Did you hear the one about the Gangsta Limes?
While there are thousands upon thousands of Essential Oil retail brands the reality is that at the other side of the equation lie only a handful or so oil processors. Put it simply, the essential oil supply chain looks a bit like this:
So when a butterfly flaps its wings in a tiny corner of mexico, the whole world runs low on lime. Oh and Lemon and Orange……
Citrus is a commodity traded like any other commodity on a stock exchange for as much money as one can reasonably get away with. Each year the big growers cough up their figures onto a huge spreadsheet (I’m making the detail of this up now you realise but the gist of what I am saying is right) eager to know what the end figure will be. While all markets react to the balance between supply vs demand, commodity stocks react much more strongly because we just simply have to have these goods. Citrus fruits and oils find their way into our every-day life in products as diverse as flavourings and floor cleaners, solvents and fine perfumes.
So with that in mind let’s take a look at what goes on behind the scenes of not just MY essential oil retail brand of choice but yours and everyone else’s too. We will start with Lemon.
Lovely Lemon Essential Oil.
It is thought that Lemons probably originated in North East India before making their way into China and then down to Roman-dominated Europe a little before AD 300 via ancient trade routes. These days the bulk of the worlds lemons come from the America’s and we have the Spanish to thank for that after sailing over with them in the 16th century. However, it wasn’t until the 19th century that citrus production really started to gain traction in the Americas and the rest is history!
Today the global lemon market is split into two dominant growing regions and several secondary growers – Argentina and the EU combined make up just over 60% of the market with the USA adding around 20% on a per volume of fruit basis. The remainder is split between Turkey and South Africa with the rest of the world bringing in just 3% of the total between them (based on 2008 figures).
Sadly for the global lemon loving public the crops in Argentina have been hit hard by inclement(ine) weather with frosts followed by drought knocking yields back by up to 50%. Supply and demand for lemon and lemon by-products (such as the essential oil) is already tight so a big event like this has the knock on effect of seeing the price of lemons skyrocket as the big buyers seek to secure volume in whichever country they can.
This year the price of Lemon Essential oil is high compared to what it has been in previous years. Whether that gets passed on to you, the buyer or not and what that does to your business depends on where you are in the supply chain. Bulk suppliers and wholesalers work on much smaller margins than retailers who can often absorb or at least minimise pricing due to the buffer that their brand value offers. In any case it is worth holding that lemon oil a little tighter tonight as it is a rare and precious thing.
The supply situation with orange is rather worse sadly as orange crops have come under attack from something called ‘citrus greening disease’ meaning that the last crop was the smallest in fifty years.
35% of the worlds oranges come from Brazil with the next largest grower being the USA (20%)
Citrus greening disease or Huanglongbing is a bacterial disease lethal to citrus. It occurs in Asia, throughout the Americas, in Africa and Indonesia, East Timor and Papua New Guinea. The disease affects the leaves, damaging them so that they can no longer produce food for the plant and also stunts fruit growth. If you have ever wondered why the Australian government make such a fuss about quarantine and ask a bazillion times if you have any food on you, then this is just one reason why. We don’t have this devastating disease here yet and neither do we want it.
Even though production of oranges is 12 times higher than lemon supply and demand are still relatively tight making crop failures such as this even more devastating and sending the price of Orange oil up and up.
This disease has been ravaging citrus crops in America since it was first spotted in 2005 and has put Florida’s $8.9 billion market and over 75,000 jobs in jeopardy. It has been known to exist in China for over one hundred years and as yet there seems to be no sure-fire way of stopping it. Citrus growers are being increasingly squeezed financially also thanks to this pest as banks cut back on funding adding more pain to an already desperate situation.
If the above hasn’t put you off farming yet then maybe you should spare a moment to consider the plight of Lime farmers in Mexico. Due to favourable trade conditions that exist between the Americas most of the USA’s Limes come from Mexico and in Mexico we have a problem.
Mexico’s largest lime producing regions are suffering at the mercy of criminal gangs who blockade roads and demand money for every truckload of limes that pass. This criminal tax has seen lime prices rise by more than 200% in the last year and has pushed limes of the menu in many American restaurants!
In terms of lime essential oil us little people who want a bit to make their cleansers and scrubs smell nice are finding it increasingly hard to get our hands on the stuff thanks to the trend towards lime flavoured beverages. The flavour and fragrance world take a massive chunk out of the essential oil business before the Aromatherapy / general cosmetic industry get a look in and this year supply is not keeping up with demand.
Other countries do grow and process limes and overall the global outlook for Lime oil is less bleak but for now at least prices remain high and supply relatively tight.
I hope that the above has given you a little bit of a behind-the-scenes look at what goes on behind your bottle of Lemon, Orange and Lime oil. We have only just scratched the surface of this fascinating supply chain and while I’d love to tell you more I now have to go as I have a meeting to get to.
Happy formulating and remember, don’t take that Lime for granted, someone might have died for it.