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R&D Plan for Essential Oils & Plant Extracts 2002 - 2006
R&D Plan for
Essential Oils & Plant
Extracts2002 - 2006
Rural Industries Research & Development Corporation
PO Box 4776KINGSTON ACT 2600
Level 1, AMA House42 Macquarie Street
BARTON ACT 2600
Phone: 02 6272 4819
Fax: 02 6272 5877
Email: [email protected]
Web: www.rirdc.gov.au
R&D Plan for
Essential Oils & Plant
Extracts2002 - 2006
Rural Industries Research & Development Corporation
PO Box 4776KINGSTON ACT 2600
Level 1, AMA House42 Macquarie Street
BARTON ACT 2600
Phone: 02 6272 4819
Fax: 02 6272 5877
Email: [email protected]
Web: www.rirdc.gov.au
R&D Plan for
Essential Oils
and
Plant Extracts
2002-2006
© 2001 Rural Industries Research and Development Corporation.All rights reserved.
ISBN 0 642 58284 XISSN 1440-6845
R&D Plan for Essential Oils and Plant ExtractsPublication No. 01/062
This publication is copyright. However, RIRDC encourages wide dissemination of its research,providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction,contact the Publications Manager on phone 02 6272 3186.
RIRDC Contact DetailsRural Industries Research and Development CorporationLevel 1, AMA House42 Macquarie StreetBARTON ACT 2600PO Box 4776KINGSTON ACT 2604
Phone: 02 6272 4539Fax: 02 6272 5877Email: [email protected]: http://www.rirdc.gov.au
Published in July 2001Printed on environmentally friendly paper by Union Offset Printing
Contents
1 Purpose of the plan ............................................................................. 1Vision and Mission Statement......................................................................................... 1
2 Industry profile..................................................................................... 3Essential oils....................................................................................................................... 3The world market for essential oils ................................................................................ 4Essential oils industry in Australia.................................................................................. 4Plant extracts...................................................................................................................... 5Key drivers of world demand for essential oils and plant extracts ........................... 6Value chains ....................................................................................................................... 6Assessment of the potential for some Australian products ....................................... 7
3 Overview of the program .................................................................... 9Program funding areas ..................................................................................................... 9Profile of resources committed to the program......................................................... 10Program performance .................................................................................................... 10
4 Key issues for industry ..................................................................... 12SWOT analysis ................................................................................................................ 12
5 R&D program ..................................................................................... 15Summary of objectives ................................................................................................... 15
6 References ......................................................................................... 23
Charts3.1 Program funding by classification............................................................................. 103.2 Program funding by stage of development ............................................................. 11
Tables2.1 Common uses for selected essential oils.................................................................... 32.2 World trade in essential oils, perfumes and flavours ............................................... 42.3 Value of Australian trade in essential oils, fragrances and flavours....................... 4
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1 Purpose of the plan
THE PURPOSE OF THIS FIVE YEAR Plan is to provide clear signals toresearchers, industry and government about the rationale and direction of RIRDC’sEssential Oils and Plant Extracts Program over the next five years. Action under theprogram will depend on the annual funds allocated to it.
The plan establishes priority areas for R&D within the essential oils and plant extractsindustries, identifies strategies and targets to reach key objectives, and specifiesperformance indicators to ensure that the program is achieving its objectives. The planwas developed in cooperation with representatives of the industries and the researchcommunity.
Vision and Mission Statement
The Vision
An Australian essential oils and plant extracts industry that has established internationalleadership in production, value adding and marketing.
The Mission
To underpin industry development by:
improving understanding of markets to better focus research efforts and to fosterefficient industry development;
improving existing products and encouraging the development of new crops andproducts 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
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demonstrate the market opportunities for the product and the anticipated contributionthat the R&D will make to these opportunities. The overarching objectives of theprogram 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 ofquality.
These objectives remain relevant, but it is also important for research and developmentto underpin action to improve Australia’s presence in, and share of, world markets.
