HUNGARY'S ESSENTIAL OIL INDUSTRY Csaba Fodor ... - IFEAT

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Chart 11: The Export Markets in 2000 USA 26% France 17% Germany 11% Japan 10% UK 9% Rest 27% Chart 12: Export Market Shares (%) 1970 vs. 2000 40 35 30 25 20 15 10 5 0 France Germany USA Japan 1970s 2000 46
Also, there has been a significant change in the crop structure: Major crops of 1960s Major crops in 2000 • Peppermint • Angelica root • Fennel • Lavender • Blue chamomile • Dill • Pinus sylvestris • Caraway • Parsley seed • Lovage • Origanum The comparative crop shares have changed every year but it is worth mentioning one important oil that influenced the country’s figures heavily between 1994-1998; namely, parsley seed. Some of you might still remember the extreme shortage and skyrocketing prices of this oil that were caused by the huge demand from US breath freshener manufacturers. This was followed by a huge overproduction that sent the prices far below production cost. This example leads to the last part of my discourse. Present and Future Challenges The essential oil industry faces general and country specific challenges. The general problems encountered by all essential oil producers are: Instable supply - Being natural products, a crop failure in a major producing country will result in a shortage, higher oil prices and, eventually, lower demand. This happened recently with our high azulene type milfoil oil, where – after 3 consecutive crop year failures in Hungary - the major users eliminated it from their formulas. Volatile demand – The parsley seed oil case is a very good example. There was a stable market: and distillers in France and Hungary used cheap non-germinating seeds for production of relatively cheap oil, which found some usage in the flavour industry. The annual world production was 1-2 tons a year, the price was stable around US$100-110 / kg and everyone involved was happy. But, in 1994 American breath freshener companies created a new, immediate and huge market. They requested more than 10 tons of PSO annually. The result After eating up all existing stocks, prices skyrocketed to US$300 / kg by 1996. This oil price trend moved on to the raw material and it encouraged hundreds of farmers all over the world to plant parsley. By 1999 there was a huge supply but by that time the main user had changed the formula: reducing PSO incorporation by more than 50% as a first step and, finally, discontinuing manufacture of the brand. What had he left behind him Many essential oil distillers and dealers had large stocks of oil and hundreds of desperate farmers had huge quantities of seeds that had been begged for two years earlier but now nobody wanted the material. The result The oil price went down to US$70-75 / kg, several farmers went bankrupt and cursed parsley forever. This good old roller coaster probably will start again one day, when some new uses will be created on a delusionary low price. Perhaps we shall see soon a roller coaster developing with one of the oils from this region that has recently increased in price: coriander. Another problem is the unbalanced relationship between large F&F corporations and small raw material suppliers. Even if you can get through the painfully long process of approvals, you have filled up tons of documents and finally got a contract at a reasonable price, are you completely happy Not necessarily, if you think of the 2 years contract time and your forthcoming difficulties. You may have to get loans to finance your next production season, while you are still carrying the stock of giant corporations, from last year’s crop. 47
Page 1 and 2: Paper presented at the IFEAT 2002 I
Page 3 and 4: Chart 1: Production scale for the m
Page 5 and 6: Chart 3: Essential oil crop cultiva
Page 7 and 8: In the 1980s, total production quan
Page 9 and 10: This is demonstrated by the export
Page 11: Chart 9: Number of Distilleries, 19
Page 15: monitoring market demand trends and

HUNGARY'S ESSENTIAL OIL INDUSTRY Csaba Fodor ... - IFEAT

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