THE ESSENTIAL OIL INDUSTRY IN SRI LANKA - IFEAT

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Paper presented at the IFEAT International Conference in Singapore, 4 - 8 November 2012 ‘Essential Asia’
Pages 113-129 in the printed Conference Proceedings
THE ESSENTIAL OIL INDUSTRY IN SRI LANKA
Fazal Mushin
Link Natural Products (Pvt) Ltd.
Sri Lanka
fazal@linknaturalproducts.com
INTRODUCTION
1
The paper provides an overview of the essential oil
industry in Sri Lanka with reference to cinnamon leaf and
bark oils, nutmeg oil, clove bud oil, pepper oil and
citronella oil. The presentation also covers the major spice
crops in the country, production and exports of essential
oils and a glance at the flavour and fragrance industry in
Sri Lanka. The paper will include the challenges facing
the industry and new developments.
THE ESSENTIAL OIL INDUSTRY
IN
SRI LANKA
!!!!!!!!!!!!!!!!
!
!!!!!!!!!!!!!!!!!FAZAL%MUSHIN%%
!!!!!!!!!!!!!!!!!Director!–!Exports!&!Biz!Dev.!
!!!!!!!!!!!!!!!!!Link!Natural!Products!(Pvt)!Ltd!
!!!!!!!!!!!!!!!!!Sri!Lanka!
!!!!!!!!!!!!!!!!!Email!:!fazal@linknaturalproducts.com!
GEOGRAPHICAL LOCATION AND DEMOGRAPHIC OVERVIEW OF THE COUNTRY
For those who are not familiar about Sri Lanka, it is an island off the southern coast of India in
South Asia.
Population
Total area
20.8mn
65,610sq.km
GDP Growth Rate 8.3%
Per capita GDP USD 2,836.00
113

AGRICULTURAL SECTOR IN THE COUNTRY
The agricultural sector in Sri Lanka is a major component of the
economic and social development in the country with about 70% of
its population connected to agriculture. Currently this sector
contributes about 12% to GDP. Some 2.6 million people, or
approximately 33% of the total labour force of 7.8 million, are
directly employed in the agricultural sector. In the past, the Sri
Lankan life style has been closely linked with agriculture, which has
been a great influence on our culture and economy.
When we look at the history of the agricultural activities, it goes back
to 1st century B.C. when the then ruling kings engineered and built
dams and waterways to irrigate the lands. These dams and waterways
are still being used in present agricultural activities. Thereafter continued the colonial era of
Portuguese, Dutch and finally the British. Historically Sri Lanka has been dependent on rice
cultivation and after colonial rule of Sri Lanka for 400 years the agriculture land space was changed to
mainly tea, rubber, coconut and coffee, which were the sort after crops for cultivation during that
period. Before that, the people mainly cultivated paddy and other field crops, which were used for
their day-to-day consumption. Since independence from Britain in 1948 the agricultural sector has
continued to play a significant role in the Sri Lankan economy. Presently 42% of the country’s total
area is under cultivation.
Climatic changes have had an impact on agricultural productivity. Rain is a major component, which
affects the crop output. For example, paddy is highly sensitive to rain and high temperature. Likewise
other crops too are also depending on adequate rain and sunlight.
Rain%fall%and%clima+c%zones%
• Annual!average!rainfall!2,!027ml!
• !!!!!Rainfall!seasons!in!Sri!Lanka!
%%%%%%%%First%Intermonsoon!!!!!!!→!!!March%9%April%
%%%%%%%%Southwest%Monsoon!!!!→!!!May%9%September%%%%
%%%%%%%%Second%Intermonsoon%!→!!October%9%November%
%%%%%%%%Northeast%Monsoon%%%%!→!!!December%9%February!
Average%Rain%Fall%
!
Wet!Zone!!>!2500mm!
!
Intermediate!Zone!>!1900mm!!
!
Dry!Zone! 2,500mm
Intermediate Zone > 1900mm
Dry Zone < 1900mm
114

