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Always comply with your State Ginseng Rules and Regulations when selling and buying wild ginseng roots.

TOPIC: Dealers

Re:Dealers 6 years 1 month ago #14360

Thank you for your kind words. They are honestly appreciated.

I'm not against a buyer making money on that pound..but lets say if he makes 500 on that pound..me as a digger, would think he is making to much and I should be getting part of that modest profit


Now we are getting to the real issues at hand...how much should dealers make and are they cheating or otherwise taking advantage of the diggers.

Ok, if we relate our hypothetical dealer last season to a situation in which some actual buyers found themselves, there might be a lesson to learn (there was for me anyway).

So, we buy an average pound at $300 and later (very late btw last year) we sell it at $800. For this to work, a few things have to happen. First, we have to be able to buy that average pound at $300, then we need to sit on it which means we didn't run out of buying money at those high prices and have to clean up. And, finally the price has to go up that high at the dealer level.

We are Assuming all those things happened with our hypothetical pound. Now, let me ask you this, what happened to the pounds bought after our hypothetical pound for $300? As the price began to rise, our hypothetical dealer had to pay more for digger lots of root. By the end, this dealer might be paying $780 - $800
just to stay in the game. In case you didn't know, the market cooled off late last year. So, now our dealer is $780 into a pound he only got $750 for when he sold. So, if this hypothetical dealer only bought two pounds (to make the math easy) we see he made $500 on one and lost $30 on the other. This is a net profit of $235 on average.

Still high?

Well, look around the boards here. Are more guys and gals selling at $400 -$450 or are they waiting looking and hoping for $600?? In reality, our dealer will likely buy much more for the higher prices than he will for the lower prices early in the season. So, if we be a little more realistic with our example, our dealer might by four pounds 1 at $300, 1 at $500, and 2 at $780. Now, if he sells them all at the same time (remember, he didn't clean up) for $750, we see his cost for root alone (no overhead business costs included) is $2360 and he sold it for $3000. This makes him a gross profit of $640. Average that out between the four pounds and he made a gross average profit of $160 per pound -not $500.

So, while speculating makes it easy to place the numbers pretty high, the reality is that this isn't always the case. I find myself working on a twenty dollar bill too often. I pay as much as I can for good root because I want to encourage that kind of digging and would like to raise the over all quality of the root we offer to the market.

To directly address your question, though, I would have to say as long as God grants us the grace to live free and work with a free market, what someone else makes on a pound of ginseng I dig is up to them and the market. We each are responsible for our own actions within the market. This includes digging right and caring for what we dig as much as selling right. I don't begrudge a buyer above me who makes more. I've seen an amount and quality of wild ginseng that I might pay $100 priced in traditional Chinese medicine shops for $800. They don't owe me part of their $700 (not including overhead).

We are working in a free market situation. This isn't a socialist controlled system where profit should be evenly spread out for everyone (meaning taken from whose who work hard, invest and take risk, and given to those who don't)

now as far as seng ever being worth nothing ,that just ain't going to happen,see the demand in the Asian market is ever growing, not shrinking.


I agree, it won't happen. However, the argument that it could happen is very valid and correct. Nothing is worth any more than someone is willing to pay for it at any given point in time. Remember a few years ago (07 maybe if memory serves) we had a high market one year and opened high the next only to have the Asian markets refuse to pay those prices. Most buyers got upside down in a hurry and the digger price dropped from $650 to $300. I had an order for 1000 pounds of cream and couldn't buy it the year before, and the next year, everyone wanted more than their ginseng was worth.

So, it can happen, but a zero price isn't realistic I agree. I don't think $600 digger prices this year are likely, however. I will say, I think they are more likely now than they were a week ago, but there is still some information that makes me think this thing is going to drop some. I know some buyers are pushing up the prices, but that tune will change if China doesn't come into the market soon.

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Re:Dealers 6 years 1 month ago #14362

BCastle wrote:

This is a net profit of $235 on average.

