R&D Plan for Essential Oils and Plant Extracts 2002-2006

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Rural Industries
Research & Development Corporation

R&D Plan for
Essential Oils and Plant Extracts 2002-2006

1. Purpose of the plan	Vision and Mission Statement
2. Industry profile	3. Overview of the program
4. Key issues for industry	5. R&D program
6. References

1	Purpose of the plan

Plan is to provide clear signals to researchers, industry and government about the rationale and direction of RIRDC’s Essential Oils and Plant Extracts Program over the next five years. Action under the program will depend on the annual funds allocated to it.

The plan establishes priority areas for R&D within the essential oils and plant extracts industries, identifies strategies and targets to reach key objectives, and specifies performance indicators to ensure that the program is achieving its objectives. The plan was developed in cooperation with representatives of the industries and the research community.

Vision and Mission Statement

The Vision

An Australian essential oils and plant extracts industry that has established international leadership in production, value adding and marketing.

The Mission

To underpin industry development by:

improving understanding of markets to better focus research efforts and to foster efficient industry development;

improving existing products and encouraging the development of new crops and products to take advantage of market opportunities;

supporting the development of sustainable and profitable production systems, continuing on from the objectives in the previous plan;

facilitating regulatory approvals;

promoting post harvest and extraction technology to improve yield and quality; and

improving the flow of information to the industries.

This plan will focus the R&D activities on products that have good market potential. The approach is not to pick winners, but to require applications for R&D support to demonstrate the market opportunities for the product and the anticipated contribution that the R&D will make to these opportunities. The overarching objectives of the program to date have been to obtain efficiency in production by:

increasing productivity (through breeding, agronomy and crop protection);

improving harvesting and post-harvest handling, extraction and value adding;

establishing a stable grower base; and

implementing quality assurance and control programs to guarantee consistency of quality.

These objectives remain relevant, but it is also important for research and development to underpin action to improve Australia’s presence in, and share of, world markets.

2 Industry profile

Essential oils and plant extracts are inputs to a range of products including food flavours, pharmaceutical goods and industrial solvents. Australia’s diverse climate and unique flora provide opportunities for new crop development and agricultural diversification. Increasing consumer interest, and a wide and growing range of applications in commercial industries has led to strong, albeit fluctuating, growth in world demand for these commodities.

Essential oils

Essential oils are the volatile oils, odorous, which occur in certain plants or specified parts of plants, recovered by accepted procedures such that the nature and composition of the product is, as nearly as practicable, unchanged by such procedures. Essential oils have been extracted from over 3000 plants, of which 200 to 300 are commonly traded on world markets (Iqbal 1995).

Essential oils are widely known for their scents and flavours, making food flavouring and fragrance industries among the biggest users. Common uses for selected essential oils are shown in table 2.1

2.1 Common uses for selected essential oils

Essential oil Common uses

Citrus Industrial solvents, fragrance for cleaning products, flavouring

Spearmint Toothpaste, mouthwash, confectionery flavouring

Peppermint Toothpaste, mouthwash, chewing gum, food flavouring, cosmetics, tobacco flavouring

Lavender/lavandin Fragrances, toiletries

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

Tea tree Toiletries, insect repellents, germicides, cosmetics

Boronia Food flavouring, fragrance

Blackcurrant bud Food and beverage flavouring

The world market for essential oils

Little information is available on the size of the markets for essential oils and plant extracts which are predominantly inputs into other products. They are a subsection of the larger perfumes and flavours market. Trends in these markets are at best indicative of trends in the essential oils markets.

World trade in the markets for essential oils and their end use products is growing. In 1998, world exports of essential oils and related perfumes and flavours was valued at US$7435 million and imports at US$6811 million (UN 1999). Table 2.2 shows that the value of world trade has increased substantially between 1986 and 1998.

2.2 World trade in essential oils, perfumes and flavours

	1986	1990	1994	1998	1986–98
	US$m	US$m	US$m	US$m	% pa
Exports	2 149	4 122	5 051	7 435	10.9
Imports	2 008	4 206	4 802	6 811	10.7

Source: United Nations International Trade Yearbook 1999 and 1992.

The major exporters of essential oils are the United States (US), the European Union (EU) and a number of developing countries, the most important of which are China, Indonesia, India and Brazil. In 1998 the EU accounted for 52 per cent of the value of world exports, and the US 13 per cent (UN 1999). Developed countries are the main importers of essential oils, with the EU and the US accounting for 44 per cent and 8 per cent respectively in 1998 (UN 1999).