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2 Industry profile
ESSENTIAL OILS AND PLANT EXTRACTS are inputs to a range of productsincluding food flavours, pharmaceutical goods and industrial solvents. Australia’sdiverse climate and unique flora provide opportunities for new crop development andagricultural diversification. Increasing consumer interest, and a wide and growing rangeof applications in commercial industries has led to strong, albeit fluctuating, growth inworld demand for these commodities.
Essential oils
Essential oils are the volatile oils, odorous, which occur in certain plants or specifiedparts of plants, recovered by accepted procedures such that the nature and compositionof the product is, as nearly as practicable, unchanged by such procedures. Essential oilshave been extracted from over 3000 plants, of which 200 to 300 are commonly tradedon world markets (Iqbal 1995).
Essential oils are widely known for their scents and flavours, making food flavouringand fragrance industries among the biggest users. Common uses for selected essentialoils 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
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The world market for essential oilsLittle information is available on the size of the markets for essential oils and plantextracts which are predominantly inputs into other products. They are a subsection ofthe larger perfumes and flavours market. Trends in these markets are at best indicativeof trends in the essential oils markets.
World trade in the markets for essential oils and their end use products is growing. In1998, world exports of essential oils and related perfumes and flavours was valued atUS$7435 million and imports at US$6811 million (UN 1999). Table 2.2 shows that thevalue of world trade has increased substantially between 1986 and 1998.
2.2 World trade in essential oils, perfumes and flavours
1986 1990 1994 1998 1986–98
US$m US$m US$m US$m % pa
Exports 2 149 4 122 5 051 7 435 10.9Imports 2 008 4 206 4 802 6 811 10.7Source: 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 ofworld exports, and the US 13 per cent (UN 1999). Developed countries are the mainimporters of essential oils, with the EU and the US accounting for 44 per cent and 8per 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 for1 to 2 per cent of world trade (Colton 1999). Australian exports of essential oils andtheir related products were valued at US$31.5 million in 1998, and imports atUS$53.9 million (UN 1999). Table 2.3 shows that the value of Australia’s imports andexports has increased steadily since 1986. Strong growth in the value of exports is apositive sign for Australian producers.
2.3 Value of Australian trade in essential oils, fragrances and flavours
1986 1990 1994 1998 1986–98
US$ m US$ m US$ m US$ m % paExports 5.9 14.3 29.5 31.5 14.9Imports 28.4 25.1 41.7 56.6 5.9Source: United Nations International Trade Yearbook 1999 and 1992.
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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 takesplace in Tasmania, Victoria and New South Wales (NSW). Tasmania producescommercial quantities of lavender, parsley, peppermint, dill, boronia, blackcurrant bud,and fennel. The main essential oils produced in NSW are tea tree and eucalyptus, whilepeppermint is the main crop produced in Victoria. For most of the essential oils thatAustralia 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 reproductivestructures of plants. In Australia, plant extracts are primarily used as inputs into themedicinal herb, pharmaceutical, nutraceuticals, and insecticide industries. The maincrops from which plant extracts are obtained in Australia are pyrethrum, poppy andhops. These extracts have a combined gross farm gate production value of around $100million.
The medicinal herb market has been identified as a huge potential market for Australianproduction 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 theUS, Europe and Japan the largest consumers of these goods. The Australian herbalmedicine 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 thirdis produced domestically (Wondu 2000). The potential exists for Australia to producehalf of all medicinal herbs used locally (RIRDC 1996). The main medicinal herbsproduced 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. InAustralia indigenous plant sources have been utilised to produce substances such asscopolamine and its derivatives, esculin, castanospermine and methyl cinnamate(RIRDC 1996). These industries are much less developed than those of the medicalherb industry.
The world market for insecticides is large, and consumer preferences for natural oversynthetic pesticides are growing. Pyrethrin is an effective insecticide with low levels oftoxicity to mammals. Tasmania is currently the second largest producer of pyrethrum inthe world, with most production exported to the US (DPIWE 1999).
