Title: Herbs
Document date: 1 Oct 1993
Author: Randy 
Organization: NDSU Extension Service
Posting-Date: 20 Jul 1994

  
      Alternative Agriculture Series, Number 18

      Herbs


      Author:   Randy Sell, Research Associate, Department of
                Agricultural Economics, NDSU

      Series Editor: Dwight Aakre, Farm Management Specialist, NDSU
                     Extension Service


      The term "herbs" means dried plant products, especially their
      green succulent parts, which are used for culinary purposes. Herb
      originated from the Latin word "herba," which means "green
      crops." Herbs are grown to add piquancy to cooking, for fragrance
      and decoration, and in a limited way for medicinal use. From 1981
      to 1991, the volume of basil sold in the United States increased
      187 percent, and the amount of oregano sold increased by 75
      percent. Competition in producing and marketing herbs is very
      intense. Producers range from large corporations to small
      entrepreneurs and hobbyists. This publication introduces the
      types of herbs which may be produced outdoors in North Dakota,
      describes methods of producing and marketing herbs, and provides
      example economic and cash flow budgets to help producers
      determine financial returns of raising herbs.

      Although herbs are not usually consumed in large quantities, some
      have measurable nutritional value. Fennel has relatively high
      levels of ascorbic acid (vitamin C) and 16 free amino acids.
      Parsley has a greater concentration of B-carotene than carrots.

      In ancient times, herbs were not only produced for their effect
      on the palate, but for their medicinal and ritual uses. To the
      Greeks, oregano meant "joy of the mountain," and thyme was
      associated with courage and sacrifice. Romans thought thyme was a
      cure for coughs and hangovers. Bay leaves were once used to crown
      Olympic champions.

      The herb industry in the United States is dominated by herbs used
      in preparation of various foods. Sage is used in making sausage,
      anise seed is used in candies and baked goods, dill is used in
      dill pickles, oils from mint are used as flavorings in
      confections and medicines, and chives impart a mild onion flavor
      to soups, salads and cottage cheese.


      Types of Herbs

      Herbs may be classified in the same manner as many other plants -
      as annual, perennial and biennial. Examples of annual herbs are
      borage, basil, dill and summer savory. In North Dakota, these
      annuals may be started indoors about four weeks before being
      transplanted outdoors. However, they can be started from seed if
      grown outdoors in late April or early May. Borage, basil and dill
      produce a large number of seeds and may start again the following
      year on a volunteer basis.

      Perennial and biennial herbs that can survive North Dakota
      winters include parsley, spearmint, peppermint, fennel and
      horseradish. Spearmint, peppermint and horseradish can withstand
      all but the most extreme of North Dakota winters. In fact,
      horseradish is so competitive that it can become an invasive pest
      if left unchecked. On the other hand, fennel and parsley should
      be protected as they may only survive a mild winter climate.
      Perennials generally take a longer period of time to begin full
      production. Herbs that are also classified as vegetables include
      garlic, peppers and mints. A listing of herbs that may be grown
      in North Dakota, and their uses and classification, is given in
      Table 1.


      Planting

      Nearly all herbs planted in North Dakota have small seeds. Soils
      must be tilled so there are not any large soil aggregates
      (greater than 3 inches in diameter). Large soil aggregates cause
      poor seed to soil contact and may reduce germination. The soil
      must also be firm to insure adequate seed to soil contact.
      Firming soil may be done with a roller packer. If a roller packer
      is unavailable, two trips across the plot with a press drill may
      do an adequate job. The first trip is to pack the soil and should
      be done perpendicular to the direction the crop is seeded. A
      properly prepared seedbed should not allow a person walking on
      the soil to settle into soil more than the width of a shoe sole.

      Seeding depths for herbs will range from one-eighth to three-
      fourths of an inch, depending on moisture availability and seed
      size. Larger seeds can germinate from deeper planting, but the
      majority of all herbs should be planted at less than one-half
      inch in depth. Planting small herb seeds requires precise seed
      placement and depth control. Prospective producers are advised to
      check with local implement dealers to locate equipment that is
      suited to this task.


      Weed Control

      Weeds are normally controlled by manual and mechanical
      cultivation because very few herbicides are available to control
      weeds in herb plots. Thus, herbs are usually seeded in rows (22
      to 30 inches) to allow mechanical row cultivation.


