Middeldrift community banking on billion rand industry for growth

Eastern Cape Development Corporation (ECDC) is on board to finance an organic essential oils project in Middledrift to the tune of over R1,6 million, the development finance institution says.

The bulk of the cash is to come from the ECDC's Imvaba Cooperative Fund, says the development finance agency.

"The total finance requirement is R1,625 000. An amount of R1,4 million can be considered through Imvaba. We'll look for the rest from development projects," says Bowell Solwandle, project coordinator for ECDC.

An amount of R700,000 of the money will go towards working capital while the bulk of it has been allocated towards operating capital, Solwandle adds.

With the help of Small Enterprise Development Agency (SEDA) Essential Oils Business Incubator (SEOBI), the cooperative conducted trials for four essential oil crops in 2008 and have selected rosemary and geranium to cultivate in the communal land. The project has formed a three year incubation contract in terms of which SEOBI will market the project.

The aim of the trials was to determine which essential oils crops would be most viable.

"Trials were conducted for four types of essential oil crop and those were rosemary, spearmint, and geranium and rose-geranium," Solwandle says.

"All trials conducted with the help of SEOBI were successful. However, the cooperative members and SEDA chose two to start with."

The Zalaze Cooperative in rural Eastern Cape has 156 hectares in total which it intends to produce organic essential oil crops. In the first two years the project is set to cover 20 hectares before expanding by ploughing back its feedstock until it covers all 156 hectares of land set aside for the crops in the next 3 years.

The projected income streams for the essential oil crop are "conservatively" estimated at millions within the first two years.

The Zalaze cooperatives projected R765,000 revenue and R281,000 in the first year for Geranium and Rosemary respectively, which are used as ingredients for aromatherapy oils and scents.

"There is high value in essential oils. The problem with vegetables is that they can be stole and essential oils are relatively safe in that regard because they are used in specialised fields in the perfume and cosmetics industry where they are processed," says Solwandle.

The Zalaze Co-operative has 40 members, with women being in the majority at 27 while the rest of the members are men. The business will create 21 jobs in the area.

 Once harvested, the crop will be destined for global markets. According to Seda, the essential oils global market is estimated at $18-20 billion per year growing at a rate of seven to 12 percent per year.