Market Overview

Although the total value of the various NTFP markets in the southeast has not been formally estimated, there are data that illustrate the economic importance of some of these products. In 1996, collectors of black walnut were paid more than $2.5 million (Jones 1998). One company in rural southwest Virginia that specializes in pine roping had sales in excess of $1.5 million in 1997 (Hauslohner 1997). A volunteer fire department in western North Carolina generates approximately 30 percent of its budget from its annual ramp festival. In 1999, the retail sales of saw palmetto exceeded $34 million, representing a 34 percent increase over the previous year (Blumenthal 2000). Based on 2001 prices, the average wholesale value of ginseng harvested from southern forests exceeds $18.5 million.

The markets for many NTFPs are well establishedbut they are often volatile. Some segments of the NTFP industry have grown rapidly over the last decade, and some have great potential to continue to grow. In recent years, segments of the industry have reportedly grown at annual rate in excess of 20 percent. For example, the sale of herbal medicines in the United States was projected to experience a three-fold increase from 1995 through 2000. At the same time, the market for these products can fluctuate tremendously from year to year. In 1998 retail sales of black cohosh grew almost 500 percent, but the following year, with warehouses full, dealers could not sell their inventory (Brevoort 1998). Sales of other major medicinal herbs, such as purple coneflower, forest-harvested ginseng, and saw palmetto also dropped in 1998. As inventories decline, however, harvesting of these products may rebound.

The demographic conditions and consumer preferences in the United States are encouraging for the continued growth in the trade and use of NTFPs. In general, consumers are moving toward things that are organic or made of natural materials. Many baby boomers have become frustrated with the high costs of western medicines and are looking for alternatives including herbal medicines. More than half of the nearly 40 million men who will turn 50 in the next decade may experience prostate problems. Many of these may choose alternatives such as saw palmetto, a plant whose berries have been shown effective against inflamed prostate. For the landowner who is willing to explore unusual markets and to take the risks associated with new ventures, NTFPs may provide alternatives for increasing forest income.

Predicting the market for NTFPs is difficult, at best. It is made more difficult by the volatility of the markets. Although the demographic conditions imply that the markets for NTFPs will flourish, the situation could change drastically over a very short timeframe. A few incidences of adverse reactions to medicinal plant remedies could result in market failures for individual products. A national economic downturn could negatively impact overall sales of NTFPs that people perceive as luxury items. But the markets for NTFPs are well developed, and unless collection is forbidden they will be there in some form for years to come. American ginseng is a good example, and a closer examination of the market for this popular herbal medicine may shed light on the overall market situation.

See also: The Market Economics of Ginseng

References