ESSENTIAL OILS MARKET VALUE CHAIN PROFILE 2011-12 · 2012. 5. 4. · 1.1.1 Overview of the essential oils market and its composition Production data for essential oils are hard to

1

A PROFILE OF THE SOUTH AFRICAN ESSENTIAL OILS MARKET VALUE CHAIN

2011

Directorate Marketing Private Bag X 15

Arcadia 0007

Tel: 012 319 8455/6 Fax: 012 319 8131

Email: [email protected] www.daff.gov.za

2

Table of Contents

1.1 Production and Production Areas 4

1.1.1 Overview of the essential oils market and its composition 7

1.1.2 Identification of Products 7

2. HARVESTING OF ESSENTIAL OILS 7

2.1 Harvesting 7

2.2 Essential Oils Marketing Activities 8

3. EXPORTS VOLUMES 8

4. IMPORTS VOLUMES 26

5. USES OF ESSENTIAL OILS 35

6. QUALITY & MAINTANANCE OF ESSENTIAL OILS 37

7. ESSENTIAL OIL VALUE CHAIN ANALYSIS 37

8. ESSENTIAL OILS DISTRIBUTION CHANNELS 42

8.1 Value Adding in South Africa 43

9. MARKET ACCESS 44

10. MARKET INTELLIGENCE 51

11. THE ESSENTIAL OILS OF PEPPERMINT 97

11.1.1 Properties of peppermint 97

11.1.2 Safety precautions and warnings 97

11.1.3 Production levels in South Africa 97

11.1.4 Major production Areas in South Africa 97

11.1.5 Stem, Leaves, and Flowers 98

11.1.6 Essential part of peppermint 98

3

11.1.7 Post harvest handling 98

11.1.8 The peppermint sale price 99

11.1.9 Essential Oils of Peppermint Industrial Utilization 99

11.1.10 Cosmetic Utilization 99

12. ACKNOWLEDGEMENTS 106

4

1. DESCRIPTION OF THE ESSENTIAL OILS’ INDUSTRY An essential oil is a liquid that is generally distilled (most frequently by steam or water) from the leaves, stems, flowers, bark, roots, seeds, fruits or other organs of a plant. Using the different technologies available essential oils are sourced from over 3,000 plants of which approximately 300 are of commercial importance. Most flowers contain very little volatile oil and their chemical components are too delicate and easily denatured by the high heat used in steam distillation. A solvent such as hexane or supercritical carbon dioxide is used to extract the oils. Extracts from hexane and other hydrophobic solvents are called concretes, which is a mixture of essential oil, waxes, resins, and other lipophilic (oil soluble) plant material. The majority of essential oils are usually obtained from agricultural plants but a number of oils are collected from wild sources including trees. The strengths of essential oils

• They are antibacterial, antiviral, antifungal, and antimicrobial. • Essential oils by-pass the digestive system so they are beneficial for people with poor

digestion/assimilation. • They require no refrigeration and require very little storage space. • They have the longest shelf life of any plant known to man. • Essential oils are highly oxygenating. • They are very cost-effective because they are one of the few substances that the more you

use them, the less you need them. • They are suitable for babies since they cannot swallow tablets and capsules thus essential

oils provide a solution as they only come in liquid form.

Weakness of the Essential Oils industry (Production Constraints) • Production of essential oils requires highly focused farm practices and field maintenance

for high quality yield. • Requires more technical support, including the production inputs and most effective plant

material for new plantings • There is a high entry barrier which includes fencing, cuttings, distillation plants and land

preparation.

1.1 Production and Production Areas

The major producers of essential oils across the world are Brazil, China, USA, Egypt, India, Mexico, Guatemala, Morocco and Indonesia. All of them with the exception of USA are developing countries with low cost, peasant type economies. It is estimated that about 65% of world production emanates from developing countries. The major consumers are the USA (40%), Western Europe (30%) and Japan (7%). While the EU as a whole dominate world trade, exports and imports, no individual country from this bloc features in the list of major producers. Most of the major producing

5

countries have large populations with huge internal appetite for essential oils. The table below shows the projected hectares under essential oil crops given by provinces in South Africa by 2010. Table 1: The projected ha under essential oil crops by 2010 as given by Provinces.

Province Species TOTAL ha

Mpumalanga Vetiver, Citronella, Lippia, Eucalyptus, Artemisia, Rosemary, Geranium, Lemon grass

943

Free State Tagete, Artemisia, Lavendin 70

Northern Cape Marjoram, Rosemary, Lavendin 45

North West Geranium, Rosemary, Lavendin, Chamomile 40 Eastern Cape Geranium, Rosemary, Lavender 200

Western Cape Eriocephalus, Lavender, Lavandin, Buchu, Rosemary 77

Limpopo & Machado

Lippia, Geranium, Rosemary, Lavendin, Tea tree 91

Gauteng Lavendin, Rosemary, Artemisia 82

KZN Lavendin, Rosemary Eucalyptus, Geranium, Tea tree, Lemon tea tree, Spear Mint, Lemon grass, Artemisia, Melissa, Thyme

422

TOTAL 1970

These estimates exclude wild harvesting and community projects in progress

Source: South African Essential Oil Producer Association (SAEOPA) Table 1 show the estimated hectares of essential oil crops of different species which will be planted by different provinces by 2010. The table shows that in the Mpumalanga province it is projected that 943 ha will be planted to essential oil crops by 2010, followed by KwaZulu Natal with 422 ha and Eastern Cape with 200 ha. The estimated total hectares to be devoted to essential oil crops by all the provinces by 2010 are about 1970 ha. However of all the total species estimated, Geranium, Lavendin and Rosemary are the most projected species to be planted in all provinces by 2010. The table indicates that in all Provinces, KwaZulu Natal Province is projected to be the major producer of most kinds of essential oil species than the other provinces by 2010.

6

Table 2: Estimated Production Statistics for certain selected Essential Oils 2009.

OIL TYPES ESTIMATED VALUE OF PRIMARY PRODUCTION (2010)

Major Oil (Citrus) and Eucalyptus) R7 444 526.00 Minor Oils (e.g. Chamomiles, Jasmine, Lavenders, Tea Trees, Mints)

R2 237 169.75

Minor Oils-FRIDGE Study - Specified Geranium (Pelargonium Graveolens Roseum) R541 666.67 Buchu (Betulina, Crenulata) 500 000.00 Chamomile – Roman (Anthemis nobilis) R24 305.56 Rosemary (Rosmarinus Officinalis) R15 000.00 Lemon Grass (Cymbopogon Citratus) R7 777.78 Lemon balm (Melissa officinalis) - Lippia (Lippia javanica) - Rose Damascene (Rosa Damascene) - Source: Institute of Natural Resources Table 2 indicates different types of essential oils and the estimated values of primary production in 2010. Table 3: The most utilized essential oils and major producers

Product Country

Orange Australia, Brazil, Dominican Republic, Israel, Italy and USA

Corn mint Brazil, China, India, Japan, North Korea, Paraguay, Taiwan and Thailand

Eucalyptus (cineole-type) Australia, Austria, Brazil, China, India, Paraguay, Portugal, South Africa and Spain

Citronella China, India and Vietnam Peppermint Australia, China, Italy, Japan and USA Lemon Argentina, Australia, Brazil, Greece, Spain, Italy, USA and Peru Clove leaf Brazil, Indonesia, Madagascar, Sri Lanka and Tanzania Cedar wood USA and China Litsea cubeba China Sassafras Brazil and USA Lime Brazil, China, Cuba, Ghana, Haiti, Ivory Coast, Jamaica, Mexico and

Peru Spearmint Argentina, Australia, Brazil, Bulgaria, China, Egypt, France, Hungary,

Japan, Korea, Morocco, New Zealand, Paraguay, Romania, Russia, Taiwan, UK, USA and Yugoslavia

Source: South African Essential Oil Producer Association (SAEOPA)

7

Table 3 indicates the most utilized essential oil products and its major producers.

1.1.1 Overview of the essential oils market and its composition

Production data for essential oils are hard to find, as it is very difficult to do an exhaustive compilation covering the broad spectrum of all of essential oils produced. The essential oil industry is dynamic with tastes and preferences of consumers changing by the day. The top 10 crops in terms of production account for about 80% of the total world market for essential oils. One of the most important things to do for farmers who want to be involved in essential oils production is selecting the right seed or plant material for sowing. It is recommended that this be obtained from a reputable supplier. Farmers should also be knowledgeable on weed control and management as this will affect the quality of the end product. If weeds are harvested and distilled with the crop, the oil from weeds can contaminate the desired oil, which would compromise quality. These would lead to a total rejection of the crop’s oil which will have a negative impact on the farm income.

