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LAVENDER
PRODUCTION IN
BULGARIA Анализ на пазара и перспективите
„ИНТЕЛИАГРО“ Автор: Стилиян Гребеничарски Редактори: д-р Десислава Николова, главен икономист „Институт за пазарна икономика“, Николай Вълканов, главен икономист „ИнтелиАгро“ София септември 2015 година
LAVENDER
PRODUCTION IN
BULGARIA Market and opportunity analysis
INTELIAGRO Author: Stiliyan Grebenicharski Editors: Nikolay Valkanov, Chief analyst InteliAgro; Assoc. Prof. Bozhin Bozhinov, PhD Sofia September, 2016
With the support of:
LAVENDER PRODUCTION IN BULGARIA
2
Contents:
Summary ............................................................................................................................................... 3
Global tendencies ................................................................................................................................ 4
Lavender production in Bulgaria ..................................................................................................... 7
Oil production .................................................................................................................................. 9
Market .................................................................................................................................................. 10
Role of support ................................................................................................................................... 11
Issues and challenges ....................................................................................................................... 12
SWOT analysis .................................................................................................................................... 15
Notes .................................................................................................................................................... 16
Sources................................................................................................................................................. 16
About INTELIAGRO ............................................................................................................................ 17
LAVENDER PRODUCTION IN BULGARIA
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Summary Global lavender market is developing dynamically driven by its increasingly diverse application,
the solvent demand in the developed countries and the growing interest among the developing
countries in products of natural origin.
The production in France, that was a leader until recently, is going through long-standing
problems related to the spread of diseases and pests. In recent years the areas there have
stabilized at about 3500 ha and in 2015 the production increased to 80 MT of oil. Lavandin is
considerably more widespread in France.
Europe is a major market for lavender and lavandin oils. Bulgaria has been a leader in the
export value of terpeneless oil in the EU since 2015 – with 10 million Euros. Together with
France they account for 2/3 of the EU’s export. The EU Member States are also a leading
importer – mainly France and Germany. Key markets are also the USA and Switzerland. Smaller
quantities are exported to countries in Southeast Asia, Latin America, Australia and Canada.
The interest in Bulgaria has been growing and after 2008 the areas have increased more than
three times. The establishment of plantations was intensive between 2012 and 2015, when the
total areas came close to 7000 ha. The range has also expanded – lavender is grown in many
parts of Bulgaria and Dobrudja has found place among the leading producing regions in the
world.
The main reasons for the growth are: the difficulties in France and other major producers under
the conditions of increasing demand and rising purchase prices, the availability of public
support, the need for alternative sources of profitability of grain production.
According to estimates of the sector, 200-250 MT of lavender oil are produced in Bulgaria,
which is almost entirely exported - through dealers and directly – by the bigger producers. In
recent years, large foreign clients have invested in their own distilleries in Bulgaria. The
installations are not very expensive and this allows medium- and large-scale farmers to close
the cycle with oil production.
The subsidization of the sector is disproportionate to the operating costs and stimulates the
establishment of plantations regardless of the products quality and marketing. It is necessary
to revise the rates under the various mechanisms and improve the control over their
functioning. It is necessary to focus the support on investments at the expense of that based
on unit area.
The main challenges are related to the rapid growth and the entry of many new producers.
Such a large increase in the areas in the leading global producer inevitably leads to pressure on
prices. Indications for this have already been observed in the 2016 campaign. In addition, the
young plants are yet to reach their full potential and France is proceeding to increase in
production.
Among the serious risks is the spread of diseases and pests, which are poorly known so far in
the country, but which can largely affect the crop.
The technical training of the farmers is insufficient which leads to various errors in the creation,
growing and harvesting of the crops, and hence to problems with the oil quality.
It is necessary to invest in scientific research – in development of new varieties, resistant to
diseases and pests, adaptable to the diverse location of the farms and consistent with the
market demand for oils.
LAVENDER PRODUCTION IN BULGARIA
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Global tendencies
Lavender is one of the most common essential
oil-bearing crops in the world. It is often
defined as a Mediterranean crop. Several years
ago Bulgaria joined France which is a world
leader in lavender cultivation and lavender oil
production. The plant is also grown in Italy,
Spain, Morocco, countries of the former
Yugoslavia, Hungary, Romania, Turkey,
Ukraine, Moldova, South Africa, in some
regions of Russia, China, the USA, etc.
Lavender is widely used in the cosmetic,
pharmaceutical and perfume industry, in the
manufacturing of detergents and cleaning
agents, etc. It is used in processed or raw form
in the production of food and soft drinks.
