Farmers will sell 17 percent more than anticipated

By MATEUSZ PERKOWSKI

Capital Press

Healthy demand has convinced the industry to release more spearmint oil onto the market.

Spearmint farmers will be able to sell more than 2 million pounds of oil produced from the 2011 crop, which is about 17 percent more than the industry had initially anticipated.

"We're happy to see worldwide demand, particularly for native spearmint, increase," said Craig St. Hilaire, sales manager at the Labeemint wholesale company in Harrah, Wash.

Demand for spearmint oil has grown along with the standard of living in developing markets like China, where consumers have been buying more oral hygiene and confectionery products, like chewing gum, said St. Hilaire.

Market fluctuations in India, a major mint-growing region, have also boosted the outlook for U.S. farmers, he said. "We've seen the spearmint imports from India drop off about 35 percent from last year to this year."

Large mint companies in India have bid up the price of Mentha arvensis, a type of mint that's used to make natural menthol crystals, he said. That's led farmers in that country to switch acreage from spearmint production, lowering the global supply.

The U.S. spearmint industry intended to allow handlers to buy about 1.7 million pounds of oil that farmers produced from this year's crop, St. Hilaire said. However, much of that production has already been pre-sold.

"We wouldn't expect to see such a large portion of the crop tied up in contracts," he said. "There's less available in the spot market than in years past."

That situation convinced the Farwest Spearmint Oil Administrative Committee, which regulates sales, to bump up the availability of salable oil by nearly 300,000 pounds.

By regulating sales of native and Scotch spearmint, which have different flavor profiles, the committee aims to prevent oversupplies. Farmers are expected not to grow more spearmint than they can sell to handlers.

With prices for spearmint ranging from about $17 to $19 per pound of oil -- depending on the type and whether it's sold under contract or on the spot market -- farmers are generating healthy returns on their investment, St. Hilair said.

Even so, spearmint acreage has not exploded because farmers have so many other planting options due to strong commodity prices, said Rod Christensen, manager of the administrative committee.

"There's too many alternatives for that to happen," he said. "Even with good prices they haven't rushed to expand acres."

Spearmint producers and handlers have been concerned about oversupplies in recent years due to economic turmoil.

The severe recession in 2009 shrank consumption of spearmint oil, leading to large carry-over of that year's crop into 2010.

In response, the administrative committee cut salable quantities of last year's crop to about 1.55 million pounds, down from more than 2 million pounds in 2009.

Christensen said the committee has been pleased with the industry's ability to adapt to the market, though it remains mindful of the threat of an oversupply.

"Mint oil is a very inelastic commodity," he said. "It doesn't take much of an oversupply to result in a massive change in price."