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AFRICABIZ VOL 1 - ISSUE: 47
MARCH 15 - APRIL 14, 2003
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Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

If you are a regular and faithful reader, welcome back
.

With this delivery starts a new series of business opportunities related to Flowers And Fragrance Plants' agribusiness. The main products extracted from these plants and flowers are called Essential Oils. The establishment of Essential Oils industry is a sure gateway to pharmaceuticals industry for any African country; in perfect line with supplements and nutriceucals industry previously introduced to you. You may scroll down now to the Business Opportunities section for more.

- IS IT THE END OF THE NIGHTMARE IN IVORY COAST?

After nearly six months of a stupid civil war, Ivory Coast's political leaders agreed on the setup of a Reconcilement government. On March 7, 2003, at Accra, Ghana, they signed an addendum to the Marcoussis Agreement - The Accra Agreement. And on March 10, 2003, the designated Prime Minister, under Marcoussis Agreement, Mr. Seydou Diarra, took office from Mr. Affi N'Guessan, the acting Prime Minister of Gbagbo's previous government.

The new Reconcilement government held its first meeting on March 13, 2003 at Yamoussoukro, the Administrative capital city. Half of the ministries - from MPCI and RDR - did not attend. Some of their designated ministries being contested by Gbagbo in contradiction to a provision of the Marcoussis Agreement. That showdown may jeopardize the new cabinet, as MPCI made it clear that it will not back down.

Anyway the Reconcilement government, which comprises antagonistic forces of former rebels and Ouattara's RDR on one side; and Gbagbo's FPI, Bedie's PDCI-RDA and five other political parties on the other side, will have to work to reestablish a) The unity of the nation; b) The confidence between Northerners and Southerners; c) And restore the disrupted economy as established for in the program set forth by the Marcoussis Agreement.

It will not be an easy task. Indeed, six months of civil war deeply changed the political stage of Ivory Coast. New young political leaders have emerged, who are more uncompromising in comparison to the old guard of politicians. And the economy is devastated. For sure the Reconcilement government will ride bumpy political road for two and a half year till the next presidential ballot scheduled for October 2005.

We are certainly going to witness frequent and harsh political convulsions. The Identification process and procedure [Who is Ivorian and who is not Ivorian?], security matters and the listing of the constituency for the presidential ballot will create tensions amongst the Reconcilement government's members and their respective political parties.

Let's hope that these inevitable political fights will not degenerate into another bloodshed.

Concerning the economy, the Reconcilement government has ahead an uphill task to turn it around.

Indeed, hundred of small scale businesses, in services, manufacturing and agriculture - patiently set up over three decades - are now either severely disrupted or simply bankrupted. Sugar cane and cotton agribusiness, located in the Northern part of the country, suffered production dislocation and export disturbances. Cocoa and coffee agribusiness are also in big trouble. The quality of cocoa beans, for instance, dropped, from international standard and producers are selling year 2003's harvest to purchasers from
Guinea, Mali and Burkina bypassing the local market. Thousand of workers and employees are out of job. The transportation business, by road or railways, between the North and the South, is severely disrupted and damaged. Etc.

In brief, within a short time period of 6 months of civil war, the damage to the economy is immense and Ivory Coast shall experience negative economic growth rate for at least two to three years running. Conservative forecast for Year 2003 is -3,5%. Down from -2.5% in 2002.
Performance hardly enough of triggering the development of a sustainable economy capable of alleviating poverty as here extensively exposed.

Furthermore, neighboring landlocked countries, Mali and Burkina Faso have been obliged to hastily reroute their imports and exports activities. Decision makers of said countries will certainly not totally reverse to the former route to the port of Abidjan, Ivory Coast. And therefore Abidjan's harbor, the first in the Region in haulage and containers dispatching activities for two decades running, will have to face an increasing harsh competition from Dakar/ Senegal, Tema/ Ghana, Cotonou/ Benin and Lome/ Togo and even so far as Douala/ Cameroon.

- GOOD STRATEGIC DECISIONS AND ORGANIZATION, PLANNING, HARD WORK AND EFFICIENT MANAGEMENT ARE KEYS TO ECONOMIC SUCCESS

The 31st edition of the America Cup had been brilliantly won by Team Alinghi / Le Defi Suisse originating from a landlocked country, Switzerland. The Defi Suisse won against seasoned sailing teams from the United States of America, Australia, Italy, France, New Zealand. Etc. Good strategic decisions making, impeccable crew staffing, and efficient race planning put Alinghi team in the winning seat. African countries could learn a lot from that success in their fight for economic development. Click here for more;

- Contributor's Guidelines are here for review. Your contribution on "How African countries / entrepreneurs could bridge the developing gap" is welcome.

