This section contains:


Essential Oils

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Products: Bergamot, Eucalyptus, other citrus, Geranium, Jasmine, Lavender/lavandin, Lemon, Lime, Orange, other mints, Peppermint, Vetiver, other essential oils, Terpenic byproducts, Resinoids

Synopsis – Australian Industry

Australia is both an importer and exporter of essential oils.  In this article, information is provided on the most important essential oils in terms of value in Australia: boronia, eucalyptus, lavender, peppermint, sandalwood and tea tree oils.


Year

Gross value of Prod’n
$ ‘000

Exports 
$ ‘000

Imports
$ ‘000

Estimated number of growers

2006-2007

25,400

25,374

2,866

 

 

Background

There are many different essential oils that are used in a range of ways, including in perfumes, cosmetics, therapeutic goods and insecticides.

World trade in essential oils, terpenic byproducts and resinoids was worth an average US$1.8 billion a year in the three years to 2005, of which Australia supplied only US$17 million.  (Terpenes are the volatile organic compounds that are extracted from essential oils and generally are associated with the characteristic fragrances of those oils.)  In value terms, terpenic byproducts and orange, lemon and peppermint oils are the most traded worldwide.

Boronia

Boronia oil is a highly fragrant oil produced from the flowers of a perennial shrub endemic to Australia (usually Boronia megastigma Nees).  The shrubs flower in spring.  The oil is extracted using a solvent process and is further refined into either a waxy solid (a ‘concrete’) or a liquid (an ‘absolute’).   Boronia oil is used in perfumery and as food flavouring.

Traditionally, boronia oil has been produced from flowers picked in the wild but most boronia oil is now produced from plantations based on the use of selected clones and mechanical harvesting.  The commercial life of a planting is around 15 years.  The plantations are located mainly in the north and on the east coast of Tasmania (with some production also on Bruny Island).  In recent years, wild picking of boronia in Western Australia has been almost eliminated because of the possibility of disease being spread by pickers.

There are currently 12 separate plantations in Tasmania and one in Western Australia at an early stage of establishment.  The total commercial plantings are believed to be around 45 hectares.  The yield with a mature plantation is around two tonnes a hectare but the industry in Tasmania is going through a replanting phase that involves lower yields in the first four or five years.  Australian production of boronia flowers in 2006-07 is estimated to be 44 tonnes with a gross value of $488,000.  This is around half the normal level of production prior to the recent replantings.

All but a small part of Australian production of boronia concrete or absolute is exported, mainly to Europe and the United States. The industry in Tasmania has been smoothing exports in recent years through releases from its stockholdings.

Over the medium term, the area planted to boronia is expected to remain stable in Australia at around 44 hectares. However, production will increase as the recent replantings mature to reach maximum yields.  By 2011-12, production of boronia flowers is expected to be around 90 tonnes a year, producing around 200 kilograms of absolute.

Eucalyptus

Eucalyptus oil is extracted by steam distillation from the leaves of a number of types of eucalypt trees including blue mallee gums (Eucalyptus polybractea), narrow leafed peppermint gum (Eucalyptus radiata var. Australiana), and Tasmanian blue gum (Eucalyptus globulus).  In recent decades countries such as Spain, Portugal, India and China, have taken over a eucalyptus oil market that once only Australia supplied.  China is now the world's largest eucalyptus oil producer, accounting for around half of world output.  Most of these countries are using the Tasmanian blue gum as the source of their oil.

The main uses of eucalyptus oil are as a medicine, usually to be externally applied or inhaled.  For example, it may be used to treat muscle soreness, arthritis and coughs and cold.  It is also used in confectionary, as a disinfectant or fragrance, and in industrial processes, particularly as a solvent. 

World consumption of crude eucalyptus oil is estimated to be about 3000 tonnes a year, with an ex distillery value of around US$15 million.  Australian eucalyptus oil production is currently around 125 tonnes a year, considerably less than the 1,000 tonnes a year that was produced in the 1940s.

Two companies dominate the Australian eucalyptus oil market.  The main areas harvested in Australia are around Bendigo in Victoria, and West Wyalong in New South Wales.  The harvesting process is a mechanical one in which each tree is cut off at the ground, then mulched.  The trees regenerate from the stump and can be harvested every two years when they are 1–2 metres in height.  Much of the harvest in Victoria is from public land, where a royalty is paid to the Victorian government for harvesting rights. There are seven producing holding licenses for around 12 000 hectares in central Victoria but only around 800 hectares is harvested every year. 

