Iron-skin Dendrobium faces overcapacity, with prices plummeting by 90% over the past six years—farmers can no longer hope to outpace the market.
Dec 09,2021
News: In recent years, reports of soaring prices for traditional Chinese medicinal herbs have been widespread—but reporters have discovered that *Dendrobium officinale*, hailed as the "number one medicinal herb of China," is actually experiencing a dramatic price drop, making it a unique exception in today’s herbal market.
Around 2012, the price of Dendrobium officinale was still hovering near a high of nearly 700 yuan per kilogram, but today, the market price has plummeted to about 90 yuan—representing a drop of nearly 90%. What’s behind this dramatic decline in Dendrobium prices?
Shen Baowen is a Dendrobium officinale farmer from Pingbian County, Yunnan Province. When the reporter met him, he was purchasing Dendrobium seedlings, planning to expand his cultivation by several more acres—his first expansion in six years. Over the past six years, the price of Dendrobium officinale had been steadily declining, dropping from 700 yuan per kilogram in 2012 to just 90 yuan per kilogram recently. Because of this sharp price drop, Shen hadn’t dared to increase his planting area again. Yet, even today, he still vividly recalls the frenzied rush to buy Dendrobium officinale that once defined those heady days.
It was the sky-high prices of Dendrobium officinale back then that prompted Shen Baowen to expand his cultivation area by 20 mu over the two years, 2009 and 2010. He told reporters that at the time, most farmers, tempted by the booming market conditions, had already increased their planting acreage—while even larger-scale agricultural enterprises ramped up their cultivation areas even further. Hu Rongxin, the head of a Dendrobium officinale base, explained that the more than 100 mu of orchids they now oversee were established precisely during the peak of the market boom. In the following period, the company went on to build additional planting bases totaling over 1,000 mu in all.
Journalists learned that before 2009, most *Dendrobium officinale* on the market was harvested from wild sources, resulting in highly limited production. It wasn’t until later that artificial cultivation techniques began to gain traction, and the cultivation areas expanded dramatically—from the original three major production regions of Zhejiang, Guangdong, and Yunnan to over ten provinces and cities. As a result, production surged significantly: while the national output stood at just 700 tons in 2008, by 2012—four years later—it had skyrocketed tenfold, exceeding 7,000 tons. However, precisely because cultivation areas expanded too rapidly without a corresponding increase in demand, the market soon faced a severe oversupply, ultimately leading to the sharp price decline seen in the following years.
Meanwhile, as prices continue to rise, the market is increasingly plagued by counterfeit products and substandard goods being passed off as genuine, severely damaging the overall market image of Dendrobium officinale and further driving prices downward.
The front end of the industry suffers damage, while the end beneficiaries reap the rewards—as the price decline begins to show its ripple effect.
Today, Dendrobium officinale is struggling in a sluggish market, with the vast majority of growers bearing the brunt of the downturn—and their incomes are declining year after year. Meanwhile, overcapacity is intensifying competition in the market, leaving many distributors struggling to attract customers.
Chen Changwu, the head of an *Dendrobium officinale* cooperative in Mangshi City, Dehong Prefecture, Yunnan Province, told reporters that at this year’s prices, he can now earn only about 50,000 yuan per mu on average—far lower than the over 300,000 yuan he was making per mu back in 2012. Compared to that golden era, his income has plummeted by a staggering 250,000 yuan per mu. Faced with steadily declining earnings, Chen realized that relying solely on selling fresh stems left him overly vulnerable to price fluctuations. That’s why, starting last year, he decided to build his own processing facility to produce *Dendrobium officinale* fengdou—a basic, yet highly valued product. Unlike fresh stems, fengdou experiences far less price volatility and commands a much higher market value, naturally boosting profitability.
So-called "fengdou" refers to the processed stems of *Dendrobium officinale*, which are carefully twisted into spiral or spring-like shapes while being gently roasted during production. In recent years, demand for fengdou has surged among herbal medicine shops and pharmaceutical companies, attracting more and more buyers eager to stock up. As a result, the market is already showing signs of supply shortages—just as our reporter was interviewing him, several groups of customers were seen arriving one after another to place orders.
As the head of a manufacturing company that sits at the very end of the Dendrobium officinale industry chain, Yang Xiaoyin told reporters that two years ago, noticing the steadily declining market for this valuable herb, their company shifted its focus toward deeply exploring new market opportunities. They developed a range of products tailored to meet the needs of diverse demographics and social groups, each designed with specific functional benefits. As a result, even though raw material prices have dropped, the company hasn’t significantly lowered its final product prices—on the contrary, the lower the cost of raw materials, the more they’ve actually benefited. Last year, their company achieved revenues exceeding 100 million yuan.
Refining from the source, deeply cultivating the market, and addressing industry pain points.
A journalist's investigation revealed that the once-booming Dendrobium officinale industry, after enduring a prolonged slump lasting six to seven years, is now shifting toward a more rational approach. Addressing the key challenges that previously dragged the industry down—such as seedling cultivation, farming techniques, and product refinement—the sector is making targeted improvements across multiple stages to enhance quality. Meanwhile, with the implementation of the national policy integrating medicinal herbs into food sources, this industry could soon enter a rapid growth phase.
Additionally, after years of market downturn, *Dendrobium* producers have begun ramping up their investment in scientific research and innovation for *Dendrobium officinale*, leading to the development of a wider range of products tailored to modern consumers' health needs. Today, there are over 30 types of deeply processed *Dendrobium officinale* products available, with an output value exceeding 30 billion yuan. Soon, the official implementation of the national policy recognizing *Dendrobium officinale* as both a medicinal herb and a food ingredient is expected to mark a pivotal turning point in the industry's growth.
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