EXPORT POTENTIAL ANALYSIS OF MENTHA OILBy: TRINA BHAGAT PRN-09020242005 MBA-AB (09-11) SIIB

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HISTORYy Mentha Arvensis:y Cultivated: 1870, in Japan. (Japanese Mint) y Extended to Brazil, China, Formosa etc.

In India:Mentha Oil & Methanol: Commercial cultivation started only after 1964. By: Col. Mr. R.N Chopra & Dr. I.N. Chopra of Regional Research Laboratory Jammu Tawi, with best efforts of Mr. S.C. Bante, Managing Director, Hindustan Richard Ltd. (VICKS).

y The survey conducted by Richardson Hindustan Ltd. determined that Tarai Area

of Uttar-Pradesh would be a suitable place for the cultivation of Mentha Arvensis so a land of 15 Hectares was purchased to setup an Agriculture Research center for Mentha.

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ABOUT THE CROPy Rabi Crop y Ideal time for sowing : Winter season y Ideal time for growing: Dry hot summers with long

days of sunshine. y Temperature y Rainfally Soil

: 45 C : 125 cm 150 cm (Growing period : sandy loamy soil(having high water content)

(Water logging and low rainfall provide hindrance in proper growth of the crop.)

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USES OF MENTHA OILy Mentha Oil is widely used iny Food industry y Pharmaceutical industry and y In perfumery and flavoring industries. y Menthol a major derivative Mentha oil is widely used in

the manufacture of:y balms, y cough drops, y inhalers, y toothpastes, y mouthwashes .

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Cont..y 50% to 60% de mentholized oil is obtained from Mentha oil in the

production process of menthol, is used in confectioneries and peppermint oil. y Medicinal uses.y used to cure indigestion, y headaches, y colic, y gingivitis, y irritable bowel syndrome, y spasms and rheumatism.

y It is also used in the manufacture of Mint sweets and chocolates. y In India Mentha is mostly used for chatni and household purposes

(edible purposes).

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CULTIVATION PRACTICES OF MENTHA OIL

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y PROPAGATION: Mint can be propagated vegetatively through stolons and runners. By and large, most area under the crop is propagated by planting live juicy 8 to 10 cm. long stolons (underground stems) during early spring season.y PRODUCTION OF STOLONS: Around 200 sq.m. plot is required to produce stolons for 1 hectare. Mature plants of chosen variety brought from a reliable nursery should be

planted at 30 X 30cm. The nursery for the stolons is planted in August. Stolons are produced in autumn and are ready for use during the months of January to March

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Cont..y PLANTING OF STOLONS: The field should be ploughed and harrowed thoroughly and

divided into beds of suitable size to facilitate irrigation. In each bed, lines are opened at a distance of 40 to 60 cm depending upon the variety used. The furrows are opened about 5 to 6 cm deep. Within a furrow, stolons are placed in rows at 10 cm. distance and furrows are closed with top soil. The bed is irrigated immediately after placing the stolons

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Conty IRRIGATION: Ten irrigations are given during summer season at intervals

of 10-12 days whereas another 4-6 for autumn crop harvested in late October. In order to obtain luxuriant growth, sufficient fertilizers and water must be applied to mint crop. A minimum water of about 100 mm is required to obtain good crop yield. Water logging during rainy season should be avoided by providing adequate drainage.

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Cont..y HARVESTING: In India, Mentha Oil is produced by steam distillation of Mentha

Crop. Once the crop reaches the flowering stage, it is harvested as it is during this period when the oil content in plant is at its highest. The harvested crop is then dried in sun, 2-4 hours a day, till it get reduced to one-third of its weight, and then it is sent for distillation. It is dried as the distillation of dried leaves is much cheaper than non-dried leaves. Over drying the crop may result in soaked up oil content.11

Cont..y PURIFICATION OF THE OIL: Menthol is the main constituent of Mentha oil. Therefore to separate

menthol from Mentha oil slow cooling is done. This is carried out firstly, byrefrigeration, then crystallization, followed by centrifugation and drying. Then finally menthol is separated from Mentha oil. The oil that is skimmed off must be cleaned of traces of water that it

may carry. For this purpose, a separator funnel is used. Treating with anhydrous sodium sulphate and decanting removes any remnant moisture in the oil.