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Key drivers of world demand for essential oilsand plant extracts
Between 1993 and 1998, world demand for essential oils grew at an average rate of6.1 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 oilsand plant extracts is largely driven by the food flavouring industry, cosmetic andfragrance industries, and demand for industrial solvents. Pharmaceutical and medicinaluses drive the demand for botanical extracts, while plant derived chemicals, gums andpolymers 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 hada strong impact on pharmaceutical and cosmetic industries, which has translated intogrowing demand for essential oils and plant extracts.
A feature of the essential oils and plant extracts market is that the markets for eachproduct are discrete. Each product faces its own demand drivers, customer groups, costconditions, 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 productionprocess 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 processingknown as rectification, which adds value to the oil, increasing its suitability for its enduse.
Traditionally, producers have used agents to distribute their products due to theirknowledge of the market and relevant buyers. However, there is a growing trend forproducers to bypass agents and sell their products as close to consumers as possible.Increasingly producers in developed countries are importing oils from developingcountries, further refining and blending the oils, and then exporting them (De Silva andAtal 1995).
The value chains — both at farm gate and wholesale levels vary greatly across productsso development of stylised value chains is not possible. However, based on a surveyundertaken 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 anaverage of 22 per cent;
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pest/weed/disease management costs make up a similar average 22 per cent ofcosts 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 ofrefinement and processing of the oil or extract. However extraction costs tend tobe around 60 to 75 per cent of processor costs.
Assessment of the potential for some AustralianProducts
In the workshop the prospects for some Australian products were discussed. The keycomments were as follows.
Eucalyptus oil has a very sound commercial base for high quality oil, howevergrowth is not expected to be significant due to strong competition from cheapersources of supply. There is potential for an increasing supply of oil from plantingsprimarily for groundwater and salinity control. There may be considerable scopefor new compounds from eucalyptus in the future but research is only atpreliminary stages and the time horizon for development may be 20 years.
Boronia has developed with the backing of RIRDC funded research, howevermarket growth is expected to be limited to 5 to 10 per cent over the next fiveyears. The high cost of the product and the single source of supply act asconstraints on increasing integration of boronia essence into end use products.There may be considerable scope for the development of new compounds andnew uses, but like eucalyptus this is in the early stages of research.
Peppermint has the potential for considerable expansion in the near future. Thereis a strong international market for quality oil. Although it is unlikely to rival theUS in production (it provides 95 per cent of the mint market) Australia should becompetitive, particularly if the Australian dollar remains low. The world market isgrowing at 5 per cent a year off a base of over 5000 tonnes per annum. The declinein tobacco production provides opportunities for expansion in crop area andmarketing has improved the image for reliable supply.
Tasmannia lanceolata is a Tasmanian native that has been wild harvested. A fledglingindustry is being developed in Tasmania, but has yet to reach commercialproduction. Prospects are considered good and the oil has a wide variety of uses.The recent reduction in permitted areas of wild harvest may threaten thedevelopment of the industry by reducing supply in the short term and impactingon supply reputation.
Lavender is produced for domestic markets and export. However productionvolumes are small and the industry is fragmented. Adherence to quality standards
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will be important to the industry’s future in Australia. It appears that the industryhas yet to focus on oil as a major product. Tourism and dried plant materialcontribute significantly to grower returns. Commercial production is hindered by alack 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 worldmarkets 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 ofimportant supply constraints, which have resulted from the switch to small-scalefresh 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 overseasproducers, and the domestic market is dominated by imports. However, themarket in the developed countries is increasingly demanding quality products withhigh levels of active constituents. If quality products can be guaranteed, thepotential for continued growth in overseas demand for Australian medicinalextracts is high. The largest domestic market for medicinal extracts is currently forEchinacea products, which are also experiencing strong growth in world demand,whereas the international market for St Johns Wort is contracting.
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3 Overview of the program
THE OBJECTIVE OF THE ESSENTIAL OILS and plant extracts Program is tosupport the growth of a profitable and sustainable essential oils and plant extractsindustry 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 followingR&D categories:
production — industry competitiveness — aimed at reducing the unit cost of productionand/or raising product quality, disease management, quality control, selection ofsuperior lines, development of new products, and improving financialmanagement;
processing — aimed at adding value to products, such as through prolonging shelflife, developing better extraction techniques, and using processing techniques todevelop new and better essential oils and extracts;
industry training and development — aimed towards building industry capacity byencouraging development of industry associations, updating priorities for R&D,including assessing the feasibility of various crops and processing techniques andinforming potential entrants;
communications/technology transfer — aimed towards developing better communicationwithin the industry, establishing networks, and promoting adoption of researchfindings; and
markets — market research to identify market opportunities, promote salesvolumes, and/or increase recognition of quality demand.