Essential oils industry in Australia

Australia is a relatively small player in the world market for essential oils, accounting for 1 to 2 per cent of world trade (Colton 1999). Australian exports of essential oils and their related products were valued at US$31.5 million in 1998, and imports at US$53.9 million (UN 1999). Table 2.3 shows that the value of Australia’s imports and exports has increased steadily since 1986. Strong growth in the value of exports is a positive sign for Australian producers.

2.3 Value of Australian trade in essential oils, fragrances and flavours

1986

1990

1994

1998

1986–98

US$ m

US$ m

US$ m

US$ m

% pa

Exports
5.9

14.3

29.5

31.5

14.9

Imports
28.4

25.1

41.7

56.6

5.9

Source: United Nations International Trade Yearbook 1999 and 1992.

The Australian essential oils industry is made up of around 150 commercial producers, with production dominated by a few larger firms. Most essential oil production takes place in Tasmania, Victoria and New South Wales (NSW). Tasmania produces commercial quantities of lavender, parsley, peppermint, dill, boronia, blackcurrant bud, and fennel. The main essential oils produced in NSW are tea tree and eucalyptus, while peppermint is the main crop produced in Victoria. For most of the essential oils that Australia produces, its share in world production is relatively small. As a result, Australia is a price taker for most of the essential oils it trades on the world market. Boronia, and until recently tea tree oil, have been two notable exceptions.

Plant extracts

Plant extracts are the compounds found in the leaves, stems and reproductive structures of plants. In Australia, plant extracts are primarily used as inputs into the medicinal herb, pharmaceutical, nutraceuticals, and insecticide industries. The main crops from which plant extracts are obtained in Australia are pyrethrum, poppy and hops. These extracts have a combined gross farm gate production value of around $100 million.

The medicinal herb market has been identified as a huge potential market for Australian production of plant extracts, with both local and export opportunities (Chung 1999). The world market for herbal medicines was valued at US$14 billion in 1997, with the US, Europe and Japan the largest consumers of these goods. The Australian herbal medicine market was valued at between $240 and $290 million in 1997 (Purbrick 1998). Australia currently consumes 250 tonnes of medicinal herbs a year, of which one third is produced domestically (Wondu 2000). The potential exists for Australia to produce half of all medicinal herbs used locally (RIRDC 1996). The main medicinal herbs produced in Australia are echinacea species, licorice root, skullcap, dandelion root, golden seal root and valerian root.

Phytochemicals, drugs derived from botanical sources, are also part of this market. In Australia indigenous plant sources have been utilised to produce substances such as scopolamine and its derivatives, esculin, castanospermine and methyl cinnamate (RIRDC 1996). These industries are much less developed than those of the medical herb industry.

The world market for insecticides is large, and consumer preferences for natural over synthetic pesticides are growing. Pyrethrin is an effective insecticide with low levels of toxicity to mammals. Tasmania is currently the second largest producer of pyrethrum in the world, with most production exported to the US (DPIWE 1999).

Key drivers of world demand for essential oils and plant extracts

Between 1993 and 1998, world demand for essential oils grew at an average rate of 6.1 per cent, botanical extracts at 15.9 per cent, plant derived chemicals at 9.8 per cent, and gums, gels and polymers at 7.4 per cent (Wondu 2000). Demand for essential oils and plant extracts is largely driven by the food flavouring industry, cosmetic and fragrance industries, and demand for industrial solvents. Pharmaceutical and medicinal uses drive the demand for botanical extracts, while plant derived chemicals, gums and polymers have industrial demands.

Demand growth does not just reflect growth in the output of these industries. Changing consumer preferences in favour of natural over synthetic substances has had a strong impact on pharmaceutical and cosmetic industries, which has translated into growing demand for essential oils and plant extracts.

A feature of the essential oils and plant extracts market is that the markets for each product are discrete. Each product faces its own demand drivers, customer groups, cost conditions, uses and price. As a result, demand is typically very oil/plant-specific, although some oils such as orange and lemon readily substitute for each other.

Value chains

The production of an essential oil or plant extract is a complex process. 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 of the crop, extraction, further processing and distribution. Some essential oils undergo further processing known as rectification, which adds value to the oil, increasing its suitability for its end use.