      Fertilizer

      No current research exists on the fertilizer needs of various
      herbs that can be produced in North Dakota. Producers are advised
      to take soil tests to determine the levels of organic matter, pH,
      nitrogen, phosphorus, potassium, calcium, magnesium, sodium, base
      saturation, zinc, copper, boron, iron, sulfur, manganese and
      soluble salts. T.J. Enterprises, Box 21, Buffalo, SD 57720,
      offers full soil consultation services for herb producers.


      Irrigation

      The need for irrigation depends on the types of herbs to be
      produced and the environment they are produced in. Irrigation in
      North Dakota is recommended for consistent production of top-
      quality herbs. Some perennial shrub-type herbs such as sage may
      not show a marked increase in production with irrigation in a
      clay soil. Others, such as basil, require more water than
      typically received in North Dakota and will have a substantial
      increase in yields with irrigation. The method of irrigation also
      depends on the type of herb to be grown. Subterranean drip
      irrigation may work well because it allows mechanical weed
      control and results in more efficient water use.


      Harvest

      Herbs may be harvested for fresh markets or dried in bulk and
      marketed as crude-dried bulk herbs. Crude-dried bulk herbs are
      dried and baled into small square bales. Herbs harvested for the
      fresh markets are extremely perishable. Harvest and postharvest
      handling of fresh herbs is much more labor intensive than crude-
      dried herbs. Because of the relatively high labor requirements,
      producing fresh herbs is usually done on a small scale. While
      producing and marketing fresh herbs may present unique
      opportunities for some individuals, this publication concentrates
      on herbs that may be harvested and marketed in bulk.

      Harvest equipment for herbs depends on the type of herb produced.
      If the seed is all that is harvested from the plant, a combine
      can be used. If the herbaceous material (leaves and small stems)
      is needed, then a swather or mower is necessary. If the leaf
      material is marketed in bulk form, the plant must be dried
      indoors, shielded from sunlight. Fresh-cut herbs may be loaded
      onto a wagon for transport to a drying floor. A grain bin with a
      full dryer floor may be satisfactory for drying herbs. After
      harvested material is dried to 15 percent moisture, it should be
      baled or bagged and stored out of direct sunlight in a heated,
      rodent-proof building. Although there are differences among
      herbs, most can be stored in this manner for six to 12 months.


      Market

      The herb and spice trade is composed of more than 400 plant
      species. Of course, some of the markets are relatively small
      while others are quite large. Traditionally, herbs were not
      cultivated; instead, they were harvested where found growing
      naturally. As demand increased, greater emphasis was placed on
      quality. Thus, harvesting wild herbs has declined in favor of
      cultivating them as a domestic crop. Cultivated herbs have higher
      yields and better quality standards. Availability of a uniform
      supply to process decreases processing costs, thereby delivering
      a higher-quality product to the consumer at a lower cost. Third
      World countries are able to harvest and supply herbs that are
      relatively inexpensive because of reduced labor costs. However,
      standards of hygiene tend to be lower and quality is variable.
      North Dakota producers may be able to economically produce some
      varieties of high-quality herbs.

      Herb prices tend to be relatively variable predominantly because
      of fluctuating supplies. Also, because of a limited number of
      alternative uses for herbs, marketing excess production can be
      difficult. Producers without contracts for herbs may have to
      store production for an extended time. Some herbs have relatively
      short "shelf lives" which can make extended storage costly.

      Market access can be difficult for a beginning herb farmer.
      Companies that currently import their necessary herbs may be
      reluctant to change suppliers because of concerns about supply,
      consistent quality and ability to reestablish a relationship with
      a previous supplier should new supplier fail. Producers
      interested in commercial herb production should find a market
      first and are advised to start small. T.J. Enterprises works with
      herb producers in North Dakota, South Dakota, Minnesota and
      Montana to produce and market their herb production.


      Economics

      An important key to success in the herb business is understanding
      the costs of producing and marketing the herbal crop. One tool,
      which can be quite helpful in assisting potential producers in
      the decision-making process, is budgeting. Estimating an economic
      and cash flow budget for a specific herb allows potential
      producers to analyze profitability and cash flow of an
      alternative that investing capital. Upon analyzing several
      alternatives the producer may pick an alternative that makes the
      best use of their resource base. Producers should thoroughly
      investigate the herb they are interested in producing. An example
      of an economic and cash flow budget has been developed for a
      drip-irrigated, one-acre basil plot.