Lavender is also used in agriculture - in plant
protection in organic production, as a natural
regulator of plant growth (sprouting of
potatoes) and in suppression of the methane
production from cows - only Lavandula latifolia
(Zheljazkov et al., 2013). It is also popular,
especially in the USA, in the entertainment
farms offering tourist services, aromatherapy,
photographic tours, organization of corporate
and personal events, etc. With the
identification of more and more useful
properties of the plant, the demand for
lavender honey is increasing. Lavender is also
used as an ornamental plant, as well as for
making bouquets and various ornaments to
decorate the home. All this predetermines the
great potential of its market.
The strengthening of consumer preferences in
developed countries for products of natural
origin, produced in an environmentally
sustainable manner, is a factor that
presupposes sustained increase in the demand
for lavender oil. To this must also be added the
rising standard of living and the growing
consumption of premium products of a
different nature in developing countries, which
opens new markets for the processing
companies. The projections are that in the
coming years China will become one of the
largest consumers and producers of lavender
oil.
Until recently, France was the leading producer
of lavender oil in the world. However, due to
long-standing problems related to the spread
of diseases and pests, after 2006 the country
gradually ceded leadership to Bulgaria. Since
the 70s of the 20th century the areas in
Provence - the emblematic region of the crop,
have periodically been affected by decline,
caused by the bacteria Stolbur phytoplasma
(Stolbur). The bacteria are not subject to
treatment and the only measures that can be
taken are prevention – fight against the vector
(cicada Hyalesthes obsoletus), and uprooting of
the infected plants. Between 2006 and 2010
some French regions lost almost half of the
harvest, and a significant part of the areas were
uprooted. In the early 80s of the 20th century in
the Alpes-de-Haute, Provence, a mealybug
(initially considered Dysmicoccus multivorus)
was observed, which quickly spread
throughout the Southeast, causing a 45% loss
of the lavender essential oil production. The
species is polyphagous and widely distributed
in the Palaearctic Region – Europe, Northern
and Central Asia, Middle East and North Africa.
It develops on the spike and the flower buds,
feeding at their base and causing leaf
distortion. After the lavender has been
harvested, the mealybug moves to the lower
parts of the stem, sometimes inside its hollow
part or even to the roots.
LAVENDER PRODUCTION IN BULGARIA
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Source: Agreste, Ministry of Agriculture, Agrifood and Forestry, France
Source: Agreste, Ministry of Agriculture, Agrifood and
Forestry, France
1 Lavandin is a hybrid cross between the most common commercial species Lavandula angustifolia (true, English lavender) and Lavandula latifolia (broad-leaved, spike, wild lavender). The lavandin is tougher, more adaptable and much more productive, but its oil is of lower quality, has higher camphor content and sharper aroma.
The problem deepened again after 2009 which
necessitated its additional study. The
morphological and DNA studies have shown
that the species is completely new –
Dysmicoccus lavandulae – a lavender-
damaging mealybug (Germain et al, 2015).
Another important pest in the country is the
lavender midge (Resseliella lavandulae), the
larvae of which develop under the bark of the
plants and cause dieback. Major obstacles for
the recovery of the affected areas are the
expensive labor force required for the
establishment of a plantation and the care
during the first two years of its growth.
Nevertheless, in recent years the areas have
stabilized and the oil production has exceeded
the amount reached in the period 1999-2002.
The development of new, more resistant,
adaptable and productive varieties have an
important role for this, although for the time
being there isn’t any variety that is completely
resistant to Stolbur phytoplasma (Germain et
al, 2011). Nowadays, lavender fields in France
cover approximately 20,000 hectares, the
predominant part of which, however, are
occupied by lavandin1 – over 16,000 hectares.
Depending on the season, France produces
between 60 and 70 MT of lavender essential oil
and in 2015 it reached 80 MT. The production
of lavandin oil is between 1100 and 1300 MT
and in the last year it approximates 1500 MT.
The production of the crop (lavender and
lavandin) is estimated at about 30 million Euros
per year and it engages directly and indirectly
nearly 30,000 people and 2,000 farms. All this
referes to regions with low agricultural
potential. The revenues from tourism in the
“lavender” regions exceed 1.5 billion Euros per
year (Germain et al, 2015).
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Lavender in France - areas and production
production - oil (t., right scale) area (ha, left scale)
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Lavandin in France - areas and production
production - oil (t., right scale) area (ha, left scale)
LAVENDER PRODUCTION IN BULGARIA
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Export of terpeneless lavender and lavandin oil * (ЕU-28)
2015 2012-2015 12-15/08-11
mln. €
MT mln.
