1.1 Economic Impact

There are around 40 to 50 spices of global economic and culinary importance. There are also many other species that are used in traditional cooking in the region of their natural occurrence but have yet to reach any significant trade [8] . The major spices of international trade have well known stable long-term markets but most species tend to be commodities and as such there is competition and price fluctuations . The value of global spice imports is estimated at US$2 to 2.4 billion and in 2002 pepper topped the list with 20% of the total value followed by capsicum (18%), vanilla (13%), nutmeg/mace/cardamom (9%), spice seeds (8%) and ginger (6%). The major spice production is in the tropics from developing and least developed countries. There is also a very significant domestic consumption of spices in many spice-producing countries. The supply side of the industry has always been dynamic and has been punctuated by periodic relocations of the major production areas. To remain competitive , countries such as India are moving into the value-added sector producing spice essential oils, oleoresins, powders, speciality extracts and blends. In addition, India has established spice Agri-Export Zones and they are actively developing capabilities in quality management, improved packaging and technology innovation in production and processing . The largest spice importer is the European Union (with Germany being the leading country in the EU). The USA and Japan are the two largest single country importers of spices. In the EU countries, 55-60% of the total spice and herb use is for industrial consumption, 35-40% by the retail sector and 10-15% by the catering sector. The high industrial sector use reflects the growing popularity of ready-to-use spice mixtures. Another reason is the increasing consumption of processed foods and ready to eat dishes, which often rely on spices and herbs to retain and enhance food flavour.

The ever more stringent regulations governing the international trade in spices and their derivatives for culinary use in food processing will mean that spice producers who ignore such specifications will eventually lose their markets to quality producers. For example, the EU (European Union) has aflatoxin regulations to detect contaminated consignments and restrict their import while adulteration of spices with colourants has led to product ban.

Some two hundred essential oils are produced and traded internationally in volumes that range from 20-30,000 tonnes for orange oil to less than 100 kg for some specialty flower extracts. Prices vary widely but for the majority of oils traded in volume fall within the range of US$4- $60/kg and for specialist s minor oils the price can be many hundreds of US$/kg. The citrus oils (orange, lemon, tangerine, lime, manadarin, grapefruit etc.) plus the mint oils have by far the largest number of important applications in tonnages as well as variety of flavours. The seasoning oils of spices and herbs (clove bud, coriander, cinnamon, garlic, nutmeg, onion etc) are traded in lesser quantities and have more selected applications. The majority of other oils are used in even lower quantities and have more targeted applications.

Estimating world production and trade of essential oils is fraught with difficulties [9] . In many countries domestic production statistics are not recorded and export statistics are recorded for some of the high volume oils and the rest are often included in codes that encompass a range of products. Therefore publications of global production must be treated with a high degree of suspicion as they are based on limited statistical data from a few countries and generally ignore factors such as domestic consumption.

Mature markets, where demand for essential oils is highly developed, have low potential growth because of low population growth. The European Union is the world’s biggest importer of essential oils (with France , Germany and UK being the major importing countries). The USA is the world’s largest importing country of essential oils followed by Japan . Most of the oils go into mainstream industries and the number of mainstream users continues to decline through mergers and acquisitions. Aromatherapy is seen as a potential high value growth area; however, it represents less than 1-2% of the total essential oil trade. It is predicted that the growth in these markets will be led by the flavour oils [10] . Use of essential oil for perfume and fragrance applications is predicted to reduce. Derivatives of dual–purpose and industrial oils will be imported from processing factories located in oil producing countries rather than from imported oils

The growth markets for uses of essential oils are predicted to be in the rapidly developing countries (dominated by China and India ), Eastern Europe and Russia and less developed countries. Long-term the amounts consumed in these growing markets is predicted to exceed the current consumption of the industrialised countries. Demand is predicted to be greatest for low-value fragrance oils used in soaps, detergents and related products with smaller growth in the flavour oils, mainly for non alcholic beverages (citrus and spice oils) and oral care products (mint oils). A growth in use of flavour oils in the processed food industries will be confined mainly to developing countries with growing middle class populations.