U.S., Indiana mint production wilts with foreign competition

Larry Wappel strode into one of his peppermint fields, stirring up a refreshing fragrance as he brushed past deep-green plants
holding the potent oil that gives a cool burst of flavor to toothpaste, candies and other products.

When Wappel planted his first peppermint fields in northern Indiana's mint-growing region in 1988, the U.S. mint oil
industry was thriving. Two decades later, the business is emerging from a chaotic period in which cheap foreign oil flooded
the market, prices dropped and the U.S. lost its global dominance in mint oil.

Although buyers are now willing to pay mint farmers more when fuel and other costs increase, the future in mint farming is
uncertain. Foreign competition has profoundly changed the industry, which is increasingly dominated by farms — many
in arid regions of the West — with thousands of acres. Those farms are better able to control production costs and compete
with overseas growers.

Meanwhile, the small family owned farms that once supplied most of the nation's mint are fading away. Between 1997 and
2007, the number of U.S. mint farms plummeted from 964 to 341, while combined production of peppermint and spearmint fell
from about 12.5 million pounds to about 8.7 million pounds, according to U.S. Department of Agriculture figures.

Decades ago, Indiana, Michigan and Wisconsin were the top U.S. mint producers, but the heart of U.S. production is now in
the Pacific Northwest, where Washington is the leading producer, followed by Oregon and Idaho. Indiana and Wisconsin rank
fourth and fifth.

As small mint farms shut down, they take with them a way of life, said Rocky Lundy, executive director of the Mint Industry
Research Council based in Great Falls, Mont. Farms handed from generation to generation provided seasonal work for local youths,
while traditions developed around the harvest.

Wappel farms near North Judson, a town of about 1,600 that honors the region's heritage every Father's Day weekend
with a mint festival. This year's celebration, with its parade, beer garden, Mint Queen and mint farm tours, runs Friday
through Sunday.

Mint is a perennial grown from roots that needs far more care than other crops. Farmers also have high fuel costs during
the harvest because mint must be steam-distilled in machines that consume diesel or natural gas.

Although U.S. farmers once dominated mint production, their share of the world market has shrunk from about 70 percent to
40 percent since India, and to lesser degrees China and South American nations, began boosting their mint oil production in
the mid-1990s, Lundy said. Many companies now buy cheaper but generally lower-quality foreign mint and blend in some American
oil to boost the flavor, he said.

"In this Walmart economy where everything is cost, cost, cost, the companies buy this cheap stuff. But they still need
high quality American mint oil," Lundy said. "That's the only thing that's really saved this industry from
just disappearing."

Eric Atkinson, the president of Atkinson Candy Co., a 78-year-old family owned confectionary based in Lufkin, Texas, said
his company will always buy only American oil for its Mint Twists and other candies even though foreign-grown peppermint is
much cheaper.

"The plant that's grown here in the United States is the Champagne of peppermints," he said.

Premium mint oil can command top-dollar prices, with one 55-gallon steel drum — the industry standard — sometimes
fetching close to $10,000. But that oil goes a long way, Lundy said, with one drum holding enough mint oil to flavor 5.2 million
sticks of gum.

Mint oil is one of only a handful of natural flavorings still used in food products, said Dr. John Finley, a food chemist
at Louisiana State University. About 90 percent of it goes into chewing gum and toothpaste and related oral hygiene products.
Most of the rest ends up in candies.

Wappel, 55, farms mint, corn and soybeans with his wife Debbie and two sons on 1,200 acres. He said he wondered whether to
stick with mint during the past two decades as foreign imports drove down prices.

"It put us in a world of hurt for a long time," he said. "There were times when we didn't have contracts
for peppermint oil. Some farmers stopped growing it — and most of us cut acreage."

But now Wappel is cautiously optimistic. More than a year ago, he signed four- and five-year contracts that require buyers
to pay him more for his mint oil if fuel or fertilizer costs rise. Buyers pay less if production costs drop.

Rod Christensen, executive director of the Washington State Mint Commission, said those flexible contracts developed as farmers
plowed under mint fields to plant more profitable crops. The trend worried mint buyers and companies that use mint in their
products, he said.

Jim Burgett, the president of I.P. Callison & Sons in Lacey, Wash., one of the world's largest mint processors, believes
foreign mint oil has grabbed about as much of the U.S. market as it can. He said his company and others began offering flexible
contracts because they wanted to make growing mint more attractive to domestic farmers.

"In the past, the farmers were producing oil and selling it at prices below their cost of production and losing money
per pound per acre. They're not going to do that now," said Burgett, who expects the nation's mint acreage to
increase 5 percent to 6 percent this year.

Richard Funke, whose grandfather started farming mint in Oregon's Willamette Valley around 1930, has scaled back his
peppermint fields in Corvallis from 200 to 150 acres.

The 57-year-old, who also grows wheat and vegetables, said he's likely the last mint farmer in his family. His two sons
don't want to farm mint and neither does his daughter. Flexible contracts have helped him and other mint farmers, Funke
said, but he isn't optimistic about the future.

"We're all kind of in the same ship that's taking on water, and we're just hoping to keep it afloat,"
he said.