€ MT
mln. €
MT
Bulgaria 10,4 125 28,8 397 122% 117%
France 10,3 378 35,0 1273 53% 33%
Spain 3,6 107 11,5 490 273% 245%
Germany 1,5 26 5,2 94 49% 32%
Great Britain 1,3 88 5,1 246 451% 406%
Belgium 1,1 9 4,6 33 109% -57%
others 1,0 22 3,4 131 8% -5%
ЕU-28 29,2 754 93,6 2664 92% 65% Source: Eurostat
* Code 33012797 of the Combined
Nomenclature of the EU related to foreign
trade. After 2007 terpenic oils of lavender and
lavandin were put together in a common
group with essential oils of other origin. Their
reporting is impossible and the presented data
do not cover the whole trade with lavender
and lavandin oils. Due to the uniting of the
two major varieties in one category, the
comparison between the separate countries
with respect to export volume and its value is
not reliable.
EU markets for terpeneless lavender and lavandin oil
Trade partner
2015 2012-2015 12-15/08-11
mln. €
MT mln.
€ MT
mln. €
MT
ЕU-28 16,1 343 50,5 1 193 141% 126%
USA 5,0 120 13,8 320 71% 47%
Switzerland 2,9 109 11,8 461 62% 47%
Mexico 1,0 41 2,1 86 30% -6%
Australia 0,8 16 2,2 49 198% 186%
Brazil 0,7 24 2,0 73 -22% -52%
Japan 0,4 18 1,8 91 70% 257%
Canada 0,3 5 1,2 23 70% 75%
India 0,3 12 1,2 45 23% 36%
Singapore 0,3 12 1,1 42 120% 64%
China 0,3 9 1,3 39 86% 63%
Columbia 0,1 6 0,3 15 658% 485%
Argentina 0,1 7 0,4 26 -35% -35%
South Africa 0,1 1 0,2 2 160% 29%
South Korea 0,1 2 0,2 5 -8% -53%
Hong Kong 0,1 6 1,1 45 -11% -25%
other 0,5 24 2,3 149 164% 73%
total 29,2 754 93,6 2 664 92% 65% Source: Eurostat
Considering the production capacity and
demand, Europe undoubtedly occupies a
leading position in the world trade of lavender
oil. The export of terpeneless lavender and
lavandin oils from the EU Member States in
2015 exceeded 750 MT amounting to 29
million Euro. Total for the period 2012-2015 its
value doubled compared to the preceding four
years. In 2015, Bulgaria overtook France for the
first time also in terms of export value in this
category (even including the lavandin in
France). The two countries together have a
share of more than two-thirds in the total
exports of the EU countries. Spain and the UK
register intensive market growth, albeit with
considerably smaller quantities and value.
The majority of the exports of the EU member
countries is to contractors in the Community
itself, where the oil-using productions are well
developed. Some of these amounts are
probably intended for re-export as well. Some
of the large exporters are also importers.
Among them, Spain registers the most dynamic
increase, albeit at low values. The value of
imports in France has also increased
significantly, but this is due to the higher prices,
since the purchased quantities are relatively
stable.
The share of third countries as export
destinations of the EU is also considerable and
the demand in most of them grows. The US and
Swiss markets play the greatest role. Some
countries in South and Southeast Asia and Latin
America also deserve attention, although the
deliveries there are less regular and of smaller
value. The most intensive increase for the
period 2012-2015 was observed in the value of
supplies to Colombia, Australia, Singapore and
South Africa.
LAVENDER PRODUCTION IN BULGARIA
7
Import of terpeneless lavender and lavandin oil into the EU
country
2015 2012-2015 12-15/08-11
mln. €
MT mln.
€ MT
mln. €
MT
France 3,6 51 9,6 163 134% 13%
Germany 2,7 58 7,4 165 44% -22%
Spain 0,8 115 1,8 170 133% 387%
Belgium 0,8 10 2,7 41 117% 83%
Italy 0,6 20 2,3 80 60% 62%
Netherlands 0,5 11 1,9 110 26% 23%
Austria 0,3 10 2,5 116 -32% -15%
Bulgaria 0,2 4 0,6 12 -21% -29%
Great Britain 0,2 4 1,6 59 -30% -60%
other 0,5 11 1,8 43 14% 4%
total 10,2 296 32,1 958 43% 7%
Source: Eurostat
Due to the lack of exchange trading, the few
countries with a large share in the supply and
the scant and untimely information about the
production there, conditions are created for
market anomalies, price speculations and price
arbitrage between different national markets.
Lavender production in
Bulgaria
Despite the boom in lavender production in
recent years, the crop is not new to the country
and Bulgaria already has experience in its
growing.
Source: “Agrostatistics” Department, MAF; State Fund
Agriculture * Declared for direct payments
One of the key events that influences the
direction of prices and trade activity is the
annual meeting of IFEAT - International
Federation of Essential Oils and Aroma Traders.
It also has another important role – to enable
oil producers and traders and their customers
to see how the land lies with respect to the
needs of the market.
The strong dependence of oil quantity and
quality on weather, as well as the
concentration of production in one major area
– the Mediterranean and Southeastern Europe,
predispose to large fluctuations in the price
level throughout the years.
