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

Or, what can you do if one of your major customers is merging with another multinational, and your
product is simply eliminated from the raw material list Shall we be worried again, listening to the
news
Legislation: I shall refrain from going into details, as there are a number of lectures during the
conference dedicated to this subject. However, what can a distiller do if his customer is forced to
eliminate his oil from the formula Unfortunately, several essential oils now should be considered as
endangered species in the EU. Even in Hungary we have a local problem and our association is trying
to fight a clever clerk in the Environmental Ministry who put a phrase into our law on Hazardous
products two years ago. This regulation states that all waste material from aromatic herb processing
must to be considered as hazardous material, unless otherwise proven by some very expensive tests.
Now all exhausted residues of chamomile, dill, caraway, etc., formerly considered as valuable byproducts
(natural fertilizers), are targets for our local agencies. It is a really crazy world.
Other specific Hungarian problems include:
• The strengthening of our currency (the Forint) by more than 15 % this year. This is quite a
challenge considering the fact that more than 95% of the Hungarian essential oil production is
exported. We have to compensate it with increased productivity, cost reductions, etc. which is
not an easy job.
• The lack of experienced farmers with large landholdings and cultivation equipment.
• The cost of manpower is increasing sharply.
Our answer to these challenges are:
We will strive to develop better and better species. Sometimes the result of research is an existing
crop with higher yield (as in case of fennel), or with higher contents of active ingredient (as in the case
of blue chamomile with more that 10% chamazulene). Sometimes, we reintroduce traditional species,
abandoned earlier due to heavy competition. Examples of this group are: lavender, coriander, tarragon,
and peppermint; all were big Hungarian products in the past, are small today but any of them might be
a key product tomorrow. Also, we must examine native flora that has previously never been distilled
on a commercial scale; the most recent example of this work is origanum. Other research in these
areas has given promising results.
Reorganization of the raw material supply: To persuade and then teach farmers to grow an
unknown aromatic herb is a difficult and sometimes hopeless job. They always compare the
profitability with very different types of crops. Unless they see a large potential margin, they stay with
their well-known annual crops, such as wheat and corn. Also, those who are already growing aromatic
herbs tend to quit rather quickly at crop failure. They do not plan for long term. If you want stability
you have to put some control on your raw material supply. For these reasons, Silvestris created a
subsidiary to grow aromatic herb exclusively for its essential oil production in 2000. This proved to be
successful in the first two years.
Reorganization of production system: Eliminating manpower whenever possible, by using
mechanisation in both agricultural and distillation operations. A new distillery is being established
right on the field to reduce transportation costs.
In summary, I think that the general trend in our industry is for shorter product lives, thus the time to
adjust to market challenges all through the supply chain is becoming shorter and shorter. Those closely
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