Traditionally, producers have used agents to distribute their products due to their knowledge of the market and relevant buyers. However, there is a growing trend for producers to bypass agents and sell their products as close to consumers as possible. Increasingly producers in developed countries are importing oils from developing countries, further refining and blending the oils, and then exporting them (De Silva and Atal 1995).

The value chains — both at farm gate and wholesale levels vary greatly across products so development of stylised value chains is not possible. However, based on a survey undertaken at the planning workshop, some guide to the share of costs is:

harvesting costs make up between 10 to 35 per cent of farmgate costs, with an average of 22 per cent;

pest/weed/disease management costs make up a similar average 22 per cent of costs with a range of 11 to 37 per cent; and

nutrition (irrigation, fertiliser etc.) typically makes up 10 per cent of grower costs.

at the wholesale level the variation is greater and depends on the extent of refinement and processing of the oil or extract. However extraction costs tend to be around 60 to 75 per cent of processor costs.

Assessment of the potential for some Australian Products

In the workshop the prospects for some Australian products were discussed. The key comments were as follows.

Eucalyptus oil has a very sound commercial base for high quality oil, however growth is not expected to be significant due to strong competition from cheaper sources of supply. There is potential for an increasing supply of oil from plantings primarily for groundwater and salinity control. There may be considerable scope for new compounds from eucalyptus in the future but research is only at preliminary stages and the time horizon for development may be 20 years.

Boronia has developed with the backing of RIRDC funded research, however market growth is expected to be limited to 5 to 10 per cent over the next five years. The high cost of the product and the single source of supply act as constraints on increasing integration of boronia essence into end use products. There may be considerable scope for the development of new compounds and new uses, but like eucalyptus this is in the early stages of research.

Peppermint has the potential for considerable expansion in the near future. There is a strong international market for quality oil. Although it is unlikely to rival the US in production (it provides 95 per cent of the mint market) Australia should be competitive, particularly if the Australian dollar remains low. The world market is growing at 5 per cent a year off a base of over 5000 tonnes per annum. The decline in tobacco production provides opportunities for expansion in crop area and marketing has improved the image for reliable supply.

Tasmannia lanceolata is a Tasmanian native that has been wild harvested. A fledgling industry is being developed in Tasmania, but has yet to reach commercial production. Prospects are considered good and the oil has a wide variety of uses. The recent reduction in permitted areas of wild harvest may threaten the development of the industry by reducing supply in the short term and impacting on supply reputation.

Lavender is produced for domestic markets and export. However production volumes are small and the industry is fragmented. Adherence to quality standards will be important to the industry’s future in Australia. It appears that the industry has yet to focus on oil as a major product. Tourism and dried plant material contribute significantly to grower returns. Commercial production is hindered by a lack of chemicals registered for use in weed and pest control.

Onion oil has been extracted successfully and is at the commercialisation stage. This has good market prospects if production costs can be reduced.

Umbelliferae or Apiaceae (celery, fennel, dill, parsley) production is small, but world markets are large. However, production costs are an issue in expanding supply.

The outlook for citrus oils is less promising than five years ago as a result of important supply constraints, which have resulted from the switch to small-scale fresh juice production, reducing the cost effectiveness of the oil extraction process.

Australia is currently a small world player in the market for medicinal extracts. Australian producers face considerable competition from low cost overseas producers, and the domestic market is dominated by imports. However, the market in the developed countries is increasingly demanding quality products with high levels of active constituents. If quality products can be guaranteed, the potential for continued growth in overseas demand for Australian medicinal extracts is high. The largest domestic market for medicinal extracts is currently for Echinacea products, which are also experiencing strong growth in world demand, whereas the international market for St Johns Wort is contracting.

3	Overview of the program

THE OBJECTIVE OF THE ESSENTIAL OILS and plant extracts Program is to support the growth of a profitable and sustainable essential oils and plant extracts industry in Australia.

Program funding areas

RIRDC has been funding research projects under the program since early 1990. Seventy projects have received funding, which have been classified into the following R&D categories:

production — industry competitiveness — aimed at reducing the unit cost of production and/or raising product quality, disease management, quality control, selection of superior lines, development of new products, and improving financial management;

processing — aimed at adding value to products, such as through prolonging shelf life, developing better extraction techniques, and using processing techniques to develop new and better essential oils and extracts;

industry training and development — aimed towards building industry capacity by encouraging development of industry associations, updating priorities for R&D, including assessing the feasibility of various crops and processing techniques and informing potential entrants;

communications/technology transfer — aimed towards developing better communication within the industry, establishing networks, and promoting adoption of research findings; and

markets — market research to identify market opportunities, promote sales volumes, and/or increase recognition of quality demand.

