Mentha oil production to decline 20% on lower acreage

Huge carryover stocks, falling prices prompt farmers to opt for alternative crops

Mentha oil production in India is likely to decline by 20% due to lower plantings of the aromatic herb on falling prices in the last two years.

In fact, huge carryover stocks from the previous year coupled with huge capacity built up of synthetic mint, a substitute of mentha oil, also discouraged farmers to bring less area under mentha plant this year.

Trade sources estimate total area under mentha planting reported a decline of 20% to 1.75 lakh ha this season resulting into a proportionate fall in mentha oil production this year.

Traders estimate India's mentha oil production at 55,000 tonnes in 2013-14 of which around 40% quantity remained unsold and therefore, carried over for the year 2014-15.

Mentha oil price shot up to set an all time record an average of Rs 2570 a kg in March 2012 after a massive shortage in availability reported despite huge global demand. Since then the price declined steadily to reach the level of Rs 716.50 a kg in July 2014, trade sources said.

In India, mentha oil is derived through distillation of mentha arvensis largely grown in Uttar Pradesh, part of Punjab and Bihar. Mentha oil finds usage for flavours and fragrances in pharmaceutical, fast moving consumer goods and cosmetics industries. Mentha oil is also used extensively for gutkha manufacturing, cosmetics (toothpaste, mouthwash, shaving creams, shampoos etc.), chewing gums, household cleaning products etc.

"The price of the mentha oil has been subdued for a while due to a ban on ghutka and prices will continue to remain subdued going ahead. Production of synthetic mentha oil on a global level has increased which has also caused demand to remain on the lower side," said Harsh Agarwal, director of Emami, one of the largest FMCG users of mentha oil.

Meanwhile, mentha oil demand has declined due to ban on gutkha production and consumption by many state governments in India. Maharashtra government joined the foray to extend gutkha manufacturing in the state for the third consecutive year in a row.

The arrivals of mentha oil all over India is currently at 300 drums. The harvesting of the commodity is complete. It usually starts in the months of July and goes right into April.

Mentha crop requires considerable moisture well distributed throughout the entire growing season. As roots do not penetrate deep in the soil, light and frequent irrigations remain useful. It's majorly grown in the northern parts of India, in Uttar Pradesh, Bihar, Himachal Pradesh and Punjab.

Many local buyers have resorted to buying mentha oil at high levels last year, which has impacted the buying capacity of players this year as well. Many players had purchased a bulk of their mentha oil requirement at the Rs 1000 per kilogram and hence are sitting on inventory purchased on those levels.

India exports around 25,000 - 30,000 tonnes in all forms of mentha oil including crystal, with the balance of production used domestically. India domestic consumption accounts for around 40% of global consumption, with China (20%), Europe (15%) and the USA (15%) accounting for the bulk of consumption. Within Europe Germany and Netherlands are major users of mentha oil.

In fact, mint products account for a large volume of spices exports in 2012-13 with a share of 29.7%. Mint products exports have grown from $235.4 million in 2008-09 to $415.3 miliion in 2012-13 according to Spices Board of India.

Data compiled by the Spices Board said that BASF and Symrise have increased their global capacity of synthetic menthol to 14,000 tonne in 2012, accounting for 35% of the global production.

Dharmendra Kumar, a Chandausi (Uttar Pradesh)-based mentha oil trader, "Demand for the commodity was quite low this year, which caused many farmers to not bring in the area under cultivation of the commodity lower. Also, due to high carryover stocks mentha plantings were impacted."