The Most Cultivated Cinnamon Varieties in Indonesia

Cinnamon, known for its distinct flavor and aroma, is derived from the bark and leaves of various Cinnamomum species. Globally, there are 54 recorded species of cinnamon, with 12 of them found in Indonesia. The three most commonly cultivated cinnamon varieties in Indonesia are C. burmanii, C. zeylanikum, and C. cassia. Additionally, C. massoi and C. culilawan are also found abundantly in the country's forests.
One of the primary uses of these five cinnamon varieties is the production of essential oils, primarily extracted from their bark and leaves. C. burmanii is renowned for its high content of cinnamaldehyde, accounting for 60-77% of its essential oil composition. C. zeylanikum, on the other hand, contains predominantly eugenol, comprising 65-89% of its essential oil. C. cassia exhibits a combination of eugenol (65-75%) and cinnamaldehyde (26%) in its essential oil.
Among the cinnamon varieties, Indonesia stands out as the largest producer of C. burmanii compared to other varieties. The country's favorable climate and soil conditions provide an ideal environment for the growth and cultivation of this specific species. C. burmanii is known for its robust flavor and is widely used in the culinary industry, particularly in Indonesian traditional dishes and various spice blends.

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Clove leaf essential oil business

Clove leaf essential oil business in some areas of Central Java, Indonesia is facing a tough challenge. Many owners of this business in a number of villages at the district of Kaligesing (Purworejo - Indonesia) complained of capital difficulty. They can not buy in large quantities clove leaves from the collectors and growers.
This fragrant product is limited because of clove leaves to run out in one or double times of distillation process. Though the price of its essential oil was improved in the range of Rp 125,000 per kilogram. "Now the price is good, but our capital is limited," said Dahlan, one of the employers in the Village District Tlogoguwo Kaligesing, to Kedaulatan Rakyat News, Thursday (9/29/2011). He claimed to have only one ton of the raw material. That raw material is expected to be discharged to a one-time process. Typically, Dahlan have it as much as two to three times.
Dry season, he continued, is the harvest period for clove leaf essential oil business. Farmers actively seek and collect the dry leaves that fall on their farms. Abundant supply of those leaves make any entrepreneur can process it every day. During the dry season, Dahlan claimed to have processing approximately 78 times. In fact, when the rainy season, a maximum of only six times of distillation did. Nevertheless, the processing could be maximized if employers easily get the raw material. Tlogoguwo distiller workers, Giman added, the price of the dried leaves also increased. When the rainy season, the businessmen buy Rp 1,200 per kilogram, but now (at the time of this article written) it is Rp 1,810 per kilogram.
According to him, each time the process, employers need between 8-9 hundred pounds of leaves. After cooking for about eight hours, it will produce 18-19 kilograms of oil. "The oil we sell directly to the merchant who is also a partner of venture capital lender," he said. Despite these obstacles become significant problems for clove leaf essential oil business, but it should be an opportunity for investors who are interested to benefit from these fragrant compounds.

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Essential oil business development in Indonesia