!
Clima&c(changes((
(
The graphs below provide a clear picture of the climatic changes during last three years, 2010 - 2012:
!
1. Rainfall (mm) 2. Temperature ( o C)
1200!
1000!
800!
600!
400!
200!
0!
!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
3. Sunshine (Hrs)
1.!!!!Annual!rain!fall!has!increased!!significantly!in!
!!!!!!!2010.!
10!
!
8!
2. Average!!temperature!has!decreased!by!3!!!
!Average!
6!
degrees!(Approx).!In!2012!this!remains!same!as!
2010!
4!
!!!!!!!2011.!
2011!
2!
2012!
!
0!
3.!!!!Sunshine!remained!at!moderate!levels!during!
!!!!!!!!past!5!years!without!change.
JAN!
JAN!
FEB!
!FEB!
MAR!
MAR!
APR!
APR!
MAY!
MAY!
JUN!
JUN!
JUL!
JUL!
AUG!
AUG!
SEP!
SEP!
OCT!
OCT!
NOV!
NOV!
DEC!
DEC!
Average!
2010!
2011!
2012!
40.00!
35.00!
30.00!
25.00!
20.00!
15.00!
10.00!
5.00!
0.00!
JAN!
FEB!!
MAR!
APR!
MAY!
JUN!
JUL!
AUG!
SEP!
OCT!
NOV!
DEC!
!Average!
2010!
2011!
2012!
7
SPICE AGRICULTURAL CROPS IN SRI LANKA
Sri Lanka is well known for its spices since ancient
times. Currently the export market for all spices is
expected to reach US$ 1billion by 2020, which is
an indication of the spice agricultural sector in Sri
Lanka becoming a major source of foreign
exchange generation.
A significant proportion of the rural population in
the upcountry districts of Sri Lanka rely on the
export agricultural crops for their livelihood. All
spice crops including clove, pepper, nutmeg,
cardamom, cinnamon, ginger and turmeric are
considered to be major export agricultural crops
and make a considerable impact on the economy of
the rural Sri Lanka.
Agricultural*sector*.*2011*
!
• Total!land!under!cul-va-on!!!!!!!!!!!!!!!!!!!!!!:!!2,!645,000!ha!(42.2%)!
• Agricultural!contribu-on!for!total!GDP!!!:!!11.2%!
• Agricultural!crops!produc-on!
!!!!!!!!Tea ! ! !Cinnamon!!!!!!!!!!!!!
!!!!!!!!Rubber ! !Pepper!!!!!!!!!!!!!!!!!!
!!!!!!!!Coconut ! !Clove!!!!!!!!!!!!!!!!!!!!!!
!!!!!!!!Paddy ! !Cardamom!!!!!!!!!!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Nutmeg!&!Mace!!
!
8
Small and medium scale farmers cultivate ginger and turmeric. Since these crops produce high yield
and have higher demand, they are considered as high potential export agricultural crops.
The government pays lot of attention to this sector and has specific line ministries over looking minor
export crops and spices. And other institutions such as the Export Development Board also give
assistance to the marketing of the spice industry. SAPPTA and the Spice Council are the other private
sector organizations that are involve in this sector.
115

ESSENTIAL OILS PRODUCED IN SRI LANKA
Cinnamon Oil
Cinnamon is the main spice crop of Sri Lanka. The cultivation of cinnamon is centred in the south
western coastal area of the country. Total area under cultivation is about 30,523 hectares. Some 90%
of true cinnamon is grown in Sri Lanka.
Both cinnamon leaf and cinnamon bark oils are obtained by steam distillation.
Crop production:
18,250 mt
Oil exports:
Cinnamon leaf oil: 231mt
Cinnamon bark oil: 8mt
!
Cinnamon!
! !
!!
ProducDon!
Whole!Spice!
Main!ConsDtuents!
Cinnamon!Leaf!!!Oil!
•!!Total!extent!of!cinnamon!!!!!!!!!!!!!!!!!
!!!!is!about!30,523ha.! • Eugenol!!!!!!!!!!!!!!!75%,85%!
!
•!!Total!cinnamon!!!
!!!!producDon!!in!2011!was! Cinnamon!!Bark!!Oil!
!!!!18,250mt.!
!
•!!!Cinamaldehyde!!55%,70%!
•!!Total!export!volume!!is!!!!
!!!13,515mt!(in!2011)!
• Eugenol!!!!!!!!!!!!!!!!