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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 itsinception, including financial and in-kind support. RIRDC accounts for around a thirdof total funding to projects under the program.
More projects have been targeted at production – industry competitiveness than anyother single R&D area (chart 3.1). This reflects the diversity of potential products fromwhich oils might be extracted, and the trial of many inputs and techniques. TotalRIRDC funding to date is $3.7 million.
3.1 Program funding by classification
Production - industry competitiveness
47.1%
Processing27.1%
Communication10.0%
Markets1.4%
Industry training and development
14.3%
Source: Background Paper, table 3.2.
Program performance
Projects funded under the Essential Oils and Plant Extracts Program can be categorisedinto 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 productand should deliver knowledge and understanding. The research output is usually aninput to more detailed projects but may also be drawn on in strategic development.
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Stage 2 is development. There should be a distinct output such as a better processingtechnology, superior characteristics, or superior production systems. The outputshould be capable of being adopted directly, although further trials may berequired 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 forgrowers. However, issues such as health, industry reputation and communicationof findings, are likely to attract public funding. There are no projects to dateclassified as Stage 3.
The vast majority of projects in the Essential Oils program have been in Stage 1. Thisreflects the diversity of products being researched and need in early stages of industrydevelopment to identify market opportunities and product applications (chart 3.2).
3.2 Program funding by stage of developmenta
Stage II13%
Stage I87%
a Excludes funding of travel to conferences.Data source: CIE classification.
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4 Key issues for industry
WITH COMPETING DEMANDS for funds, not only within the program but alsofor public resources generally, it is essential that funds be directed to those areas wherethe returns (economic, social and environmental) are likely to be greatest. The SWOTanalysis is one tool in setting priorities. It identifies the strengths, weaknesses,opportunities and threats faced by an industry. The following analysis was undertakenin the planning workshop.
SWOT analysis
Strengths
Strengths refer to advantages that Australia has over its competitors. Strengths areinternal to the country and its producers and may come from natural resources, humancapital 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 ofcrops to be grown;
a reputation as a consistently high quality producer and ability to offer qualitymanagement systems which developing countries may not be able to match;
ability to offer superior customer service by tailoring oil production to specificbuyer 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 andquality control.
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Weaknesses
Weaknesses include:
difficult and costly regulatory processes for registering new products particularlyfor 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 singledomestic source of supply;
a small domestic market so large scale producers need to look to overseas marketsfor buyers;
high transport costs, particularly ‘volatile’ goods;
difficulty entering established markets, as buyers tend to have specific productrequirements and are reluctant to change suppliers; and
limited funds available for basic research.
Opportunities
Opportunities are external events or conditions that Australian producers couldpotentially exploit to their advantage:
changing consumer preferences towards the use of ‘natural’ over syntheticproducts;
existence of and growth in niche markets, where quality is more important thanprice;
strong growth in the pharmaceutical, cosmeceutical and nutraceutical industriesleading to growth in demand for essential oils and plant extracts;
potential to extend the range of available products including new productdevelopment through biotechnology;
need to diversify the farm base in many irrigation areas to improve the return towater use, and the search for crops that can be grown to contribute to salinitycontrol;
importance of reliability of supply and potential to deliver by developing multiplesources within Australia; and
lack of standards for many products and capacity to lead the way in thedevelopment of standards.
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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 nohedging facilities being available;
loss of control of Australian genetic material; and
high cost of meeting overseas markets entry standards, such as those set by theFood and Drug Administration in the US.
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5 R&D program
THE FOLLOWING SIX PRIORITY OBJECTIVES for the program over thenext five years were developed in the second Essential Oils and Plant Extracts R&DPlanning workshop held in March 2001.