Profile of resources committed to the program

The Essential Oils and Plant Extracts program receives funds from RIRDC, industry, and research institutions. Over $11 million has been allocated to the program since its inception, including financial and in-kind support. RIRDC accounts for around a third of total funding to projects under the program.

More projects have been targeted at production – industry competitiveness than any other single R&D area (chart 3.1). This reflects the diversity of potential products from which oils might be extracted, and the trial of many inputs and techniques. Total RIRDC funding to date is $3.7 million.

3.1 Program funding by classification

Source: Background Paper, table 3.2.

Program performance

Projects funded under the Essential Oils and Plant Extracts Program can be categorised into stages, which indicate the phase of development to which each project is targeted. Each stage reflects how close the output of the R&D is to actually impacting on prices, quantities, costs, and other factors.

Stage 1 is identification. This might be identification of a problem, possible solutions, market opportunities, and the like. This is the first step in developing a product and should deliver knowledge and understanding. The research output is usually an input to more detailed projects but may also be drawn on in strategic development.

Stage 2 is development. There should be a distinct output such as a better processing technology, superior characteristics, or superior production systems. The output should be capable of being adopted directly, although further trials may be required for commercial application.

Stage 3 is adoption. It is the stage where R&D output is brought to commercial use. Commercialisation ideally is an industry activity as is extension of best practice for growers. However, issues such as health, industry reputation and communication of findings, are likely to attract public funding. There are no projects to date classified as Stage 3.

The vast majority of projects in the Essential Oils program have been in Stage 1. This reflects the diversity of products being researched and need in early stages of industry development to identify market opportunities and product applications (chart 3.2).

3.2 Program funding by stage of development^a

a Excludes funding of travel to conferences. Data source: CIE classification.

4	Key issues for industry

WITH COMPETING DEMANDS for funds, not only within the program but also for public resources generally, it is essential that funds be directed to those areas where the returns (economic, social and environmental) are likely to be greatest. The SWOT analysis is one tool in setting priorities. It identifies the strengths, weaknesses, opportunities and threats faced by an industry. The following analysis was undertaken in the planning workshop.

SWOT analysis

Strengths

Strengths refer to advantages that Australia has over its competitors. Strengths are internal to the country and its producers and may come from natural resources, human capital and/or industry or other experience.

The strengths of the domestic essential oils and plant extracts industries include:

the existence of a diverse range of unique genetic material (some still untapped);

a variety of climate and soil conditions within Australia, allowing a wide range of crops to be grown;

a reputation as a consistently high quality producer and ability to offer quality management systems which developing countries may not be able to match;

ability to offer superior customer service by tailoring oil production to specific buyer requirements;

high industry standards;

the availability of skills and technology to undertake value adding activities; and

licensed laboratories and high quality technicians available to undertake R&D and quality control.

Weaknesses

Weaknesses include:

difficult and costly regulatory processes for registering new products particularly for human consumption;

high costs involved in establishing characteristics of new genetic material;

slow rate of uptake of new technology in some sectors of the industry;

high capital costs of investment and lack of venture capital;

difficulty in ensuring reliability of supply as a number of crops have only a single domestic source of supply;

a small domestic market so large scale producers need to look to overseas markets for buyers;

high transport costs, particularly ‘volatile’ goods;

difficulty entering established markets, as buyers tend to have specific product requirements and are reluctant to change suppliers; and

limited funds available for basic research.

Opportunities

Opportunities are external events or conditions that Australian producers could potentially exploit to their advantage:

changing consumer preferences towards the use of ‘natural’ over synthetic products;

existence of and growth in niche markets, where quality is more important than price;

strong growth in the pharmaceutical, cosmeceutical and nutraceutical industries leading to growth in demand for essential oils and plant extracts;

potential to extend the range of available products including new product development through biotechnology;

need to diversify the farm base in many irrigation areas to improve the return to water use, and the search for crops that can be grown to contribute to salinity control;

importance of reliability of supply and potential to deliver by developing multiple sources within Australia; and

lack of standards for many products and capacity to lead the way in the development of standards.