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ECONOMIES OF THE CROP (Per Hectare)y A. Total cost of cultivation - Rs. 25,000/y B. Return

(1) Oil yield (2) Oil Price y C. Cost of Oil produced y D. Net Profit

- 200 Kg - Rs. 350 - 850/- per Kg. - Rs. 70,000 to Rs. 1, 70,000/- Rs. 45,000 to Rs. 1, 45,000/-

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STORAGE, PACKING AND LABELLING OF MENTHA OILy PVC (polyvinyl chloride) drums of good quality (20-200l

capacity) and galvanized iron (GI) drums or aluminum containers are suitable for short and long term storage respectively.y The containers should be kept in cool and dark place. y The Labelling on the drums must include a short description of

the product and country of origin and the date of production.y Further it is recommended to include the following aspects on the

label. Name / address of the producer / exporter, Net weight, Recommended storage conditions14

PRODUCTION & CONSUMPTION OF MENTHA OIL

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MAJOR PRODUCERS OF MENTHA OILy The following are the major Mentha oil producing

countries. India China USA Brazil Japan

y India remains the largest producer and consumer of

menthol in world. It also shares the highest percentage in terms or world export in menthol.

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PRODUCTION OF MENTHA OIL IN INDIAy Cultivated in districts of Uttar Pradesh, and parts of Punjab and Haryana. y In the production of Mentha, Uttar Pradesh is leading state. y Mentha Oil Processing is done in Barabanki District of Eastern Uttar

Pradesh.

y It can be deduced that almost 95% of Indias total production comes from UP and in turn India accounts for almost 80% of World y The Menthol crop has become a favorite with many farmers because this crop is

a cash crop and the prices are Volatile. y Due to this the base prices have been firming upwards every year prompting more farmers to take up this lucrative crop

y Thereby maintaining the leadership position in Mentha oil production.

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MAJOR CONSUMERSy India is not only contributing to the

world production but also to the consumption. Evident from the table, consumption pattern in India has grown in sync with the world consumption. y Total consumption has grown thrice as compared to the 1993 levels. y While Europe and USA has maintained almost stagnant levels of growth rates whereas India and China has contributed significantly to the increased demand of menthol due to more of the household purposes.21

EXPORT OF MENTHA OIL FROM INDIA

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MENTHA OIL EXPORT

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MENTHA OIL EXPORTy India exports nearly 60-62% of the total Mentha oil production. Mint products including y y

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mint oils, menthol crystals and menthol powder, is the single largest product group in the export basket accounting for 27% of spices export from India. Indian Mentha oil exports have increased in a steady manner for last 4-5 years and recorded an all time high in 2007-08 in quantity terms. Exports of Mentha oil during 2007-08 was 21,100.10 tonnes valued Rs.1,28,050 lakhs which was 30% up in quantity terms and 16% in value terms as compared to previous year. In 2008-09, India has exported a total of 20,500 tonnes of Mentha oil valued Rs.1,42,025 lakhs which is 3% lower in quantity terms but 11% higher in value terms as compared to previous year. Exports of Mentha oil during April 09 to January 10 was 14,225 tonnes valued at Rs.90,360 lakhs, which was 18% lower in quantity terms and 24% lower in value terms as compared to the data for corresponding period during 2008-09. During January 2010, Mentha oil exports from the country have been 1,350 tonnes valued Rs.8707.50 lakhs, which is 2% lower in quantity terms and 8% down in Value terms as compared to the exports for corresponding period last year.

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EXPORT DESTINATION OF INDIAN MENTHA OILy Mentha oil is exported to

USA (5675 tonnes) y and China (5200 tonnes) and these two countries together accounts for more than 53% of total mint exports. y The other major buyers are Singapore (2700 tonnes), Germany (1100 tonnes), Netherlands (800 tonnes) and Japan (575 tonnes).25

THE SUPPLY CHAIN

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y The supply chain consists of

farmers, local dealers, big commercial oil distilleries and exporters. y The local dealers are present mainly in Rampur, Sambhal, Ramnagar and Massauli areas. y Distilleries are the vital link between the farmers and the end user of Mentha oil and its derivatives. y These distilleries are not only meeting the domestic industry requirements but also cater to the growing export markets in various parts of the world.27

y PROBLEMS: The existing marketing channel is not perfect enough to ensure fair

price to farmers. Farmers often resorts to distress sale of oil to local dealers due to compulsions to square off debts soon after oil is extracted. As it is dealt in bulk (normally their minimum deal size is one tonne) farmers do not have direct access to them. This gives an opportunity to local market dealers to interface between the distilleries and farmers. The local dealers make large pool of oil purchase from farmers and sell it to distilleries. Some of them, over a period of time, have become leading exporters in some pockets and many of them established linkages with pharma, cosmetics and confectionary companies located in different parts of the country. Many of them are disguised traders who do not want to be identified as Mentha oil dealers because they didnt want to be trapped by sales tax authorities.28

