Developing essential oils in Malaysia

Developing Essential Oils in Developing Essential Oils in Malaysia as a Global Malaysia as a Global

IndustryIndustry

Mohamed Murray HunterSchool of Bioprocess Engineering

Northern Malaysian University College of Engineering

Introduction

Essential oil industry

almost non-existent in Malaysia – WHY?

Industry unknown

Crops Unknown

Economics Unknown

Benchmarking

Essential Oil

A volatile oil obtained from a

wide variety of plant, scrub,

and tree species and from

various parts of the plant

anatomy, such as the roots,

rhizomes, wood bark, leaves,

stems, fruit, flowers and seeds.

Usually extracted by hydro or

steam distillation, expression

or effleurage - Hunter 1996

H&R Guide to Fragrance Ingredients


Other Aromatic Compounds

Concretes & Absolutes

Balsams & Resins

Extracts & Tinctures





Potential Models of Essential Oil Production

• Co-operative or Contract growing (community organisation)

• Small Scale Plantation (boutique/niche/agro tourism /vertical integration – manufacture consumer products)

• Large Scale Plantation (competitive cost advantage required to enter market)

• Production of Essential Oil as a Bi-product (focus on other industry, timber, etc)

Opportunities

Ranking Criteria 1. Potential Returns 2. Production Costs 3. Capital Investment 4. Crop Suitability 5. Risk 6. Time Frame of Opportunity 7. Level of Difficulty to enter Market 8. Personal Bias

What Not to Consider• Lemongrass Cost of production, small market

• Citronella Cost of Production, Elasticity of supply

• Patchouli Establishment costs, elasticity of supply

• Rose Oil Labour intensive, requires great organisation, cost of production

• Jasmine Cost of production, high investment, requires great organisation, labour intensive

10. Geranium (pelargonium species)

Potential High Value Boutique Crop

Good for Hilly Terrain

9.Lengkuas (Alpinia galanga)

UV Properties

Flavour Ingredient

Easy to cultivate

Niche Oil –specialised market

8.Melaleuca bracteata

Source of Aromatic Ethers that can Assist in Relieving Plant Stress

Cultivates Well in Malaysia

Rapidly Growing Market

7. Artemisia annuaA source of artemisinin for treatment of malaria

World Shortage

Straight forward cultivation

6. Pyrethrum (Chrysanthemum cinerariifolium)

Not Strictly Essential Oil

Solvent Extraction

Rapidly Growing Market for Pyrethrum as Organic Pesticide

Excellent Crop for Highlands – Pahang, Terengganu,Kelantan, Sarawak, Sabah

5. Backhousia citriodora (Lemon Myrtle)

High Investment to Expand Industry in Australia

Strong Demand as an Ingredient for tea

Good Crop to Grow in Most Parts of Malaysia

4. Persicaria odoratum (Kesum)New Material

Good Highland Crop

Small Scale High Value

Pests Easily Controlled

Doesn’t need Registration as an Aromatic Chemical

3. Eucalyptus citriodoraGood Northern Crop

Easy to Cultivate

Oil is a bi-product

Excellent & High Valued Hard Wood

One year for oil

10 years for timber

2.Cajuput (Gelam) Melaleuca cajuputi

Local Tree

Number potential Markets

Can Basically Set Price

Easy to Cultivate

1. Tea Tree (Melaleuca alternifolia)

No Stable Production

Forecast Shortage

Potential Downstream

Suitable All Areas

Few Pest & Disease Issues

Small or Large Scale Production

Established Market

Product and Market Price of Tea Tree Oil 1982-2005

0

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60019

82

1984

1986

1988

1990

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1998

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2002

2004

Year

To

nn

es

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Price (AUD)

Just Out of Top 10

• Pandan Absolute (Pandanus odorus)

• Tobacco Leaf Absolute (Various sps. Nicotiana)

• Agarwood (Aquilaria sps.)

• Star Anise Oil (Illicium verum)

What Do We Do Next?

Natural Product Development Process (Aromatic)

Biological Screening

Screening For Development Potential

Regulatory Screening

Market Development Environmental

Analysis

Evaluation of Capabilites

Market Analysis

Technical Development

Commercialis -ation Strategies

Development Process

Screening Process

Opportunities & Threats

Theoretical & Biological Screening

REACH, BPD, SCP, GRAS, etc

Finance, Knowledge, Land Tenure, etc

Project Development in the Field

Market, Customers, Options

Screening Process

Biological Screening

• Bio-prospecting• Literature Review• Consider Reintroduction of a Crop• Consider Introduction of New Crop

Identify Chemical Constituents of Essential Oil

Screening For Development Potential

• Match Chemical Constituents of Essential Oil to Possible Market Uses

• Evaluate Application Potential of Essential Oil

• Evaluate Yields, Cost of production

• Evaluate Time and Cost of Development

• Value Determination (Use Criteria)

Screening

• Require Knowledge of Essential Oil Applications

• Require knowledge of International Market

• Require Knowledge of International Regulations

• Need to Collaborate with Industry Parties

Screening Protocols

• Anti inflammatory

• Anti microbial

• Skin whitening

• UV absorbing

• Anti age actives

• Flavour & fragrance application

• Aromatherapy

Regulatory Screening

• United States

- GRAS (Genarally Regarded as Safe)

• RIFM – Collections of Monographs

• Food and Drug Administration

• Europe – REACH, BPD, SCP

Development Process

Environment Analysis

Opportunities & Threats

Evaluation of Resources & Capabilities

• Resources - Funding - Time - Facilities & Infrastructure - Equipment - Literature• Capabilities - Available Skills (Research Team) - Experience

Market Analysis

• Knowledge of Industry

• Knowledge of Potential Applications

• Knowledge of Customers

• Understanding of Derived Demand

• Understanding of Trends

• Understanding of Other Developments & Improving Technology and Knowledge

Essential Oil Technical Development

• Project Preparation and Early Work

- Stakeholders

- Team

- Objectives

- Funding

- Plan


• Land Selection

- Suitable (Soil, Rainfall, drainage, access)

- Climate

- Location

- Tenure

- Future Expansion


• Development of Propagation Material

- Easy to Domesticate?

- Seed Collection (genetic variance)

- Other Propagation Methods


Planting

Harvesting Techniques

Extraction

Techniques


Are Developed Techniques able to Create a

Viable and Economic Industry?

Marketing Strategies

• Develop in Conjunction with International Company

- They will have their own strategy

• Raw Material

• Finished Product

• Local Market

• International Market

Conclusion

• Multi-disciplinary Approach• Market Orientation• Focus on Research Objectives• Economic Basis• Focus on Regulatory Issues• Passion for the Business• Strategise your business (production/market)

where you want to be?, what is the way you will approach the business?

• Look for spin-offs (i.e., mulch, dried leaves, etc)

Thank You

Education

Developing essential oils in Malaysia