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

140,000
Sandalwood oil production (tonnes)
120,000
100,000
80,000
60,000
40,000
20,000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Year
Figure 2.
Anticipated yields of sandalwood oil from Indian sandalwood (S. album) plantations in Australia,
2014–23 (Source: Clarke 2006)
Australian sandalwood (Santalum spicatum)
Six species of Santalum grow naturally throughout
Australia, but only S. spicatum (Australian sandalwood),
which is native to Western Australia, and,
to a minor degree, S. lanceolatum (bush plum) in
Queensland are harvested for commercial use. The
current estimated total area of distribution of S. spicatum
is 161 million ha, of which 49% is protected
from harvesting (AAG 2006).
Australian sandalwood accounts for the majority
of the sandalwood currently harvested in Australia.
The harvest of native stands is regulated by the
Western Australian Government through the Western
Australian Forest Products Commission, which
coordinates harvesting and replanting of native
sandalwood species (Adviser Edge 2008).
The agarbatti industry represents an important
market for Australian sandalwood. Australian
sandalwood is exported to South-East Asia for the
manufacture of incense and to India for the production
of oil. Taiwan and Hong Kong are the largest
importers of Australian sandalwood, accounting for
upwards of 60% of Australia’s annual production,
while China represents a significant and growing
market (AAG 2006).
In addition to the natural resource, a significant
planted estate of Australian sandalwood has been
established over the past decade in corporate-,
government- and farmer-owned plantations in
Western Australia.
Current and future production in Australia
Just over 2,100 tonnes of S. spicatum heartwood
from Crown land and approximately 200 tonnes
from private landholders in Western Australia are
harvested annually. Government legislation dictates
that at least half this quota must be deadwood that is
unsuitable for oil extraction (Clarke 2006).
With declining global supplies of sandalwood, the
market outlook for Australian sandalwood is positive.
To capitalise on this opportunity, the total area
planted over the past 10 years has increased from
approximately 650 ha in 1999 to 15,627 ha in 2012
(Figure 3). Rates of sandalwood planting in Australia,
however, are likely to slow, as investor confidence
has cooled since the recent insolvency of a number
of managed forestry investment schemes across
the country.
Although the level of santalol in S. spicatum is typically
lower than that in S. album, there is still strong
demand for its oil (Clarke 2006). The estimated
supply of marketable oil from recently established
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