used herbs such as Huang Qin and Ban Xia were selling at 2-3 times their normal volume, while many herbs that would normally be used in smaller amounts were quickly sold out nationwide (such as Zi Wan, Kuan Dong Hua, Huo Xiang, Guan Zhong, etc.).
In particular, the herbs prone to shortages were often ingredients used in formulas that received widespread media attention, such as Qing Fei Pai Du Tang and Lian Hua Qing Wen. Shortages of herbs during the early phase of the pandemic were exacerbated by the fact that many herbal suppliers were understocked, as they were hoping that Trump’s tariffs on herbs imported from China would be reduced by the Biden administration (unfortunately, the tariffs remain in effect).
As time went on, the situation in the US normalized to some degree. Herbal companies finally got new shipments, the waves of infection began to moderate, and the panic buying dropped off. In some cases, herbs that were almost impossible to obtain in the early stages of the pandemic are now overstocked, such as Jin Yin Hua, Lian Qiao, and Ban Lan Gen. However, increasing raw herb costs in China and the impact of recent COVID surges in Asia continue to keep things volatile and unpredictable.
I recently returned from a trip to Taiwan, and I visited many granule wholesalers to scope out the current situation there. Taiwan had largely avoided COVID for the first two years of the pandemic, but eventually they experienced a large wave when omicron broke through. Now, the major wave in Taiwan has calmed down and life is getting back to normal, but they are still experiencing acute shortages in the granule industry.
A formula called “Qing Guan Yi Hao” (清冠一號) was widely produced by several granule companies in Taiwan in response to the pandemic, and many herbs from this formula are now in short supply in Taiwan. Similarly, many other common formulas such as Xiao Qing Long Tang are widely sold out in Taiwan, with extremely limited supply regardless of the manufacturer.
Over the past few months, high prices and high demand for herbs in mainland China temporarily reduced the supply of herbs that were sent to Taiwan, and some herbs became so expensive that a few granule companies paused producing new batches rather than risk buying large lots of raw materials during times of price volatility (particularly in the case of Suan Zao Ren). Hopefully, the current shortages in Taiwan will not last long enough to have a major impact on the US market, but it is hard to be sure.
Omicron hit mainland China in December, which put further pressure on herbal suppliers. The demand for many common herbs caused Chinese herbal factories to experience shortages and production delays, and prices became erratic. Fortunately, the COVID wave passed relatively quickly, and the situation is already beginning to improve. Recent reports suggest that many herbs such as Jin Yin Hua and Lian Qiao are already starting to come down in price after peaking at record levels a few months ago.
Part Two: Price Issues
In recent times, the stock of Chinese herbs in the US has been much more stable, and we are now rarely experiencing shortages. However, the price of herbs keeps going up every year. Shipping costs and import costs have gone up exponentially, and the Biden administration has maintained Trump’s tariffs on Chinese herbs (adding a 13.9% tariff on all the herbs we buy). However, much of the pressure on Chinese herbal costs is due to rising prices of individual raw herbs.
Many of the herbs that are prone to price increases are items that require significant human labor for harvesting, such as Suan Zao Ren. Suan Zao Ren is a small seed from a fruit that must be harvested by hand from large spiny trees, and the increasingly high costs of labor in China are causing some herbs to go up in price significantly. For example, Suan Zao Rengranules now cost more than Ren Shen granules in Taiwan, and virtually every company in the industry has already (or will soon) raise the price on Suan Zao Ren.
The raw herb market is generally more volatile than the granule market in terms of pricing. For example, last year some herbs such as Cang Zhu surged to over $40/kg for the raw herb, while the granules remain reasonable (for now). In some cases, herbs such as Jin Yin Hua, Lian Qiao, Guan Zhong, and Huo Xiang are prone to temporary price surges that calm down over time; some suppliers will hesitate to buy too much stock when the prices are unusually high, while others will have to risk taking a financial loss to maintain sufficient inventory.
In addition to labor-intensive herbs like Suan Zao Ren, other items that are going up in price include animal and insect products, such as Sang Piao Xiao, E Jiao, Chan Tui, Quan Xie, Wu Gong, and Gui Ban. Although these items are all farmed, they often require significant labor and have been steadily increasing in price over the years. Similarly, several relatively expensive cultivated herbs have continued to rise in price over the years, including Huang Lian and Zhu Ling.
Price increases are also common for many cultivated herbs that are covered by CITES regulations, such as Rou Cong Rong, Mu Xiang, and Tian Ma. These items require a complex importation process, as they require special certificates of cultivation.
Additionally, some herbs that are wild harvested are being discontinued to protect their wild populations. At Legendary Herbs, we will no longer be selling Zi Cao or Hong Jing Tian after the current batches are sold out, and our supplier will no longer be producing these items due to their limited wild resources.
Three years into the pandemic, we are all gradually adjusting to the changed world that we find ourselves in. Practitioners have endured tremendous challenges in their clinical practice and many herbal companies have struggled with supply chain challenges over the past three years. Things are gradually improving, and by working together we can continue to make a tremendous impact in our communities.
At Legendary Herbs, we are grateful to have a wonderful practitioner base that values quality above all. Despite the pressures faced by the herbal industry, we will continue to maintain the best prices and quality in the industry, and we appreciate your great support during this unusual time.