MENTHA OIL FUTURES

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y Currently, three national multi commodity exchanges offer

futures in Mentha oil. While MCX and NCDEX offer futures in Mentha oil, National Multi Commodity Exchange of India Ltd (NMCEIL) trades in menthol futures. y The reason to include Mentha oil in futures trading was, Mentha oil is a highly volatile commodity. Such volatility was

the major trouble faced by the processors and exporters. Due to such inherent inefficiency, they offered lower price to the farmers. In order to arrest volatility as well as to provide hedging tools to the physical market traders, processors and exporters, futures trading in menthe oil were introduced.

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Cont..y This had resulted in higher producers share in consumers

rupee or in this case exporters export realization. The realization of better prices was also realized at exporters end. y In 2003 the export was 13000 MT. In 2007 the export was 25000 MT. There was an increase of 92%.

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TRADE POLICIES AND REGULATIONS

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EXPORTERS REGISTRATIONy One has to obtain Import-Export Code Number issued by the office of y y y y y

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the Director General of Foreign Trade. For export of Mentha Oil, Certificate of Registration issued by the Spice Board is also required in addition to the IE Code number. Issue Of Export Permits & Certificate Of Origin. Furnishing Post-shipment Documents : 45 Days Custom Duty: Standard rate of duty is 35% HACCP now fast becoming a pre-requisite for import in developed markets and certification widely used as a Marketing tool by many exporters. Implementation of certifications such as ISO 9000, ISO 14000,HACCP & ISO 22000

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PRODUCT SPECIFICATIONSITC [HS] N0 3301-25-90

Source & Description

Entirely Natural oil, obtained by steam distillation from various species Mentha Arvensis grown in India Colour-less Pale-Yellow, Transparent and clear Characteristic and pleasant of Minty

Appearance

Odour

Solubility34

Soluble (1:4 to 6 volume in 70% alcohol)

ContGLC Test Terpene Menthol Isomers Methyl Acetate Water and solid sediments Total Menthol contents (TMC) Optical Rotation Refractive Index35

-Above 68% - Premium -Below 63% - Rejected -Basis 7.5% - Premium -Above 9% - Rejected -6% Maximum -6.5% Maximum -0.65% maximum 70%-79% - 33degree to 38degree -1.42-1.48( at 25 degree C)

SWOT ANALYSIS

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STRENGHTSy India is the Largest producer of Mentha oil. India accounts y y y y

for almost 80% of World. India enjoys the monopoly. Suitable soil condition, rainfall, temperatures. India exports nearly 60-62% of the total Mentha oil production. Mint products including mint oils, menthol crystals and menthol powder, is the single largest product group in the export basket accounting for 27% of spices export from India

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WEAKNESSy Lack of properly organized marketing activities. y There is demand from various quarters for introducing minimum

support price (MSP) for Mentha oil. But there is no government intervention in Mentha oil market. y It is primarily a local middlemens market. Large number of local dealers and commission agents operates in markets. As a result of this farmers do not get fair price. y The market is dominated by big players where as small farmers are disadvantaged by their insignificant small size. These small farmers sell their output to local dealers who in turn deal with large scale distilleries and exporters. y The physical market of this commodity is very fragmented. . The information flow is not uniform and accurate between different participants in many cases.38

OPPORTUNITIESy Mentha oil market is at its nascent stage so, much is there to

be explored. y With proper infrastructure, proper marketing channel and technology this market can prove to be good for the economy. y Increase in awareness.

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THREATy Competition from China. y Weather in India. In 2009 there was a fall in the production of Mentha oil. This was because,

the southwest monsoon usually covers the northern state of Uttar Pradesh, the biggest producer, in the first week of July, but in 2009, rains arrived almost a fortnight earlier. Rains damaged crops in some parts of Uttar Pradesh. As a result of this the harvesting process had also been impeded. Pest infection also damages the crop.

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FUTURE STRATEGIES

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y Government regulation in quality testing and processing. y Government intervention in introducing minimum support y y y y y

price (MSP). Duty free import for processing equipment. Extensive marketing and promotional activities. Proper use of insecticides and pesticides. Encourage trading in Mentha oil. Create awareness among the farmers regarding the price of Mentha oil so that they get fair price for their product.

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BIBLIOGRAPHYy Mr. Nazir Moulvi of MCX ( Multi Commodity Exchange). y Spice board y Commodity online y Wikipedia

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THANK YOU

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