1.1.2 Identification of Products

Given the appropriate equipment, essential oils can be fractionated and components sold individually. Alternatively, at home industry level, essential oils can be used in scented candles, soaps, and hand creams. Some authors are of the view that massaging oils into the human skin as in aromatherapy is of little therapeutic value, although it may induce a sense of sensual well being. However, in spite of the lack of a scientific basis for aromatherapy, it remains a viable component of the market for the South African essential oils industry. There are numerous ways to create value added products through the use of essential oils. Based on information gathered from a brief overview of the essential oil sub sector map and value chain, it has been decided that the following value added products will be investigated further, completing each investigation with a sub sector map for that product. The products are; Soaps, Scented candles, Bath salts, Aromatherapy creams and lotions and Potpourri. It has been determined that each of these identified products are relatively simple to make, thus making use of the home based production units, and have a viable market within South Africa, and particularly, the Eastern Cape. Each of these products will be discussed in detail.

2. HARVESTING OF ESSENTIAL OILS

2.1 Harvesting

It must be noted that the essential oils can be harvested as either plants or seeds. For the plants the proximity of the steam distillation plant is important. If the period between harvesting and distillation is too long the oil from the plant can evaporate or decline in quality. The quality of the oil is volatile. It changes as the crop grows; this means that a farmer should ensure that the crop is harvested at the right time.

8

2.2 Essential Oils Marketing Activities

The marketing structure of essential oils is not different from most products. The traditional structure begins with the producer who sells to the flavor and fragrance industries. Fragrance houses may or may not embark on value adding to the product, they then sell it to the end users. At times system has been supplemented by traders, agents and brokers who use their knowledge to market niches and buy directly from producers and sell directly to the flavor houses or end users. Although it is very difficult to enter into the essential oils industry from either side, as producers or end users, there is always an opportunity for small players. The reason for the difficulty in gaining entry is that once end users have developed a product using specific oil they do not want to change that oil or the supplier as they may fear a compromise in quality. Small scale farmers may enter the market and target small industries such as Aromatherapy and Massage for their product market.

3. EXPORTS VOLUMES

Figure 1: Exports volumes of essential oils, nes to various

regions

0

100

200

300

400

500

600

700

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Africa 569.526 244.543 181.514 126.633 221.872 148.123 146.079 128.742 28.678

Americas 29.009 52.004 75.367 4.527 36.919 16.377 2.848 10.191 14.732

Asia 22.61 1.065 6.667 11.028 1.212 17.808 6.338 4.701 0.782

Europe 350.704 572.349 147.493 175.263 174.428 161.233 144.134 170.214 101.597

Oceania 53.071 72.948 74.727 92.098 79.676 60.722 59.906 41.929 0.01

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 1 indicates exports volumes of essential oils (nes),from South Africa to various regions between 2002 and 2010 period. The figure further indicates that the major export markets for essential oils, nes was Europe followed by Africa. Americas, Oceania and Asia had very low levels of exports of essential oils, nes during the same period under review. The figure also indicates that exports of essential oils, nes from South Africa to Europe started to increase in 2002 at approximately 350 000 tons, until a peak was attained in 2003 at approximately 572 000 tons. Exports of essential oils, nes from South Africa to Africa

9

started to increase in 2002 and during the same period attained a peak at approximately 569 000 tons. Figure 2 further indicates that the demand for essential oils, nes from South Africa to Americas, Asia and Oceania was less as compared to what South Africa exported to Europe and Africa during the period under review. The figure also indicates that there was a 0.01% decline in exports of essential oils, nes from South Africa to Europe in 2010 as compared to 2009, while there was a 349% decline in exports of essential oils, nes from South Africa to Africa in 2010 as compared to 2009.

Figure 2: Exports volumes of essential oils, nes to Africa

0

50

100

150

200

250

300

350

400

450

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Africa Rest 17.85 17.645 10.312 3.531 9.752 5.145 3.491 7.666 2.687

Middle Africa Rest 0 18.368 0.95 0.32 1.16 5.997 1.812 5.975 0.2

Western Africa 165.818 47.967 0.31 1.346 0.048 0.022 0.907 0.111 0.208

SADC 385.255 160.563 169.942 121.435 210.912 136.587 139.869 114.971 25.583

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 2 confirms exports of essential oils (nes) from South Africa to Africa between 2002 and 2010 period. The graph further confirms that the major market for essential oils, nes from South Africa to Africa was SADC region followed by low volumes of essential oils (nes) to Western Africa. The figure also confirms that exports of essential oils, nes from South Africa to SADC started to increase in 2002, and then a decline occurred in 2003 until the lowest levels of essential oils, nes exports were attained in 2010 at approximately 25 500 tons. The graph further confirms that a peak in exports of essential oils, nes from South Africa to SADC was attained in 2002 at approximately 385 000 tons. Essential oils, nes exports from South Africa to Western Africa also attained its peak in 2002 at approximately 165 000 tons. Eastern Africa Rest and Middle Africa had very low levels of exports of essential oils, nes from South Africa during the period under review.

10

Figure 2 clearly confirms that the demand for essential oils, nes from South Africa to Western Africa, Middle Africa and Western Africa was less as compared to what South Africa exported to SADC over the same period under examination. In 2010, there was a 348% decline in exports of essential oils, nes from South Africa to SADC as compared to 2009.

Figure 3: Exports volumes of essential oils, nes to SADC

0

20

40

60

80

100

120

140

160

180

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Angola 1.019 5.499 2.515 6.78 2.78 12.768 7.345 0 0

Democratic Republic of the Congo 22.385 2.17 17.815 0 0.036 0.726 0.103 0.233 1.25

Mauritius 17.488 4.871 5.266 63.452 39.576 58.289 76.922 64.297 8.5

Malaw i 87.152 19.671 45.522 17.955 24.699 18.008 25.964 15.049 0.093

Mozambique 155.596 84.123 62.621 17.682 121.601 25.928 17.986 8.13 0.61

United Republic of Tanzania 45.038 21.711 3.552 0.133 0.154 0.282 0.208 0.195 0.015

Zambia 47.885 18.525 26.811 8.396 11.065 12.837 9.524 12.764 13.738

Zimbabw e 8.692 3.793 5.782 6.737 10.337 7.749 1.362 13.267 1.329

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 3 illustrates exports volumes of essential oils (nes) from South Africa to SADC member states between 2002 and 2010 period. The major attractive markets for essential oils, nes from South Africa to SADC was Mozambique followed by Malawi and Mauritius. The graph further illustrates that exports of essential oils, nes from South Africa to Mozambique started to increase in 2002 and during the same period attained a peak at approximately 155 000 tons, while Malawi also attained its peak in 2002 at approximately 87 000 tons. The graph also illustrates that Mauritius experienced its peak in 2008 at approximately 76 000 tons.

11

Figure 3 also illustrates that the demand for essential oils, nes from South Africa to Malawi, Mauritius, Zambia and Zimbabwe was less as compared to what South Africa exported to Mozambique during the same period under scrutiny. In 2010, there was a 1.23% decline in exports of essential oils, nes from South Africa to Mozambique as compared to 2009.

Figure 4: Exports volumes of essential oils, nes to Americas

0

10

20

30

40

50

60

70

80

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

South America 0.001 0.2 0.42 0.02 0.018 0.048 0.081 0.099 0.038

NAFTA 29.008 51.804 74.947 4.507 36.901 16.329 2.764 10.085 14.694

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 4 depicts essential oils (nes) exports from South Africa to Americas between 2002 and 2010 period. During the period under scrutiny, the most attractive market for essential oils, nes exports from South Africa to Americas was NAFTA. The graph further depicts that essential oils (nes) exports started to increase in 2002 to 2003, until a peak was attained in 2004 at approximately 74 000 tons. Essential oils (nes) exports from South Africa to South America had very low levels of exports during the period under scrutiny. The graph also depicts that in 2005 and 2008, essential oils, nes exports from South Africa to NAFTA were below 5000 tons. The figure clearly depicts that the demand for essential oils (nes) from South Africa to South America was less as compared to what South Africa exported to NAFTA during the same period under scrutiny. The figure further depicts that there was 31.4% increase in exports of essential oils, nes from South Africa to NAFTA in 2010 as compared to 2009.

12

Figure 5: Exports volumes of essential oils, nes to NAFTA

0

10

20

30

40

50

60

70

80

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Canada 16.8 50.4 67.2 0.01 0 0.059 0 0.395 0.4

United States 12.208 1.404 7.746 4.496 36.9 16.27 2.734 9.28 14.287

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 5 shows volumes of essential oils (nes) exports from South Africa to NAFTA between 2002 and 2010 period. The figure further shows that essential oils (nes) from South Africa to Canada started to increase in 2002 to 2003, until a peak was attained in 2004 at approximately 67 000 tons during the period under scrutiny. Exports of essential oils (nes) from South Africa to United States attained a peak in 2006 at approximately 36 000 tons during the period under review. Figure 5 also shows that the demand for essential oils (nes) from South Africa to Canada was high as compared to what South Africa exported to United States between 2002 and 2005 years. The figure further shows that the demand for essential oils (nes) from South Africa to United States was high as compared to what South Africa exported to Canada between 2006 and 2010 years. The figure also shows that there was 35.0% increase in exports of essential oils (nes) from South Africa to United States in 2010 as compared to 2009.

