To reduce the volatility in pricing, and reduce freight costs, industry users are encouraging production of the same in the South, to the mutual benefit of farmers and industry. But the message is not going as far it should, they feel.

According to menthol users, the south Indian farmer has not made any serious attempt for cultivating the cash crop as he is not aware of its potential. Market demand for the product is growing at the rate of 10 to 15 per cent annually within and outside the country.

India supplies about 3,000 tonnes for meeting the local demand and around 9,000 tonnes is exported.

Five years ago China used to be a major producer and exporter, but the country removed the subsidies on the product. Middlemen of disrepute reduced farmer's returns further and the industry collapsed. With no serious competition on the global front and no synthetic substitute for menthol, the future seems to be bright for the cash crop.

Climatic extremes seem to favour the crop. The current variety which is grown is called Shivalik. However CDRI has come out with a new variety called Kosi which is supposed to give increased yield to the tune of 25 to 30 per cent. This year about 20 per cent of the sown variety have been replaced with kosi.

According to a pain balm manufacturer, menthol could be grown in the South even though the area does not face extreme cold. ``The yield could be lesser by 25 per cent, but the price of menthol still makes it attractive for farmers to give it a shot,'' he said.

There are no pest threats to the crop. It could be sown in February and harvested once in June and again by October in time for the next different crop. Currently prices are ruling between Rs 345 per kg and Rs 312 per kg.But it fluctuates wildly and the average ruling price for 1999 was around Rs 620. The highest price was in August 1999 when it ruled at Rs 850 per kilo. An acre could produce 40 kilos. International prices veer around $12 per kg.

A crop option from the South would bring about certain levels of stability on the domestic front. Menthol crystals (at the next step in the value chain) which get sold to industries are generally priced 50 per cent more than menthol oil. However this also increases irrespective of the oil prices depending on demand, sometimes by 100 to 150 per cent. Peppermint oil, another by product containing less of menthol after crystallisation also has a good demand. The years will see an increasing demand of menthol in cosmetics, ayurvedic products and pharmaceutical products, toothpastes as also in confectionery and perhaps even cigarettes.

The demand is making itself felt as seen in the pricing of menthol crystals. There used to be a difference of Rs 120 per kg between bold crystals and rice crystals some years ago, the bold variety being better. However the difference between the two has narrowed down to Rs 30, on account of the growing demand.