In a program initiated by a state government department with the aid of federal government funds, large numbers of oil-producing eucalypts (mainly blue mallee) have been planted in Western Australia.  The broad aim of this program is to address environmental degradation issues, particularly salinity and greenhouse gases, through profitable growing of mallee trees.  Apart from eucalyptus oil, the intended outputs from the trees are activated carbon, charcoal and fuel for electricity generation.  The program target is plantings of 500 million mallee trees by 2025. Potential annual output from these plantings would be 35 000 tonnes of eucalyptus oil, 140 000 tonnes of activated carbon, and 75 megawatts of electricity.  An integrated processing plant commenced production in June 2006.

The major export markets for Australian eucalyptus oil are the United States (27 per cent of the total volume of Australian eucalyptus oil exports in the three years to 2006-07), Thailand (18 per cent), New Zealand (10 per cent) and Hong Kong (6 per cent).

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Lavender

Lavender oil is an essential oil used mainly in the fragrance, perfume and aromatherapy industries. It is derived from plants of the genus Lavandula by steam distillation of the flowers.  There are several types of lavender oil.  The mostly highly priced product comes from Lavandula angustifolia.  There is also lavandin, the essential oil of the hybrid lavender plant Lavandula hybrida which has a much higher oil yield than true lavender but is generally considered to be of inferior quality because of a distinct camphor scent.  Lavender is also used as fresh or dried flowers.

In Australia, the industry consists of around 250 growers.  Some operations are quite large but the majority are very small, part time operations.  Australia's largest grower is in northern Tasmania producing around 5 tonnes a hectare a year of lavender flowers from 40 hectares of plantings.

The annual Australian production of lavender oil in 2001-02 is estimated at 1.7 tonnes, 1.2 tonnes of which was produced in Tasmania.  Despite severe drought, Australian production of lavender oil in 2006-07 was an estimated 1.3 tonnes and there was probably another 1.2 tonnes produced of lavandin oil.  There was also estimated dried flower production (bunches and stripped flowers) of 4.5 tonnes.

The estimated gross value of Australian lavender production in 2006-07 was $566 000.  The industry is oriented toward the domestic market.  There were Australian lavender and lavandin oil exports of 11.7 tonnes in 2006-07, but these would appear to be largely re-exports of imported product.  At the same time, there were lavender and lavandin oil imports of 47.5 tonnes worth $1.4 million.

In 2005, 2173 tonnes of lavender and lavandin oil were traded worldwide at a total value of $US48 million.  The largest exporter is France with a share in the total value of world trade in the three years to 2005 of 64 per cent, with the other main exporters being the United States, Bulgaria and Spain.  The main importers are the United States, the United Kingdom, Switzerland and Germany.

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Peppermint

Peppermint oil is extracted from the leaves of the perennial plant Piperita mentha.  It is mainly used as a flavouring, particularly in confectionary and toothpaste, but also in cosmetics and for medicinal purposes.
In Australia, peppermint is a perennial crop that is planted in autumn, has its major growth flush in spring and is harvested in late summer after it has dried off.  Australia’s peppermint industry was originally established in Tasmania and is now also located in the north east of Victoria. There were 9 growers in Victoria in 1996-97 with total plantings of 127 hectares, falling to 2 growers but with 398 hectares of plantings in 2000-01. Both Victorian growers ceased peppermint production in 2002, but Victorian plantings commenced again in 2004. There are around 10 growers of peppermint in Tasmania with annual harvestings of around 90 hectares producing 6–7 tonnes.

Australian exports of peppermint oil exceeded 25 tonnes in the early 1990s but had fallen to very low levels by 2003-04 before recovering to 16 tonnes in 2006-07. The main markets for Australian peppermint oil are Indonesia (41 per cent of total Australian exports in the three years to 2006-07), Malaysia (13 per cent), Singapore (9 per cent), Thailand (7 per cent), Republic of Korea (7 per cent).

The United States accounts for more than half of world trade in peppermint oil, with India and Thailand the other major exporters.  World import prices for peppermint oil have been fairly constant at around US$23 a kilogram in constant (2008) dollars over the last five years.