Summary of objectives
This section summarises the program objectives and identifies those aspects of theSWOT analysis that each objective will address. It also provides an indication of atarget share of the program’s total budget that will be directed to each of the objectivesover 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 andidentify 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 tocapitalise on our strengths of unique genetic material and variety of climate andsoil conditions.
Support the development of sustainable, profitable production systems (20 per cent).This objective addresses the opportunities offered by the growing demand foressential oils and plant extracts and the need to develop production systems thatimprove yields, provide reliable supplies, diversify the farm base and protect theenvironment.
Facilitate regulatory approvals for essential oils and plant extracts (10 per cent).This objective will help to address the difficulties and costs involved in meetingdomestic 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 alsocontribute to dealing with competition from other countries and the opportunitiesoffered 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 toimprove the uptake of technology.
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Objective 1 — Understanding of marketsTo improve understanding by potential researchers and producers of markets foressential oils and plant extracts.
Background
The diversity of Australia’s native flora provides strong potential for the developmentof new products. However for successful production a market has to be established forthe product. Unless there is an existing market this will be a lengthy and very expensiveprocess. Often the volumes that can be produced will not be sufficient to interestmanufacturers who require not only volume but also security and consistency of supply.In addition, where low cost alternatives are available, such products will not beeconomic to produce as premiums for superior quality will be low. An understanding ofmarket opportunities will help to direct research and production effort to productswhere a viable industry can develop.
Strategies
Encourage an understanding of the market opportunities for new products and theneed to substantiate such opportunities before engaging in substantial R&Defforts.
Support studies, for wide dissemination to industry and potential entrants, whichexplore market opportunities and examine returns to Australian producers. Thiswould include comparing the returns on new products with existing products andidentifying the steps required for commercialisation. Consideration of the costs ofregistering products for human consumption should be included in suchassessments, including where applicable, toxicity studies.
Targets
All R&D proposals include a brief assessment of market opportunities for the cropor product affected by the R&D.
Information on market opportunities be available for the major essential oil andplant extract products produced in Australia and those with the best futurepotential.
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 electronicform).
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Objective 2 — Development and improvement of products
To improve existing products and encourage the development of new crops and newproducts (including uses for existing products).
Background
Australia’s advantage in production comes from the unique inherent characteristics ofour flora (often still to be exploited), from our growing conditions (climate, soils) andfrom growing technology. The development of new products is a high risk butpotentially high return activity. In addition, as a high labour cost producer (low labourinputs), productivity growth must come largely from improving yields and quality andmeeting market specification.
Strategies
Support the identification of potentially useful genetic variability in essential oil andplant extract crops.
Undertake selection for yield and market desired characteristics under differentproduction 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 beenestablished. 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 newproducts (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 acommercialisation plan.
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Objective 3 — Improved Production SystemsTo support the development of sustainable and profitable production systems.
Background
Essential oil and plant extract crops attract a wide variety of growers. Some crops aregrown largely under contract, and production protocols are well established andadopted. Crops that offer the potential for diversification may face a barrier toexpansion due to unfamiliarity for farmers. The development of sustainable productionprotocols for new crops and their wide dissemination is an important input intoestablishing 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 therange and effectiveness.
Continue to support the development of protocols for measuring residues in cropproducts. Encourage this research to lead to the establishment of standards foroptimal 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.
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Objective 4 — Regulatory Approvals
To facilitate regulatory approvals for essential oils and plant extracts.
Background
Products with theraputic claims require registration domestically with the TherapeuticGoods Administration (TGA). Export market penetration will be assisted throughregistration with the US Food and Extract Manufacturer’s Association (FEMA) forapproval for human consumption or with the US Food and Drug Administration formedical claims. No Australian native based product has yet to receive FEMAregistration. While a number of products are used in food manufacturing in Japan andEurope, this use may be threatened by lack of registration. Standards for many essentialoils and plant extracts for industrial and typical uses have also yet to be established. Thedevelopment of Australian standards, particularly for non-food and non-medical uses,may also improve the international marketing of Australian products and prevent theimposition of external standards on Australian producers. The program’s role is tosupport the research that is needed to back up registration applications that may beundertaken 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 industrialand personal uses and for human consumption.