Still high? ....No in my opinion ,you should make that on every pound you buy.. again thanks for your reply...I'm going to wear your typing finger out..now one more question,,who do you think makes the most profit after it leaves your hands,the buyer you sell too,or the next guy after him or the next guy after that ,ect. ect. or the exporter himself or the chinese...I'm with you if we don't hear from the chinese soon these prices right now won't be able to sustain itself..this will relate to alot of shattered dreams ;) ..are they really not saying because they are trying to buy cheap and make the market skittish or do they really not know how much they need to buy..[the chinese]

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Re:Dealers 6 years 1 month ago #14363

That was a good question. Not the answer I expected though!

Had you come back telling me that was too much profit on a pound, I would have pointed out that you had made $300 on the first pound, $500 on the second, and $780 on the last two for a profit of 2360 as compared to the dealer's $640! Then, I was going to ask you if you were going to share that with the dealer. ;)


To answer your question about who makes the most profit, it all just depends. The market makes a huge difference in who makes the most profit, obviously. If I am holding it when the market climbs, I make more. But, the reverse is also true. If I am holding when the market drops, I stand to lose the most. I have bought and exported directly to the retail market on a small commission percentage, and then I have bought as a low level dealer and made more than I have at times exporting.

I guess if I can pass on anything in this exchange it would be that the dealers arn't the bad guys some diggers seem to think we are. Most dealers will pay the most they can in a given market situation. Sure, there might be our hypothetical pound that was bought at $300 and then saw the market go to $800 before it was sold. But don't forget, the market price when that pound was bought from the digger was $300 (and only slightly higher for the dealer level). So, the market made the dealer money in our hypothetical situation; the dealer didn't make it by skinning the digger. It could very likely be that hypothetical dealer bought that pound for $300 and sold it the next week for only slightly more -payiing his overhead out of that gross profit margin.

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Re:Dealers 6 years 1 month ago #14366

I'm a digger and also a small KY. dealer. I usually buy and sell to a bigger dealer that deals in large amounts. It is scary this year and buying with borrowed money from the bank.
I want my dealer to make money so he can buy next year. Right now I'm making $25 on the lb. which is not a lot and he really doesn't know what the market is going to do so it's a gamble on his part. I paid $400 a lb. yesterday and really not sure about what may happen next week. I'm trying to keep my diggers happy in buying their seng but if my buyer stalls then so will I.

rootman

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Re:Dealers 6 years 1 month ago #14378

whats the price in illinois now

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Re:Dealers 6 years 1 month ago #14379

The price will go up when the buyers buy up all the easy root .
Root that diggers have to sell for the cash, root that most people have to sell to pay their light bills ,car payments, ect when that is all bought up and the people that have root that they don't have to sell and don't then it's a waiting game.
If the chinese don't get what they want it's all supply and demand....
Bcastle when you say profit are you adding up the time and gas and sweet it takes for most people to dig a lb. of dry seng?

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Re:Dealers 6 years 1 month ago #14385

lyle dean wrote:

whats the price in illinois now

got one guy paying 425 and another 450...

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Re:Dealers 6 years 1 month ago #14386

i am really looking for an updated price in eastern ky. getting close to selling time and i dont really want to hold it over. between me and the old man we have only dug about 5 pounds this year, but when you work 72 hours a week thats alright. would love to have more time to be in the hills.

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Re:Dealers 6 years 1 month ago #14390

who are they?

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Re:Dealers 6 years 1 month ago #14395

triton wrote:

Bcastle when you say profit are you adding up the time and gas and sweet it takes for most people to dig a lb. of dry seng?


Are you counting the gasoline, shipping, utilities, phone, advertising, taxes, licenses, permits, insurance, fees of all other sorts and other misc things dealers have to pay for when you suggest we make too much?

Let me give you just a taste...

To get ginseng out of the country, I have to have a state dealer license, a protected plant permit from the USDA, a wild (and cultivated if applicable) license from the US Fish and Wildlife Service, a CITES certificate for each shipment, a collection of other generated paperwork and reports for each shipment, I have to be registered with and report the shipment to the US Department of the Census (REALLY!), I have to have a warehousing service to have the root inspected at an approved for ginseng port before export by a USDA Protected Plant Specialist who certifies it for export, then it gets shipped and goes through customs -which normally means shipping through a freight forwarder because UPS and FedEx will NOT ship this stuff out of the country. -most of these costs money too.

Additionally, it can easily take four or five hours or more of my time to get a shipment ready to move.

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