Monday, July 11, 2011

Domestic trade of Essential Oil in Indonesia

Essential oil trade in Indonesia is mostly in the form of crude oils which is almost entirely produced by farmers or industry of small scattered areas of production centers. Its market is relatively long, originated from peasant producers and end on exporters, with variations.
Exporter / manufacturing industry as an actor in the chain end of the essential oil trade in Indonesia obtained through a broker. Among the brokers are also "agents" or representatives of exporters and others are free. Middlemen buy the oils stemming from traders in the producing regions. Traders generally provide capital or advances to farmers / distillers so that the oil produced by the farmer / distiller must be sold to collectors at a price specified by the buyer / collector based on the quality of the assessed unilaterally by the buyer are subjective (organoleptic), not based on levels or content of specific compounds in the products. That is, the good oil priced the same or less. This is what is causing refiners to mixing good oil with low-quality oil even oil refiners are reluctant to produce good oil.
Manufacture of essential oils consist of a series of productive activities that are connected between the activity values with each other to form the industry value chain. Value chain is also a link in a business activity from plant raw materials to industrial consumers, the perfume industry, cosmetics, toiletries, and food.
Food industry, pharmaceutical and cosmetic products market in Indonesia is an essential oil derivatives. Huge market potential is still untapped, because of the industry that processes crude oils into derivative products is still very limited. Needs derived products needed by the food industry, pharmaceuticals and cosmetics obtained through imports.
Essential oil trade in Indonesia was faced with two major problems: low quality and the prices fluctuate, especially in the major export commodities of patchouli and vetiver. The low grade is an accumulation of volatile plant quality raw materials which is low and not uniform, use of equipment and process technologies that refiners have not been standardized, and the lack of price incentives for good-quality oils. Plant raw material prices are determined by the movement of fuel prices at the refinery, not by production costs. All business actors (farmers, refiners and exporters) then receive the same risk of loss due to the problem.

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