The Profitability of Growing Medicinal Herbs at the Start of the Project Reaches 46% – Opinion
The profitability of growing medicinal herbs in the first four years is 46% and will grow in the future. The technologist-consultant expressed this opinion for the cultivation of medicinal plants of the company “Shlesem-Ukraine” Olexander Gubanev during the online webinar “Industrial and private cultivation of medicinal plants.”
The event was organized by the Ukrainian Horticultural Business Development Project (UHBDP).
“If, for example, you grow medicinal plants on an area of 25 hectares, you will have to spend about UAH 2.5 million ($ 911 thousand) on the purchase of machinery and equipment. During four years of growing gross production, the costs will amount to approximately UAH 3.8 million ($ 138.5 thousand). That is, the total costs, in this case, are 6.3 million UAH ($ 229 thousand).
At the same time, the total cost of raw materials that the farmer will be able to grow over these years will be UAH 9.2 million ($ 335.5 thousand). Thus, we can get a net profit at the level of 2.9 million UAH ($ 105.7 thousand) “, explained Olexander Gubanev, revealing the nuances of the business model for growing medicinal plants.
The specialist explained that these profit figures, at first glance, are not very large. “However, we are talking about the first four years of business, during which the farmer acquires everything necessary for its successful continuation, including machinery, equipment, and irrigation systems. Therefore, starting from the 5th year, the costs in this business will go only to the growing process itself, and, accordingly, the profits will increase,” said Olexander Gubanev.
At the same time, he emphasized that starting a business of growing medicinal herbs without having enough equipment and equipment costs from an area of no more than 10 hectares.
According to the expert, this type of business is not entirely suitable for large agricultural holdings because a large amount of manufactured products, in this case, as a rule, is at the expense of quality. Most of all, this type of business is suitable for small and medium-sized farms.
“Growing medicinal plants requires a high level of proficiency. Medicinal herbs require much more care, knowledge, and skills than vegetable crops. Besides, medicinal plants are mainly wild plants, which have the property of prolonged germination, which has another name, in particular, “germination friendliness.” The top layer of soil for planting medicinal plants should be prepared in such a way as to preserve moisture as much as possible for further germination of seeds,” said Olexander Gubanev. If a person wants to grow medicinal plants, then this is precisely the sphere of agribusiness where you can get some of the most significant profits in the smallest area.”