13

Figure 6: Exports volumes of essential oils, nes to Asia

0

5

10

15

20

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Asia 18.8 0.728 0.025 0.055 0.079 0.398 0.057 0.317 0.143

South-central Asia 3.198 0.121 5.389 10.232 0.17 17.026 0.186 0.601 0.431

South-eastern Asia 0.08 0.048 0.284 0.192 0.255 0.265 0.535 3.625 0.208

Western Asia 0.532 0.168 0.969 0.549 0.708 0.119 5.56 0.158 0

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 6 represents volumes of essential oils (nes) exports from South Africa to Asia between 2002 and 2010 period. The figure further shows that the major export destination for essential oils (nes) from South Africa to Asia was Eastern Asia and South-central Asia. Exports of essential oils (nes) from South Africa to Western Asia and South-eastern Asia were below 10 000 tons, during the period under review. The graph also shows that exports of essential oils (nes) from South Africa to Eastern Asia started to increase in 2002, and during the same period attained a peak at approximately 18 000 tons. Exports of essential oils (nes) from South Africa to South-central Asia attained a peak in 2007 at approximately 17 000 tons. The figure clearly shows that exports of essential oils (nes) to Eastern Asia dominated in 2002, while exports of essential oils (nes) to South-central Asia dominated between 2004 and 2007 years. In 2010, there was a 122% decline in exports of essential oils, nes from South Africa to Eastern Asia as compared to 2009, while there was a 39.4% decline in exports of essential oils, nes from South Africa to South-central Asia as compared to 2009.

14

Figure 7: Exports volumes of essential oils, nes to Europe

0

100

200

300

400

500

600

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Europe 0 0 0 0.004 0.381 0 0 0 0

Western Europe Rest 0.522 2.354 1.889 1.878 2.043 1.592 4.286 2.125 0.613

European Union 350.182 569.995 145.604 173.381 172.004 159.641 139.698 168.089 100.984

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 7 depicts volumes of essential oils (nes) exports from South Africa to Europe between 2002 and 2010 period. The graph further depicts that the major export destination for essential oils (nes) exports from South Africa went to the European Union. The figure also depicts that there were very low volumes of essential oils (nes) that were exported to the European Union between 2004 and 2010. Exports of essential oils (nes) from South Africa to Eastern Europe were very much intermittent, with no exports of essential oils (nes) between 2002 and 2004, and again between 2007 and 2010 years. The figure also depicts that exports volumes of essential oils (nes) started to increase in 2002, until a peak was attained in 2003 at approximately 569 00 tons during the same period under examination. The figure also depicts that there was a 66.4% decline in exports of essential oils (nes) from South Africa to the European Union as compared to 2009.

15

Figure 8: Exports volumes of essential oils, nes to European

Union

0

50

100

150

200

250

300

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Belgium 118.868 11.778 1.295 0.928 0 0.376 6.424 3.25 0.042

Germany 92.558 100.027 106.079 104.252 100.034 101.561 92.062 106.642 31.659

Spain 0.077 7.55 0.212 14.884 13.535 7.53 21.411 14.85 29.633

France 58.72 61.368 10.279 39.123 46.368 27.072 9.413 35.144 9.345

United Kingdom 31.11 76.477 3.521 5.748 2.576 17.145 5.407 7.048 4.21

Netherlands 48.844 261.435 7.118 8.381 8.807 5.684 3.757 0.616 26.088

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 8 illustrates volumes of essential oils (nes) from South Africa to the European Union between 2002 and 2010 period. The graph further illustrates that the major export destination for essential oils (nes) exports from South Africa to the European Union was Netherlands. Belgium, Germany, France and United Kingdom had very low levels of essential oils (nes) exports from South Africa to the European Union at volumes below 130 000 tons. The graph further illustrates that volumes of essential oils (nes) exports started to increase in 2002, until a peak was attained in 2003 at approximately 261.44 tons. In 2010, there was a 97.6% increase in exports of essential oils (nes) from South Africa to Netherlands as compared to 2009.

16

Figure 9: Exports volumes of essential oils, nes to Oceania

0

10

20

30

40

50

60

70

80

90

100

Period (Years)

Exp

ort

Qu

an

tity

('0

00 t

on

s)

Australia and New Zealand 53.071 72.948 74.708 91.588 79.349 60.722 59.906 41.929 0.01

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 9 indicates exports volumes of essential oils (nes) from South Africa to Oceania between 2002 and 2010 period. The figure further indicates that during the period under scrutiny, exports of essential oils (nes) from South Africa to Oceania went to Australia and New Zealand. The figure also indicates that exports of essential oils (nes) from South Africa to Australia and New Zealand started to increase in 2002 to 2004, until a peak was attained in 2005 at approximately 91 000 tons. After 2005 exports essential oils (nes) started to decline consistently to low levels of approximately 0.01 tons. The further decline in exports of essential oils (nes) to Australia and New Zealand was as a result of the increase in imports from Australia and New Zealand into South Africa during the same period. The figure also indicates that there was a 419% decline in exports of essential oils (nes) from South Africa to Australia and New Zealand as compared to 2009.

17

Figure 10: Value of essential oils, nes exports by Provinces

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

Period (Years)

Exp

ort

Valu

e (

Ran

ds)

Western Cape 21084551 29522324 22835505 31351141 35205174 3185026830463550 86649915 43694065 44150351

Eastern Cape 1432255 2855286 1240492 705759 93631 270370 58640 809804 3460755 14303622

Free State 542556 3230134 3125309 105600 158176 866239 718369 883750 406389 783653

Kw azulu-Natal 238353 1225311 2598462 2873645 2839933 3319554 2196653 3575479 2671764 3818444

North West 18008253 22305696 27409218 19468378 284474 381144 670130 530514 1241232 2239

Gauteng 46245035 53308351 45052560 48645115 55600869 3352146144987547 77952736 51843648 59652560

Mpumalanga 8569629 25837170 8989225 13091352 23100581 1833297021916411 7710896 12773685 7542087

Limpopo 194390 782160 200174 0 191396 0 938131 11632111 2735518 14214423

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure10 shows values of essential oils, nes exports by provinces of South Africa to the world between 2001 and 2010 period. The figure further shows that the major supplying markets for essential oils (nes) from South Africa to the world was Western Cape Province, followed by Gauteng Province during the period under scrutiny. The figure also shows that exports of essential oils (nes) by Gauteng province started to increase in 2001, with three declines in 2003, 2006 and 2009 years. The figure further shows that exports of essential oils (nes) from Western Cape Province to the world attained a peak in 2008 at approximately 86.6 million rands, while exports of essential oils (nes) from Gauteng province to the world attained a peak also in 2008 at approximately 77.9 million rands. Exports of essential oils (nes) from Eastern Cape, Free State, KwaZulu Natal, North West, Mpumalanga and Limpopo provinces had very low volumes to the world during the period under examination. In 2010, there was a 1.03% increase in exports value of essential oils (nes) from Western Cape Province to the world as compared to 2009, while there was a 13.1% increase in exports value of essential oils (nes) from Gauteng Province to the world as compared to 2009.

18

Figure 11: Value of essential oils, nes by Gauteng Province

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

Period (Years)

Ex

po

rt V

alu

e (

Ra

nd

s)

Sedibeng District municipality 0 6506 1838281 3779107 1418241 28 47095 32498 74685 0

West Rand District Municipality 1136339 2229476 1374131 26596 171750 325 9899 1782 48769 3529188

Ekurhuleni Metropolitan Municipality 2917351 3240992 2785073 1949858 795912 1077365 549080 560857 1206909 644545

City of Johannesburg Metropolitan

Municipality

30179285405365673547680735279114475050402600802637276874637084473557566444634713

City of Tshw ane Metropolitan

Municipality

12012059 7294808 3578267 7610441 5709926 6435717 7104599 136422311492260710844114

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 11 indicates exports values of essential oils (nes) from Gauteng province to the world between 2001 and 2010 period. The graph further indicates that the City of Johannesburg Metro was the major exporter of essential oils (nes) in Gauteng province. Exports of essential oils (nes) from the City of Johannesburg started to increase in 2001 and 2002, and between 2003 and 2004 there was a slight decline in exports of essential oils (nes). The biggest decline in essential oils (nes) exports from the City of Johannesburg was in 2006 at approximately 26 million rands. The graph also indicates that exports of essential oils (nes) from the City of Johannesburg to the world attained a peak in 2008 at approximately 63.7 million rands. Value of exports of essential oils (nes) from Sedibeng and West Rand Districts, Ekurhuleni and City of Tshwane Metro were below 20 million rands during the period under review. There was a 20.3% increase in exports value of essential oils (nes) from the City of Johannesburg Metro to the world in 2010 as compared to 2009.