Tea Tree Oil

Tea tree oil is extracted from the leaves of the Australian tea tree (Melaleuca alternifolia) by steam distillation.  Reflecting its antifungal, anti-inflammatory and antibiotic qualities, the oil is used in a range of cosmetics, pharmaceuticals, toiletries, household products and industrial products (solvents and disinfectants).
The tea tree is native to northern coastal New South Wales and is also grown commercially in the Atherton Tablelands region of Queensland.  Many coastal regions of northern Australia are potential growing regions for this tree.  However, there is increasing competition from tea tree oil grown in Africa (mainly Zimbabwe) and Asia (mainly China).

In Australia in 2006, there were around 4500 hectares of cultivated tea trees, with approximately 100 growers.  Australian tea tree oil production grew strongly throughout the 1990s, peaking at 625 tonnes in 1999-2000, but then declined to around 300 tonnes in the early 2000s in response to low prices.  Production has recovered in more recent years but dipped again in 2006-07 to around 442 tonnes as two large plantations shifted out of tea tree oil production.

No specific data are available on Australian exports of tea tree oil but indications are provided by exports of the ‘Other essential oils’ category in ABS (2008b) for New South Wales and Queensland where most tea tree oil is produced.  In 2006-07, exports of this category for these states were 446 tonnes with a total value of nearly $10 million and an average export price of $22.63 a kilogram.
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Sandalwood

Sandalwood has been a valuable traded commodity for thousands of years.  Sandalwood oil is typically extracted from the heartwood or roots of sandalwood trees that are at least thirty to forty years old. The oil is used in perfumes, cosmetics and therapeutic goods. The wood has a variety of uses including furniture, turned or carved woodworks, and incense and joss sticks.

There are various forms of sandalwood tree that produce sandalwood oil. The main form is Santalum album which is believed to have originated in Indonesia but is also grown in India (the main producer of sandalwood and exporter of sandalwood oil), China, East Timor and the Philippines.  The sandalwood tree is parasitic on other trees.  The species of sandalwood native to Australia is Santalum spicatum.  There is also an African tree (Osyris lanceolata), native to Tanzania, the wood and oil of which is often traded as sandalwood in world markets.

Australia appears to supply around half of world sandalwood exports, with Indonesia, East Timor and India as the other main exporters. The main importers of sandalwood are Chinese Taipei, China and India. The United States and France are the main importers of sandalwood oil. There is also demand from north Asia and the Middle East.

Sandalwood has been over exploited in India and Indonesia.  In India, the government has responded by limiting exports of sandalwood and sandalwood oil to an annual quota.  Growing demand and restrictions on supply have meant strong increases in sandalwood oil prices since 2000, as indicated by US import prices.
The estimated value of Australian exports of sandalwood products in 2006-07 was $12.2 million.  Around 60 per cent of Australian sandalwood exports go to Chinese Taipei.  Australia supplied 43 per cent of Chinese Taipei’s sandalwood imports with Tanzania and Indonesia supplying 20 per cent and 12 per cent, respectively.

Under the Sandalwood Act 1929 in Western Australia, sandalwood is a resource managed on state government owned (Crown) land by a government agency, the Forest Products Commission of Western Australia.  Sandalwood is harvested both green and dead (including roots and bark).  A maximum sustainable harvest for green sandalwood is set each year; this has been 1500 tonnes a year since 2001-02.  Harvesters are contracted by the Commission and are required to plant sandalwood seeds whenever they remove a sandalwood tree.

Links

Links  – Essential oils

    • International Federation of Essential Oils and Aroma Trades (IFEAT) (www.ifeat.org), information on the world essential oils industry, particularly through the proceedings of the annual IFEAT conference.
    • RIRDC Publication No 08/053 ‘Essential Oils and Plant Extracts 5-year R&D Plan for 2008–2013’ (https://rirdc.infoservices.com.au/downloads/08-053.pdf), profiles Australia’s essential oils industry.
    • The ‘Essential oils’ section in RIRDC’s The New Crop Industries Handbook, pp. 105–64 (https://rirdc.infoservices.com.au/items/04-125) Includes sections on boronia, chamomile, eucalyptus, fennel, lavender, mint, parsley, sandalwood and tea tree oils.