Many thanks for dropping by and see you here on April 15, 2003


Dr. B.M. Quenum

Editor of AFRICABIZ
Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


- Several business opportunities with high profit making potential, which are economic catalysts and components to the Strategy for African Countries - here available, have been introduced to you. They are listed in following table.

a- SHEA BUTTER (Issues 5, 6, 7, 11, 12, 13)
b- BLUE GOLD (Issues 14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (Issues 20, 21, 22 and here)
d- KENAF (Issues 23, 24)
e- VEGETABLE OIL (Issues 25, 26, 27 and 28)
f- CEREALS (Issues 30, 31, 32, 33)
g- FRUITS (34, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 46)

- TROPICAL FLOWERS AND FRAGRANCE PLANTS AGRIBUSINESS AS INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY: PART - I - INTRODUCTION TO THE ESSENTIAL OILS' INDUSTRY AND TRADE

Essential oils are odorous products obtained from natural raw materials such as leaves, fruits, roots and wood of many seasonal or perennial plants. They are generally of complex composition and contain alcohol, aldehydes, ketones, phenols, esters, ethers, and turpenes in varying proportions. An estimated 3,000 essential oils are known of which approximately 300 are of commercial importance. The majority of them are obtained from agricultural plants, but some 28 essential oils are collected in commercial quantities from wild sources Below is a short list of essential oils and the plants they originated from; together with the main producing countries (Adapted from this link).

List of Some Wild Or Cultivated Plants Suitable For The Production Of Essential Oils

Products

Botanical source

Main origin

Amyris

Amyris balsamifera

Haiti

Anise/star anise

Pimpinella anisum

Spain, Soviet Union, Poland

Anise, star

Anisum verum

China, Vietnam

Bay/laurel leaf

Pimenta racemosa/Laurus nobilis

Dominica, Turkey, Italy, Cote d'Ivoire

Cabreuva

Myrocarpus frondosus

Brazil

Caraway seed

Carum carvi

Many Asian, Western Europe and North African Countries, USA

Cedarwood

Cedrus spp./Juniperus spp.

India, Sri Lanka, Guatemala, USA, China, Kenya

Cinnamon/Cassia

Cinnamomum verum/C. cassia

Sri Lanka (Cinnamon), China (Cassia)

Citronella / Sweet Calamus

Cymbopogon spp.

Indonesia, China, Sri Lanka, India, USA, Taiwan, Guatemala, Malawi

Davana

Artemisia spp.

India, Pakistan

Eucalyptus

Eucalyptus globulus

China, USA, Portugal, Spain, South Africa, Brazil, Australia, Malawi

GeraniumPelargonium graveolensMorocco, Algeria, Egypt, Reunion, China, Kenya, Tanzania, East European Countries, Russia

Lavender

Lavendula spp.

France, Italy, Spain, Hungary.

Lemon grass

Cymbopogon citratus

India, Guatemala, China

Litsea

Litsea cubeba

China

Muhuhu

Brachyleana hutchinsii

Tanzania

Nutmeg/mace

Myristica fragrans

Indonesia, Grenada, Sri Lanka

Palmarosa

Cymbopogon martini

India

Patchouli

Pogostemon cablin

Indonesia, China

Pimento (Allspice)

Pimenta dioica

Jamaica, USA

Rosewood

Aniba rosaeodora

Brazil, Peru

Sandalwood

Santalum album

India, Indonesia

Sassafras

Ocotea pretiosa

Brazil

Tagetes

Tagetes glandulifera

East and Southern Africa

Thyme

Thymus vulgaris

Spain

Vetiver

Vetiveria zizanioides

Haiti, Indonesia, China, Reunion

Ylang-ylang

Cananga odorata

Comoros, Madagascar, Indonesia

- Flowers and fragrance plants' industry is a sector with tremendous opportunities for African countries to have a share of the big pie of the international trade of essential oils. The reforestation policy - necessary in some if not all of African countries to control recurrent drought - should be undertaken by planting trees species, which could be used as raw material for the production of aromatic oils. The most promising speculations are essential oils from : Geranium, Citronella, Lemon grass or Sweet calamus, Eucalyptus.

- THE INTERNATIONAL MARKET

Little information is available for free on the size of the market for essential oils and plant extracts. The most detailed statistics are provided by the US Department of Commerce's Census Bureau. Other free sources such as the European Union' statistics are global and do not list the several categories of essentials oils exported or imported by European Union's countries members states. [Click here if you are prepared to shed US$ 1,360 to get a full printed report on The West European Market For Essential Oils - For Digital Deliveries In Adobe PDF For Several Regional Markets Click here]

Table 1 below gives an idea of the level of transactions worldwide in the markets for essential oils. It shows an average increase per year (between 1986-1998) of +10.9 for Exports and 10.7 for Imports.