Pepper Oil
Pepper, which is known as the "king of spices", is widely grown in central upcountry and is now also
being cultivated in the southeastern area too. The total area under the cultivation is 31,296 ha. Sri
Lankan black pepper has a high level of piperine and volatile oil content.
A fair amount of black pepper ends up with the distillers, as farmers tend to harvest the light berry
pepper. Black pepper oil is produced by the steam distillation of the dried berries.
13
!Pepper%
Produc;on!
Main!Cons;tuents!
Crop production:
10,800 mt
Oil exports: 8.5 mt
!
!
Whole%Spice%
•!!Total!extent!of!pepper!!
!!!!is!about!31,296ha.!
!
!
•!!Total!pepper!produc;on!!!
!!!!in!2011!was!10,800mt.!
!
! •!!Total!export!volume!is!
!!!!5,056.5mt!(in!2011.)!
!
! ! !
! !
!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!!!!!
Black%Pepper%Oil%
• α!–!pinene!!!!!!!!!!!!!3.5%!–!10.0%!
•!!ß!–!pinene!!!!!!!!!!!!!6.0%!–10.0%!
•!!sabinene!!!!!!!!!!!!!!!6.0%!–!11.0%!
•!!ß!I!caryphyllene!21.0%!–!35.0%!
Source:(Department(of(Export(Agriculture(
Specifications of
Black Pepper Oil
α – pinene (3.5-10.0%),
β – pinene (6.0-10.0%)
Major constituents sabinene (6.0-11.0%)
β – caryphyllene
(21.0-35.0%)
Physical appearance
Colourless to bluish
green clear liquid
Odour
Fresh, dry-woody and
warm-spicy reminiscent
Specific gravity at 20 °C 0.868 to 0.890
Optical rotation at 20 °C - 18 to + 4
Refractive index at 20 °C 1.480 to 1.4920
Country of
origin
Piperine
content
%
Volatile oil
content
%
Tellicherry 3.83 2.10
Lampong 5.43 1.90
Malabar 6.58 3.73
Sri Lanka 8.91 3.97
Madagascar 5.72 2.90
Brazil 6.05 2.75
Awak 7.20 2.79
Muntok 6.10 2.32
117

Clove Bud Oil
Cloves are used in the form of whole cloves. The crop is mainly grown in the upcountry wet zone. The
total extent of clove is 7,605 ha. Most of the cloves are exported, mainly to India. The eugenol acetate
level is higher than other origins.
Clove bud oil is produced by the steam or water distillation of the flower bud of the plant.
14
Clove&
ProducAon!
Main!ConsAtuents!
Crop production: 5,553 mt
Oil exports: 13 mt
Whole&Spice&
• Total!extent!of!clove!is!
!!!!!!7,605ha.!
!
• !!!!Total!clove!producAon!!
in!
!!!!!!2011!was!!5,533mt.!
!
• !!!!Total!export!volume!is!
!!!!!!5,195.4mt!(in!2011)!
Clove&Oil&
!
•!eugenol!!!!!!!!!!!!!!!!75%+85%!
•!eugenyl!acetate!!!!9%+16%!!
Source:(Department(of(Export(Agriculture(
Major constituents
Physical appearance
Odour
Specifications of
Clove Bud Oil
eugenol (75-85%)
eugenyl acetate (9-16%)
Pale yellow clear liquid
Warm, spicy and eugenolic
Specific gravity at 20 °C 1.040 to 1.060
Optical rotation at 20 °C -1.5 to 0
Refractive index at 20 °C 1.5280 to 1.5370
Nutmeg oil
Nutmeg is mainly a home garden crop in the central wet zone of the Island. Nutmeg and mace are the
main two products of this tree and both are mainly used for culinary purposes and other food products.
The total extent of nutmeg is 954 ha. Although the land area is relatively small yields are relatively
high. Most of the trees are 25 to 50 years old with high productivity. The nutmeg found in Sri Lanka is
similar to that found in Grenada. Sri Lankan nutmegs are low in safrol and myristicin and at the same
time high in sabinene, when compared to Indonesian variety. Nutmeg oil is produced by the steam
distillation of the seeds of the plant.
118