The first Bulgarian varieties were created in the
60s of the previous century at the Institute of
Rose and Essential Oil Cultures in Kazanlak, and
in the 70s and 80s – Hemus, Sevtopolis,
Druzhba and Yubileina, which still dominate
the varietal structure. The Sub-Balkan has long
been a major production area.
The planted areas in the country have
increased more than three times since 2008
reaching nearly 7,000 ha. Although crop yields
are highly dependent on weather conditions
every year, a distinct increase in the average
values is observed. During the past four years
they vary within 250-350 kg of green mass per
decare, the average being about 200 kg before
2013. This determines production growth rate
as well, surpassing that of the areas. Thus, in
2015 almost 19,000 MT of green mass were
harvested - four times more than that in 2008.
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Areas and production of Lavender in Bulgaria
production - flower mass (000 t, right scale) area* (ha)
LAVENDER PRODUCTION IN BULGARIA
8
Source: State Fund Agriculture - declared for direct
payments
Note: The areas declared for direct payments in the
Regional Directorates of State Fund Agriculture are in
accordance with the registration of the Agricultural
Producers and there may be a discrepancy with the
district where the plantation is located.
Size and legal status of the farms, 2013/2007 Number 2013/07 Hа 2013/07
Individuals 589 312% 2 479 268%
Sole traders 41 310% 227 -
COOP 24 -4% 590 -18%
Companies 140 126% 1 735 42%
Associations 4 300% 52 -
Total 798 231% 5 083 81% Source: “Agrostatistics” Department, MAF
Source: “Agrostatistics” Department, MAF
Organic lavender production
2014 2015
area (hа) farms area (hа) farms
in transition 1605 - 2188 -
organic 1329 - 1224 -
total 2935 205 3413 308 Source: MAF, according to controlling persons’ data
2 Information by State Fund Agriculture from the direct payments campaign
The rise in the green mass productivity is
mainly due to the spread of the crop on more
fertile soils in Dobrudzha and Thrace, where
the growth and formation of clusters are
considerably more intense.
The expansion of existing farms supports the
overall increase in the areas, but it is rather a
result of the strongly increasing interest in
lavender among farmers. The number of the
farms growing the crop grew over 3 times
between 2007 and 2013, reaching nearly 800.
In the following years this process accelerated
and in 2016 over 1,100 farms are engaged in
the crop cultivation2. This niche attracts both
entrepreneurs who are complete beginners in
agriculture and farmers looking to diversify
their farms to more profitable crops. The main
prerequisites for this boom are the difficulties
of the sector in France, the sustained decline in
prices at the grain markets, the accumulation
of capital and own agricultural land by many
farmers from other sectors, the rising rents and
(not least) the existence of various public
support mechanisms.
As a result of the entry of many new players,
the average size of the farms has reduced by
half for the same period, but still remains
higher compared to other permanent crops
grown in the country. The share of the
companies in the number of farms and total
areas is higher as well. Just in harmony with the
overall picture of Bulgarian agriculture, the
number of associations for lavender
production is negligible.
Lavender is among the most popular
organically grown crops in Bulgaria which is
also encouraged by the relatively slight
difference with the conventional technology.
Almost half of the areas in the country are
organically grown, two-thirds of them being in
a period of transition. In 2015 their growth rate
exceeded by 16% and the number of organic
producers increased by 50%.
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Tota
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Sole
tra
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CO
OP
Co
mp
anie
s
Ass
oci
atio
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Average area of the farms (ha) according to their legal status, 2013/2007
2007* 2013
LAVENDER PRODUCTION IN BULGARIA
9
Oil production
The technology for flower processing - steam
distillation – is not expensive, which allows
small- and medium-scale farms to produce
essential oil. Thus, they can retain most of the
added value along the chain and be more
flexible in the realization. The distillation
installations can be constructed in comformity
with the size and needs of the farm. In addition,
most of the farmers, processors and traders
possessing distillation installations, offer
digestion to smaller producers. Some of them
carry out against payment the mowing and
transportation to the distillery as well. The
quality characteristics of the essential oil are
almost unique for each plantation but after
mixing the processors prepare a homogeneous
batch with composition consistent with the
market demand.
During the last years, the oil production
capacity has increased considerably – both by
expanding the existing distilleries and by the
construction of new ones. Some of the
investments in the sector are foreign – for
example, of companies from France and the
USA, that have purchased Bulgarian essential
oil through intrmediaries until recently.
Source: NSI, Eurostat
The flower demand growth rate comes before
the plantations that were established during
the past years to have reached their full
potential. This has led to a kind of competition
among processors turning into a price war.
Thus, in 2015, against the background of more
areas and high yields, both in Bulgaria and
France, the purchase price of essential oil
almost doubled compared to that in preceding
years.