Threats

Potential threats faced by producers include:

production of essential oils and plant extracts from low cost developing countries;

availability of synthetic substitutes;

loss of access to wild harvests;

market demand for oils and extracts can be subject to strong fluctuations, with no hedging facilities being available;

loss of control of Australian genetic material; and

high cost of meeting overseas markets entry standards, such as those set by the Food and Drug Administration in the US.

5	R&D program

THE FOLLOWING SIX PRIORITY OBJECTIVES for the program over the next five years were developed in the second Essential Oils and Plant Extracts R&D Planning workshop held in March 2001.

Summary of objectives

This section summarises the program objectives and identifies those aspects of the SWOT analysis that each objective will address. It also provides an indication of a target share of the program’s total budget that will be directed to each of the objectives over the next five years (figures in brackets).

Improve the understanding by potential researchers and producers of the markets for essential oils and plant extracts (20 per cent).

This objective will help address the difficulties of entering established markets and identify opportunities offered by the potential of niche markets.

Improve existing products and encourage the development of new crops and products (20 per cent).

This objective focuses on the need to address low cost competition and to capitalise on our strengths of unique genetic material and variety of climate and soil conditions.

Support the development of sustainable, profitable production systems (20 per cent).

This objective addresses the opportunities offered by the growing demand for essential oils and plant extracts and the need to develop production systems that improve yields, provide reliable supplies, diversify the farm base and protect the environment.

Facilitate regulatory approvals for essential oils and plant extracts (10 per cent).

This objective will help to address the difficulties and costs involved in meeting domestic and overseas regulatory requirements.

Promote cost effective post harvest and extraction technology (15 per cent).

This objective will help address competition from synthetic substitutes. It will also contribute to dealing with competition from other countries and the opportunities offered by niche markets.

Encourage the development of essential oils and plant extract industries (15 per cent).

This objective will focus on the need to encourage industry networks and to improve the uptake of technology.

Objective 1 — Understanding of markets

To improve understanding by potential researchers and producers of markets for essential oils and plant extracts.

Background

The diversity of Australia’s native flora provides strong potential for the development of new products. However for successful production a market has to be established for the product. Unless there is an existing market this will be a lengthy and very expensive process. Often the volumes that can be produced will not be sufficient to interest manufacturers who require not only volume but also security and consistency of supply. In addition, where low cost alternatives are available, such products will not be economic to produce as premiums for superior quality will be low. An understanding of market opportunities will help to direct research and production effort to products where a viable industry can develop.

Strategies

§ Encourage an understanding of the market opportunities for new products and the need to substantiate such opportunities before engaging in substantial R&D efforts.
§ Support studies, for wide dissemination to industry and potential entrants, which explore market opportunities and examine returns to Australian producers. This would include comparing the returns on new products with existing products and identifying the steps required for commercialisation. Consideration of the costs of registering products for human consumption should be included in such assessments, including where applicable, toxicity studies.

Targets

§ All R&D proposals include a brief assessment of market opportunities for the crop or product affected by the R&D.
§ Information on market opportunities be available for the major essential oil and plant extract products produced in Australia and those with the best future potential.

Performance Indicators

§ Proportion of proposals including market opportunity information.
§ Number of essential oil and plant extract products for which market information, including world production levels and trends, is published (in print or electronic form).

Objective 2 — Development and improvement of products

To improve existing products and encourage the development of new crops and new products (including uses for existing products).

Background

Australia’s advantage in production comes from the unique inherent characteristics of our flora (often still to be exploited), from our growing conditions (climate, soils) and from growing technology. The development of new products is a high risk but potentially high return activity. In addition, as a high labour cost producer (low labour inputs), productivity growth must come largely from improving yields and quality and meeting market specification.

Strategies

§ Support the identification of potentially useful genetic variability in essential oil and plant extract crops.
§ Undertake selection for yield and market desired characteristics under different production conditions and provide the basis for producing to market specification.
§ Encourage the maintenance and distribution of improved genetic material.
§ Support preliminary R&D into new products where high potential has been established. Areas for consideration include insecticidal and biomedical uses.

Targets

§ Superior lines identified in at least three major crops.
§ Inclusion of commercialisation plans in research reports for new products.
§ Establishment of cost effective, profitable end products and uses for four new products (from existing or new crops).

Performance Indicators

§ Adoption of superior lines by growers (percentage).
§ Overseas market penetration of key product lines.
§ Number of products successfully commercialised, and number of products with a commercialisation plan.

