Supplier Endures Tough 2004 Ginseng Market

Supplier Endures Tough 2004 Ginseng Market

RICHMOND, British ColumbiaChai-Na-TaCorp. (OTCBB:CCCFF), a supplier of North American ginseng, suffereda hefty financial blow during fiscal 2004, due to soaring ginseng root pricesand the strong Canadian dollar. Revenues were cut in half and earnings plummeted$0.12 to zero cents per share (US$) from the previous years figures. Thecompany harvested fewer acres in 2004, and production was down 21 percent.Following a softened market in winter 2004, the company decided only to sellproduct if reasonable returns were attainable. It has sold only a little morethan half of its 2003 harvest and none of its 2004 harvest.

Management reported buyers are still hesitant to purchaseginseng root due to concerns about currency fluctuations and other marketvariables. Another challenge facing growers is a decision by the Chinesegovernment, effective November 2004, to stop the practice of importingcultivated North American ginseng for contract processing and then exporting itto other markets, said William Zen, chairman and chief executive officer. Henoted buyers and grading houses current resistance to carrying supply ispushing inventory back to the farm gate. In 2005, we expect prices tostabilize and moderately improve, as a result of lower production industry-wide, he said.