15
Crop production: 2,700 mt
Oil exports: 30 mt
Nutmeg'and'Mace'
!
Produc9on!
Whole'Spice'
• !Total!extent!of!nutmeg!is!
!!!954ha!
!
• !Total!nutmeg!produc9on!
!!!in!2011!is!2,700mt!
!!!(approx)!
!
• !Total!export!volume!is!
!!!2,200mt!in!2011!(approx)!
Main!Cons9tuents!
Nutmeg'Oil'
•!!α!–!pinene!!!!!13.5%!–!17.0%!
•!!ß!–!pinene!!!!!!10.2%!–!11.0%!
•!!sabinene!!!!!!!!!36.0%!–42.5%!
•!!myris9cin!!!!!!!!!!!2.0%!–!2.7%!
•!!safrol!!!!!!!!!!!!!!!!!!!0.5%!–!1.2%!
Source:'Department.of.Export.Agriculture'
Major constituents
Physical appearance
Odour
Specific gravity at 20 °C 0.885 to 0.915
Optical rotation at 20 °C + 8 to + 25
Refractive index at 20 °C 1.4750 to 1.4880
Specifications of
Nutmeg Oil
α – pinene (13.0-17.0%)
β – pinene (10.2-11.0%)
sabinene (36.0-42.5%)
myristicin (2.0-2.7%)
safrol (0.5-1.2%)
Colourless to pale yellow clear liquid
Terpiny, woody and spicy nutmeg
Parameter West Indies East Indies Sri Lanka
Composition α – pinene (10.6-
13.2%)
β – pinene (7.8-12.1%)
sabinene (42.0-50.7%)
myristicin (0.5-0.9%)
safrol (0.1-0.2%)
α – pinene (18.0-26.5%)
β – pinene (9.7-17.7%)
sabinene (15.4-36.3%)
myristicin (3.3-13.5%)
safrol (0.6-3.2%)
α – pinene (13.0-17.0%)
β – pinene (10.2-11.0%)
sabinene (36.0-42.5%)
myristicin (2.0-2.7%)
safrol (0.5-1.2%)
Relative density at 20 °C 0.860 to 0.880 0.885 to 0.915 0.885 to 0.915
Optical rotation at 20 °C +25 to +45 +8 to +25 +8 to +25
Refractive index at 20 °C 1.4720 to 1.4760 1.4750 to 1.4880 1.4750 to 1.4880
Solubility in ethanol 90% (v/v) 1:4 1:3 1:3
119

Citronella Oil
The citronella plant is a 1-2 metres tall bush and cultivation has largely been spread in southern part of
the country. Total extent of citronella is 1,174 ha. The geraniol content of Sri Lankan citronella oil is
higher than Java citronella oil.
Citronella oil is produced by the steam distillation of the leaves of the plant.
16
Oil production: 25 mt
Oil exports: 11.7 mt
Citronella*
Produc7on!
Whole*Spice*
• !!Total!extent!of!
!!!!citronella!is!1,174ha!
!
• !!Total!citronella!oil!
!!!!produc7on!is!25mt!in!
!!!!2011.!
!
• !!Total!export!volume!
!!!!(citronella!oil)!is!
!!!!11.7mt!in!2011!
Main!Cons7tuents!
Citronella*Oil*
•!citronellal!!!34.8%D36.6%!!
•!geraniol!!!!!!!22.1%D25.4%!!
•!cirtonellol!!!!!9.9%D11.5%!
Source:*Department.of.Export.Agriculture*
Major constituents
Physical appearance
Odour
Specifications of
Citronella Oil
Citronellol, geraniol, citronellal
Golden yellow clear liquid
Lemon like
Specific gravity at 20 °C 0.900 – 0.910
Optical rotation at 20 °C -6 to -14
Refractive index at 20 °C 1.478 to 1.483
Specifications Ceylon (C. nardus) Java (C. winterianus)
Major constituents
Citronellal (34.8-36.6%)
geraniol (22.1-25.4%)
cirtonellol (9.9-11.5%)
Citronellal (13.3-14.7%)
geraniol (17.5-40.0%)
cirtonellol (6.2-6.5%)
Physical appearance Pale yellow to brownish Yellow to pale brown
Odour Lemon like Lemon like (more superior)
Specific gravity at 20 °C 0.894 – 0.910 0.880 – 0.895
Optical rotation at 20 °C -6 to -14 -6 to -14
Refractive index at 20 °C 1.479 – 1.487 1.466 – 1.473
Moisture content (%) 0.4 1.1
120

