Africa Could Thrive On Essential Oils*
The essential oil market presents huge opportunities for African countries, especially South Africa, according to Prof Ramu Govindasamy from the Department of Agricultural, Food, and Resource Economics at Rutgers University in New Jersey, US.
About 28,200 tons of essential oils are produced worldwide every year. Of this ammount, China produces 16,600 tons, followed by Iran with 5,000 tons and the US with 3,950 tons. Africa, on the other hand, annually contributes less than 1% of global production.
Speaking at the Agribusiness in Sustainable Natural African Plant Products (ASNAPP) meeting in Stellenbosch recently, Govindasamy said low production costs, well-established export relations with essential oil importers and strong investment in science and technology could help turn Africa into one of the world's largest essential oil producers.
He admitted South African production costs may be higher than those in the traditional essential-oil producing countries - such as China, India, and Brazil - but added that labour costs were still cheaper here than in other first world countries.
He also acknowledged that prices of essential oils decrease as the oils become commodities, but said prices could be managed through careful market research and planning and collaboration among growers to prevent over-supplies. Competition with synthetic substitutes could also drive down essential oil prices. ASNAPP board chair Prof Leopoldt van Huyssteen advised producers to identify niche markets they could supply with value-added products.
He said that while prices of any product would come under pressure if the product became a commodity, there would always be a market for high quality and value-added products.
It is estimated that the global essentail-oils market is worth up to $18 billion (about R114 billion). The US is the largest essential oil importer and user, importing oils worth $321 million (about R2 billion) a year.
Most of the oils are used in the flavor and fragrance industries by soft drink, food and perfume companies. - Glenneis Erasmus
*article originally appeared in Farmers weekly