The increased competition also makes oil
producers interested in establishing long-term
partner relationships with the farmers. This
implies very good synchronization and
collaboration during the whole production
process – creation of plantations of particular
varieties, proper care, mowing, transportation,
etc. in order to adequately meet market
demands.
The lavender oil, not the green mass, is the
subject of transactions not only in the export
but also among farmers, processors and
traders in the country. Nevertheless, there
aren’t official statistics either about its
production or the producer prices. According
to estimates of the sector, the essential oil
produced in the country varies within 200 and
250 MT per year and the purchase prices
during the 2016 campaign were about 85-90
BGN/kg (60-65 BGN - when the costs for
transportation, digestion and some of the
mowing are born).
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25
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75
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Average prices of lavender flower and lavender oil (BGN/kg)
flower mass (left scale)average (left scale)exported oil (right scale)average (right scale)
LAVENDER PRODUCTION IN BULGARIA
10
Market
Regardless of Bulgarian traditions in the
pharmaceutical and cosmetic industry, the
domestic consumption of lavender essential oil
plays a rather supplementary role and the
retail sales are symbolic. In this situation,
nearly the whole produced quantity is
exported.
Source: Eurostat
Markets for Bulgarian terpeneless lavender oil
Trade partner
2015 2012-2015 12-15/08-11
MT mln.
€ MT
mln. €
€/kg MT mln.
€
France 71 5,8 169 13,4 83 207% 227%
USA 22 1,8 97 7,1 72 116% 124%
Germany 10 0,9 33 2,4 75 1% 6%
Japan 2 0,2 26 0,7 74 631% 211%
Spain 1 0,1 11 0,8 76 443% 302%
Australia 2 0,2 10 0,8 71 46% 53%
Canada 2 0,2 10 0,7 80 120% 86%
Great Britain 1 0,0 7 0,5 80 116% 89%
Switzerland 3 0,3 7 0,5 78 560% 554%
Austria 2 0,1 4 0,3 53 -77% -80%
other 8 0,7 22 1,7 76 124% 213%
total 125 10,4 397 28,8 76 117% 122%
Source: Eurostat
The country is part of the largest lavender oil
market in the world – the European one.
Simultaneously, the high value and the low
weight of the essential oil make it profitable to
transport to more distant markets - affluent
and still developing - such as North America,
Southeast Asia, Australia and the Middle East.
Bulgaria and France are the largest exporters of
lavender oil in the world. In 2015, when record
production was reported, our country exported
over 125 MT of terpeneless oil amounting to
over 20 million BGN. In recent years, an upward
trend in both the quantity and the value of
export is observed. Its volume in 2013, 2014
and 2015 is 2 to 4 times higher compared to
previous years (depending on the crop yields).
A major export market for Bulgaria is France -
with nearly half of the total export for period
2012-2015 and more than threefold increase
compared to the previous four years. Another
key and fast growing destination is the United
States. It is followed by Germany with a
significant difference. Although of small
quantities and turnover, the sales in Japan,
Switzerland and Spain record remarkable
growth. Bulgarian production is also present in
other distant markets such as Australia and
Canada. Apart from the countries listed in the
table, in some years a more considerable
export was realized to Hungary, Russia and
China.
Since Bulgaria is a leading producer and
exporter, the lavender oil is one of the very few
agricultural niches in which our country has a
significant impact on the prices in the
international markets.
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Export of deterpenated lavender oil from Bulgaria
т. (лява скала) млн. евро (дясна скала)
LAVENDER PRODUCTION IN BULGARIA
11
Role of support
Despite the existence of a number of market
factors for the development of the sector in
Bulgaria, the public support mechanisms play a
significant role in directing the farmers towards
growing lavender. Since it is a perennial crop
and the predominant farms are up to 30
hectares, the maximum amount of direct
payment can be received for it - single area
payment, "green" and redistributive payment -
approximately 44 BGN/decare (+ 4 BGN/decare
for young farmers ).
The farmers who have planted the varieties
Karlovo, Hemus, Druzhba and Hebar can
receive 105 BGN/decare (up to 500 decares)
per year under measure 10 “Agroecology and
climate” of the RDP 2014-2020 for the activity
“Preservation of endangered local varieties”.
The productivity of these varieties is
comparatively lower but the content of linalyl
acetate in their oil is usually higher. Although
they are defined as endangered, the quality of
their oil makes them a frequently preferred
option among farmers in establishing new
plantations.
Up to 101 BGN/decare per year can be received
for transition to organic production (3 years)
and up to 79 BGN/decare per year after
certification under measure 11 “Organic
farming”. However, it should be noted that
measures 10 and 11 cannot be combined.
