In the lead-up to the IFEAT event, several exporters made sudden decisions to halt or significantly reduce their purchases of patchouli oil. While these actions may have been part of specific market strategies, they had an immediate and profound impact on the domestic supply chain. Small-scale collectors, who typically maintain limited stocks, were suddenly overwhelmed with a surge in supply. This created a ripple effect, sparking panic among irregular farmers. In an effort to quickly sell their harvests before the situation worsened, many farmers opted to harvest patchouli plants prematurely, at just 2–3 months of age—far from their optimal maturity.
This early harvesting decision came with significant consequences. The patchouli oil produced contained lower levels of patchouli alcohol (PA), ranging between 25–27%, which falls far short of the ideal standard required for trade. Export markets, in particular, demand PA levels of over 30%, making this subpar quality a challenge. Additionally, the oil’s acid value saw a substantial increase, with some areas, such as Southeast Sulawesi, reporting values as high as 24. High acid values indicate a deterioration in oil quality, which can be attributed to premature harvesting, suboptimal processing techniques, or improper storage conditions.
The impact of this situation extended beyond quality concerns, introducing complex economic challenges. At the farmer level, the decline in oil quality led to lower selling prices. However, prices remained relatively stable at the exporter level because substandard oil required additional processing to meet export standards. This added processing not only increased operational costs but also resulted in volume losses during refinement. Consequently, the anticipated cost savings from lower raw material prices were not fully realized at the exporter level.
In recent days, patchouli oil supplies have shown signs of stabilizing. Stocks that had accumulated with small-scale collectors are gradually being absorbed by the market, creating an opportunity to rebalance pricing dynamics. However, prices at the lower levels of the supply chain have continued to decline. While this downward trend may ease some market pressures, a sharp or sudden price drop poses significant risks to the supply chain.
If supply diminishes drastically due to reduced farming activity, the patchouli oil industry faces the prospect of uncontrolled price spikes in the future—a scenario currently seen as prices soar. This situation not only threatens exporters, who will find themselves competing fiercely for limited raw materials, but also jeopardizes global market stability. As one of the world’s leading suppliers of patchouli oil, Indonesia’s role in maintaining a steady and reliable supply chain is critical to the industry’s long-term sustainability.