TABLE 1 - World Trade In Essential Oils, Perfumes And Flavors - US$ million
 19861990199419982002 Est. 1986-98 Average % pa
Exports2 1494 1225 0517 4358 254+10.9
Imports2 0084 2066 8114 8025 316+10.7
Source: United Nations International Trade Yearbook 1999 and 2002

World total production of essential oils is estimated at about 100,000 to 110,000 metric tons. [Source]. 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 year 1998 the EU accounted for 52 per cent of the value of world exports, and the US for 13 per cent (UN's Yearbook1999). 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's Yearbook 1999). Other big consumers are Japan, East European countries and China. For more Click here for Adobe PDF digital deliveries on several regional markets.

In Table 2 below are reported the import value in US $ of essentials oils by the United States of America.


TABLE 2 - Imports of Essential Oils by USA - US$ x 1000
Imports1997199819992000200120012002%CHNG
World Total 359,526 369,853 338,807 334,497 329,898 329,898 363,134 10.07
Africa Total 2,919 1,912 2,577 3,622 8,342 8,342 6,268 -24.86

Data Source: Department of Commerce, US Census Bureau, Foreign Trade Statistics

The categories of essential oils imported from Africa by USA are reported in Table 3 below. One can see that Eucalyptus, Geranium, Citronella and Lemon Grass essential oils, which are the most used essential oils in quantities - are not explicitly mentioned. Are they included in the category labeled Other Commodities? We can not tell as we do not have access to more detailed statistics.

TABLE 3 - US's Essential Oils Imports From Africa x 1000 US$
Imports19981999200020012002
Lemon Oil3174651,0692,4752,238
Ess Oil x Citrus 5666621,0562,4481,741
Grapefruit Oil 1304144051,6341,146
Orange Oil 02950109495
Paprika Olesreen 6101165840210
Citrus, Nes Oil 1692027181142
Clove Oil 399277179242136
Alc Mix<20%<50%4202194
Ess Oil Temp Nes010271539
Other Commodities32141360147828
TOTAL1,9122,5773,6228,3426,268

Data Source: Department of Commerce, US Census Bureau, Foreign Trade Statistics

- THE INTERNATIONAL TRADE OF THE FOUR MOST USED ESSENTIAL OILS (For more accurate and current international selling prices of the categories below briefly outlined, you may need to purchase Adobe PDF digital deliveries available here)

1 - Geranium

Picture courtesy of FreeFoto.com- Geranium essential oil is one of the most marketed and its components, citronellol and geraniol, are used for the synthesis and manufacturing of a great number of high grade and superior quality perfumes. Taking into account all brands and origins, the world production of geranium essential oil total up to around 400 metric tons per year with a monetary value in the range of 20 - 30 millions US dollars. Réunion - an island in the Indian Ocean; French territory - produces the best quality geranium essential oil in the world. Its production level is around 50 - 60 metric tons per year. Second in quality are the North African countries productions; Morocco and Algeria together account for 10 to 20 tons; Egypt for around 70 tons. China provides for 100 - 150 tons yearly of a less good quality geranium essential oil comparatively to the other origins above mentioned. Kenya and Tanzania were exporters some time ago; they are no longer on the market.

The geranium essential oil produced by the East European countries - Russia included - is totally used for their internal consumption.

The largest importers are the USA (around 65 metric tons per year); France (95 tons); United Kingdom (20 tons); West Germany (15 tons); Japan (20 tons). East European countries barter also great quantities. Réunion's superior quality geranium essential oil is sold around 90 US dollar per kilo; Egyptian origin one 65 US dollar per kilo; Chinese brand 50 - 55 US dollar per kilo. Prices fluctuate according to China's production level and sales on the international market.

The decline of production in La Réunion and Egypt combined with the increasing level of the Chinese internal consumption make it possible for a newcomer to enter the international market of geranium essential oil.

2 - Eucalyptus


Eucalyptus Globulus Plant- Only few of the 400 species of eucalyptus are used to produce eucalyptus essential oil. Among those are Eucalyptus Globulus, E. Smithii and E. Australiana which are used in the pharmaceutical industry. Eucalyptus Citriodora is used in the fragrance industry as the main source for citronellal. The total world production of all those categories is around 2,000 metric tons per year; but E. Citriodora accounts for less than 200 tons. Portugal and Spain are the largest producers (400 and 200 tons respectively); Brazil, Australia and South Africa are also large producers. DRC used to be on the market. France is the leading importing country (approximately 600 metric tons per year); followed by the USA (around 300 tons); West Germany (230 tons) and the United Kingdom (150 tons).