19

Figure 12: Value of esential oils, nes by Western Cape Province

0

10000000

20000000

30000000

40000000

50000000

Period (Years)

Ex

po

rt V

alu

e (

Ra

nd

s)

City of Cape Tow n Metropolitan

Municipality

5637121 9146756 6595314 3637864 5869710 3760123 10297037436718631140650314034124

West Coast District municipality 1410776 2047808 493130 1395731 1398112 1616454 328777 139447 234721 265529

Cape Winelands District Municipality 8510265 150897821195754124995974276018802645790819661729428296193202317329654515

Overberg District municipality 5526390 3237978 3691613 1200600 332588 351 176007 0 873 19078

Eden District municipality 0 0 97907 120973 2883 15432 0 8986 28795 177106

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 12 shows values of exports of essential oils (nes) from Western Cape Province to the world between 2001 and 2010 period. During the same period under examination, the figure further shows that the major exporter of essential oils (nes) from Western Cape to the world was the City of Cape Town Metro. The figure also shows that exports of essential oils (nes) from the City of Cape Town Metro attained a peak in 2008 at approximately 43.6 million rands. The figure further shows that between 2001 and 2006, exports of essential oils (nes) from the City of Cape Town Metro did not exceed 10 million rands. The figure also shows that exports of essential oils (nes) from Cape Winelands District to the world attained its peak also in 2008 at approximately 42.8 million rands. In 2010, there was 18.7% increase in exports value of essential oils (nes) from the city of Cape Town metro to the world as compared to 2009, while there was 8.8% decline in exports value of essential oils (nes) from Cape Winelands District to the world as compared to 2009.

20

Figure 13: Value of essential oils, nes exports by KwaZulu-Natal

Province

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

Period (Years)

Ex

po

rt V

alu

e (

Ra

nd

s)

UMgungundlovu District municipality 0 0 0 0 0 0 59055 238180 465 1517418

Uthukela District municipality 5482 61990 42877 16898 32747 0 0 0 7 0

Zululand District municipality 0 0 0 0 121335 176056 274268 237437 53814 36795

eThekw ini Metropolitan Municipality 175737 116332125555852856747268585031434981863310208581726007851830556

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 13 depicts values of exports of essential oils (nes) from KwaZulu-Natal Province to the world between 2001 and 2010 period. During the same period under examination, the figure further depicts that the major exporter of essential oils (nes) from KwaZulu-Natal province to the world was eThekwini Metropolitan Municipality, followed by very intermittent values from UMgungundlovu District Municipality. The figure further depicts that exports of essential oils (nes) from the eThekwini Metropolitan Municipality started to increase in 2002, until a slight decline occurred in 2005. Exports of essential oils (nes) from the eThekwini Metropolitan Municipality to the world attained a peak in 2004 and 2006 at approximately 2.8 million rands and 3.1 million rands respectively. Exports of essential oils (nes) from UMgungundlovu District Municipality to the world attained a peak in 2010 at approximately 1.5 million rands. The figure also depicts that that exports of essential oils (nes) from UMgungundlovu, Uthukela, and Zululand Districts were very low during the period under scrutiny. There was a 42.1% decline in exports value of essential oils (nes) from eThekwini Metropolitan to the world in 2010 as compared to 2009, while there was 99.9% increase in exports value of essential oils (nes) from UMgungundlovu District to the world in 2010 as compared to 2009.

21

Figure 14: Value of essential oils, nes exports by Eastern Cape

Province

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

Period (Years)

Exp

ort

Valu

e (

Ran

ds)

Cacadu District municipality 20462 136482 127361 0 0 212614 0 0 1173703 103458

Amatole District municipality 0 134784 38599 187359 93631 57647 56590 0 183273 0

Nelson Mandela Metropolitan

Municipality

1411792 2584020 1074532 518400 0 109 2050 809804 2103778 14200163

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 14 indicates exports values of essential oils (nes) from Eastern Cape Province to the world between 2001 and 2010 period. During the same period under examination, the figure further indicates that the major exporter of essential oils (nes) from the Eastern Cape Province to the world was Nelson Mandela Metropolitan Municipality with no competition from other district municipalities. The figure further depicts that exports of essential oils (nes) from the Nelson Mandela Metropolitan Municipality started to increase in 2001 and continued in 2002, until a decline occurred in between 2003 and 2007. In 2008 there was a slight increase in terms of value of exports of essential oils (nes) from Nelson Mandela metro until a peak was attained in 2010 at approximately R14.2 million. There was 85.2% increase in exports value of essential oils (nes) from Nelson Mandela Metro to the world in 2010 as compared to 2009.

22

Figure 15: Value of essential oil, nes exports by Free State Province

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

Period (Years)

Ex

po

rt V

alu

e (

Ra

nd

s)

Motheo District municipality 0 0 1731057 0 75480 799675 622563 373061 0 0

Lejw eleputsw a District municipality 0 0 0 0 0 0 0 170228 0 42237

Thabo Mofutsanyane District municipality 542556 3230134 1394252 105600 72824 66563 95806 340461 406389 741416

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 15 illustrates values of exports of essential oils (nes) from Free State Province to the world between 2001 and 2010 period. The graph further illustrates that Thabo Mofutsanyane District was the major exporter of essential oils, nes from Free State Province, followed by Motheo District. The graph also illustrates that Lejweleputswa District experienced low export value during the period under review of less than R500 000. Exports values of essential oils (nes) from Motheo District and Thabo Mofutsanyane District to the world attained their peaks in 2003 and 2002 at approximately R1.7 million and R3.2 million respectively. There was a 45.2% increase in exports value of essential oils (nes) from Thabo Mofutsanyane District to the world in 2010 as compared to 2009, while there was 100% decline in exports value of essential oils (nes) from Motheo District to the world in 2009 and 2010 as compared to 2008.

23

Figure 16: Value of essential oil, nes exports by Limpopo Province

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

Period (Years)

Exp

ort

Valu

e (

Ran

ds)

Mopani District municipality 0 0 0 0 191396 0 0 734773 364805 0

Vhembe District municipality 0 0 0 0 0 0 0 2608824 2763 402366

Capricorn District municipality 194390 782160 0 0 0 0 938131 8288514 2367949 13812057

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 16 confirms values of exports of essential oils (nes) from Limpopo Province to the world between 2001 and 2010 period. The figure further confirms that Capricorn District was the main exporter of essential oils (nes) from Limpopo Province to the world during the period under scrutiny. The figure also confirms that Vhembe and Mopani Districts had very low or intermittent export values of not more than R3 million respectively. There were no exports of essential oils (nes) from Mopani District between 2001 and 2004 and again in 2006 and 2007 years. The figure further confirms that there were no exports of essential oils (nes) from Vhembe District between 2001 and 2007 years. In 2010, there was 83.6% increase in exports value of essential oils (nes) from Capricorn District to the world as compared to 2009.

24

Figure 17: Value of essential oils, nes exports by Mpumalanga Province

0

5000000

10000000

15000000

20000000

25000000

Period (Years)

Exp

ort

Valu

e (

Ran

ds)

Gert Sibande District municipality 1015433 3963489 3105702 3303619 3606352 5431278 6466419 7470009 12773512 6608579

Nkangala District municipality 0 0 89525 49859 0 814 7102 0 172 0

Ehlanzeni District municipality 7554197 21873681 5793998 9737874 194942281290087815442891 240888 0 933507

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 17 shows values of exports of essential oils (nes) from Limpopo Province to the world between 2001 and 2010 period. During the period under review, the figure further shows that exports of essential oils (nes) from Mpumalanga Province to the world were mainly from Ehlanzeni District, followed by Gert Sibande District. The figure also shows that exports of essential oils (nes) from Ehlanzeni District started to increase in 2001, until a peak was attained in 2002, 2005 and 2007 at approximately R21.8 million, R19.4 million and R15.4 million respectively. The figure further shows that exports of essential oils (nes) from Gert Sibande District started to increase in 2001 and again in 2002, until a slight decline was experienced in 2003. The figure also shows that from 2004 to 2008 years, exports values of essential oils (nes) exports increased consistently, until a peak was attained in 2009 at approximately R12.7 million. There was a 100% increase in exports value of essential oils (nes) from Ehlanzeni District to the world in 2010 as compared to 2009, while there was 93.3% decline in exports value of essential oils (nes) from Gert Sibande District to the world in 2010 as compared to 2009.

