1.4 VOLATILE OILS

This book contains many entries covering oleoresins and essential oils which have a very wide range of industrial and domestic uses. The earliest use of these types of product was as perfumes and flavourings, and this still represents a large proportion of their market today. These substances are now used in a broader range of cosmetics including soap; toothpaste, shampoo makeup and skin care products. A new, and what may turn out to be ephemeral, use has also been found in aromatherapy; an alternative treatment used in developed countries for physical and mental disorders. The products are also used on and industrial scale in the manufacture of pharmaceuticals, household cleaners and detergents. The total annual production of these volatile oils is estimated to be in the region of 45,000 tonnes, worth approximately US$700 million.

As with many other broad categories of tropical products, it is inappropriate to try to make an exact definition of a volatile oil. In this section we examine the markets of those oils that could be said to fall between vegetable oils and gum exudates, and which are used for their smell or taste rather for their food value or physical properties.

Over the past few decades the number of uses and the volume of trade of these materials has increased enormously. During the same period the development of synthetic substitutes has also grown. Processing and distribution of these substances have tended to move away from the small, Specialist Company and into the hands of large transnationals.

There are bout 100 commercially valuable volatile oils directly derived from plants. Of these, about one third of world production is derived from citrus plants. Only about 1 per cent is derived from wild plants. Of these 100 products, just 15 peppermint, cedar, citronella, lemon, eucalyptus, Lisea cubeba, clove, spearmint, sassafras, lavender, Osmanthus, patchouli and lime. Only a few of these can be grown successfully in tropical climates.

The relatively simple production technique of steam distillation is now often carried out in the country producing the raw material. India is development its industry in the essential oils essential oils derived from herbs and spices, for example. Such techniques can even be carried out on a relatively small scale at the village level. In this method, steam is passed through the oil-containing vegetable material, be it leaves, bark, flowers, roots or wood, in some suitable vessel. The low boiling point oils turns into gas and mixes with the steam until both are condensed by cooling. The oil, in liquid form, separates from the condensed steam (water) and can then be collected.

The sale of these relatively expensive products can be an important element in the income third-world communities, but the scale of production units differs markedly. Some eucalyptus distilleries can produce hundreds of tonnes a year, while some local distilleries can produce hundreds of tonnes a year, while some local producers of a rare oil in Amazonia might only produce a few litres for domestic consumption.

The international trade in tropical volatile oils place either between the producers and specialised merchants or between the producers and processors based in the consuming countries. Either way, the product usually needs to be refined further or decoloured or blended before its final application. Processors tend to specialise either in products with food applications or those wanted for their perfume.

Many of the more sophisticated techniques of production, such as solvent extraction, require very controlled conditions and higher levels of capital investment. The main trade in those natural products requiring these forms of extraction, as far as the developing world is concerned, takes the form of exports of the raw materials to processing plants in industrial countries.

The source of certain volatile oils can only come from large, slow-growing trees, and others emanate from small, quick-growing herbaceous plants. This distinction is very important as far as the market is concerned. Oils derived from tress have an inelastic supply. The cost of growing the trees in plantations, often waiting years before harvesting can begin, is very high. The climate and other conditions in which they can be grown may not be easily available.

This means that in periods of increasing demand for oils derived from mature trees the prices are likely to be high and remain high. This, theoretically, gives producers of this type of product some control over their prices. The prices for oils derived from quick-growing plants, however, are likely to remain low due to the competition between growers who can swiftly increase production as soon as demand increases.

Unfortunately, as with most natural products, production often increases almost as soon as prices rise. Diversification from one product with poor market prospects into other, more promising products is necessary. The opportunities presented by processing local products into higher-value oils is an obvious strategy. If many countries adopt this strategy at the same time, however, the net effect will be overproduction and poor prices.

China, especially, has become a major supplier of volatile oils to the international market. Brazil, Egypt, Indonesia, India and Morocco and several other developing countries are not far behind. These countries, together with Turkey, account for 85 per cent of third-world production, but they compete directly with each other.

On the face of it, the idea of developing countries using their very special botanical reserves to produce a relatively sophisticated added value product seems very hopeful. Many of thee countries income to costs measured in weak domestic currencies. However, the market price is the price, which the lowest seller is prepared to accept, not the price of the highest seller, and the lack of cooperation between those countries means that this promise is unlikely to be realised.

There is also a dynamic tension between the developments of synthetics as advances are made in the chemistry of such substances and the growing desire to use natural products. It is likely that the price of some of these products will be able to compete on a stronger base with synthetics, but many of these synthetics are being developed by the very corporations who dominate natural volatile oil processing, and competition will always limit these prospects. In spite of the growing demand for volatile oils, the markets for these products are likely to remain poor for the foreseeable future.
>Home >Market information > Tropical commodities and their markets>Chapter 1.4