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Naturals in Indonesia

Sandeep Tekriwal +62-81-29185762 vanaroma@indo.net.id. Naturals in Indonesia. Shanghai, 18-22 October 2009. A Country Overview. Country Location. Naturals in Indonesia. Indonesia & Canada. Naturals in Indonesia. Country Introduction. Capital city: Jakarta 24 mil (+Metro area)

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Naturals in Indonesia

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  1. Sandeep Tekriwal +62-81-29185762 vanaroma@indo.net.id Naturals in Indonesia Shanghai, 18-22 October 2009 A Country Overview

  2. Country Location Naturals in Indonesia

  3. Indonesia & Canada Naturals in Indonesia

  4. Country Introduction • Capital city: Jakarta 24 mil (+Metro area) • Area: 1,919,440 km2 consisting of 17,508 islands (world’s biggest archipelago) • Population July 2008: 234.5+ million (world’s 4th), consisting of 300 ethnic groups and 742 languages & dialects • Biggest Moslem nation (88%) yet very tolerant to other religions • Shining example of a new democratic nation and stable government in the past five years • Per capita GDP (PPP) 2008: US$4,016 with consistent annual growth by 4.5-6% Naturals in Indonesia

  5. Country Introduction • Climate: tropical (wet and dry seasons) 22º-32ºC • Very fertile land with more than 150 active volcanoes & has the 2nd highest level of biodiversity in the world • Agriculture sector (2005): 14.0% of GDP but accounts for 44.3% of workforce • Important agricultural products: palm oil, rice, rubber, tea, coffee, cocoa and spices • Major world exporters of natural gas, coal, copper, gold and tin Naturals in Indonesia

  6. SWOT - Naturals STRENGTHS • Supplying WORLD’s: • 90% of patchouli oil (1400 MT) • 80% of nutmeg oil (500 MT) • 55% of crude clove oil (750 MT) • 75% of clove oil derivatives (1750 MT) • Having 2nd world’s highest bio-diversity • Low cost production base • Geographic advantages: • Tropical climate • Strategically located close to 70% world’s population Naturals in Indonesia

  7. Current Patchouli Oil Supply Chain Cultiva Patchouli Oil Supply Chain SWOT - Naturals WEAKNESSES • Unorganized and fragmented production system: • Raw material availability • Field distillation • Distillation method • Long supply chain from farmers to exporters • Poor infrastructures • Lack of international market information for local farmers and distillers • Lack of funding (working capital) support from financial institution Naturals in Indonesia

  8. SWOT - Naturals OPPORTUNITIES • Partnerships between: • International buyers & Indonesian exporters • Indonesian exporters & farmers-distillers • Developing Indonesian F&F industry • Relocating high-cost labor intensive production base to Indonesia • Increasing purchasing power of Indonesian middle class • Shifting trend from synthetic to naturals Naturals in Indonesia

  9. SWOT - Naturals THREATS • Global warming: • El Nino/La Nina • Unpredictable weather • Violent price fluctuations affecting supply • Competition from other agricultural commodities • Biotic adversity Naturals in Indonesia

  10. Export vs Import (US$) Essential Oils (HS-3301) Source: Indonesian Bureau of Statistics Naturals in Indonesia

  11. Patchouli Oil • Traditionally produced in Sumatera, later in Java • Growing importance of Kalimantan • and Sulawesi Naturals in Indonesia

  12. Patchouli Oil • Map of patchouli oil producing areas Naturals in Indonesia

  13. Violent Price Fluctuations Naturals in Indonesia

  14. Patchouli Oil • Probable causes: • El Nino • Speculative trading mentality • Cultivation method/Nomadic farming (Sumatera) • Diseases • Price of other agricultural commodities • Rising cost of energy • Current world economic melt-down Naturals in Indonesia

  15. Patchouli Oil • Effects: • Reducing demand & usage due to change in formulations & shift to other more stable raw material supplies • Uncertainty of new product development • Production behavior of farmers during violent price fluctuations Naturals in Indonesia

  16. Patchouli Oil • Proposed & On-going Efforts: • “Cultiva Program” launched in IFEAT Budapest & its progress • On-going 5 pilot projects: Aceh, North Sumatera, West Sumatera, West Java, East Java • Implementing Good Agricultural Practices & Good Manufacturing Practices • Determine sustainable price • Price ranging from US$40-55 per kgCNF would be fair to all parties concerned • Opening dialogue with farmers & exporters • Making field trips to understand ground realities • Develop mutual partnerships Naturals in Indonesia

  17. Nutmeg Oil • Current Conditions • Compared to patchouli, relatively more stable price & supply • Farming & distillation are more organized • Production concentrated in Aceh, West Java & North Sulawesi • Prices are expected to be firm • Challenges • Deadly disease, attack by stem borer bug (Batocera) • Trees are getting old & not much of replanting Naturals in Indonesia

  18. Nutmeg Oil • Map of nutmeg oil producing areas Naturals in Indonesia

  19. Clove Oil • Facts • Biggest producer & consumer of clove buds – mainly in the cigarette industry • Stable price & supply of crude Clove oil & its derivatives • Clove leaf & stem – sources for oil • Production centralized in Java & Sulawesi • Prices move upward due to international price increase of buds Naturals in Indonesia

  20. Clove Oil • Map of clove oil producing areas Naturals in Indonesia

  21. New Developments - Naturals • Alpinia Malaccensis oil • Production approximately 12-15 MT per annum at price range US$35-40 per kg CNF • Grows wild in Java & Maluku islands • Used to produce Methyl Cinnamate crystals mainly used in cosmetics and pharmaceutical industries • Very high potential for production of Organic certified Methyl Cinnamate if the demand for this product can be generated Naturals in Indonesia

  22. New Developments - Naturals • Aetoxylon Sympetalum oil • Production approximately 5-6 MT per annum at price range US$130-140 per kg CNF • Grows wild in Kalimantan – distilled in Kalimantan & Java • Used in fragrance industry • Main component is Alfa Eudesmol – similar to sweet woody note of agarwood oil Naturals in Indonesia

  23. New Developments - Naturals • Sandalwood Papua (Santalum Macgregorii) oil • Price range US$300-350 per kg CNF • Produced and distilled in West Papua • Used in fragrance industry • Good potential to increase quantity as price is much cheaper than other varieties of Sandalwood Oil Naturals in Indonesia

  24. Organic Certification Issues • High potentials but lack of dissemination of education and information on benefits • High certification costs for fragmented, traditional farmers • Few local certifiers that are not globally accredited • Existing exporters are not focused on Organic certified naturals and reluctant to foster farmers • Supporting certified organic materials (biofertilizers, biopesticides, bioinsecticides, etc.) are scarcely available Naturals in Indonesia

  25. ISEO • 2nd Indonesia’s ISEO (International Seminar on Essential Oil) • Organized by DAI/IEOC and Ministry of Industry • Will be held on 25-28 October 2009 in Bogor, West Java, IPB International Convention Center (40 km south of Jakarta) • Including a field trip to essential oil production centers in West Java • All are cordially invited • Please visit www.iseo2009.com for more details Naturals in Indonesia

  26. Terima kasihThank you谢谢你 Naturals in Indonesia

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