At this stage there are no tangible market
incentives for organic production development
– due to the specificity of oil processing and
applications, most of the clients do not require
this and the prices of the organic produce are
similar to those of the conventional one (ETC,
2016).
The support under measure 13 “Payments for
areas facing natural (mountain) or other
specific constraints” is 25 and 14 BGN/decare
per year, respectively. Various compensations
are possible (according to the location) if the
farm falls within the ecological network Natura
2000.
Thus, a farmer in a mountainous area growing
a local variety or being in the process of
certification of his lands as organic, can receive
a payment varying within 170-180 BGN/decare
per year which could recover the costs for the
establishment of the plantation in three or four
years, even without taking into account the
market revenues from the first harvests. In
combination with the relatively lower
operating costs after the second year, the
existence of such support reduces the
investment risk considerably. This, in turn,
often results in many unprepared farmers
orientating to lavender, who neglect the best
practices for creation and maintanence of the
areas. As a result, on the one hand, the
quantity and the quality of the obtained oil
deteriorates (and the market performance of
the farm, respectively) and the work of the
processors is hindered. On the other hand - the
risk of pests and diseases spread increases.
The current situation with lavender clearly
demonstrates the need for a more
differentiated approach to various crops in
determining the rates under the different
mechanisms for payment per acre. Such an
approach should be based on a thorough
analysis of the technological costs and the
opportunities for market revenues, so the
support can actually have a redeeming
character and not be a motivating factor to
enter a particular niche.
LAVENDER PRODUCTION IN BULGARIA
12
The essential oil-bearing and medicinal crops
are identified as priority ones in the evaluation
of projects under the investment measures of
the RDP – establishment of new plantations
and purchasing of machine and equipment
(sub-measure 4.1); processing (sub-measure
4.2); support to young farmers and small-scale
farms (sub-measures 6.1 and 6.3). This favours
the increasing of the size of existing farms, the
entry of new players from other sectors and
the construction of own distilleries.
After weighing the costs of land purchase, the
weigth of lavender in the calculation of the
standard output (SO) is low compared to a
number of crops and animals3. The difference
is even more significant with the rest essential
oil-bearing crops, with the exception of the oil-
bearing rose. This restricts the access of small-
scale farms and those who are new to farming
even to the measures specifically directed at
them.
Increasing the competitiveness of the sector
requires that the future support policies shift
their emphaisis to mechanisms encouraging
investments. It would be better for this to be
done at the expense of mechanisms
distributing funds per unit area. Unfortunately,
the opportunity for such changes from 2017
was missed by the Bulgarian administration.
The favorable natural conditions and the
positions that have already been gained in
foreign markets are prerequisites for future
establishment of thematic investment program
for essential oil-bearing and medicinal plants
within the RDP.
3 For example, SO of 8000 Euros is equal to 96 decares of lavender; 34 decares of oil-bearing rose; 231 decares of other essential oil-bearing and medicinal crops; 11 decares of stone fruits; 16 decares of pome fruits; 17 decares of strawberries and raspberries; 24 decares of potatoes; 17 decares of pepper; 138 decares of common wheat; 8 dairy cows.
Issues and challenges
Most of the issues and challenges that lavender
production in Bulgaria is facing can be defined
as ”growing pains” for the sector – closely
related to the sharp growth of interest in the
crop.
The rapid increase in the areas under lavender,
expansion of the range in the lowland regions,
accompanied by concentration on larger plots
of land, increase the risk of spread of pests and
diseases affecting the crop. One of the main
risks that the farmers may face is the
occurrence of such a "French" scenario. The
causes of the greatest losses there - stolbur,
mealybug, lavender midge - do not occur at this
stage or are an exception among the
plantations in Bulgaria. In our country Stolbur
is found in tomatoes and tobacco, but
according to some researches in France,
lavender is affected by specific strains of the
bacteria, affecting this crop in particular
(Fialova et al., 2009). This is far from insuring
Bulgarian farmers and considering the lack of
treatment against Stolbur phytoplasma,
prevention come to the fore – regular
inspection of the plantations for presence of
symptoms and fight against the vector of the
bacteria (the cicada).
The position of a global leader implies also a
strong relationship between the demand in the
country and the price at which the essential oil
is realized abroad. The size of the new
plantations established in Bulgaria in just three
years is almost the same as their overall size in
France. And the interest in new investments
does not seem to be lost. The growth in the
areas and production will inevitably lead to
pressure on prices, especially when young
plantations reach their full productivity.
Although the lavender oil can be used in a
LAVENDER PRODUCTION IN BULGARIA
13
number of sectors, in some of which
alternatives are lacking, the market is hardly
capable of responding to such an sharp change
in the balance. Indications in this respect
already appeared in this year's campaign.
