Opportunities for the smallholder sandalwood industry in ... - ACIAR

Summary
Vanuatu is a developing country with a small ruralbased
economy and limited high-value export products.
It has a wealth of forest resources that provide
benefits to local communities on both subsistence and
commercial levels. Timber exports from Vanuatu have
been a good source of foreign exchange, royalties and
taxes. However, timber volumes have decreased over
the past 10 years, reducing potential export earnings
and royalties available to the Vanuatu Government.
A positive outcome of this decline is that it has
led to increased community and private interest in
producing commercially significant forestry species,
particularly the highly valuable sandalwood tree.
Sandalwood (Santalum spp.) provides high-value,
low-volume, non-perishable products that are in
demand on the international market. Although only
small volumes are harvested from wild sources in
Vanuatu (80–120 tonnes annually, representing
~1–2% of world supply), it has contributed significant
export revenue and provided a significant proportion
of income to harvesters.
Wild-harvested sandalwood is the basis of the
worldwide sandalwood industry, and most countries
have severely depleted their natural reserves. This
downward supply trend, combined with continued
demand, has resulted in sustained price increases on
the international market and has prompted interest in
commercial plantings of sandalwood.
Although sandalwood has been traded internationally
for several centuries, plantations have only been
established in the past 20 years. In Vanuatu, this has
resulted in the establishment of between 270 and
550 ha of smallholder plantings and 150 ha of commercial
plantings since 2000.
This report describes the current activities of
smallholder and commercial producers in establishing
new sandalwood plantings. Basic information
is provided on expected growth rates, heartwood
development and length of rotations for sandalwood
plantings. A market overview and recommendations
for further development of the industry are provided.
Policy issues and recommendations are discussed to
facilitate greater investment and control over the
marketing of the products at harvest.
In Vanuatu, sandalwood plantings can be readily
incorporated into existing swidden agriculture, and
village and boundary plantings. Reliable methods and
information now exist for establishing and maintaining
sandalwood in smallholder and commercial plantings.
However, more resources are needed to ensure
that new participants can implement appropriate
silvicultural practices. For example, the pruning of
young sandalwood trees to promote the formation of
trees with a single bole can increase the value of the
tree by encouraging greater heartwood development
from the root to the branches, and improving the
possibility of attaining a high-value carving log. If
this simple management practice is adopted more
widely, it has the potential to add significant value
to Vanuatu’s planted resource and its future exports.
It appears that a 15–20 year rotation may be reasonable
for trees growing on optimal sites. However,
much longer rotations (30 years or more) may be
expected when establishing sandalwood on suboptimal
sites. Despite this, smallholder sandalwood
production in Vanuatu is economically feasible, with
an internal rate of return of 24% for sandalwood
agroforestry. A sandalwood agroforest harvested for
heartwood has a net present value that is approximately
13.5 times swidden cropping. This study also
demonstrated that the production of sandalwood on
a shorter rotation for sapwood is not economically
competitive with sandalwood agroforestry at both
15 and 30 years. The return to labour for sapwood
production was less than the current minimum wage.
In contrast, a 1 ha sandalwood agroforestry planting
harvested for heartwood at 15–20 years returns the
equivalent income to that of a Vanuatu Government
employee with a technical college diploma. The earnings
for sandalwood agroforestry are much greater
than many smallholders can expect to earn from other
activities or employment.
A high potential exists for further investment
in planting sandalwood in Vanuatu. Vanuatu has
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