Cardamom Oil
Cardamom is cultivated as a mono crop in the Central hills and used mainly in the food industry, as a
flavour, the dried fruit is the commodity of trade. The total extent of cardamom is 2,795 ha. The
terpinal acetate level is higher in Sri Lankan cardamom oil when compared to other origins. There are
good prospects for organic cardamom, production of which is expanding.
Cardamom oil is produced by the steam distillation of the fruit of the plant.
17
Cardamom''
Produc:on!
Whole'Spice'
Main!Cons:tuents!
Cardamom'Oil'
Crop production: 57 mt
Oil exports: 1.5 mt
!
• !!!Total!extent!of!
!!!!!cardamom!is!2,795ha.!
!
• !!!Total!cardamom.!!
!!!!!produc:on!is!57mt!in!2011!
!
• !!!Total!export!volume!is!
!!!!!1.5!mt!(oil)!in!2011!
•!sabinene!!!!!!!!!!!!!!!!!!!4.26%!
•!myrecene!!!!!!!!!!!!!!!!!2.08!%!
• 1,8!Cineol!!!!!!!!!!!!!!!!29.39!%!
•!linalool!!!!!!!!!!!!!!!!!!!!!4.04!%!
•!terpinyle!acetate!!41.93!%!
!
Source:'Department.of.Export.Agriculture'
Major constituents
Specifications of
Cardamom Oil
sabinene 4.26%
myrecene 2.08 %
1,8 Cineol 29.39 %
linalool 4.04 %
terpinyle acetate 41.93 %
121

DEVELOPMENT PROJECTS IN ESSENTIAL OILS
The growing demand in industrialised countries for natural products has created a wide market for
essential oils. Therefore, the development of the essential oil industry is important since the country
has the raw materials and appropriate climatic conditions for the initiation of crop cultivations. This
will also result in increased foreign exchange revenues.
The main distillers in the country have shown their interest in cultivating new plants such as coleus,
sandalwood, ginger, and turmeric etc. Further they are moving ahead with producing organic certified
essential oils and extracts since there is a growing demand for organic products in the market.
18
!
!
Poten&al)new)crops)
Turmeric!
Ginger!
Davana!
Ve3ver!
!!!!!!!
Coleus!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Sandalwood!
!
!
ESSENTIAL OIL SECTOR: STRUCTURE AND TRADE
Structure
It is apparent from the above discussion that there are seven major essential oils produced in Sri
Lanka, namely cinnamon bark and leaf oils, nutmeg oil, clove bud oil, black pepper oil, citronella oil
and cardamom oil.
The complex supply chain network in the essential oil sector is illustrated in the following diagram.
Since there are a large number of smallholders it is difficult to organise them into a continuous and
steady supply chain that provides a regular supply of raw materials as well as controls the quality and
sustainability of supply to keep the industry operating throughout the year. There are usually three of
four levels of traders before the product ends up with the processor, exporter or consumer. The system
has worked reasonably well for many hundred of years but the industry is trying to reduce the
complexity of the supply chain in order to ensure the quality of the material coming into the factory.
122

There are 4 main distillers in the country, as well as 12 other small/medium distilling companies and it
is anticipated that this number will grew in the next 2-3 years. With regard to the number of field
distillation units there are 135 field distillation units for cinnamon leaf oil and 30 field distillation units
for citronella oil.
The spice industry in Sri Lanka is a very old industry but during the last 30 or so years has made
significant progress and the country has become better known for supplying a range of products other
than cinnamon.
Supply&chain&network&of&spice&crops&&
19
!!
!
!!
!
!
!
!
!
!
!!
!
!
Oil&
Dis>llers&
Export&
Collectors&
Wholesalers&
Producers&
Auc>ons&
Exporters&
Village&
Traders&
Town&
Traders&
Retailers&
Consumers&
Sri Lankan essential oil export volumes for the years 2009 to 2011 are shown in the table. The
dominant export ! is cinnamon leaf oil, recent exports have shown wide annual fluctuations peaking at
265.7 mt in 2010.
! ! ! !!
!Exports(of(essen,al(oils(! ! ! !!
!
Product(
!
!
!
!
!
!
!
!
!
Volume((mt)(in((
2009(
(
Volume((mt)(in(
2010(
(
Volume((mt)(in(
2011(
Cinnamon!leaf!oil! 107! 265.7! 231!
Pepper!oil! 3.7! 5.9! 8.5!
Nutmeg!oil! 15! 25! 30!
Cardamom!oil! 0.2! 0.4! 1.5!
Citronella!oil! 7! 9! 11.7!
Cinnamon!bark!oil! 7! 7! 8!
Clove!oil! 1.5! 10.7! 13!
123
23

