Executive Summary

This document summarizes a study on the essential oils industry in Luzon, Philippines. The study analyzed primary data from farmers and processors, as well as secondary data. It focused on the domestic supply and demand of essential oils, and the capacity of small-scale producers to meet local needs. The study found that production of lemongrass and citronella oils is limited, leading to import dependence. It identified problems like high local prices, quality issues, and lack of market studies. The document recommends increasing production, prioritizing R&D, improving quality standards, and promoting essential oils.

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Executive Summary

Uploaded by

Joseph Hernandez-Ramirez Bañados-Alinsod

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EXECUTIVE SUMMARY

The main objective of the study was to analyze the essential oils industry in Luzon. In achieving
this objective, the study used primary data gathered from the farmer-producers, processors and
users of essential oils conducted by the Philippine Council for Industry and Energy Research and
Development researchers in 2002. Also, most of the analyses were based on secondary data.
The study focused its major analysis on the capability of the small-scale essential oils producers
and processors to provide the needs of the local industry. It also made focused on the top five
essential oils imports of the Philippines, the domestic supply, the demand in terms of export
performance, and the marketing system of the industry.
Majority of the essential oils producers in the country are located in region Isabela, Laguna and
Pampanga. Citronella accounts the highest land area planted at 118 hectares followed by ylang
ylang at 33.5 hectares; lemongrass is at 115 hectares and jasmine only had 3.5 hectares.
Results showed that the average quantity of extracted oil per batch per month for lemongrass is
20.80 liters while citronella is 24.38 liters.
The analyses points to the lack of the local producers and processors capacity to meet the
demand of the local users and manufacturer resulting to import dependence of heavy users of
essential oils.
The Philippine importation of essential oils, in terms of gross weight, is decreasing from 20012003; however, the dollar value of imports is steadily increasing. Lemon oil accounts the highest
import followed by orange oil, peppermint oil, spearmint oil and oil of eucalyptus. These oils are
used in the manufacture of medicine, personal care products and food flavourings. The United
Kingdom, including Northern Ireland, is the highest exported of different kinds of essential oils.
The exports of the country are mainly re-exports with lemon oil topping the list from 1999-2003.
Exports of the country decreased from 1999-2002, yet, it continues to ascend in 2003. The
United States ranked the number one importer of local essential oils followed by Indonesia,
China, Singapore and Japan.
The identified major problems of the industry were: local productions are limited to very small
operations, local oils are sold at much higher price compared to imports, poor quality control,
low yield of essential oils, difficulty in penetrating markets, high cost of importation due to weak
currency, inconsistent supply, insufficient market studies, and lack of effective media campaign
on the essential oils production and utilization.
The study recommends an efficient and regular monitoring of production and processing
operations, prioritization and appropriation on research and development for essential oils,
tapping the local market, venturing on value added products, feasibility studies on production
and processing, improvement of quality standards and promotion of essential oils through
publications.