01 Jun 2016
Up by the Roots
What does it take to reinvent a family farm for the modern era?
by Francis StorrsTopics:
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Photo by Narayan Mahon
When he graduated from high school in 1994, Will Hsu (MBA 2006) had no plans to take over his father’s ginseng farm—there just didn’t seem to be a future in it. Hsu’s Ginseng Enterprises Inc. was one of the largest operations in central Wisconsin, a region as prized for ginseng as Bordeaux is for its wine, but inferior product from Canada and China had begun flooding the market, driving down retail prices from $50 a pound that year to $12 a pound by 2006. Instead of joining the family business, Hsu went to work for General Mills after college, where he eventually landed in its organics division and in time, had a revelation: “Seeing some of the trends in organic foods, I could see a lot of interest in the return to slow food and family farming,” he recalls. “I had a feeling the ginseng market had to turn around.”
The Hard Labor of Ginseng
For Hsu, Success has brought its own challenges. Ginseng is a notoriously labor-intensive crop: Plants can take four to five years to mature, all of the seeds are picked by hand, and most of the harvesting is manual. All machinery is customized from other uses—like a $100,000 root vegetable harvester Hsu converted to handle the rockier, less sandy soils of Wisconsin—yet has to fit under the 8-foot-high shade cloth that ginseng depends on. “We’ve started using a lot more technology to reduce the dependence on farm labor,” Hsu says, “but you can only do so much.”
Compounding the challenge, many of the older relatives who used to work with Hsu’s father are retiring, and younger generations seem less interested in farming. But even as aunts and uncles retire, Hsu counts another kind of family among his core team of roughly 100 employees. Like Hsu, they are the second generation to work the fields—his farm manager, for example, is the son of his father’s first employee. “It used to be a true family business,” Hsu says, “and now it’s a business family.”
Hsu returned to the farm in 2011, at first taking a leave from General Mills to help out while his father underwent surgery and treatment for cancer, then deciding to stay for good. Long-heralded for its therapeutic applications, the global market for the bitter root was on the rise, driven by the expansion of the Chinese middle class; today, genuine Wisconsin ginseng can fetch $200 a pound at retail. The challenge for Hsu has been better communicating the story of his family’s products—which include roots, teas, and supplements—and how they differ from the competition (some of which are counterfeits labeled “Made in Wisconsin”). Hsu insists that consumers understand they’re getting what they pay for. “We maintain control of the supply chain from start to finish,” he says. “That’s something I picked up from General Mills: We had to be able to have that kind of traceability and accountability to consumers.” That reputation attracted the attention of the luxury conglomerate LVMH, which now offers Hsu-brand ginseng in six of its busiest duty-free shops (including New York and Los Angeles), alongside high-end items like Louis Vuitton handbags and Hermès scarves.
The network behind Hsu’s Ginseng only begins in Wisconsin, where more than 100,000 pounds a year are harvested on more than 200 acres that includes a $1.7 million, 39,000-square-foot processing facility. It stretches into branch offices and warehouses serving six major Chinatowns across the United States and Canada, two offices in Taiwan and Hong Kong, and a wholly owned subsidiary in Nanjing serving mainland China. Hsu has also made significant investments in improving the company’s e-commerce infrastructure. Beyond these advances, however, he has little interest in outgrowing his company’s family-run origins. “Our employees count on us and our customers count on us, and we try to do right by them,” he says. “It’s hard to stay true to some of those roots if you get too big.”
The Hard Labor of Ginseng
For Hsu, Success has brought its own challenges. Ginseng is a notoriously labor-intensive crop: Plants can take four to five years to mature, all of the seeds are picked by hand, and most of the harvesting is manual. All machinery is customized from other uses—like a $100,000 root vegetable harvester Hsu converted to handle the rockier, less sandy soils of Wisconsin—yet has to fit under the 8-foot-high shade cloth that ginseng depends on. “We’ve started using a lot more technology to reduce the dependence on farm labor,” Hsu says, “but you can only do so much.”
Compounding the challenge, many of the older relatives who used to work with Hsu’s father are retiring, and younger generations seem less interested in farming. But even as aunts and uncles retire, Hsu counts another kind of family among his core team of roughly 100 employees. Like Hsu, they are the second generation to work the fields—his farm manager, for example, is the son of his father’s first employee. “It used to be a true family business,” Hsu says, “and now it’s a business family.”
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Featured Alumni
Class of MBA 2006, Section I