Objective 3 — Improved Production Systems

To support the development of sustainable and profitable production systems.

Background

Essential oil and plant extract crops attract a wide variety of growers. Some crops are grown largely under contract, and production protocols are well established and adopted. Crops that offer the potential for diversification may face a barrier to expansion due to unfamiliarity for farmers. The development of sustainable production protocols for new crops and their wide dissemination is an important input into establishing sufficient production to develop an industry in the crop.

Strategies

§ Support R&D into protocols for sustainable production, including assessing locational impact on production where producers support field trial activities.
§ Continue to respond to pest/weed/disease problems imposing significant control costs or production risks to growers.
§ Support the examination of alternative herbicides for essential oil and plant extract crops that are currently dependent on a narrow range of products to increase the range and effectiveness.
§ Continue to support the development of protocols for measuring residues in crop products. Encourage this research to lead to the establishment of standards for optimal pesticide/herbicide use for Australian production.
§ Support improvements in harvester technology.
§ Support wide dissemination of production and pest/weed and disease management protocols.

Targets

§ Full adoption of best practice production protocols.
§ The residue levels measured for all high value products (based on total value of production).
§ Standards on optimal pesticide/herbicide use established for major crops.
§ Twenty percent expansion of herbicides/pesticides and other chemical treatments registered for use on essential oil and plant extract crops.

Performance Indicators

§ Geographical diversity of commercial production.
§ Increase in number of herbicides/pesticides and other chemical treatments registered for use on essential oil and plant extract crops.
§ Change in average yield/ha for selected essential oils and plant extracts.

Objective 4 — Regulatory Approvals

To facilitate regulatory approvals for essential oils and plant extracts.

Background

Products with theraputic claims require registration domestically with the Therapeutic Goods Administration (TGA). Export market penetration will be assisted through registration with the US Food and Extract Manufacturer’s Association (FEMA) for approval for human consumption or with the US Food and Drug Administration for medical claims. No Australian native based product has yet to receive FEMA registration. While a number of products are used in food manufacturing in Japan and Europe, this use may be threatened by lack of registration. Standards for many essential oils and plant extracts for industrial and typical uses have also yet to be established.
The development of Australian standards, particularly for non-food and non-medical uses, may also improve the international marketing of Australian products and prevent the imposition of external standards on Australian producers. The program’s role is to support the research that is needed to back up registration applications that may be undertaken by commercial partners.

Strategies

§ Identify effective and offending compounds to be selected for toxicity tests.
§ Support the establishment of safety standards for Australian products for industrial and personal uses and for human consumption.
§ Provide research support for FEMA and other registrations of Australian plant products with strong market growth potential.
§ Provide a documented procedure for application to FEMA and other registrations for a new product.

Targets

§ Application for FEMA registration of at least one Australian plant extract.
§ Standards established for at least four Australian plant extracts.

Performance Indicators

§ Publication of the process of application for registration for FEMA and other common registrations.
§ Number of internationally accepted standards.

Objective 5 — Improved Post Harvest Treatments

Promote cost effective post harvest and extraction technology to improve yield and quality.

Performance Indicators

Increasingly, the effectiveness of further processing and handling of oils and extracts will determine the future profitability of the Australian essential oil and plant extract industries. This is particularly so as low cost competitors around the world become more dominant suppliers of products traditionally produced in Europe and the US. Adding value through the use of more sophisticated extraction and finishing technology is a key part of improving existing products, and facilitating the creation of new formulations and uses.

Strategies

§ Evaluate and establish post harvest treatments to improve yield and quality

Targets

§ On average, a twenty percent improvement in yield achieved from post harvest treatments.

Performance Indicators

§ Percentage improvement in yield achieved from post harvest treatments.
§ Number of crops undergoing post harvest treatment.

Objective 6 — Industry Development

To encourage the development of essential oils and plant extract industries.

Background

The Australian essential oils and plant extracts industry is diverse and comprised of mainly small scale producers. As a result, it is also relatively fragmented, and industry cooperation and development needs further encouragement. RIRDC plays an important role in seeking to overcome this fragmentation by encouraging industry cooperation, and disseminating information that will improve the flow of information to growers, processors and retailers.