Essential oil business development in Indonesia needs to consider many complex factors, ranging from actors, technical and management of cultivation, processing technology, to the marketing. Intensification programs of essential oil plant need to consider absorption of markets, and prefer the commodity area grouping programs as well as intensification to improve its productivity and quality of raw materials, so it does not pose a risk of loss for farmers. Its plant farming is developed in the appropriate area, using top quality of plant material, and applying a good way of cultivation (good agricultural practices) to improve productivity and quality.
In the downstream, the essential oil industry should be developed that relies on the availability of raw materials and chemicals. Plant engineering and processing as well as R and D is undertaken by the Indonesian people themselves, so they do not only export raw materials but also high value processed commodities.
Volatile oil price fluctuations and levels, among others, are determined by supply and demand. So the government and exporters are expected to play an active role in providing guidance and counseling to farmers and distillers to anticipate market conditions and needs of the world. Attitude of openness of all businesses in terms of information components and cost structure of farming, refining, trading, and export and the level of prices in export markets can improve the harmonization of relationships between business actors.
Its value-added commodities can be improved because the technology to produce derivative commodities or conversion of its natural commodities into high value-added products has been available. The results of research and development need to be disseminated to the business. It required the support and joint efforts between government and business to the intensive dissemination of technology progresses, including the utilization of human resources at universities and research / development institutions.
Formulation and implementation of standardized processes (Good Agricultural Practices and Good Manufacturing Practices), standard equipment, quality standards applicable and needed in world trade, and prices associated with the quality standards should be promoted. It required the support of all stakeholders in order to realize and implement the various standards.
Increased profits can be pursued through the use of high quality raw materials, processing with appropriate technology, as well as increased efficiency of processing and marketing. The more intensive facilitation and coaching from the government / universities / research institutes and exporters needed to disseminate the appropriate technology to farmers and refiners.
Governments need to socialize the conditions and regulations on essential oil businesses development, both nationally and internationally. Improved access to capital for farmers and refiners, as well as institutional strengthening / farmers' associations and refiners in the region should continue to be pursued.
In every essential oil production centers, forum for communication of all relevant actors and agencies should be held periodically to seek solutions to problems faced and develop several action strategies for essential oil business development. The existence of “essential sites” to maintain the networking and communication among stakeholders at central and local governments can also support the efforts.
In order to integrate and harmonize the national essential oil community activities, all the stakeholders have agreed to form the Indonesia Council of Essential Oils. This council serves as a vehicle to: (1) to unite, protect and defend the interests of all stakeholders in the face of globalization, (2) improve the competitiveness and the "glory" of the commodities in the international world, and (3) enhance cooperation in the development of its value-added products.
Referring to the Estates Act No.18/2004 of Indonesia, the government is obliged to facilitate the establishment of commodity boards, so that the Council should be formed immediately. The establishment of the board of commodities is carried by the stakeholders. The small team which is a special task force representing various departments from government can be formed. This team can be a strategic partner in managing the Council and improve the performance and competitiveness of essential oil commodities, so that Indonesia become the world's major producer of volatile oil. Furthermore, the essential oil business development in Indonesia requires a strong commitment from the players to execute all the strategies and rules that have been agreed.

Reference: Molide Rizal and Muhamad Djazuli, 2006. Strategi Pengembangan Minyak Atsiri di Indonesia. Warta Penelitian dan Pengembangan Pertanian Vol. 28, No. 5, 2006)

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Essential oil business opportunities in Indonesia

As one of the biodiversity central, Indonesia has the opportunities to produces 40 kinds of essential oils from 80 species that are traded in world business. Of these, 13 species have entered the world markets that is patchouli, lemongrass, cloves, ginger, nutmeg, pepper, cinnamon, sandalwood, jasmine, vetiver, ylang, eucalyptus, and cubeb.
Most of the them produced by the farmers is exported to the market share of 64% patchouli, 67% ylang, 26% vetiver, 12% lemongrass, 72% nutmeg, 63% cloves. 0.4% ginger, and 0.9% pepper oil of world exports. Essential oils export destination for Indonesia, among others, the United States (23%), Britain (19%), Singapore (18%), India (8%), Spain (8%), France (6%), China (3% ), Switzerland (3%), Japan (2%), and other countries (8%). Although the market share of some of these commodities are individually relatively high, the total share of Indonesia in the essential oils international market is only about 2.6%. In any national economy, these products at 2001-2003 period has only a small portion, classified into commodities "plantation", the role of an average 0.01% of total export value of commodities. In 2004, essential oils export value reached U.S. $ 47.2 million, but this country also imported this commodity worth U.S. $ 12.26 million and their processed products (derivatives, isolates, and formulas) U.S. $ 117.20 million. If the value of imports is taken into account, so the Indonesia's trade balance for these commodities became negative. Actually, some of them can be produced domestically, such as peppermint oil (Mentha arvensis) and anise oil (Clausena anisata).
On 18-20 September 2006, in Solo (Indonesia) has held the National Conference with the theme Towards SMEs of Essential Oils with Highly Competitive. The conference has identified 32 types that have the potential to be developed, among which there are seven new types which can be exploited commercially, ie anise oil, peppermint oil (cornmint oil), basil (Reunion type basil oil), fragrant lemongrass (East Indian Type), kitchen lemongrass (West Indian Type), jerangau (Calamus oil), and bangle. Various agreements have also been reached to develop these products in this country in order to provide optimum benefit and proportionate for all national stakeholders of this commodity.

