Rosy Future Expected for Jojoba Producers As Global Demand Continues to Strengthen

11 October 2004 00:01  [Source: ICB Americas]

The jojoba oil industry is enjoying stronger-than-ever demand as consumption in cosmetics and personal care applications continues to rise. While primarily used as an emollient-moisturizer, research and development for new applications, even in other industries such as in pharmaceuticals and nutrition, continues to expand as consumer awareness of jojoba’s benefits become more apparent.

“The jojoba oil market continues to grow as more researchers discover the difference between jojoba’s unique array of long-chain monounsaturated esters and all other seed oil triacylglycerols,” says Hal Purcell, president of Purcell Jojoba International (PJI). “Researchers worldwide are discovering higher-value uses of jojoba, particularly in the pharmaceutical field. For instance, our company has been issued a patent on the treatment of enveloped viruses using jojoba oil esters. These viruses include herpes simplex virus that causes cold sores and HIV that causes AIDS.”

A compound called simmondsin from jojoba meal is also currently being studied as an appetite suppressant for pet and human nutrition. Further trials are being conducted before it can be approved as a pharmaceutical or diet aid, according to the US Department of Agriculture.

In cosmetics and personal care, new jojoba products continue to sprout, driving jojoba oil consumption to its highest level. The cosmetics industry continues to consume the majority of all jojoba oil produced worldwide. Global consumption in the industry is said to have increased to over 2,000 metric tons per year.

“The development of the jojoba market is very positive as jojoba oil became a recognized raw material mainly in the cosmetics industry,” says Christian Watjen, cofounder and president of the International Jojoba Export Council (IJEC) based in Phoenix, Ariz. Mr. Watjen is also the president of Inca Oil SA, a global jojoba producer and processor based in Argentina and Peru.

“Global consumption is increasing year over year,” he adds. “In the US alone, jojoba oil consumption in 2003 has doubled to 600 tons over the past three years. Pure jojoba oil became very popular, and refined jojoba and hydrogenated jojoba beads and spheres have increased in demand as well.”

Alongside the US, major jojoba oil importers include Germany with nearly 600 tons of oil consumed last year, followed by Japan with 220 tons. Demand in Japan is said to have increased by 70 percent in the last five years. Although still a small consumer, China increased its jojoba imports to 45 tons last year.

Due to the increase in US demand for jojoba products, Inca Oil decided to enter the US market last November with the creation of Animus Cosmetic and Pharma Inc., based in Miami, Fla. The company supplies jojoba liquid wax and derivatives to the cosmetics and personal care industries in North America by resourcing products directly from Inca Oil’s plantations and processing facility in Peru and Argentina. Animus says it has expanded its production capability by producing hydrogenated jojoba, and is about to introduce jojoba beads into the US market.

“Sales growth has been positive since Animus was created,” says Patrick Garbade, CEO. “By next year, Inca Oil will process 600 metric tons of jojoba oil which is equivalent to about 35 percent of the world production. We believe we are more than ready to meet increased demand growth in the US and world markets.”

In the past, supply volatility plagued the jojoba industry, hampering growth in consumer usage. Over the past five years, however, the dependable supply of jojoba raw material at a stable price has given manufacturers confidence to move forward with new jojoba products, notes PJI’s Mr. Purcell.

“Simultaneously, the steadily growing demand has given growers the confidence to increase the production. The result is a fairly good balance between supply and demand over the past years,” he adds. PJI currently procures the oil from its 1,200-acre jojoba orchard in Bouse, Ariz. The company’s customers include Weleda, Aveda, L’Oreal, The Body Shop, Procter & Gamble, Unilever, Beiersdorf and 3M Company.

Last year, global jojoba seed production set a record year for the industry. Total production rose 89 percent to 4,900 tons compared to 2,600 tons in 2002, according to IJEC. US jojoba seed production for 2003 jumped 40 percent to 1,000 tons, while in Argentina, seed production made a whopping three-fold increase to 2,400 tons. In 2003, around 50 percent of global production came from Argentina, followed by the US at 20 percent, Israel at 17 percent and Peru at 10 percent. Other jojoba producers include Australia, Chile, Egypt and Mexico.

“Global jojoba seed production has averaged about 3,500 tons per year over the past eight years,” says James Brown, president of Gilbert, Ariz.-based Inter-national Flora Technologies Ltd., another major jojoba derivatives supplier. “Productivity of the fields in different countries varies from year to year factored by the genetics of the planting stock, age of the fields, weather events, etc. This year, Argentina has the largest surface area of jojoba planted with 2,900 hectares followed by the US with 1,900 hectares and Israel with 550 hectares.”

For 2004, global jojoba seed production is expected to be off by 26 percent, to 3,620 tons due to frost damage early this year in Argentina and the US. Production is expected to decline by 50 percent in the US and 42 percent in Argentina.

In 2005, global production is projected at 3,750 tons by IJEC. Jojoba seed production in Argentina will slightly decline to a projected 1,200 tons compared to the estimated 1,400 tons this year. In the US, seed production is expected to increase to 600 tons.

Despite lower production this year, US jojoba oil pricing remains steady between $5 to $9 per pound—depending on quality and quantity—as global oil inventories remain high from last year’s carryover stocks. High-quality pure golden jojoba oil is currently selling between $6 and $9.50 per pound, depending on the terms of the sale and on volume, which ranges from a single 180-kilogram drum to multiple 80-drum containers.

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