Program Overview

Background and Long-Term Strategy

The Essential Oils and Plant Extracts Program represents a number of different industries, and a wide variety of end users. The common feature is that all involve growing plants to harvest active ingredients. Users include the pharmaceutical, industrial and food industries.

Essential oils are used for therapeutic properties, perfumery, food additives, and as industrial chemicals (solvents, etc). Dominant products in Australia are eucalyptus, sandalwood, lavender, peppermint and fennel. Australia exported $26.8 million of essential oils in 2003-04 and imported $22.7 million. The industry peak body is the Essential Oil Producers Association of Australia (EOPAA).

Medicinal herbs are produced for complementary medicines and for extraction of active compounds for pharmaceutical medicines. The global market for medicinal herbs has been growing steadily over the past decade. Sales of natural medicines in the United States are growing at between 3 to 4 per cent a year. The place of alternative medicines is also being recognised by the medical community. This has created good market opportunities, but also is increasing the demand for regulation of the industry.

There are three large herb growers in Australia, a small number of medium sized growers, usually specialising in a particular herb, and an estimated 50-60 small-scale growers that are the main sources of medicinal herbs. The value of medicinal herb production is not known but is estimated to be around $2 million a year. The processing of medicinal herbs in Australia draws largely on imported material. There is considerable scope for import replacement, however, both processing and growing costs are relatively high, which tends to restrict competition to the high value, high quality end of the market.

Key long term strategies

• improve production systems to raise productivity and control over product qualities 
• support the demonstration of safety and effectiveness of Australian products and facilitate the satisfaction of regulatory requirements to enhance market access 
• support new ideas that provide potential for growing the market for Australian product 
• improve industry and research capacity