25

Figure 18: Value of essential oils, nes exports by North West Province

0

5000000

10000000

15000000

20000000

25000000

30000000

Period (Years)

Ex

po

rt V

alu

e (

Ra

nd

s)

Bojanala District municipality 18008253223056962740921819468378 284474 381144 670130 530514 1142500 0

Bophirima District municipality 0 0 0 0 0 0 0 0 44824 0

Southern District municipality 0 0 0 0 0 0 0 0 53908 2239

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 18 indicates values of exports of essential oils (nes) from North West Province to the world between 2001 and 2010 period. The figure further indicates that exports of essential oils (nes) from North West Province to the world were originated mainly from Bojanala District, with no competition from the other counter parts. The figure clearly indicates that between 2001 and 2008 years, there were no exports of essential oils (nes) from both Bophirima and Southern Districts. Exports of essential oils (nes) from Bojanala District to the world started to increase in 2001 and again in 2002, until a peak was attained in 2003 at approximately R27.4 million. Between 2004 and 2010 years, value of exports of essential oils (nes) from Bojanala district declined dramatically due to low production levels and the distance and high transport costs to the market. In 2010, there was 100% decline in exports value of essential oils (nes) from Bojanala District to the world as compared to 2009.

26

4. IMPORTS VOLUMES

Figure 19: Imports volumes of essential oils, nes from various

regions

0

20

40

60

80

100

120

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Africa 9.659 6.113 1.455 4.426 1.168 1.588 2.887 3.27 3.419 1.545

Americas 19.974 19.456 38.665 30.456 55.636 35.16 20.47 16.053 14.193 9.123

Asia 30.308 13.943 40.177 36.576 32.595 24.408 18.231 51.591 97.691 21.241

Europe 37.103 41.727 33.682 48.591 69.833 74.79 93.205 47.674 53.521 27.313

Oceania 6.282 7.34 7.406 3.863 7.692 5.344 12.552 15.12 12.682 6.439

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 19 shows imports volumes of essential oils (nes) from various regions of the world to South Africa between 2001 and 2010 period. During the same period under review, the major import market for essential oils (nes) from various regions was Asia, followed by Europe and Americas. The figure further shows that imports of essential oils (nes) from Europe to South Africa started to increase in 2001, and again in 2002 with a slight decline in 2003. Between 2004 and 2010, South Africa imported high volumes of essential oils (nes) due to low domestic production and supply in the market. Figure 1 on exports of essential oils (nes) confirms that between 2002 and 2003, exports from South Africa to Africa and Europe were high and then declined between 2004 and 2010 period. Africa and Oceania had very low levels of imports of essential oils (nes) to South Africa over the same period under review. The figure further shows that imports of essential oils (nes) from Europe to South Africa attained a peak in 2007 at approximately 93 000 tons, while imports of essential oils (nes) from Asia to South Africa attained a peak in 2009 at approximately 97 000 tons. Imports of essential oils (nes) from Americas to South Africa attained a peak in 2005 at approximately 56 000 tons. In 2010, there was a 96.0% decline in imports of essential oils (nes) from Europe to South Africa as compared to 2009, while there was a 358.7% decline in imports of essential oils (nes) from Asia to South Africa as compared to 2009.

27

Figure 20: Import volumes of essential oils, nes from Africa

0

1

2

3

4

5

6

7

8

9

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Africa Rest 0.946 1.042 0.035 0.713 0.634 0.947 0.357 1.397 1.727 1.078

Northern Africa 0.201 0.057 0.492 0.376 0.017 0.047 0.076 0.641 0.685 0.062

Western Africa 0.04 0.275 0.2 0.02 0 0 0.005 0 0.002 0

SADC 8.472 4.739 0.728 3.317 0.517 0.594 2.449 1.232 1.005 0.405

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 20 indicates imports volumes of essential oils (nes) from Africa to South Africa between 2001 and 2010 period. The figure further indicates that the major import market for essential oils (nes) from Africa to South Africa was SADC region followed by very minimal imports from Eastern, Western and Northern Africa. The figure also indicates that imports of essential oils (nes) from SADC region to South Africa started to increase in 2001, and during the same period attained a peak at approximately 8000 tons. Figure 20 as compared to figure 19 clearly indicates that the demand for essential oils (nes) from Africa to South Africa was far less as compared to what South Africa exported to Africa over the same period. The figure also indicates that there was a 148.1% decline in imports of essential oils (nes) from SADC region to South Africa as compared to 2009.

28

Figure 21: Imports volumes of essential oils, nes from SADC

0

1

2

3

4

5

6

7

8

9

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Malaw i 0 0 0.548 2.189 0 0 0.416 0.269 0.303 0

Mozambique 0 0 0 0 0 0 0.5 0 0.675 0.4

South Africa 0 0.024 0 0.095 0.095 0.022 0.863 0.527 0.026 0.005

Zambia 0.42 0.01 0 0.033 0.138 0.096 0 0 0 0

Zimbabw e 8.043 4.705 0.18 1 0.284 0.476 0.67 0.436 0 0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 21 depicts imports volumes of essential oils (nes) from the SADC region to South Africa between 2001 and 2010 period. The graph further depicts that the only import market of essential oils (nes) from the SADC region to South Africa was Zimbabwe with no competition from other SADC countries. The graph also depicts that there were no imports of essential oils (nes) from Zimbabwe to South Africa between 2009 and 2010 period. Imports of essential oils (nes) from Zimbabwe to South Africa started to increase in 2001, and during the same year attained a peak at approximately 8000 tons. The graph further depicts that imports of essential oils (nes) from Malawi, Mozambique and Zambia were very intermittent. The figure also indicates that in 2009 and 2010, there was a 100% decline in imports of essential oils (nes) from Zimbabwe to South Africa as compared to 2008.

29

Figure 22: Imports volumes of essential oils, nes from Americas

0

5

10

15

20

25

30

35

40

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Caribbean 0.03 0.043 4.375 0 0.112 0.146 0.572 0.07 0.042 0.091

South America 0.205 0.055 0.029 7.459 33.715 15.801 3.637 0.206 0.249 0.286

NAFTA 19.654 19.323 34.216 22.946 21.808 19.213 16.239 15.624 13.886 8.746

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 22 illustrates volumes of imports of essential oils (nes) from Americas to South Africa between 2001 and 2010 period. The figure further illustrates that major import markets for essential oils (nes) from Americas was NAFTA and South America during the period under review. The figure also illustrates that imports of essential oils (nes) from NAFTA started to increase in 2001 then a slight decline in 2002 until a peak was attained in 2003 at approximately 34 000 tons, while imports of essential oils (nes) from South America to South Africa attained a peak in 2005 at approximately 33 000 tons. The figure also illustrates that from 2004 to 2006 there was a consistent decline in imports of essential oils (nes) from NAFTA to South Africa due to the high tariffs agreements and that let to less imports entering the Borders of South Africa during the same period under review. In 2010, there was a 58.7% decline in imports of essential oils (nes) from NAFTA to South Africa as compared to 2009, while there was a 12.9% increase in imports of essential oils (nes) from South America to South Africa as compared to 2009.

30

Figure 23: Imports volumes of essential oils, nes from NAFTA

0

5

10

15

20

25

30

35

40

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Canada 0.095 0.235 0.01 0 0.04 0.111 0.674 2.075 2.59 0.578

Mexico 0.109 0 0.043 0.032 0.019 0.089 0 0 0 0

United States 19.45 19.088 34.163 22.914 21.749 19.013 15.565 13.549 11.296 8.168

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 23 represents volumes of imports of essential oils (nes) from NAFTA to South Africa between 2001 and 2010 period. The graph further shows that the major import market for essential oils (nes) from NAFTA to South Africa was United States. The graph also shows that imports of essential oils (nes) from United States to South Africa started to increase in 2001, and then a decline occurred in 2002. In 2003 imports of essential oils (nes) from United States to South Africa attained a peak at approximately 34 000 tons. The graph further shows that imports of essential oils (nes) declined consistently from 2004 to 2010 until lowest levels of approximately 8 000 tons were experienced. The reason for that was due to stringent tariff agreements between United States and South Africa. Canada and Mexico had very low or intermittent volumes of essential oils (nes) imports to South Africa during the period under scrutiny. The figure also shows that in 2010, there was a 38.3% decline in imports of essential oils (nes) from United States to South Africa as compared to 2009.

31

Figure 24: Imports volumes of essential oils, nes from Europe

0

10

20

30

40

50

60

70

80

90

100

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Europe 0.022 0.198 0.001 0.235 0.056 0.094 0.033 0.011 0.502 0.028

Southern Europe 0 0 0.002 0.265 0.022 0.124 0.026 0.016 0.108 0.004

Western Europe Rest 0.141 0.456 0.035 0.065 1.107 0.058 0.803 0.23 0.357 0.028

European Union 36.94 41.073 33.644 48.026 68.648 74.514 92.343 47.417 52.554 27.253

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 24 indicates imports volumes of essential oils (nes) from Europe to South Africa between 2001 and 2010 period. The figure further indicates that European Union commanded the greatest share in terms of imports of essential oils (nes) from Europe with no competition from its counter parts. The figure also indicates that imports of essential oils (nes) from European Union started to increase in 2001 to 2002, until a decline occurred in 2003. Between 2004 and 2007, there was a consistent increase in volumes of essential oils (nes) imported from the European Union to South Africa. A peak in imports of essential oils (nes) from the European Union to South Africa was attained in 2007 at approximately 92 000 tons. In the year 2010, there was dramatic decline in imports of essential oils (nes) from the European Union to South Africa due to increasing demand for Asian products. In 2010, there was a 92.8% decline in imports of essential oils (nes) from the European Union to South Africa as compared to 2009.

