Most people think that Growing Wasabi is Just Farming.
Growing wasabi is not just about farming. In fact, growing wasabi is probably the simplest part of being involved with wasabi.
What the majority of people who want to get involved with growing wasabi seem to forget is that “Growing Wasabi is a Business”.
Getting the farm set up and operating is merely an exercise in Engineering and Logistics. Once you have got the basics sorted out, and the plants are in the ground or in some other growing system then the real work starts.
If you decide to merely grow the Wasabi, and then sell it at the farm gate to someone else, such as a passer-by or even a produce wholesaler, then you will not make much money, merely survive. In some cases even that will not happen.
Becoming a wasabi grower and hoping to live a lifestyle where people beat a path to your door is wishful thinking unless you get off your chuff and work at making that happen. There is no such thing as a free lunch.
By now, you are probably wondering what I am waffling on about.
What I am talking about is Marketing the wasabi you are growing. Just Farming Wasabi is not enough.
Looking at the newspapers, and hearing through the grapevine that Wasabi root is sold for $250.00 a pound in the shops, we have come across many potential growers who seem to think that is what they will receive. These people have no understanding of the realities of the mark ups by the people and companies between the farmer and the public. Most farmers who follow the “system” will be lucky to get 10% of the retail price.
A case in point; earlier this year we were approached and asked to supply fresh wasabi root that were 50mm long (2”) and no more than 50 gms in weight. The enquiry was for 40,000 Kg per year. This equates to 800,000 plants minimum per year. [In reality, it would be closer to a million plants to allow for growing and other losses – nothing is 100% perfect 🙂 ]. The price the buyer was willing to pay was $35.00 per Kg delivered – a contract value of 1.4 Million dollars per year. Take off the price of packaging (this was special and very specific), the shipping cost (by air), customs and other bureaucratic charges and it came to about $12.00 per kg in the hand. Bearing in mind that this equates to $0.60 per plant after 12 months growth, it was a losing proposition.
The purchaser was working on selling each wasabi root for $10.00 each to a wholesaler. This would have eventually been sold retail for approx $20.00 each [this equates to $400 per Kg]. As you can see from the above example, relying on others to purchase your wasabi at a price that will enable you to make a decent living from is hoping for the moon.
Dependent upon the size of the wasabi farm you want, the cost of setting up varies between $5 and $150 per plant. Most farms will survive for 5 – 10 years before incurring significant equipment replacement costs – this depends on where you are and what quality the original materials were. All these replacement costs, inflation, making a profit, paying the taxman, etc., means that you must collect more than 10% of the retail price. No one else is going to do that for you.
YOU must be the marketer!
So, getting a large order or contract is not the way to make a living. Most contracts are very onerous and demanding. There is no account taken of the possibility of crop failure, transport disruption or even the buyer changing their mind or specifications after you have made the investment in setting up a wasabi farm to supply the contract.
I have seen cases where people take a contract where the total amount of money being offered blinds them to all potential failure modes, and then they fail and the produce buyer ends up taking over the operation for free instead of suing the original farm owner for non-compliance of the contract.
So, how do you make a decent living if you don’t want to deal with the middlemen and sharks that want to get your product for cents on the dollar.
Well, you have to do your own marketing and make your own brand, market and demand in your local area.
Throughout the information that I send you I always stress that you need to be a marketer over and above being a grower. As I have said previously, growing the wasabi is the easy bit. It is actually getting enough money from your customer to make it worthwhile; that is the difficult trick.
When you see high prices being paid in the stores, and then look at the price you are likely to be paid as a farmer (work on 5 – 19% of retail), you realise that selling the wasabi to middlemen is not the best return on your investment.
I advocate that before you even start getting serious about growing wasabi, you do serious market research to find out if there is a “starving, hungry crowd” as Gary Halbert called it, that you can sell to. How big is it? What do they actually want – this is sometimes difficult because the product will be new to customers as most will never have seen true wasabi, and most importantly – How much are they willing to pay?
Contrary to what you might think, restaurants will not be your best customers – most only want a couple of roots per week (or month), and certainly do not want to pay reasonable prices for anything.
The best customers we have found is the small greengrocer, delicatessen and specialised food store that you can work with to make the wasabi root a star. This takes working with the store on a serious marketing plan to ensure that both of you maximise the returns. This might involve keeping the wasabi supply under control and using scarcity tactics to maintain price and profit levels.
There is always a temptation to continually enlarge the growing area, but that should only be done if there is an indication (strong) that there is sufficient demand to justify making the investment.
Personally, I would always go for a smaller operation with a decent profit margin than decide to be the biggest wasabi farm in the state / country or world.
If you can be the dominant or only wasabi grower in your area (within 100 miles) then that is where you should concentrate your efforts. Transport and middlemen costs outside an area that you can personally service will absorb any potential extra profit you might hope to get, as you grow bigger.
As the years roll by and transport costs continue to increase, then becoming a big fish in a small pond holds more and more appeal.
Have you found your Market yet?
Have you even thought about where your Market might be?
There is another article I have written on this same subject. It is called Selling Wasabi.
This is your first lot of homework and possibly the most important one you will ever do. Do not skip past this homework because the results you get will ultimately determine if you become a Wasabi Grower or not.
Where is your Wasabi Market? How big is it and how much can you earn from that market?
Don’t guess the answers, ring around and visit restaurants, green grocers, delis, etc. Keep notes on every visit, phone call, casual meeting.
1. Find a market – local, countrywide, worldwide? Be specific.
2. How much do they say they would buy? Divide by 3 – people are always optimistic.
3. How much are they willing to pay? Also divide that by 3 – most people will tell you what they think you want to hear instead of what they would really pay cash for.
Now you have an idea of the potential size of YOUR market and what you can expect to earn. If that meets your requirements then stop there, if not then expand your catchment area.
You do not need to send me the information you have gathered unless you want me to comment on the results.
Move onto the next lesson AFTER you have done this market research.
NOTE: This is not a one-shot job. Market research needs to be done a systematic and continuous basis.
Here is a simple spreadsheet that will tell you as the farmer how much of the retail price you are likely to receive. Adjust the pricing and other costs as you find them out. You will probably be horrified by the results you get, but the spreadsheet is based on real numbers.