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Export and Import Trend of Essential Oil Indonesia

The essential oil is the exports commodity of Indonesia and Indonesia is one of the major manufacturers, especially patchouli, nutmeg, vetiver, clove leaf and citronella oil. Export destinations include Europe, America, Australia, Africa, China, India, and ASEAN. However, their export to the international market is still largely in the form of semi-finished products. To meet the needs of the food industry, cosmetics and pharmaceuticals, Indonesia is still importing derived products or essential oils that have been "purified".
Indonesia trade statistics show volatile oil exports in 2007 reached U.S.$ 101.14 million, with 20 kinds. In the same year, Indonesia import of essential oils, its derivatives, and perfume products worth 381.9 million U.S.$.
What about essential oil prices?
Its price greatly influenced by the development of downstream industries are essential oils made from raw industrial perfumes, cosmetics, pharmaceutical, food and beverage industry. Therefore the need for importing countries is highly dependent on the magnitude of the needs of these industries, both industries in Indonesia and abroad. The dynamics of the downstream sector will give effect to the formation of volatile oil value.
The essential oils use in the downstream products require a high degree of purity, because the doses used in certain specific purpose with strict requirements. For example its use in aromatherapy products that can be encountered in salons and spas. In large industries, the use of products such as food, perfume, cosmetics, toiletries, raw materials used come from the its derivatives such as eugenol (from clove oil), methyl ketone cedryl (from cedarwood oil), vetiveryl acetate (from vetiver oil ), etc..
In some commodities, trade in essential oils are not only based on the workings of the fundamental aspects of global supply, but there are also non-fundamental aspects, such as market sentiment. Market sentiment and attitude is a product of all market participants ranging from farmers, middlemen, exporters, importers, speculators (fund managers) and the end users (end users) themselves. Therefore, the risk factors remain to be faced by exporters in deciding on policy sales.
Behavior of essential oil prices on world markets each year shows the pattern of change is divided into three categories, that is likely to decrease, relatively stable, tend to rise or fluctuate. It tend to rise developments indicate there is still a bright market prospect. At the level of refiners in the domestic market, from early 2009 until May 2009, Indonesia volatile oil value trend is still fairly stable.
Some of the Indonesia essential commodities prices tend to be stable each year, meaning not too sharp fluctuations in commodities such as oil of clove leaf and vetiver oil. Clove leaf oil has experienced the lowest, which is about 3.2 U.S. $ in 1998, slowly began to rise until in 2001 the level of U.S. $ 6. The next year has decreased to the level of U.S. $ 3.5 and started to climb back up in 2007 again reached 6 - 6.5 U.S. $.
Commodities essential oils that have a very great fluctuations are patchouli oil. In 1997, patchouli oil was valued settled down to reach 150 U.S. $, but the following year (1998) declined rapidly to the level below 20 U.S. $. Economic crisis in Indonesia at that time was one reason. In the year 1998 - 2006, patchouli oil prices can be said to be stable in range of 20-60 U.S. $.
In 2007, a combination of unfavorable weather and patchouli oil prices are not attractive in 2006 than any other agricultural commodities as well as the emergence of various plant diseases caused a sharp decline in production is estimated that nearly half of the normal situation. This situation causes the value shot up to reach 150 USD $. In the year 1997 - 2002, vetiver oil prices fairly stable price level 25 0-55 U.S. $, subsequently increased to reach 85 U.S. $ in 2007.

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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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