Since the beginning of 2023, cinnamon essential oil products have been difficult to sell, with low prices, and could not be exported due to unsuitable regulations. Recently, the Ministry of Health and the General Department of Customs have issued specific guidelines, so the export of cinnamon essential oil has started to recover.
According to calculations, producing 1 kg of cinnamon essential oil costs approximately 400,000 - 480,000 VND. However, since the beginning of 2023, the selling price of cinnamon essential oil has dropped sharply, from 600,000 VND/kg to 360,000 VND/kg, and even down to 280,000 VND/kg at times, causing businesses to suffer losses, temporarily halt production, and accumulate raw materials. Exporting cinnamon essential oil has also become difficult, with hundreds of tons of essential oil unable to be exported, and businesses ceasing purchases, resulting in thousands of tons of raw materials rotting and spoiling.
Since the end of April 2024, the export of essential oil products has become more favorable, with expanding consumer markets and gradually increasing selling prices, which is a positive sign for businesses. After a period of reduced production, the cinnamon essential oil factory of Trieu Duong One-Member Limited Company (Pho Rang town, Bao Yen district) has now resumed stable operation. Currently, the company uses an average of 30-50 tons of raw materials per day, producing about 0.7 tons of essential oil (reaching about 80% of the factory's capacity).
Mr. Vu Van Thang, Director of Trieu Duong One-Member Limited Company, shared: "We hope for stable domestic and international markets, creating favorable conditions for businesses to produce and consume raw materials for the people."
The favorable demand for cinnamon essential oil is also good news, helping thousands of cinnamon growers in the province alleviate their worries about selling their raw materials. Mr. Dang Van Minh from Ban Cai commune (Bac Ha district) said: "Since the end of last year, the price of cinnamon branches and leaves has dropped, at times selling for only 600 VND/kg. The low selling price was not enough to cover the labor costs of harvesting, so many households did not prune branches and leaves for sale. Recently, the selling price has stabilized again (from 1,600 to 1,900 VND/kg), helping cinnamon growers earn more income."
Bao Thang district currently has 4 cinnamon essential oil processing plants, with an output of 140 tons of essential oil per year. Sharing the same difficulties as other cinnamon essential oil processing facilities in the province, in 2023, many facilities operated at a reduced capacity, some even ceased operations, but have now resumed activity.
Mr. Hoang Minh Thai, Director of Hoang Thai Co., Ltd. (Xuan Quang commune, Bao Thang district) shared: Recently, the market for cinnamon essential oil has become more favorable, with selling prices increasing by about 10-20% compared to the end of last year. However, the quantity of goods exported remains low due to the general difficulties of the global market. With a designed capacity of 70 tons of essential oil per year, the company is currently only producing at 50% of its capacity.
After hitting rock bottom at the end of 2023 with selling prices ranging from only 280 to 330 million VND/ton, cinnamon essential oil prices have started to rise in the past month, currently reaching 360 to 400 million VND/ton. According to forecasts, this price level will continue to improve as relevant authorities actively cooperate to resolve the issues related to export product codes.
Mr. Vu Hong Diep, Deputy Head of the Provincial Forest Protection Department, said: Currently, cinnamon products are mainly exported in raw form, used as food and flavoring. Therefore, applying a single code for medicinal herbs has inadvertently created difficulties for businesses, leading to cinnamon growers being unable to sell their products. Recently, the General Department of Customs issued specific guidelines for businesses on declaring the purpose of export, which has helped revive the export of cinnamon essential oil. With this move, people are enthusiastically harvesting cinnamon, and businesses are actively purchasing and processing essential oil and other cinnamon products.
The province currently has over 58,000 hectares of cinnamon trees, annually producing approximately 9,000 tons of cinnamon bark and nearly 120,000 tons of branches and leaves for the market. Currently, there are 9 companies and 1 cooperative producing cinnamon essential oil. The designed capacity of processing facilities ranges from 60 to 120 tons of cinnamon essential oil per year per facility. The basic essential oil extraction technology uses steam boilers. The province's cinnamon essential oil production reaches over 450 tons per year. Raw materials for essential oil extraction (cinnamon branches and leaves) are procured through small-scale purchasing facilities in various localities. 85% of the province's cinnamon essential oil production is exported to China, India, and Japan; 15% serves the domestic market.
Cinnamon essential oil is primarily extracted from the leaves and small branches that people prune annually to allow the trees to grow. Although it is a byproduct of cinnamon cultivation, it has brought in a significant income that helps people reinvest in production.
The province's cinnamon essential oil production is expected to increase significantly as many raw material areas in various localities are reaching their harvesting season. Along with expanding organic cinnamon cultivation areas, the province is also prioritizing the deep processing of cinnamon products, including cinnamon essential oil, to enhance the value and sustainability of this key industry.
The price of cinnamon essential oil has fallen, making exports difficult. Besides challenging market conditions and falling prices, this is also due to the implementation of certain regulations regarding product code declarations for export. The People's Committee of Lao Cai province has sent a letter to the Ministry of Health requesting assistance in resolving difficulties and obstacles in exporting cinnamon essential oil for businesses.
On April 15th, the Ministry of Health held a meeting to review difficulties and obstacles in the export of medicinal herbs, in accordance with Prime Minister's Directive No. 35/CD-TTg dated April 10, 2024. At the meeting, the General Department of Customs stated that it had sent a letter to the Lao Cai Provincial Customs Department, clarifying: If a business declares the export of cinnamon essential oil as a medicinal herb, the regulations of the Pharmaceutical Law should be followed; if a business declares the export of cinnamon essential oil as food, food additive, cosmetic, or for other purposes, the regulations of food safety law and related fields should be consulted to determine the corresponding management policy and process the procedures accordingly.
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