Hokkaido is attracting growing interest as a promising site of medicinal plant production, as the burgeoning demand in China creates an alluring business opportunity.

In recent years, prices of plants used to make Chinese herbal medicines have surged. In addition to increased demand in the Western world, as well as Japan, growing consumption in China due to continued economic growth and population expansion has boosted prices, according to Masatomo Tanaka, chief of the Hokkaido Bureau of Economy, Trade and Industry’s Bio-industry Division. The bureau is a branch of the Ministry of Economy, Trade and Industry.

In 2009, Hokkaido was the second-largest production region for medicinal plants in Japan in terms of cultivation area size, with 212 hectares, and the fifth-biggest in terms of production volume at 698 tons, according to the Japan Specialty Agriculture Products Association.

Hokkaido is seen as a particularly promising production region because the climate there is said to be similar to that of major production areas in China. The availability of vast farmland in Hokkaido is also an attraction.

A survey by the Japan Kampo Medicines Manufacturers Association showed that annual consumption of medicinal plants in Japan amounts to around 20,000 tons, some 80 percent of which is imported from China, the largest medicinal plant producer in the world. Over a four-year period from 2006, the import prices of major varieties of medicinal plant shot up by around 60 percent.

An official at Tsumura & Co., a major maker of Chinese herbal medicines in Tokyo, attributed the price upsurge also to other factors, such as unfavorable weather conditions and speculative trading.

Some people have likened China’s huge influence as the predominant supplier of medicinal plants to the country’s stranglehold on the supply of rare earths, which are strategic resources used to make a wide range of electronics products.

Among the main varieties of medicinal plants produced in Hokkaido are cnidium officinale, used to make painkillers and sedatives, and Angelica acutiloba, which contains ingredients effective in improving blood circulation.

In July 2009, Tsumura set up a subsidiary in Yubari, Hokkaido, to grow cnidium officinale, which is used to make a medicine to treat symptoms associated with dementia. Sales of this medicine jumped to around ¥4.7 billion in the business year that ended last March 2012 ¥1.1 billion four years before.

“We will increase production as the market continues to expand,” a Tsumura official said. Tsumura plans to increase the size of cultivation areas, including farmland owned by the company and by partner farmers, to 1,000 hectares by 2020.

To help efforts to expand production, the Hokkaido Bureau of Economy, Trade and Industry presented a proposal in May 2012 to capitalize on the growing demand for medicinal plants to reinvigorate the regional economy.

Despite the potential of medicinal plants, however, farmers may have to think twice before venturing into cultivation. The processing requires sophisticated skills and meeting the quality standard set by the government is a significant challenge. Another problem is the lack of relevant farm machinery and agrochemicals.

Tanaka said some companies and farmers pulled the plug on cultivation of medicinal plants after piling up huge debts as a result of embarking on mass production with little regard for pharmaceutical makers’ needs.

Meanwhile, the Hokkaido branch of the Research Center for Medicinal Plant Resources under the National Institute of Biomedical Innovation receives a constant stream of inquiries from farmers.

Atsuyuki Hishida, an official of the branch, stressed the need for extensive cooperation to avoid repeating previous failures.

“If production is to be increased, it is necessary first and foremost to create a framework for government, agricultural cooperatives and pharmaceutical makers to work together to support farmers,” he said.