The essential oils industry has been growing rapidly in recent years, as consumers turn to natural products for their health and wellness needs. This growth has led to an increased demand for essential oils from emerging markets and in turn ethical concerns in the sourcing and production process.

So, what are the concerns and related challenges in sourcing essential oils from emerging markets?

Essential oils are produced by further processing aroma crops which are grown by farmers with small land holdings in emerging markets. The aggregation of these farmers on a large scale is necessary for viable essential oil production. This has necessitated the use of middlemen traders who provide this aggregation service. In countries like India Farmer Producer Organisations (FPOs) sometimes play this role.

The second challenge is that for essential oils extracted from flowers and leaves the processing or distillation of the oils is best done close to cultivation to minimize oil losses. In India, this has led to the development of micro crude distillation units in aroma crop-growing belts.

These distillation units churn out relatively small quantities of essential oils which are then purchased by a larger manufacturer who runs quality checks, blends, further distils, removes contaminants, and creates larger batches of essential oils fit for the wholesale market. These manufacturers have market linkages with the business customer i.e. Flavour and Fragrance Houses either directly or through international distributors.

Such a long supply chain means smaller margins at each stage of the production process and the potential for malpractices like child labour, unfair wages, poor working conditions, adulteration, and fair prices to creep in at several stages as players try to protect their margins.

With the advent of technology, solutions exist today that can provide transparency and checks throughout the essential oils supply chain. Therefore, the success of ethical sourcing for the essential oils industry will largely be driven by business customers’ insistence on transparency and traceability measures as well as suppliers’ willingness to provide them.

Origin Oils is tackling this sourcing challenge for business customers by working directly with farmers and the Flavour & Fragrance Houses thus bringing transparency into the essential oils production process. Reach out to us to learn more.

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