The utilization of eucalyptus essential oil by the pharmaceutical industry had increased steadily over the years, particularly for its constituent cineol. The Citriodora has not followed the same trend; but with the new tendency to use natural products instead of chemically synthesized ones, the demand for E. Citriodora shall increase to produce citronellal. Selling prices of eucalyptus essential oils increased slowly from US dollar 6 per kilo in 1980 to 8 by 1989; and as the production cost is rising in Spain, Portugal and Australia, the prospects for new suppliers are good, particularly if Cinnamomum Camphora is accepted as a source of cineol for medicinal uses.

3 - Citronella

Two kinds of citronella essential oils dominate the world market : the Cympobogon Nardus from Sri LankaCitronella plant and the Cympobogon Winteranus from Java. The former is produced exclusively in Sri Lanka. Both are profusely used in the fragrance's industry, particularly for the manufacturing of soaps, detergents and household and cleaning products. Two constituents of citronella essential oils : the Citronellal and the Geraniol are also very used in the fragrance industry. Indonesia is the leading producer and main exporters of citronella essential oil. But its exportations which reached the peak in 1986 (850 tons) is declining as home consumption increased. China exports quite the same quantity as Indonesia. Guatemala is on the market for 200 tons /year. Brazil and India are also important producers; but mainly only for their home consumption.

The main importers are Japan (around 180 tons /year); USA (150 tons); France (140 tons); The Netherlands (140 tons); United Kingdom and West Germany (100 tons each). Selling prices during the beginning of the 80's were around 6 to 8 US dollars per kilo and hit 10 US dollars in 1987-88; but the competition of synthesized citronella oil will has a moderation impact on the price evolution.

4 - Lemon grass


Lemon Grass Plant- Two specimens of lemon grass essential oils dominate the market : the one produced from the Cympobogon Flexnosus, a lemon grass originated from Eastern India, and the other produced from the Cympobogon Citratus (Western India); but the commercial distinction between the two kinds of lemon grass essential oil is quickly fading. The lemon grass essential oils are directly used in a wide range of low grade, inferior quality perfume and household products; they are also the main source for citral which is one of the raw materials used to produce ionones and vitamins A and E.

The lemon grass essential oils dominated the essential oils market over twenty years but suffered from the harsh competition of synthesized essential oils and the Chinese essential oil made from Litsea Cubeba (another raw material for citral).

There have been a constant commercial disputes over lemon grass essential oil because of the uncertainty created on the market by India which uses a great portion of its production (750 tons /year) for its home consumption and exports the remaining to former USSR under barter agreement. Nowadays, the Republic of Guatemala is the leading exporter (250 tons). China is on the market for 80 to 100 tons per year. USA and former USSR import each around 70 tons per year; the United Kingdom 65 tons; France and Japan 35 tons each; and West Germany around 20 tons.

Selling prices fluctuate according to the quantity of lemon grass essential oils put on the international market by India. India's brands are sold around US dollars 17 per kilo against 9 per kilo for Guatemala's brand.

Based on above briefs on the amount of hard currency generated by the international trade of essential oils, one can have an idea about what African countries could gain from entering the market. They can undertake needed reforestation of their national territories by planting trees that are suitable to the production of essential oils and therefore kill two birds with one stone.

The production of essential oils will provide to any African country, which takes the necessary economic and financial measures to entering the market, first, local finished products / raw materials for the establishment of national pharmaceuticals and perfumes industries; and second, increase its reserve of foreign currency.


The production of essentials oils is also a complement to the former delivery dedicated to nutriments and supplements pharmaceutical ventures here described as essential oils from Lemon grass provide the basic raw material (citral) for the production of Vitamins A and E.

DATA ON REGIONAL MARKETS OF ESSENTIAL OILS IN ADOBE PDF
1- Essential Oils Market In Africa
2- Essential Oils Market In Latin America
3- World Market Forecast
For Imported Essential Oils, Perfumes And Flavor Materials
4- World Market Forecast
For Imported Essential Oils, Concretes, Absolutes And Resinoïdes
5- Essential Oils Market In The Middle East
6- Essential Oils Market In Oceana
7- Essential Oils Market
In Northern America & Caribbean
8- Essential Oils Market In Europe
9- Essential Oils Market In Asia

Adobe Acrobat Reader is available here

In Issue 48, the chemical properties and usages of essential oils will be addressed; prior to the methods of preparation (49) and the exposition of a small scale production facility 50 and a medium/ large scale operation (51).

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