32

Figure 25: Imports volumes of essential oils, nes from

European Union

0

5000

10000

15000

20000

25000

30000

35000

40000

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Austria 0.35 0.242 0.2 0.832 0.574 0.349 0.478 0.244 0.334 1.226

Belgium 0 0 0.025 1.381 0.232 0.103 0.199 0.291 0.205 0

Germany 8.825 5.275 2.661 5.868 6.263 7.261 9.731 8.604 6.573 1.01

Spain 6.694 14.201 9.76 8.11 8.08 14.663 9.81 1.307 1.287 1.501

France 8.843 5.876 4.173 3.736 4.855 3.809 8.004 6.181 8.084 2.545

United Kingdom 10.501 11.944 9.828 22.37 37982 45.783 57.07 29.404 33.312 19.931

Ireland 0 0 0.1 0 0.4 0 0 0.2 0 0.615

Italy 0.317 1.686 5.029 4.152 9.267 0.446 5.992 0.721 2.494 0.005

Netherlands 1.27 1.668 1.771 1.419 0.864 1.567 0.939 0.155 0.243 0.372

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 25 depicts imports volumes of essential oils (nes) from the European Union into South Africa between 2001 and 2010 period. The figure further depicts that United Kingdom commanded the greatest share in terms of imports of essential oils (nes) from the European Union with no competition from the other EU counter parts. The graph also indicates that imports of essential oils (nes) from United Kingdom into South Africa attained a peak in 2005 at approximately 37 000 tons, while imports of essential oils (nes) from the other European Union member countries were very low during the period under review. There was a 67.1% decline in imports of essential oils (nes) from the United Kingdom to South Africa in 2010 as compared to 2009.

33

Figure 26: Imports volumes of essential oils, nes from Asia

0

10

20

30

40

50

60

70

80

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Eastern Asia 11.65 2.799 7.715 23.236 12.665 10.6 4.313 24.827 73.923 16.319

South-central Asia 9.739 3.987 27.233 6.961 11.422 4.608 6.613 19.314 15.764 3.028

South-eastern Asia 8.16 4.335 4.598 5.281 8.045 6.254 5.613 6.277 7.206 1.873

Western Asia 0.759 2.822 0.631 1.098 0.463 2.946 1.692 1.173 0.798 0.021

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 26 represents volumes of imports of essential oils (nes) from Asia to South Africa between 2001 and 2010 period. The graph further illustrates that the major import market for essential oils (nes) from Asia to South Africa was Eastern Asia. The graph also illustrates that imports of essential oils (nes) from Eastern Asia to South Africa started to increase in 2001 with a slight decline in 2002, then an increase in 2003 until the lowest levels of imports were attained in 2007 at approximately 4.31 tons. The graph further illustrates that imports of essential oils (nes) from South-central Asia to South Africa attained a peak in 2003 at approximately 27 000 tons. Imports of essential oils (nes) from Western and South-eastern Asia to South Africa were very low during the period under scrutiny. In 2010, there was a 353% decline in imports of essential oils (nes) from Eastern Asia to South Africa as compared to 2009.

34

Figure 27: Imports volumes of essential oils, nes from Oceania

0

2

4

6

8

10

12

14

16

Period (Years)

Imp

ort

Qu

an

tity

('0

00 t

on

s)

Australia and New Zealand 6.282 7.34 7.406 3.863 7.692 5.344 12.549 15.12 12.682 6.439

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Quantec Figure 27 confirms volumes of imports of essential oils (nes) from Oceania to South Africa between 2001 and 2010 period. The graph further confirms that the major import market for essential oils (nes) from Oceania to South Africa was Australia and New Zealand. The graph also confirms that imports of essential oils (nes) from Australia and New Zealand to South Africa started to increase in 2001 until 2003, with a decline in 2004 and 2006. In 2007 there was an increase in imports of essential oils (nes) until a peak was attained in 2008 at approximately 15 000 tons. The graph further confirms that imports of essential oils (nes) from Australia and New Zealand to South Africa experienced a decline in 2010 due to high input costs of production from Australia and New Zealand. The figure also confirms that there was a 97.0% decline in imports of essential oils (nes) from Australia and New Zealand to South Africa in 2010 as compared to 2009.

35

5. USES OF ESSENTIAL OILS

• Most essential oils are used for cooking, potpourri, crafting, cosmetics, massage, aromatherapy and other uses.

• Other essential oils are used to repel insects and other arthropods that are pests of humans, livestock, and pets (mosquitoes, fleas, ticks, etc).

• There are four broad sectors in which the oils are also used, including the flavor, pharmaceutical, personal care and industrial.

It is important to note that essential oils are not the same as perfume or fragrance oils. Where essential oils are derived from true plants, perfume oils are artificially created fragrances or contain artificial substances and do not offer the therapeutic benefits that essential oils offer. With so many plant species from which essential oil products are sourced it is even more problematic to accurately classify which plant belongs to which plant family or species. However, among the plants notable for their essential oils are members of the following plant families: carrot, ginger, heath, laurel, mint, myrtle, olive, orchid, pulse, rose and rue. Table 4: Common uses of selected essential oils

Essential oils Common uses

Citrus Industrial solvent, fragrance for cleaning products, flavoring

Spearmint Toothpaste, mouthwash, confectionery flavoring

Peppermint Toothpaste, mouthwash, chewing gum, food flavoring, cosmetics, and tobacco

Lavender/ Lavendin Fragrances and toiletries

Eucalyptus Cough/cold remedies, solvents, cleaning agents, flavoring

Tea tree Toiletries, insect repellents, germicides, cosmetics

Boronia Food flavoring, fragrance

Blackcurrant bud Food and beverage flavoring

Source: South African Essential Oils Producers Association (SAEOPA) Table 4 above shows the list of common uses for selected essential oils in different industries. There are a number of uses for essential oils in general with some of those uses mentioned above. The table indicates that most of the essential oils are used interchangeably in all segments, with most of them being used mainly in the food flavoring.

36

Table 5: Overview of end-user sectors markets

Sectors Segments Essential oils

Cosmetic industry Personal care Soap and detergent Dental care

• Lemon • Peppermint • Orange • Patchouli • Rosewood • Mint • Spice • Eucalyptus and derivatives

Food industry Soft drink Confectionery Tobacco Candy Processed and canned food products Chewing gum

• Citrus • Spice oleoresins • Vanilla • Flavor and floral oils • Oleoresins • Peppermint

Pharmaceutical industry Homeopathy Health-care products Aromatherapy

• Orange • Citrus • Patchouli • Lavender • Geranium

Source: South African Essential Oils Producers Association (SAEOPA) Table 5 shows the overview of the end user sectors markets for different kind of essential oils. It is indicated that most essential oils are mainly used in three sector markets such as the cosmetic industry, food industry and the pharmaceutical industry. The essential oils of orange and patchouli are used in both the cosmetic industry and also in the pharmaceutical industry, followed by the use of essential oils of orange in the food and pharmaceutical industry. These indicate that the essential oils can in a given time period perform different kind of functions or uses in different industries.

37

6. QUALITY & MAINTANANCE OF ESSENTIAL OILS

Over and above the barriers to entry alluded to above there is also the issue of quality. Entering lucrative industries such as the rose and boronia can be difficult as they have exceptionally rigid quality standards which require sophisticated equipment to attain/extract from the plants. Above the general quality requirements, storage of the product is also highly important as it can compromise quality. Storage materials should be solid and should be glass bottles; aluminum bottles and drums (used mostly for expensive essential oils), lacquered and lined steel drums, and plastic drums in high density polyethylene, which are less expensive than lined steel drums. Before they are stored for shipment oils should be dried by filtration or the use of anhydrous calcium sulphate. Head space should be filled with nitrogen gas although carbon dioxide is cheaper and easier to source in developing countries. The danger with using carbon dioxide though, is that it might react with residual moisture to form carbonic acid, which may react with essential oil ingredients.

7. ESSENTIAL OIL VALUE CHAIN ANALYSIS

Essential oils in the value chain are generally used ‘as is’ when dealing with the flavor and fragrance industry, especially with the minor or smaller oils, such as rose geranium. Only some oils are further processed and made into synthetic chemicals. It is also important to know the different role players that are a part of this value chain. One of the main organizations is the South African Essential Oils Producers Association (SAEOPA). SAEOPA was formed in 2000 as an alternative to the council for Scientific and Industrial Research, as a source of information about current and potential producers. It is a voluntary association and has an objective to support its members, who primarily comprise producers of essential oils. The organization (SAEOPA) supports its members throughout the value chain, beginning with the sharing of information on agricultural issues and ending with marketing matters. The other role players in the essential oils value chain can be identified as; Growers, Distillers, Researchers, Government, Marketers and also the Consumers or Buyers. The value chain for essential oils is illustrated on the figure below.