This volume could be increased since only about 10% of the available leaf is used for oil extraction.
Most leaf is used for fertiliser since the relatively low prices does not encourage the farmers to use it
for oil production.
Export of other oils are much smaller but have shown an upward trend in recent years. Thus, exports
of pepper oil are growing and it is anticipated that this will continue with India being the dominant
market. Nutmeg oil exports are growing; the crop is growing and has not suffered from any disease
problems or low productivity. The export volume can definitely increase since there are 600 – 800 of
nutmeg available and only about half of it is used for distillation. Cardamom oil exports are small but
growing, especially organic oil, but Sri Lanka cannot compete with Guatemala with regard to
conventional cardamom oil. Citronella oil exports are growing slowly but the major problem is the
fluctuating prices, which make it difficult to induce farmers to grow the crop and produce the oil.
Cinnamon bark oil is relatively stable but there has been a growing demand for the spice, especially
from Latin America for culinary purposes. This is likely to grow further especially for organic oil.
Exports of clove oil have been increasing recently and the dominant market is India.
The export destination of the essential oils is illustrated in the following table, which shows the
domination of the USA, EU and Indian markets. In recent years India has become a much more
important market for Sri Lankan oils.
!
!Major&des*na*ons&of&essen*al&oils&–&2011&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Cinnamon!leaf!
oil!
USA&
%&
UK&
%&
France&
%&
India&
%&
Germany&
%&
Others&
%&
57! 8! 4! 12! 2! 17!
Pepper!oil! 13! 1! 1! 84! 1! 0!
Nutmeg!oil!
52! 12! 3! 3! 16! 13!
24
Citronella!oil!
46! 3! 17! 0! 6! 27!
Cinnamon!
bark!oil!
12! 4! 16! 0! 63! 4!
Clove!oil! 47! 2! 3! 39! 5! 6!
124

MAJOR CHALLENGES IN THE INDUSTRY
Though the industry – both the government and the private sectors - have initiated many development
programmes there are still many constraints to be overcome if Sri Lanka is to be competitive in the
market. Some of the limitation factors associated with the essential oil industry include:
• Instability of market prices which has an undesirable impact on both the farmers and the
processors
• Lack of long term backward integration for new cultivation
• Establishing effective supply chain
• Lack of initiatives for moving up the value chain; need to move beyond essential oils
• Environmental/climate changes affecting everyone globally and we have to deal with them
when they occur.
DEVELOPMENT PROJECTS IN THE INDUSTRY
Sri Lanka offers very good opportunities for the expansion of the organic essential oil business as well
as various added value products. The smallholder families use very little fertiliser; there is very little
pollution; the industrial base is not that large; the underground water streams are not contaminated, so
there is negligible pesticides or heavy metal pollution. So organic essential oils is a niche market area
which is growing and in which Sri Lanka can compete. In addition, investments are taking place to
develop new products including fractions, isolates and CO2 processing – both conventional and
organic.
Companies also realise that they must integrate backwards in order to ensure raw material supplies.
Companies are developing new plantations for new crops and expanding the existing cultivation area,
including working with existing plantation companies to encourage them to plant spices alongside
their traditional plantation crop production. Also they are trying to collectivise smallholders as well as
organising buy-back schemes. The end of the civil war has led to the opening up of the northern and
eastern parts of the country and is offering new opportunities to develop new areas of production.
Donor agencies are also assisting in the development of lands, which are now free.
INSTITUTIONAL SUPPORT
Within the country there are a number of institutions that support the spice and essential oil sector. The
Sri Lanka Export Development Board, which is the apex body, drives the marketing, value addition
and promotion of the industry. It has supported the attendance of a few companies to the IFEAT
Singapore Conference to expose them to the international industry. The government places a lot of
emphasis on the minor crops and there are two ministries involved, namely the Department of
Agriculture and the Department of Export Agriculture, which overlook spices. This reflects the
importance of spices to the development of the rural economy.
In addition, there are two private sector trade associations working alongside the government in
helping to promote the industry, namely the Spice Council and The Spices and Allied Products
Producers’ and Traders’ Association.
125

28
Ins$tu$onal*support*
The$Apex$Body$
!
Others$
Department!of!Agriculture!
Department!of!Export!Agriculture!
Trade$Associa3on$
!!The!Spices!!and!Allied!Products!
!!Producers’!and!Traders’!Associa;on!
The!Spice!Council!
Within the essential oils sector there are four main well-established companies, each of which has
been an IFEAT member for at least 20 years or more, namely:
HD de Silva Group
EOAS Organics
LB Spices Trading (Pvt.) Ltd
Link Natural Products (Pvt.) Ltd.
This number will grow as other companies develop and will show a similar level of sophistication
rather than just a cottage industry.
IFEAT&members&
27
!
!!
HD!De!Silva!Group!!
EOAS!Organics
!
!
!
LB!Spices!Trading!(Pvt)!Ltd!!
Link!Natural!Products!(Pvt)!Ltd!
126