Strategies

§ Foster the development of industry organisations through support for workshops, newsletters and developing networking strategies.
§ Encourage adoption of quality management procedures at grower and processor level, and the development of reputable labelling for products meeting standards.
§ Encourage wise market entry through the publication and communication of key industry facts. These would include assessment of the costs of entry and likely profitability, basic establishment and market information and key industry contacts.
§ Encourage adoption of R&D outputs through the inclusion of summaries of progress and completion reports in industry publications.
§ Encourage the use of farmer friendly presentation and language in research reports. Emphasise the need for communication strategies as part of research design.

Target

§ Publication of a ‘key fact-key people’ report, with wide coverage of essential oil and plant extracts.
§ Inclusion of information on progress in R&D projects in EOPAA newsletter.

Performance Indicators

§ Availability of market information for grower use.
§ Level of grower/processor take up of research outcomes.
§ Number of members and activity level of industry organisations.

Products and R&D priorities

The following is a list of essential oil and plant extract crops that have already been the subject of R&D, often supported by RIRDC. In these cases work has been undertaken in such areas as understanding markets, developing products, production systems, improved post harvest treatments and providing industry information. However, these crops remain a priority for the program because further work will benefit existing growers or enhance industry growth. This relates particularly to such areas as product and industry development and facilitating regulatory approval.

Blackcurrant Bud (Ribes nigrum L)
Boronia (Boronia megastigma)
Eucalyptus (oil producing species)
Ginseng (Panax quinquefolium, Panax ginseng)
Mountain pepper (Tasmannia lanceolata)
Onion Oil (Allium cepa)
Peppermint (Mentha piperita L.)

The following is a list of crops that RIRDC has, to date, supported only modestly or that have not yet been supported by RIRDC. Research priorities for these crops will be generally across the range of objectives in this plan, but the need to demonstrate market potential remains an important first step for any product. Proponents should also take into account research undertaken elsewhere.

Black Cohosh (Cimicifuga racemosa)
Borage (Borago officinalis)
Buchu (Barosma betulina)
Chamomile (Anthemis nobilis)
Chaste Tree (Vitex agnus-castus)
Echinacea (Echinacea purpurea, Echinacea angustifolia, Echinacea pallida)
False Unicorn (Chamaelirium luteum)
Golden Seal (Hydrastis canadensis)
Kesom (Polygonum minus)
Lavender and Lavandin
Mimosa (Acacia dealbata)
Sandalwood (Santalum spicatum)
Skullcap (Scutellaria lateriflora)
Spearmint (Mentha spicata L.)
Umbelliferae (Apiaceae):
Parsley (Petroselinum crispum)
Fennel (Foeniculum vulgare)
Dillweed (Anethum graveolens)
Celery seed (Apium graveolens)
Valerian (Valeriana officinalis)

It is not intended to preclude the consideration of other crops in addition to those listed above. Key criteria that will be used in assessing any research proposal will be the market prospects for the product, the capacity for the proposed research to address major issues in the supply chain and the commitment of industry partners.

6 References

Chung, B. 1999, Natural Plant Extracts — Export Market Opportunities in the USA, http://www.rirdc.gov.au/rports/EI/00-51.pdf, Accessed 5 February 2000.

Colton, B. 1999, The Australian New Crops Newsletter, issue no. 11,
http://www.newcrops.uq.edu.au/newslett/ncn11184.htm, January, Accessed 15 Jan 2001.

De Silva, T and Atal, C.K., 1995, Report of the international expert con
sultation on Non-Wood Forest products, Ref.., appendix 4.2.1,
http://www.fao.org/docrep/v7540e/v7540e/shtm, Accessed 15 January, 2001.

Iqbal, M., 1995 International trade in non-wood forest products: An overview, http://www.fao.org/docrep/x5326e/x5326e/x5326eoj.htm#appendix%20i, Accessed 12 February 2000.

Purbrick, P., 1998, Medicinal Herbs,
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Links

Essential oil	Common uses
Citrus	Industrial solvents, fragrance for cleaning products, flavouring
Spearmint	Toothpaste, mouthwash, confectionery flavouring
Peppermint	Toothpaste, mouthwash, chewing gum, food flavouring, cosmetics, tobacco flavouring
Lavender/lavandin	Fragrances, toiletries
Eucalyptus	Cough/cold remedies, solvents, cleaning agents, flavouring
Tea tree	Toiletries, insect repellents, germicides, cosmetics
Boronia	Food flavouring, fragrance
Blackcurrant bud	Food and beverage flavouring

Rural Industries Research & Development Corporation

Rural Industries
Research & Development Corporation