Provide research support for FEMA and other registrations of Australian plantproducts with strong market growth potential.
Provide a documented procedure for application to FEMA and other registrationsfor 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 othercommon registrations.
Number of internationally accepted standards.
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Objective 5 — Improved Post Harvest Treatments
Promote cost effective post harvest and extraction technology to improve yield andquality.
Performance Indicators
Increasingly, the effectiveness of further processing and handling of oils and extractswill determine the future profitability of the Australian essential oil and plant extractindustries. This is particularly so as low cost competitors around the world becomemore dominant suppliers of products traditionally produced in Europe and the US.Adding value through the use of more sophisticated extraction and finishing technologyis a key part of improving existing products, and facilitating the creation of newformulations 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 harvesttreatments.
Performance Indicators
Percentage improvement in yield achieved from post harvest treatments.
Number of crops undergoing post harvest treatment.
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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 ofmainly small scale producers. As a result, it is also relatively fragmented, and industrycooperation and development needs further encouragement. RIRDC plays animportant role in seeking to overcome this fragmentation by encouraging industrycooperation, and disseminating information that will improve the flow of informationto 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 processorlevel, and the development of reputable labelling for products meeting standards.
Encourage wise market entry through the publication and communication of keyindustry facts. These would include assessment of the costs of entry and likelyprofitability, basic establishment and market information and key industrycontacts.
Encourage adoption of R&D outputs through the inclusion of summaries ofprogress and completion reports in industry publications.
Encourage the use of farmer friendly presentation and language in researchreports. Emphasise the need for communication strategies as part of researchdesign.
Target
Publication of a ‘key fact-key people’ report, with wide coverage of essential oiland 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.
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Products and R&D priorities
The following is a list of essential oil and plant extract crops that have already been thesubject of R&D, often supported by RIRDC. In these cases work has been undertakenin such areas as understanding markets, developing products, production systems,improved post harvest treatments and providing industry information. However, thesecrops remain a priority for the program because further work will benefit existinggrowers or enhance industry growth. This relates particularly to such areas as productand industry development and facilitating regulatory approval.
Blackcurrant Bud (Ribes nigrum L)Boronia (Boronia megastigma)Eucalyptus (oil producing species)Ginseng (Panax quinquefolium, Panaxginseng)
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 orthat have not yet been supported by RIRDC. Research priorities for these crops will begenerally across the range of objectives in this plan, but the need to demonstrate marketpotential remains an important first step for any product. Proponents should also takeinto 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, Echinaceaangustifolia, 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 thoselisted above. Key criteria that will be used in assessing any research proposal will be themarket prospects for the product, the capacity for the proposed research to addressmajor issues in the supply chain and the commitment of industry partners.
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6 ReferencesChung, 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 consultation 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 12February 2000.
Purbrick, P., 1998, Medicinal Herbs, http://www.rirdc.gov.au/pub/handbook/medherbs.html, Accessed 5 February 2000.
RIRDC, 1996, R&D plan for the essential oils and plant extracts program 1996–2001, RIRDC,Canberra.
Tasmanian Department of Primary Industries, Water and Environment (DPIWE) 1999,Tasmanian Rural and Fishing Industry Profiles 1999, Pyrethrum (Extractive),http://www.dpif.tas.gov.au/domino/DPIFIndustryprofiles.nsf/65cc7bcd0c352/e4a2564620027ef3c/9ee.c9e2f3020a78d4a2564c60015a0b3/$FILE/ATID12PW/Industry+Profiles+1999.pdf, Accessed 12 February 2000.
UN (UnitedNations) Statistical Office 1992, International Trade Statistics Yearbook 1991, .UN.
UN (UnitedNations) Statistical Office 1999, International Trade Statistics Yearbook 1998, .UN.
Wondu Holding Pty Ltd., 2000, New Pharmeceutical, Nutraceutical & Industrial Products: The Potentialfor Australian Agriculture, RIRDC, Canberra.