38

Diagram 1: Processing of essential Oils

Source: SAEOPA (South African Essential Oil Producer Association)

Purification

Flavor/

Perfume

Essences

Natural Raw

Materials

Solvent

Extraction,

Distillation

etc.

-Retinoid

-Oleoresins

-Essential Oils

Further Chemical/

Biological

Modification

Aroma

Chemicals

Chemicals Organic Synthesis,

biological catalysis

Compounded Flavors

and

Fragrances

-Foods -Cosmetics

-Toiletries

-etc

39

The value chain of Essential Oils basically follows this pattern identified on Diagram 2 below. Diagram 2: Value chain pattern of the Essential oils

Crop Selection

Primary

Processing

• Drying

• Distillation

Further

Beneficiation

• Rectification,

• Fractionating,

• Formulations

Sales & Marketing • Market

Knowledge

• Market Reputation

• Market Access

Consumer

Crop Cultivation Input

Supplier

40

The value chain at farm gate and wholesale levels vary greatly across products such that it is impossible to develop stylized value chains. Diagram 2 represents the general essential oils’ value chain summarized in seven stages, which can be described as follows;

• The crop selection stage provides knowledge about the local soil, climate, correct genotype and potential markets.

• Crop cultivation stage which gives the sourcing of plant material (seeds or seedling), planting, crop management (pests and irrigation) and harvesting;

• Input Supply stage which provides information about the correct measure and application of different inputs according to the crop requirements.

• Primary processing stage shows the application of drying, distillation, quantities (economic yields), qualities (chemical and sensory qualities) and certification.

• Further beneficiation involves rectification, fractionating and formulations; and • Sales and marketing inform about the market knowledge, reputation and market access.

While it is difficult to quantify costs from farm gate to wholesale levels, it is estimated that harvesting costs make up between 10 to 35% of farm gate costs, with an average of 22%. Pest, weed and disease management costs are about 11 to 37%, with a mean of 22%. Nutrition, which includes irrigation and fertilizers are about 10% of grower costs. At wholesale level there is even greater variability as it depends on the extent of refinement and processing of the oil. Extraction costs are estimated to range between 60 to 75% of processor costs.

41

Diagram 3: Essential Oil Value Chain Tree

Diagram 3 above represents the various industries that are fully playing a part in the use of essential oils. Farmers can produce Essential oils and sell directly to the fragrance industry, flavor industry and to the traders who can also supply the flavor industry. The fragrance industry and traders may also buy the product directly from the producer and supply the end users, and after which the products reached the end users, is then supplied to the three different industries specifically, the cosmetic, food, and the pharmaceutical industry.

PRODUCERS

Flavor

Industry

Traders, Agents &

Brokers Fragrance

Industry

End Users

Cosmetic

Industry • Personal

care

• Soap & Delegent

• Dental Care

Food Industry • Soft drink

• Confectionery

• Tobacco

• Candy

• Processed & canned food

• Chewing gum

Pharmaceutical

Industry • Homeopathy

• Health-care products

• Aromatherapy

• massage

42

8. ESSENTIAL OILS DISTRIBUTION CHANNELS

International trade for the bulk essential oils (like citrus) takes place on a large scale. Shipments may be diverted to neighboring countries, and there is a substantial re-export business. Most of the leading traders in the European Union supply several countries. The re-exports are important, as they can reduce the effect of supply irregularities and domestic imbalances in supply and demand caused by the vagaries of climate, crop disease, inadvertent overstocking or unexpected peaks in demand. Some producers will bargain directly with major end-users. Other producers will sell through independent traders (importers) or sales agents. Figure below shows the various distribution channels for essential oils.

Diagram 4: Essential Oils Distribution Channels There are four major types of business partners for exporters of essential oils such as; Agents, Importers or Traders, The processing industry (processing importer), and the end product manufacturers. The trade structure illustrated in figure 4 changes constantly, the distribution channels and the specific functions mentioned are not as clear-cut as they might seem. However, sixty to eighty percent (60-80%) of the essential oil trade goes directly from producers or exporters to processing importers such as the multinational flavor houses. An advantage of processing importers is that they can create a total flavor composition and give excellent service. This can facilitate co-operation with end-product manufactures in the food or cosmetic industries. Many end-product manufacturers do not usually purchase essential oils directly from producers. The essential oil market is somewhat fragmented between the following end-user market sectors; Aromatherapy, Natural personal care and pharmaceutical, Flavor and Fragrance, Cosmetics and Beverages.

Foreign Producers/ Exporter

Broker/ Agent Importer/ Trader Re-export

Processing Industry Food/ Cosmetic/

Pharmaceutical Industry

Re-export Retail Trade

43

8.1 Value Adding in South Africa

The production process and people involved vary depending on the type and end use of the product. Common stages of production include growing and harvesting the crop, extraction, further processing and the oil, increasing its suitability for end use. Value adding in the form of products such as creams, bath salts, candles, potpourri, and gifts has proved more profitable for producers in South Africa. The booming tourism industry has contributed to the success and survival of producers in difficult times.

44

9. MARKET ACCESS

Table 6 below shows tariffs that are applied by various countries to the exports of essential oils (nes) originating from South Africa.

COUNTRY (IMPORTERS)

PRODUCT DESCRIPTION TRADE REGIME DESCRIPTION

APPLIED TARIFFS 2010

ESTIMATED TOTAL AD VALOREM

EQUIVALENT TARIFF 2010

Canada Ess oils, whether or not terpeneless, incl concretes.

MFN duties (Applied) 0.00% 0.00%

China Ess oils, whether or not terpeneless, incl concretes.


China Ess oils, whether or not terpeneless, incl concretes(excl. those of citrus fruit & mint)


France Terpenic oils of clove, niaouli & ylang-ylang, incl concretes & absolutes.


Terpenic oils of clove, niaouli & ylang-ylang, incl concretes & absolutes.

Preferential tariff for South Africa

0.00% 0.00%

Germany Terpeneless oils of clove, niaouli & ylang-ylang, incl concretes & absolutes.


0.00% 0.00%

India Ess oils (terpeneless or not), including concretes & absolutes, resinoids, extracted oleoresins, concentrates of ess oils in fats.


Spain

Terpeneless oils of clove, niaouli & ylang-ylang, incl concretes & absolutes.


0.00% 0.00%

United Kingdom


MFN duties (Applied)

2.30%

2.30%

45

Source: ITC Market Access Map Table 6 indicates the level of tariffs applied by various countries to different types of essential oils originated from South Africa during the year 2010. The table further indicates that countries such as France, Germany and India applied equal tariffs of 0.00% to different types of essential oils originating from South Africa. Table 7 below indicates tariffs that are applied by various countries to the exports of essential oils of peppermints from South Africa.



0.00% 0.00%

COUNTRY (IMPORTERS)





Belgium Terpenic oils of peppermint “Mentha piperita”, incl. concretes & absolutes.


Brazil Oleos essenciais (desterpenados ou nao), incl. os chamados (concretos) ou.


China Oils of peppermint Mentha piperita, whether or not terpeneless, incl concretes & absolutes


Germany Terpeneless oils of peppermint “Mentha piperite”, incl. concretes & absolutes


Terpeneless oils of peppermint “Mentha piperite”, incl. concretes & absolutes


0.00% 0.00%

Nigeria Oils of peppermint Mentha piperita, whether or not terpeneless, incl concretes & absolutes


United Arab Emirates

Essential oils (terpeneless or not), incl. concretes &


46

Source: ITC Market Access Map Table 7 shows the level of tariffs applied by various countries to the essential oil of peppermint originated from South Africa during the period 2010. Exports of essential oils of peppermint from South Africa to the SADC region (Zimbabwe) were free due to the fact that South Africa is part of SADC. Non SADC countries such as China, United Arab Emirates and Brazil charged South Africa a tariff of 5.00%, 14.00% and 15.00% respectively. There was no tariff barrier for South African essential oils of peppermint exports from South Africa to Germany and Belgium because of the common trade agreement between South Africa and the European Union, which makes it for all EU countries to maintain a preferential tariff of 0.00% for South African products. Table 8 below reflects tariffs that are applied by various countries to the exports of essential oils of other mints from South Africa.

absolutes, resinoids, extracted oleoresinoids.

Zimbabwe Oils of peppermint Mentha piperita, whether or not terpeneless, incl concretes & absolutes


COUNTRY (IMPORTERS)

PRODUCT ESCRIPTION TRADE REGIME DESCRIPTION




Angola Oleos essencias de mentas, desterpenizados ou nao, incl. os chamados


Argentina Terpenic oils of clove, niaouli & ylang-ylang, incl concretes & absolutes.