THE FLAVOUR AND FRAGRANCE INDUSTRY IN SRI LANKA
The flavours and fragrance sectors in Sri Lanka have been growing quickly, thanks to rising incomes,
the cessation of the civil war and the opening up new markets in the north and eastern regions,
changing social and cultural habits, as well as the growth of tourism. Both the food manufacturing and
beverage industries have shown tremendous growth.
Flavours and fragrances are used as ingredients for the food industry. Fragrances are also used in the
personal care industry and the household care industry. These raw materials might be of natural origin
like essential oils, which have been discussed earlier, or a composition of synthetic chemicals. Orange,
lemon, and lime are the widely used flavours and rose, jasmine are the fragrances that are moving
quickly in the market.
Tea, carbonated beverages, nutritional drinks, RTS (ready to serve) and concentrated juices, alcohol,
confectionaries, cosmetics, detergents and toiletry are the industries which are using considerable
amounts of flavours and fragrances. The total trade value of above markets is US$ 1,284 million
during the last year. The value of flavours and fragrances imported during last year was US$ 25.68
million (HS Codes: 3302.10.10; 3302.10.20; 3302. 10.90; 3302.90.00 and Others). The value is
probably higher because ingredients may be included in other code numbers.
In 2011, there was an 8.7% growth in the food manufacturing industry compared to 2010. Expanding
the FMCG sector to Northern and Eastern provinces was a major factor behind this growth. The
beverage manufacturing industry saw a 10.2% growth in 2011 compared to 2010. A key factor was the
growth of the tourism sector. The value of consumption in various beverage sectors is illustrated in the
slide.
The total market value of the industries that use flavours and fragrances are listed below.
32
Consump(on)of)flavours)and)fragrances)
• !Tea!(Flavoured!Tea,!Green!Tea,!Black!Tea) ! !US$.!!!!!12!mn!!!Ceylon'Tea'Board'
• !Carbonated!Beverages! ! ! ! !US$.!!!130!mn!!!!Nielsen'
• !NutriDonal!Drinks! ! ! ! !US$.!!!!!20!!mn!!!!!!,,!
• !RTS!&!Concentrated!Juice ! ! !US$.!!!!!!10!mn!!!!!!,,!
• !Alcohol! ! ! ! ! !US$.!!!!440!mn!!!!Excise'Dpt.'
!
• ConfecDonery ! ! ! ! !US$!!!360!mn!
• CosmeDcs ) ))))) ) ) )US$!!!192!mn!
• Detergents!&!Toiletry)))))))) ) ) )US$!!!120!mn!!
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There is an increasing number of key international F&F companies represented in Sri Lanka and they
are servicing the F&F industry.
Key$interna*onal$players$represented$in$Sri$Lanka$
31
• IFF$
• Robertet$
• Firmenich$
• Takasago$
• Givaudan$
• Symrise$
!
Thank you for your attention – and I look forward to welcoming you to Sri Lanka for a future
international conference.
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THANK YOU
!
!
!
!
!
!
!
!
!
!!!!!!!!!!!!!!!!
!
!!!!!!!!!!!!!!!!!!!FAZAL%MUSHIN%%
!!!!!!!!!!!!!!!!!Director!–!E!&!BD!
!!!!!!!!!!!!!!!!!Link!Natural!Products!(Pvt)!Ltd!
!!!!!!!!!!!!!!!!!Sri!Lanka!
!!!!!!!!!!!!!!!!!E;mail!:!fazal@linknaturalproducts.com!
!
!
Fazal Mushin is the Director of Exports & Business Development at Link
Natural Products (Pvt) Ltd., Sri Lanka. He joined Link Natural in 2003,
overlooking the purchasing of raw material and exports of Essential Oils. Link
Natural Products, has been in the essential oil business since 1982. He has
actively been involved with several trade chambers representing exports and
spices. He has also headed the organising of the IFEAT Study Tour in 2005.
With over 29 years of working experience in trading of commodities, of which
the last 16 years in spices and thereafter, essential oils. In Sri Lanka,
smallholder families cultivate 70% of spices and thus, collectivising and establishing a sound supply
chain, whilst understanding the global demand and trends is vital to our business, including the
impact of environmental changes.
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