Listening to Rhodiola

“I’m sitting there listening and up comes Rhodiola,” recalls Lutz, “and it’s in every presentation on natural health products.” Presenters lauded the herb as a potential bestseller – if a reliable supply existed. “I came out of that conference thinking, ‘Of all the ideas running across my desk, that one might have some potential.’”

Soon she was collaborating with the farmers and assembling a business plan aimed at new standards to regulate an industry with a reputation for spurious claims. After testing 10 locally available Rhodiola products, the group found two to contain no active ingredient whatsoever, a situation Bill C-51, set to sweep the market of duds, could soon rectify. The farmers commissioned the development of an extraction process and followed that with toxicology tests and plans for clinical trials to support claims that Alberta Rhodiola can ease stress-induced fatigue – all thanks to about $1.1 million, mostly from AVAC Ltd., the venture capital outfit for Albertan value-added agricultural startups. The rest came from government and a few industry players. But even while none of this had Lutz hovering over the kill switch, her confidence in the venture didn’t firmly set in until recently.

“The turning point,” she says, “was when ARRGO formed. A group of people saw the business opportunity and were willing to put their dollars on the table.”

They did so cautiously. ARRGO, which arose last December from that original group of growers and the Alberta Natural Health Agricultural Network, is a new generation co-op, a model that John Feddema, a farmer two hours southeast of Edmonton near Daysland who is now a director with the organization, was eager to see implemented. Members buy as few as 1,000 plants from the co-op and purchase a contract to eventually sell them back, sharing not only growing tips but risk. As a result, says Feddema, “You become a team.”

Maruszeczka, for example, besides his tinkering, has drafted schematics for an Alberta extraction facility. ARRGO chair Peter Haberli, who moved to Spruce Grove eight years ago after travelling the world as a chef and manager in the hotel industry, applies his familiarity with international business to sales, recently entertaining German interest in five tonnes of Rhodiola. But what that deal could be worth, he says, “We can’t say with certainty, because we have not sold any yet.”

Regardless, that offer suggests ARRGO’s grow-it-and-they-will-come approach is working, says Deane Parkes. Starting out with a single health food store in the mid-1970s, Parkes is now president of Preferred Nutrition, an online retailer supplying natural health stores nationwide. He also does consulting work and provided the growers with one-time sessions in the spring of 2007. “When I met with them, they still didn’t know what the demand would be,” says Parkes, “But if the Germans are after this, that’s the hardest market to sell any herbal product in. They’re extremely particular.”

That’s why he’d call the $100,000 ARRGO is investing in clinical trials money well spent, even if Nancy Smithers, president of Naturally Nova Scotia, disagrees, pointing out that existing literature on Rhodiola’s traditional use is sufficient for licensing from Health Canada’s Natural Health Products Directorate. After performing small-scale extractions on hand-chopped herbs in the mid-1990s, Smithers now supplies national drug and grocery chains, a leap she believes owes to her certified organic status and to Canadians’ increasing interest in natural health products.

“It’s mainstream now,” she says. “People want preventative measures.” With Rhodiola, she’s expecting a positive reception, even if she’d urge Alberta growers to pursue organic certification rather than carry out the clinical trials Parkes believes will help ARRGO with branding. Either way, says Smithers, “It may be the new St. John’s wort; you never know.” Despite debate over its ability to treat depression, wort still ranked ninth amongst America’s bestselling natural health products in 2004.

Feddema has similar hopes for ARRGO’s experiment. Besides 22,000 Rhodiola plants in the ground, he has 40,000 seedlings to sell to members for as much as $2 each. He’s 65 and still spends eight hours a day on his crop. “I should be retiring,” he says, “but we don’t have a nest egg to retire on.”

Not far from the peeling, white barn, Feddema’s Dutch immigrant parents built in 1922 are four silos remaining from his custom feedlot. “The cycles that you went through, they were stressful,” he says of the 30 years he operated. “You’d think you got her made, and then everything would go into the tank.” When interest rates soared in the 1980s, he liquidated, losing the feedlot and over 95% of his land, reducing it to 27 acres. Even now, says Feddema, who’s hoping for a return of about $10 per mature plant, “We really have no idea what the future holds.”

Parkes might wonder the same. How long, he asks, before herb producers like China and Chile realize the potential of their own colder regions and undercut ARRGO? Even Susan Lutz, as she looks toward easing ARRGO out of incubation, says prices local producers are currently eyeing may be ambitious. “They’re going to have to come down,” she says. “Lots of groups expect to be making money their first year, and anything we’ve ever done says it’s year three.”

Regardless, Feddema continues with a job and a life that, despite ups and downs, might be as good for body and soul as the stuff he’s growing may prove to be. “Since we let our operation go, I’ve worked, and it’s not real pleasant to have to punch a time clock when you’re not used to it. But out here with the plants, you’re at peace.

“The lifestyle is worth something,” he adds. “But there’s a price to pay to have that.”

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