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Compliance costs hinder growth of SA’s essential oil industry

From costly certifications to limited access to rural extension services, SA's essential oil industry struggles. Experts at a recent webinar highlighted the need for innovative business models, increased focus on indigenous oils, and addressing the gender gap

by Patricia Tembo
12th February 2025
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Experts discuss sustainability and market opportunities in South Africa’s essential and vegetable oils industry.
Photo: Southern African Essential Oil Producers’ Association

Experts discuss sustainability and market opportunities in South Africa’s essential and vegetable oils industry. Photo: Southern African Essential Oil Producers’ Association

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South Africa’s essential oil producers are in a sticky spot. Not only are they battling costly compliance, but they also have limited extension services in rural areas, and low production volumes are stalling industry growth.

This was revealed during a webinar hosted by the Unido Global Quality and Standards Programme (GQSP) South Africa project, which explored key aspects of the sector, including value chain models, compliance costs, and the role of women.

Hosted in partnership with the Swiss State Secretariat for Economic Affairs (SECO), the department of trade, industry and competition (DTIC), and the Southern African Essential Oils Producers’ Association (Saeopa), the event brought together experts to discuss sustainability and market competitiveness.

Introducing indigenous oils to global market

Dr Karen Swanepoel, CEO of Saeopa, highlights low production volumes as a major hurdle to attracting international investment in the sector.

“That’s also maybe the reason for the absence of the international companies – it’s because of the volumes that we simply just don’t have. I think we definitely have to work towards that.”

Swanepoel pointed out that while the country excels in producing eucalyptus, citrus, tea tree, and khaki bos oils, indigenous oils remain underdeveloped.

“The reality is that most of our export products are exotic. So we are very well positioned when it comes to eucalyptus and citrus and tea tree and khaki bos. Unfortunately, we are not very well positioned when it comes to indigenous oils, except for buchu. But even that doesn’t make up the real potential of South Africa,” she explained.


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Funding business expansion

There is also a need for strategic funding models at different business stages, said Chikomborero Chiobvo, a senior agricultural economist at Urban Econ.

Chiobvo noted that while initial grants help farmers through the incubation phase, scaling up requires further investment. For contract harvesting, funding from international agencies, venture capital, and diverse financial solutions is crucial. However, institutional and policy barriers remain key challenges.

“Some of these limitations included agricultural extension services, which are limited in rural areas where they do exist. They are less accessible due to biases in targeting or delivery methods.

“Due to the non-food crop nature of the industry that we are assessing, which is the essential and vegetable oil industry, an added limitation to access to extension services that are relevant to the work that is done,” Chiobvo said.

Tap into South Africa’s growing essential oils industry

Compliance costs: A major barrier to growth

A study conducted by Urban Econ development economists from June to October 2024 revealed that compliance with national and international quality standards is a major financial hurdle for small and medium-sized essential oil enterprises (SMEs).

Bernard Bau, project manager of GQSP South Africa, highlighted that while compliance is crucial for market access, it remains a costly affair.

“Organic certification alone can cost between R90 000 and R200 000, while food safety standard certifications required for export can exceed R1 million,” he explained.

Additionally, wild harvesting permits cost up to R5 000, and upgrading facilities to meet safety and environmental regulations adds further financial strain on SMEs.

GQSP South Africa aims to strengthen SME sustainability and competitiveness by enhancing technical compliance capacity and market access.

“The goal is to enhance quality infrastructure, improve market access, promote the competitiveness of South Africa on the global stage, and most of all, to build a strong brand for oils produced in South Africa,” Bau said.

To address compliance costs, the study explored alternative business models, including cooperatives, out-grower schemes, and incubation hubs. These models enable SMEs to share costs, access funding, and streamline compliance processes.

Chiobvo defined compliance in the sector as the adherence to “both national and international standards, regulations and quality requirements necessary for market access”.

She highlighted training and development as a priority for SMEs, focusing on women’s leadership. The webinar also underscored community support, market access, financial aid, and policy reforms as key strategies.

Essential oils industry offers growing opportunities for farmers

Women’s role in the essential oils industry

Chiobvo examined the role of women in the industry, highlighting contributions and barriers to participation. The study revealed that while 76% of women were involved in raw material production and wild harvesting, only 23% participated in technical roles like processing.

In contrast, women’s involvement was higher in administration (71%), quality control (53%), and sales and marketing (41%).

Despite these contributions, the industry remains male-dominated, with 59% of businesses being male-owned. Socio-cultural barriers, economic constraints, and institutional challenges limit women’s advancement.

Swanepoel acknowledged the current gender gap but saw it as an opportunity. “We don’t see that as bad news. We see it as the way and the potential that we need to grow into.”

READ NEXT: Farmland vs. housing: Balancing SA’s land reform tug-of-war

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Patricia Tembo

Patricia Tembo is motivated by her passion for sustainable agriculture. Registered with the South African Council for Natural Scientific Professions (SACNASP), she uses her academic background in agriculture to provide credibility and technical depth to her journalism. When not in immersed in the world of agriculture, she is engaged in outdoor activities and her creative pursuits.

Tags: Commercialising farmerdepartment of trade industry and competitionEssential oilsInform meSouth African Essential Oils Producers' Association (SAEOPA)
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