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Despite the fact that growers have developed suitable farming practices, the industry is only now beginning to achieve the credibility, cohesiveness, and efficiency required for large-scale commercial success.
Indeed, jojoba has had to overcome a dubious reputation: a few promoters made outrageous claims (especially in deals associated with land speculation); others sold oil of questionable quality; and some manufactured products claiming to contain jojoba that in fact contained none. The enormous price increases in 1981 and 1982 (when the wild crop was sparse and prices rose to $10,000 a barrel) disenchanted many potential long-term customers. Further, the lack of standards and quality control has not helped jojoba's image with its most important audience, the manufacturers of consumer products.
Because of irregularities in the weather, the supply of jojoba oil to the market is still erratic and unreliable. (In parts of Arizona the 1984 crop was lost to a "freak" flood, the 1985 crop to frost.) As a result, potential purchasers have had no assurance of a consistent supply of dependable quality oil at a stable price. Consequently, major industrial corporations are not using jojoba in their products as yet.
Market Development
The jojoba industry can only realize its profit potential if it now applies the same effort to market development as it applied to propagation and farming practices. The major challenge is to increase the number of companies that utilize jojoba in their products.
Potential users have already shown reluctance to incorporate jojoba into their products because they lack technical information, have only limited experience in handling it, and suffer from a dearth of costbenefit data - all of which has been compounded by the absence of an assured supply.
Growers and processors must now concentrate on helping industry develop and market jojoba products by educating buyers and technical personnel. For example, they must help substantiate the claims made for jojoba oil and its many uses.
The manufacturer, on the other hand, has an opportunity to create a new, national, renewable resource by cooperating with the jojoba industry in developing products that utilize jojoba oil at prices that match the requirements of today's producers.
Pricing
Some of the problems growers face in achieving an adequate return follow (This section deals with jojoba pricing in the United States. Information supplied by C. Whittaker).
· Today. During these early years - when production is low, harvesting costs high, and plantation development costs are being borne - a U.S. grower needs to receive about $2.00 per pound ($4.40 per kg) for his seed to break even (The break-even costs are high because the grower has 5 or 6 years of expenses with no income. After about year 8, when the cost of establishing the plantation has been amortized, break-even costs could be much lower). Producing 1 pound of oil takes up to 2.5 pounds (1.1 kg) of seed and extracting it in low volume costs 50¢ per pound ($1.10 per kg) of oil. This means that the selling price for oil from today's plantations has to be about $5.50 per pound, the equivalent of $40.00 per gallon, ($12.00 per kg; $8.80 per liter).
· The near future. In higher volumes, processing is more costefficient (especially with solvent extraction) and can be done at 8¢ per pound (18¢ per kg). Therefore, as supplies increase, the price of oil should soon drop to $4.00 per pound, or $30.00 per gallon ($9.00 per kg; $6.60 per liter). This will still give the grower a selling price of $2.00 per pound ($4.40 per kg) of seed.
· Long term. With increasing production, improved harvesting, and a yield of 2,000 pounds (910 kg) of oil per acre, the break-even cost should come down to $2.00 per pound of oil, the equivalent of $15.00 per gallon ($4.40 per kg; $3.30 per liter). This situation is within reach as the latest clones are planted.
Eventually, jojoba oil must be competitively priced with the products it is replacing. To reach the mass markets for lubricants and hard waxes, it must be priced below $2.00 a pound ($4.40 per kg). At that level, the demand would far exceed supply, and plantings would have to increase substantially all over the world just to keep up (Preliminary results from the sparse information available indicate that jojoba oil outperforms its competitors and at a lower additive level. Thus, it may well be that jojoba oil at, say, $5.00 per pound ($11.00 per kg) is more cost-effective than a synthetic lubricant additive at $2.00 per pound ($4.40 per kg). But this is not proven.).
A long-term target sale price is close to 50¢ per pound of plantation seed ($1.10 per kg), which is equivalent to an oil price about $8.00 per U.S. gallon ($1.80 per liter). This general level seems realistic in the future world marketplace. It represents a gross output of $1,000 per acre at a ton of seed per acre ($2,470 per hectare at 2.47 tons of seed per hectare).
Reducing Production Costs
Efficient plantation management is the key to the future of the jojoba industry. Commercial growers must concentrate on vigorous cost control - slashing to the minimum production costs per acre, per bush, and per pound.
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