Lemon oil from all corners of the world is one of Ultra’s core products and is obtained by cold expression or steam distillation of lemon peel.
Lemon has a place in many culinary uses from soft drinks and cocktails to marmalade. However, it can also be used and found in household cleaning products since it can disinfect, deodorise, remove grease and dissolve wax and grime to name but a few uses.
Lemon is also used in aromatherapy to enhance moods and can be used for its anti-bacterial properties in other medicinal applications. In fragrances it gives a fresh uplifting and zesty note to any perfume as it is highly volatile.
Interestingly the three top producers of fresh lemons in the world are not the countries we would associate with oil production; the top 3 being China, India and Mexico, which account for over 40% of the world production.
Today we associate lemon oil production with Italy and Spain (Europe), Argentina and USA (Americas) and even South Africa.
Over the past 40 years Argentina's processed lemon volumes have increased significantly decade on decade, from an average annual volume of 80,000 MT in the 1970s, to 200,000 MT in the 1980s, to 540,000 MT in the 1990s and 900,000 MT since 2000. This is why today its contribution is very important to our markets.
Argentina's 2014 crop disaster put huge pressure on the global market, something we are still recovering from. Argentina contributes around 10% of the global fresh lemon fruit market. When you think that over the past 5 years Argentina has processed an average of 860,000 MT of fresh lemons then any crop 'disaster' will have a major impact on the global market.
The lemon season in Argentina is progressing but facing some severe difficulties. The unstable weather conditions during the fruit’s development, the workers’ strikes, the harsh conditions imposed on exports to Europe and the growing competition with South Africa are some of the major obstacles faced by Argentinian lemons. This caused high pressure on volumes and prices in the market.
The weather has been one of the decisive factors. The lack of rainfall in Tucumán, the main producing area in Argentina, during the fruit setting and growth phases has taken its toll on production, reducing fruit size and harvest forecast in the province. However, timely summer rains facilitated a partial recovery in lemon production resulting in a larger than initially expected volume. Argentina’s 2020/2021 fresh fruit production is estimated to be 1.15 million MT, up 12% from prior estimates.
The start of Argentina’s lemon season has also been hit by a series of strikes in Tucumán. Self-organising workers blocked roads in different points of the province and prevented the passage of trucks transporting citrus. The blockades also took place at the access to farms and packing plants. These two factors have delayed the lemon harvest and created a shortage in volume.
The European Commission has lifted, as of 1 May 2021, its ban on citrus imports from Argentina. Trade was suspended last August following a number of interceptions of citrus black spot in shipments. Argentina’s plant health authority, SENASA, agreed with the EU new product traceability requirements. These measures and conditions for the re-entry of citrus fruit to the EU include additional actions that must be carried out both by the different actors of the private and public sectors, which are so high that it is estimated that it will affect the quantities to be exported.
Moreover, the suspension of Argentinian citrus imports to Europe from August 2020 to May 2021 was beneficial for other global players, such as South Africa, which absorbed part of the import quota of the EU’s main lemon supplier. The challenging domestic economic conditions in Argentina do not help, making Argentina less prepared to compete with other exporters from the southern hemispheres, mainly South Africa.
In this context, lemon exports are forecast to decrease to 180,000 MT, a decrease of 10,000 MT because of larger fruit supply in the northern hemisphere, the strong competition from South Africa, and the uncertainty about stringent EU sanitary measures restricting imports of fruit, as stated above. The fresh lemon export business remains profitable; however, with production costs, such as labour, inputs, energy, inland and ocean freight increasing, and high inflation rates, the competitiveness of the lemon sector has been affected. Furthermore, although the continuous depreciation of the Argentinian peso and the elimination of export taxes make exports more price-competitive in foreign markets, a decrease in export rebates and high interest rates, partially offset that advantage. Despite the tough situation faced by the lemon sector, growers and processors continue to invest in new production and technology, with 70%-75% of total production directed to exports.
Fresh lemons for processing are forecast to increase to 831,000 MT, up by 13.5% from the previous forecast, due to the increase in production and the decline in exports of fresh fruit. Nevertheless, this represents a decline of 23% in processing levels compared with last year.
The COVID-19 pandemic has not had a major impact on the activity of the citrus industry. Although the national government enacted a mandatory quarantine in 2020, which has continued in 2021 on an intermittent basis, the citrus harvest was declared an excepted activity, allowing the packing and processing industry to continue working under a stringent protocol to guarantee the safety of workers in the citrus sector, and prevent transmission of the virus.
Global demand for lemon oil is lower, in part because of COVID 19 and lower beverage consumption. Despite reduced Argentine production, supply appears to be in equilibrium with demand and price stable, with the anticipated price increase not having materialised. Nevertheless, the global shortages of reefer and dry containers are increasing transport costs for citrus oils and leading to shipment delays from many origins.
ARGENTINA : LEMON PRODUCTION, PROCESSING AND EXPORTS (‘000 MT)
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