      Performance criteria, production coefficients, equipment rental
      rates and selling prices used to develop enterprise budgets are
      shown in Table 2. This enterprise was assumed to be 50 percent
      leveraged. The interest rate on borrowed capital was 9.75
      percent, while the opportunity cost of equity capital was 4
      percent. Basil is an annual crop which is not tolerant of frost;
      it should be seeded into 70 F soil after danger of frost has
      past. Optimum quality and production results from about 18 to 36
      inches of water during the growing season. For this reason, the
      basil plot was drip irrigated. Irrigated basil can yield between
      two to four tons per acre per year and is harvested two to three
      times during the growing season. Basil is swathed about 2 inches
      above the ground at the bud stage. Quality rapidly deteriorates
      at flowering; therefore, timing of harvest is critical. Basil was
      assumed to be dried indoors and baled in small square bales.
      Basil bales should be stored indoors to avoid exposure to
      elements that can cause quality deterioration.

      A one-acre plot of basil can generate positive returns to labor,
      management and equity and a positive cash flow (Table 3). It is
      important to recognize that while returns per acre for basil are
      attractive, basil production is much more labor intensive than
      conventional irrigated crops and may be more risky.

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      For Further Information:

      Dumville, Caroline. 1988. "The Herb Industry." PROFESSIONAL
      HORTICULTURE. Oxford: Blackwell Scientific Publications. Vol. 2.
      pgs. 82-85.

      Janick, Jules and Simon, James E. "Proceedings of the First
      National Symposium, New Crops: Research, Development, Economics
      in Indianapolis, Indiana, October 23-26, 1988." Portland, Oregon:
      Timber Press, 1990.

      Johnson, Tom. T.J. Enterprises, Box 21, Buffalo, South Dakota
      57720, (605) 375-3504.

      Kader, Adel A. POSTHARVEST TECHNOLOGY OF HORTICULTURAL CROPS.
      Oakland: University of California, Division of Agriculture and
      Natural Resources, 1992.

      Phillips, Roger and Foy, Nicky. RANDOM HOUSE BOOK OF HERBS. New
      York: Random House, 1990.

      Pontius, J.C. "The Process Budget: A Tool for Analyzing Your
      Production System and Potential Returns." THE HERB SPICE, AND
      MEDICINAL PLANT DIGEST, Fall 1987.

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      Table 1. Herbs Which may be Produced Outdoors in North Dakota,
      Classification and Comments


      Name         Classification  Comments
      =================================================================
      Basil        Annual          Used for the clove scent from
                                   leaves; works well with tomato
                                   dishes, especially pizza and
                                   spaghetti sauces.

      Borage       Annual          Easily cultivated, good for making
                                   honey. Leaves and blooms have a
                                   subtle cucumber flavor when seeped
                                   in water.

      Dill         Annual          Seeds are used as flavor for dill
                                   pickles. Popular in Germany. Seed
                                   harvest in North Dakota is difficult
                                   because seed shatters from head when
                                   ripe.

      Fennel       Perennial       Licorice flavoring adds zest to fish
                                   and vegetable dishes; seed also said
                                   to work as appetite suppressant.

      Horseradish  Perennial       Strong flavoring for meats and
                                   oysters. Root is harvested for use;
                                   limited market potential.

      Mints        Perennial       Both spearmint and peppermint are
                                   used to enhance teas, garnish lamb
                                   dishes and general flavor
                                   enhancement.

      Oregano      Perennial       Strongly aromatic, earthy, minty
                                   character, used with any tomato
                                   dish, especially pizza and sauces.
                                   Good market potential but difficult
                                   to raise in North Dakota on a
                                   commercial scale.

      Parsley      Biennial        Garnish for all foods, also adds
                                   flavor to soups and stews. Only herb
                                   to have a herbicide labeled for use.

      Sage         Perennial       Silver-gray, spear-shaped leaves of
                                   small shrub. Prized for aromatic,
                                   piney, slightly medicinal character;
                                   leading use is flavoring pork
                                   sausages.

