One of the key factors in the success of a flavor and fragrance Buyer is the in-depth knowledge of the context in which his company operates, including all natural variables that regulate (directly and indirectly) the availability and prices of raw materials serving the company business.
Indeed, climate dynamics, natural disasters or epidemic plant diseases can heavily influence the quantity and quality of crops and, consequently, affect production, formulation and distribution processes within the F&F Industry, worldwide.
Microclimate and annual climate dynamics
The agricultural output is clearly connected to the soil characteristics, the geography of lands, the microclimate, and —last but not least — the climate variability. Since quality and quantity of crops change season after season, availability and prices of natural flavor and fragrance ingredients change accordingly.
In terms of quality, temperatures, rainfalls and yearly meteorological variability actually influence the chemical composition of essential oils and other flavor and fragrance naturals, imprinting a wealth of codified facets that differentiate each single production.
In terms of quantity, climate influences the crop yield and —in some cases — the cropping “intensity” (amount of crops grown within a year). This means that every year the quantity of natural raw materials available on the market can change radically, thus influencing all the necessary transformation and optimization processes, the stock management and the commercial strategies, together with many other industrial activities.
As a pertinent example of the effect of the microclimate and the climate variability on the agricultural output, we can consider the specificity of bergamot that grows exclusively in the South of Italy. Another case is the difference between quality and quantity of Linalool-type basil grown in Europe and the Estragole-type from Southeast Asia —where the production is almost continuous during a long period of the year thanks to a more favorable (quantity wise) tropical climate.
The Buyer’s wisdom will push him not to plan the purchases according to temporal production needs only. The climate season should be constantly monitored, in order to keep the purchasing plan always updated and efficiently serving the whole business.
A geographical forecasting of crops (quality, quantity and harvest timing) and yields of flavor and fragrance materials can give advantage to the Buyer, allowing him to plan his purchases in advance, to adjust his strategies, and to chase opportunities.
Parasites and plant diseases
Parasites and plant diseases can have acute and temporary or chronic evolutions, locally circumscribed or widely spread. Once spotted, any plant disease must be fought from the very beginning, and their potential evolution should never be underestimated.
An emblematic case links the “greening bacteria” (Candidatus Liberibacter spp.) to the global production of citrus essential oils. The so-called “citrus greening” (also known as Huanglongbing – HLB) was first found in Florida in 2005, and is now considered a chronic global disease, whose effect should be kept monitored and forecasted crop-by-crop.
The greening progressed from an acute to a chronic disease throughout the state of Florida and, according to The Telegraph, the local “orange production plunged by 60% between 2005 and 2017” (April 25, 2018), mainly due to the mentioned bacteria.
In 2016, a survey led by the Institute of Food and Agricultural Sciences of Florida University found that 80% of the citrus trees in operation across the United States were infected.
In 2017, “a species of the African psyllid, a plant louse that can transmit the “greening bacteria” disease, has been detected in Spain and Portugal” (The Telegraph – April 25, 2018), a region producing around a fifth of the world’s oranges, clementines and lemons.
Natural adversities
Hurricanes, blizzards, floods, tsunamis and earthquakes are —fortunately — exceptional events. Nevertheless, they can have a major impact on the availability of raw materials, depending on their location. In fact, when they affect areas of the planet with specialized agricultural production (e.g. cultivation of cloves in the Philippines or Vetiver in Haiti), even natural disasters of moderate magnitude may trigger market dynamics that are difficult to predict and deal with.
Patchouli essential oil may be a good example. About 80% of the world production of patchouli comes from the Indonesian archipelago, which is often subject to earthquakes, floods and volcanic eruptions that periodically devastate the crops.
Also clove essential oil —a typical Philippine product — suffers from the presence of the “El Niño” meteorological phenomenon and the particularly destructive typhoons that have been recurrently hitting the Philippines since 2006 up to now.
The earthquake that devastated Haiti in January 2010 affected the availability of a premium-quality Vetiver, of which Haiti is the leading producer Country —followed by Indonesia, China, India and Brazil — with more than 100 tons/year, equal to 40% of the world production. The fact that —as reported by Perfumer and Flavorist magazine — more than 36% of the perfumes on the market contain Vetiver essential oil, may help to better understand the consequences of such an event for the F&F Industry.
The impact of each natural phenomenon should be studied separately. Storms and earthquakes, for example, have different influences on the production and processing of essential oils: while earthquakes mostly affect the processing stage —the biggest ones may destroy plants and entire orchards —, the results of heavy storms may inhibit harvesting too.
Recent studies and data comparisons are showing that hurricanes and floods are steadily increasing because of global warming. As reported by the CNN, “consensus among scientists is that the effects of the climate change, such as rising sea levels and warmer oceans, are making storms like Harvey or Irma (August/September 2017) far more destructive than they would have been in previous decades”, with heavier rainfalls causing recurrent flood. And also: “changes in our planet's atmosphere did not cause hurricanes Harvey or Irma. […] But in the case of a really bad storm, climate change can make them totally disastrous or catastrophic” (CNN – September 19, 2017).
This ever-changing scenario suggests Buyers of flavor and fragrance materials to select suppliers according to their specific capacity (in terms of volumes). Generally, the consequences of natural adversities are best managed by those companies with a strategic maintenance of minimum stocks and multi-sourcing assets, justified by strong economies of scale.
However, diversification of sources is always a possibility to keep in mind. The Buyer has to assess the costs of standardization for products coming from a new different supplier, knowing that these costs and the relative issues may eventually be much more expensive than buying from those suppliers ensuring greater supply continuity. Accordingly, the know-how and the industrial capacity of efficiently manufacturing improved F&F materials can be carefully analyzed by the Buyer with the support of the technical staff of his company.
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