On the other hand, due to the permanent
nature of the crop and the high share of the
initial costs, the farmers are not quite flexible
towards price decline. The price risk is
considerably higher for those who have
entered this business at the time when the
costs for plantation creation were higher. Their
expectations for higher profitability may differ
from the market realities. Those farmers who
are yet to orientate to this niche should be
more conservative and careful in the
establishment of their farms and the projection
of the future revenues. A possible decline in
prices, in its turn, would expand essential oil
consumption into new niches.
Market dynamics raises another question –
about the lack of purchase price differentiation
according to oil quality. This encourages
farmers to focus on the quantity of the
produced oil at the expense of its composition
and neglect the selection of varieties.
Simultaneously, there are considerable
differences among the oils produced by various
farms depending on their location and the
varieties used. According to processors and
traders, in the course of time this market
situation will impose an individual approach to
purchase price determination.
The boom in the establishment of new
plantations in 2014 and 2015 has led to
shortage of seedlings and a sharp rise in their
price – from 0.08-0.10 BGN at the beginning of
the decade to 0.25-0.30 BGN/pcs. in the last
two years (about 2,000-2,200 cuttings being
necessary per decare). The considerable
interest is accompanied by the emergence of
seedlings of unclear origin and quality in the
market. Quite often in this period there are
thefts of cuttings. Under these conditions,
there is a high risk for the new plantation to be
of heterogeneous varietal structure. This
questions the stability of the farm as a whole –
tufts of various size, different bloom period and
various oil composition, lead to difficulties and
losses in harvesting and processing of the
flowers. Once established in such a way, the
plantation can only be corrected through
uprooting. In this sense, it is highly
recommended to purchase seedlings from
certified nurseries.
The expansion of lavender areas in Bulgaria and
the need of quality seedlings are related to
another challenge. The research activity lags
considerably behind the production
development. More than three decades have
already passed since the selection of the most
widespread Bulgarian varieties and the most
active period of the research activity in this
field. Meanwhile, they are not preserved in
their original genotype, even in the certified
nurseries, and their qualities change over the
years. In addition, the varieties are developed
under the conditions of mountainous and
semi-mountainous regions with poor soils,
which were dominant for the crop at that time.
The spread of lavender on flat and more fertile
regions requires selection of new varieties
adapted to these conditions. The French
experience implies the necessity to work on the
creation of varieties with higher resistance to
pests and diseases as part of the prevention
activities against their spreading. Thorough
investigations of their specificities have started
only in the last two decades – long after the
currently used varieties have gained their
reputation in Bulgaria. The investments in new
varieties have a purely market motivation as
well – the increasingly diverse application of
lavender also means demand of oils of various
composition. Selection in this respect is a
prerequisite for a higher added value and
competitiveness. Bulgaria’s leading position on
a global scale goes hand in hand with research
and development and, if producers want to
keep it, they have to take the initiative in this
direction. The entry of farmers from other
LAVENDER PRODUCTION IN BULGARIA
14
sectors, processors, representatives of
multinational companies, is a prerequisite for
the generation of necessary funds and know-
how.
Lavender oil producers are also affected by the
increasingly stringent regulations and
consumer demands for safety, sustainable
production, awareness, labeling, etc. Since
2013 oils of natural origin have fallen within the
scope of the REACH Regulation on Registration,
Evaluation, Authorisation and Restriction of
Chemicals. Manufacturers and importers of an
annual average quantity of 1 to 100 MT of
lavender oil can benefit from a transition
period for REACH registration4 until May 31,
2018. For larger quantities the transition
period does not apply and the smaller ones are
exempt from registration. The introduction of
the newly developed technologies in the
processing of essential oil-bearing crops also
often undergoes a change in the description of
the respective processes in the EU legal
framework.
Although the lavender is almost entirely a
subject of mechanized processing and the
necessary equipment is not very expensive, the
issue of the labour force shortage in agriculture
is topical with this crop as well. The labour
costs are among the most significant items in
the plantation creation. Manual planting is
preferred because of its higher precision and
better performance. In addition, during the
first year when the plants have not developed
tufts yet, frequent treatments against weeds
are necessary, which can be done only
manually in the rows. The regulation of labor
relations with seasonal workers remains a
serious problem. The one-day labour contracts
that were introduced, solve it only partially, but
at the same time their application is
accompanied by a number of practical
4 More information about the requirements, procedures and fees for REACH registration can be obtained at National Helpdesk on Chemicals and Road Map for registrants.
difficulties and poses a serious administrative
burden on farmers.
At the same time the rapid development
requires more well prepared specialists for this
crop - agronomists, specialists on plant
protection and selection, technologists in oil
production, etc., whose shortage will be felt
more strongly in the future.
The spread of lavender also leads to problems
with the technical training of the farmers
entering the business. Errors are made in the
selection of land and varieties, as well as in the
creation of plantations. Many producers rush
into mowing the flowers, which affects
negatively the yields and the oil quality.