      Savory       Annual          An excellent meat seasoner used in
                                   stews and soups. Second to parsley
                                   as (summer) a garnish. May be
                                   difficult to harvest because of
                                   limited plant height.

      Thyme        Perennial       Gray-green leaves give a pungent
                                   warmth to chowders, seafood and
                                   vegetable dishes. Small woody shrub;
                                   commercial harvest may be difficult
                                   because of extremely small leaves.


      Portions adapted from unpublished work by Ronald C. Smith, North
      Dakota State University Extension Horticulturist.

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      Table 2. Production Coefficients a Drip Irrigated Basil Plot
      Using Rented Field Equipment, North Dakota, 1993

      Land value/acre                                         $350
      Acres                                                      1
      Seeding rate (lb/acre)                                     3
      Seed price ($/lb)                                        $38
      Seeding depth (inches)                               1/8-1/4
      Irrigated yield (lbs/acre)                             3,000
      Soil temperature for germination                        70 F
      Water requirements
      (inches during growing season)                            27
      Number of cuttings                                         2
      Bale weight (lbs)                                         75
      Number of bales per acre                                  40
      Selling price per ton                                 $1,000
      Spread fertilizer [1] ($/acre)                            $2.42
      Planter rent [1] ($/acre)                                 $6.12
      Row cultivator rent [1] ($/acre)                          $3.75
      Number of row cultivations                                 4
      Field cultivate [1] ($/acre)                              $3.70
      Number of field cultivations                               2
      Chisel [1] ($/acre)                                       $4.68
      Number of chisel cultivations                              1
      Swather rent [1] ($/acre)                                 $4.21
      Baler rent ($/bale including twine)                       $0.34
      Nitrogen per acre per year                                $8.49
      Phosphorus per acre per year                             $17.42
      Manual weeding per acre per trip                         $23.10
      Irrigation-operating costs/acre                         $150
      Drip irrigation-total fixed investment                $1,698
      Hoes and spades                                         $100
      Storage shed                                          $5,000
      Years depreciation-fixed assets                           10


      [1] Average custom farm work rates as reported in North Dakota
      Agricultural Statistics, 1992.

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      Table 3. Economic and Cash Flow Budgets for an Irrigated Basil
      Plot, Selling Crude-Dehydrated Basil Square Bales, North Dakota,
      1993

                                       Economic Budget    Cash Flow Budget
                                      -----------------  ------------------
    Returns                               Per Plot            Per Plot
      Crude-dehydrated,
         basil bales                     $1,500.00            $1,500.00
                                        -----------          -----------
      Gross Revenue                      $1,500.00            $1,500.00


    Variable costs
      Seed                                 $114.00              $114.00
      Fertilizer                             25.92                25.92
      Manual weeding                         46.20                46.20
      Field operations                       57.64                57.64
      Irrigation and
         electric costs                     150.00               150.00
      Interest                               27.07                19.20
                                        -----------          -----------
      Total Variable Costs                 $420.83              $412.95


    Fixed costs
      Land ownership cost
         and property taxes                 $26.81               $19.81
      Depreciation on fixed
         assets                             679.80               xxx.xx
                                        -----------          -----------
      Total Fixed Costs                    $706.61               $19.81

      TOTAL LISTED COSTS                 $1,127.44              $432.76
      Returns over variable
         costs                           $1,079.17            $1,087.05
      Returns to labor,
         management and equity             $372.56               xxx.xx
      Cash flow (debt service,
         family living)                     xxx.xx            $1,067.24


      The economic budget is generated by charging market rates for all
      resources needed for production. It helps answer the question "Is
      this enterprise profitable?" The bottom line represents a return
      to labor and management.

      The cash flow budget is an estimate of the out-of-pocket cash
      needed to run the enterprise, including not only direct costs but
      indirect cash costs such as principle and interest payments,
      insurance and taxes. It helps answer the question "Can I meet my
      cash obligations if I go into this enterprise?" Total cash
      expenses are subtracted from total cash receipts to calculate the
      net cash which is available for family living and other needs.

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      Funds to support the research for and production of the Alternative 
      Agriculture Series were made available to the Value-Added 
      Agriculture project by Growing North Dakotalegislation through 
      Technology Transfer, Inc. 


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