Chinese hope the spice is right in bird flu fight

GULONG, China - In a large concrete yard covered with two-foot-high rows of star anise seeds, farmers shovel the pungent spice into boxes for export.

The coin-sized buds' telltale liquorice scent fills the air and in it Chen Xiao smells opportunity.

The dry, brownish star-shaped spice has flavored soups and stews for centuries, and seasons cola, toothpaste and perfume.

But now, it is becoming famous - and being hoarded - for another reason: it is the source of a key ingredient in Tamiflu, a drug that might be the difference between life and death for people infected with bird flu.

"The township must seize the chance and develop star anise planting in a major way," says Chen, the Communist boss of this area in the green hills of China's southern region of Guangxi. He implores a visitor to tell businessmen that all their star anise needs can be met in Gulong.

As bird flu spreads from Asia into Europe, fuelling fears of a possible human pandemic, the outside world has never been so interested in the exotic spice.

But many farmers who grow the spice are considering chopping down their star anise trees for something hopefully more lucrative, like fruit.

The H5N1 strain of bird flu has already killed close to 70 people in Asia. So far, almost all of those infected were in close contact with sick birds, but experts fear the virus could mutate and spread easily between humans. Millions could die.

Governments worldwide are scrambling to stockpile Tamiflu, made by the Swiss firm Roche AG, and another anti-flu drug made by GlaxoSmithKline, Relenza, hoping they can hold an outbreak at bay.

Tamiflu does not cure bird flu, but experts hope it will help reduce its severity if taken early enough. In the rush, star anise has been thrust into the limelight.

SPICE OF LIFE?

Within days of the first reports that star anise was the main source of shikimic acid which is used in Tamiflu, its price more than doubled to 14 yuan per kilogram (2.2 pounds).

The cost of a box of Tamiflu in Hong Kong, 350 km southeast of Gulong, has gone from about US$25 to as much as US$130 in a matter of weeks. Many doctors and pharmacies have run out.

At least six pharmaceutical firms in China snapped up hundreds of tons of star anise each in the hope that they could make their own Tamiflu or develop other bird flu remedies.

The sudden attention gave a shot in the arm to the tiny star anise world, centered in Guangxi. Its farmers harvest 30,000-50,000 tons a year, or about 70 per cent of the world's total output of the spice.

After an unusually small harvest in 2001, prices soared to the highest anyone here had ever seen -- well above current levels. Since then, however, they have declined sharply.

Many farmers are making losses, or barely scraping by.

"Bird flu may save the star anise farmer," said Wei Xingsong, deputy director of the Guangxi Star Anise Confederation and head of a company in Gulong that sells star anise to exporters.

But he says he is not optimistic. "The peasants don't have any enthusiasm at all for star anise," he said.

In Gulong, farmers sold most of their crop before the star anise craze hit and prices rose, Wei and others said.

"At current market prices, it's hard for us farmers to operate," said Zhou Yongzhuang, 33.

Zhou has considered chopping down his 1,000 or so trees and he is not alone. Many others in these verdant hills also are considering getting out of star anise, Wei said.

WAITING IT OUT

But for now, they have decided to wait and see if prices keep rising.

That could be a risky proposition. About a third of the shikimic acid Roche uses is man-made and the firm is said to be seeking ways to expand the amount.

"This gives us more flexibility, and in particular, allows us to be more independent," a Roche spokeswoman said in an email.

Still, spice trader Ketan Mehta from Bombay says booming interest in the hard-to-grow spice means demand will eclipse supply for a while.

"There will be a great shortage of star anise seed if things continue like this," he said as farmers boxed his shipment.

Star anise exporter Huang Chuhua agrees. He says domestic pharmaceutical firms appear to have stopped buying the spice for the time being, but they still have agents in the field.

"That's proof they still want the product," he said. "If they all decide to take one to 2,000 tons, then the market has been cut in half ... As I see it, the market will continue to go up."

Of course, if Tamiflu turns out to be ineffective against a new form of bird flu, or if the virus develops a resistance to the drug, the spice farmers of Guangxi and the rest of the world might be out of luck.

"We still don't know how close the relationship will be between bird flu and star anise," the region's Party chief Chen said.

- REUTERS