Farmers who do not sell immediately after
digestion, often store the oil under improper
conditions and in unsuitable containers,
reducing its quality and the opportunities for
realization.
LAVENDER PRODUCTION IN BULGARIA
15
SWOT analysis
Although lavender weaknesses in the
economic analysis appear seemingly few, the
challenges facing the sector have the potential
to become fundamental problems if they
remain underestimated.
Unlike many crops, lavender can be suitable for
both large- and medium-scale, and small-scale
farms. Nevertheless, if we have to outline our
vision for optimal business model, it would
have the following characteristics:
- At least 10 ha of lavender plantations;
- Maximum mechanization of the farm;
- Own oil production;
- Diversification with other compatible
essential oil-bearing crops and digestion of raw
material of small-scale producers in order to
use the capacity of the distillery more
efficiently;
- Oil sales directly abroad and establishment of
long-term relationships with foreign
contractors;
- Development of accompanying activities with
high added value.
The diverse applications of lavender have
market potential that is almost
underdeveloped in Bulgaria. An interesting
niche that can provide considerable added
value, especially to small-scale farms, is the use
of the plantations for tourism, attraction,
aromatherapy and other recreational
activities. The country is a popular summer
destination and a great part of the farms are
located near Sofia, Plovdiv and the Black Sea
coast. The period when the lavender tufts are
in bloom lasts about one month but, if various
varieties are used, it can be extended.
STRENGTHS:
Wide range of applications;
World leader;
Easy and cheap oil transportation;
Suitable for low-productive
regions;
Irrigation is not necessary.
OPPORTUNITIES:
Mechanization of production;
Crop diversification;
Priority sector;
Additional oil processing;
Alternative activities.
WEAKNESSES:
Highly dependent on weather conditions;
Obsolete varietal structure.
CHALLENGES:
Pest and disease spread;
Price decline;
New varieties and technologies;
Quality premium;
Farmers’ technical training.
LAVENDER PRODUCTION IN BULGARIA
16
Notes
The preparation for this material used data
from internationally recognized sources and
official institutions in Bulgaria, as well as data
from meetings with producers from Dobrich,
Plovdiv and Shumen regions. However, no part
of the text should be used as a
recommendation to use particular types of
technologies and varieties.
Please note that there is no ideal strategy that
ensures high yields and profit margin. Optimal
choice varies according to the specific soil and
climate conditions and economic
characteristics of the particular farm. When
analyzing the sector, the reservations for the
data about the yields, production and prices in
Bulgaria, described in the text above, should be
considered.
Sources
1. Eurostat (http://ec.europa.eu/eurostat);
2. “Agrostatistics” Department, MAF
(http://www.mzh.government.bg/MZH/bg
/ShortLinks/SelskaPolitika/Agrostatistics/C
rop/Posts_copy3.aspx);
3. NSI (http://www.nsi.bg/);
4. MOEW(http://www.moew.government.bg
/?show=top&cid=694);
5. Agreste, Ministry of Agriculture, Agrifood
and Forestry. France
(http://agreste.agriculture.gouv.fr/);
6. ETC - Market Insider
(http://www.intracen.org);
7. Danet J.L., Semetey O., et al. – “Lavender
decline is caused by several genetic
variants of the stolbur phytoplasma in
south eastern France” – COST FA0807,
2010;
8. Fialova et al., - Genetic variability of Stolbur
phytoplasma in annual crop and wild plant
species in south Moravia J. Pl. Pathol., 91,
2009;
9. Gaudin J., Semetey O., et al. - „Phytoplasma
titer in diseased lavender is not correlated
to lavender tolerance to stolbur
phytoplasma“ – Bulletin of Insectology 64,
2011;
10. Germain J.-F., Matile-Ferrero D., Kaydan
M.B, et al. - „A new species of Dysmicoccus
damaging lavender in French Provence” –
Zootaxa 3980 (4), 2015;
11. Li Y., Fabiano-Tixier A-S., Chemat F. –
“Essential Oils as Reagents in Green
Chemestry” – Springer, 2014;
12. Zhelajzkov V., Cantrell C., et al. –
“Distillation Time Effect on Lavender
Essential Oil” – Journal of Oleo Science,
2013.
LAVENDER PRODUCTION IN BULGARIA
17
About INTELIAGRO
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America for Bulgaria Foundation at the end of 2014.
Our mission is to support the development of sustainable and competitive agriculture. We believe that
the full potential of the sector can be unlocked through a combination of more effective and efficient
management of resources, improving the conditions for doing agribusiness, reducing bureaucratic
burdens and placing Bulgarian farmers on an equal footing with their European counterparts.
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Contacts:
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Analyst
Т: +359 889 716 090
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