Belgium Terpeneless oils of mints, incl. concretes & absolutes (excl. those of peppermint “Mentha piperita”)


0.00% 0.00%

Brazil Oleos essencias de mentas, desterpenizados ou nao, incl. os chamados


Chile

Aceites esenciales (desterpenados o no), incl los concretes & absolutes


Congo

Huiles essentielles de menthes, deterpenees ou non, y.c. celles dites.


47

Source: ITC Market Access Map Table 8 depicts tariffs that are applied by various countries to the exports of essential oils of other mints from South Africa during the 2010 period. The table further depicts that there was no tariff barrier for South African essential oils of peppermint exports from South Africa to Germany, Belgium, Italy and Spain because of the common trade agreement between South Africa and the European Union, which makes it for all EU countries to maintain a preferential tariff of 0.00% for South African products. Angola which falls under SADC agreement charged South Africa a tariff of 5.00% for essential oils of other mints exported by South Africa during the period under scrutiny. Table 9 below illustrates tariffs that are applied by various countries to the exports of essential oils of oranges from South Africa.

Germany

Terpeneless oils of mints, incl. concretes & absolutes (excl. those of peppermint “Mentha piperita”)


0.00%

0.00%

Italy Terpeneless oils of mints, incl. concretes & absolutes (excl. those of peppermint “Mentha piperita”)


0.00% 0.00%

Spain Terpeneless oils of mints, incl. concretes & absolutes (excl. those of peppermint “Mentha piperita”)


0.00% 0.00%

COUNTRY (IMPORTERS)





China Oils of sweet & bitter orange, whether or not terpeneless, incl. concretes & absolutes (excl. orange flower oil)


France Oils of sweet & bitter orange, whether or not


0.00% 0.00%

48

terpeneless, incl. concretes & absolutes (excl. orange flower oil)

India Ess oils (terpeneless or not), including concretes & absolutes, resinoids, extracted oleoresins, concentrates of ess oils in fats.


Mozambique

Oils of sweet & bitter orange, whether or not terpeneless, incl. concretes & absolutes (excl. orange flower oil)


Mozambique

Oils of sweet & bitter orange, whether or not terpeneless, incl. concretes & absolutes (excl. orange flower oil)


0.00% 0.00%

Netherlands

Terpenic oils of sweet & bitter orange, incl. concretes & absolutes (excl. orange-flower oil)


0.00% 0.00%

Spain





0.00% 0.00%

United Arab Emirates

Ess oils (terpeneless or not), including concretes & absolutes, resinoids, extracted oleoresins, concentrates of ess oils in fats.


49

Source: ITC Market Access Map Table 9 illustrates tariffs that are applied by various countries to the exports of essential oils of oranges from South Africa during the 2010. The table further illustrates that countries such as France, Mozambique and Netherlands had free trade agreements under EU and SADC. Asian countries applied a tariff of 20.00% to essential oils of oranges originating from South Africa during the period under examination. Table 10 below depicts tariffs that are applied by various countries to the exports of essential oils of lemon from South Africa.

Zimbabwe Oils of sweet & bitter orange, whether or not terpeneless, incl. concretes & absolutes (excl. orange flower oil)


COUNTRY (IMPORTERS)





Canada Ess oils of lemon, whether or not terpeneless, incl concretes.


China Ess oils, whether or not terpeneless, incl concretes.


Japan Lemon oil MFN duties (Applied) 0.00% 0.00%

Norway Ess oils (terpeneless or not), including concretes & absolutes, resinoids, extracted oleoresins, concentrates of ess oils in fats.


Spain



0.00% 0.00%

Spain

Terpeneless oils of lemon, incl. concretes & absolutes.


Sri Lanka Oils of lemon whether or not terpeneless, incl. concretes and absolutes.


Switzerland

Huiles essentielles de citron,

Preferential tariff for SACU

0.00% 0.00%

50

Source: ITC Market Access Map Table 10 represents tariffs that are applied by various countries to the exports of essential oils of lemon from South Africa during the 2010 period. The table again further shows that South Africa and EU had a free trade agreement which led to 0.00% tariffs applied by Canada, Spain and United Kingdom. Japan also had a free tariff agreement with South Africa during the same period which led to 0.00% tariff by Japan. Uganda also had a free tariff agreement with South Africa during the same period which led to 0.00% tariff.

United Kingdom





0.00% 0.00%

Uganda Oils of lemon whether or not terpeneless, incl. concretes and absolutes.


51

10. MARKET INTELLIGENCE

Table 11: List of importing markets for Essential oils (nes) exported by South Africa in 2010 Product: 330129

Importers

Trade Indicators Tariff

(estimated) faced by South

Africa (%)

Exported value 2010 (USD thousand)

Share in South Africa's exports (%)

Exported quantity 2010

(tons)

Unit value (USD/unit)

Exported growth in

value between 2006-2010 (%,

p.a.)

Exported growth in quantity

between 2006-2010 (%, p.a.)

Exported growth in


p.a.)

World 4763 100 383 12436 -7 -7 17 United States of America 509 10.7 19 26789 -17 -17 123 0 France 489 10.3 14 34929 -13 -19 -9 0 Zambia 477 10 49 9735 19 35 88 0 Germany 473 9.9 33 14333 -11 -20 -52 0 Australia 405 8.5 34 11912 -6 -18 23 0 United Kingdom 354 7.4 11 32182 -19 12 98 0 Spain 319 6.7 31 10290 27 25 175 0 Mauritius 300 6.3 88 3409 22 18 58 0 Switzerland 216 4.5 2 108000 -14 0 9 0 Malawi 208 4.4 11 18909 9 -17 33 0 Netherlands 202 4.2 26 7769 -19 3 115 0 Singapore 186 3.9 1 186000 53 11 0 Japan 141 3 4 35250 10 1663 0 Democratic Republic of the Congo 72 1.5 36 2000 1700 10 Source: ITC Trade Map

52

Table 11 indicates the list of importing markets for Essential oils, nes exported by South Africa in 2010. The table further indicates that during 2010 South Africa exported a total of 383 tons of essential oils, nes to the world, with greater volumes being exported to United States of America followed by France, Zambia and Germany. The table also indicates that United States of America as the leading import market commanded the greatest share of South Africa’s essential oils, nes exports at approximately 19 tons with a share in South Africa’s exports of 10.7%. Exports of essential oils, nes to United States of America experienced a decrease of about 7% in both value and quantity between the period 2006 and 2010. During the period under review, United States of America has increased its export value of the essential oils, nes imports from South Africa by almost 123% between 2008 and 2009 period,.

53

Figure 28: Performance of South African essential oils (nes) in 2010

Source: ITC Trade Map

54

Figure 28 shows that United States of America, France and Germany were the biggest import markets for essential oils (nes) exported by South Africa in 2010. The figure further shows that the annual growth in demand for essential oils (nes) exports from South Africa to Spain and Singapore increased at approximately 25% and 55% respectively in 2010. The figure also shows that the annual growth of South Africa’s exports to China and Kenya during the period 2010 was high at 65% and 98% but in declining markets. The figure further shows that the annual growth of South Africa’s exports to Spain and Singapore during the period 2010 was higher at 30% and 55% but in a dynamic market. However, countries such as Zambia, and Mauritius increased their share of essential oils (nes) imports to the total South Africa’s exports growth but decreased their annual growth of imports from the world.

55

Figure 29: Diversification of markets for essential oils (nes) exported by South Africa in 2010

Source: ITC Trade Map

56

Figure 29 indicates diversification of markets for essential oils (nes) exported by South Africa in 2010. The bubble graph further indicates that the United States of America, France and Germany were the main markets for essential oils (nes) exported by South Africa between 2006 and 2010 period. United States of America commanded the greatest share in South Africa’s exports in 2010 at approximately 11%. If South Africa were to look for alternative options in terms of export markets for essential oils (nes) small but attractive markets exist in Mozambique, Zimbabwe, India, and Singapore. The same small markets (countries) of essential oils (nes) mentioned above were importing less essential oils (nes) from South Africa but more from the world between 2006 and 2010 period.

57

Table 12: List of exporting markets for essential oils (nes) imported by South Africa in 2010 Product: 330129

Exporters

Trade Indicators Tariff (estimated)

applied by South Africa (%)

Imported value 2010

(USD thousand)

Share in South Africa's

imports (%)

Imported quantity

2010 (tons)

Unit value

(USD/unit)

Imported growth in value between 2006-2010 (%,

p.a.)

Imported growth in quantity

between 2006-2010 (%, p.a.)

Imported growth in


p.a.)

World 4273 100 181 23608 12 7 26 United Kingdom 911 21.3 34 26794 2 -11 20 0 India 578 13.5 53 10906 39 80 58 0 France 536 12.5 17 31529 24 34 80 0 Australia 367 8.6 11 33364 17 17 6 0 Chin

Documents

ESSENTIAL OILS MARKET VALUE CHAIN PROFILE 2011-12 · 2012. 5. 4. · 1.1.1 Overview of the essential oils market and its composition Production data for essential oils are hard to