Essential oil when it comes out of vessel it’s a mixture of oil and water and since water and oil have different specific gravities —separation of two is an easy job.
Oil distillation has to be an uninterrupted continuous process for every batch of oil. Hence, before we start the process the complete backward supply chain has to be in order be it raw material, fuel, manpower anything. Flower petals takes least time, green leaves bit more, dried leaves furthermore, roots a lot more and wood based longest. Each hour of processing adds to cost.
So primary costs are
- raw ingredient costs
- machine cost
- Time and manpower
Also, for higher end items, manpower/hour cost is higher because of the expertise of the person. The lowest rung of the operator does grass oils like lemongrass etc. and the highest rung operators work on oils like German chamomile, Rose, sandal and that reflects in costing.
Post the quality raw material is sourced and filled in a vessel, the only variable parameter that determines the oil quality is the intensity of heat. Water starts flowing out of the condenser only after a few hours, in between that time, the only way to know what is happening in the vessel is fumes escaping traps and to smell that correctly is the skill of the operator of that vessel. So, his specialization, experience, quality of nose, alertness, and intuition is his value additions. That is why for the low-cost oil the labor cost is also lower technically impacting the final cost and the same increases in higher-value oils.
Vessels employed are also usually different. Low valued oils will be made in bigger vessels (to reduce cost) and higher value in smaller vessels (to ensure lower risks) –thus adding to cost.
Oil recoveries are very low say around 0.02 to 0.4 %. So from a 500 kg vessel, one might get oil in few ml. to 2000-3000 ml, after cleaning and letting oil settle in sediments by storing (earlier it was done in sheepskin bags) and further leading to 10-15% of it as waste. In fact, there is a classic case from a place where mint is grown to produce oil. A farmer attempted suicide by drinking few hundred mls of oil yield because the yield of essential oil came lower than even cost of processing and that he hired trolley to take the crop to the processing unit- forget about the raw material cost.
So, there are risks about the yield, and a lot of other reasons go as input to the costs including just bad luck. However, the others factors are an inherent quality of product, post-harvest handling, operators training/experience, and quality of fuel –its consistency.
The process /technology is simple, though wide range. Water, steam breaking down the molecular formation of raw material, converting it in steam. Steam going upwards and moved to condensor where its cooled down by water. On other side you get water /oil mixed after separation it’s the EO and Hydrosol. High value hydrosols are recycled again and again as a continuous process to recover oil.
After that oil gets a settling time when sedimentation helps it to clean naturally. Individuals who have found sedimentations in ark can understand it better. A lot of particles of herbs get broken into such nanoparticles that they pass along with steam.
Now as a distiller how I decide my prices:
Forget the B school costing modules —of demand and supply. My experience is quality and knowledge of distiller adds an IP (intellectual premium) price to oils. That is why I often say EO is both a science and an art science for low valued oils but just art in high valued oils.
We all know using fertilizers like urea increase yield by 30-50 % especially in the case of herbs having foliage like mint. So, if one uses or not, makes a qualitative difference in yield and oil understanding the fact oil is broadly a function of quantity of yield. Reason we never used fertilisers, was based on our social commitment but now research shows that heavy metals in essential oils is area of concern, that is where global focus is again shifting to organic protocol on herbs. So, following organic farming protocol adds on costs of output since the production is affected. However, people world-wide who treat oil as diamond are willing to pay prices because they understand the quality, they are getting is worth it!
There are other technical ways to reduce costs of oil like if best oil is in leaves alone —and 2nd-grade oil comes from twigs, a healthy mixture of two cuts costs.
Then there is blatant mix of Chines EO’s with yield —it reduced prices like bomb. Example Chinese mint oil is around INR 1400-1500 ltr in bulk. Indian mints production cost is around INR 3000 plus. If distiller mixes 50:50 the cost falls to INR 2200. So are the other oils like lavender etc.
So, oil prices are hardly taken into account by people who are in line for long. Whole process of oil and distiller is considered.
In the next note, we will discuss how oils move from distiller to end-user, how prices get loaded, what affects prices; something that impacts the final user. How and why qualities change, from pure EO to crap stuff it turns. And from there we will move to the medicinal properties of individual plants.