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

Sandalwood production in Vanuatu
The Republic of Vanuatu is an archipelago of
volcanic and coralline islands in the south-western
Pacific Ocean. It is located approximately 1,700 km
to the east of Australia and is immediately north of
New Caledonia and south of the Solomon Islands.
The country spans approximately 850 km from
north to south and has a land area of 12,190 square
kilometres (VNSO 2007). Vanuatu has a seasonal
tropical climate, with most islands experiencing wet
(November–April) and dry (May–October) seasons;
however, the timing and intensity of these seasons
vary both within and between islands. The country
experiences frequent tropical cyclones, particularly in
the northern islands, which occur primarily between
November and April. These intense weather events
often negatively impact people’s livelihoods and the
economy of affected areas.
Vanuatu has a small population of approximately
243,000 people (VNSO 2009), dispersed evenly
across the country but tending to areas close to the
coast. Port Vila and Luganville are the main urban
centres for commerce and export, but the majority
(~75%) of ni-Vanuatu people live in rural areas. The
population is identified primarily as Melanesian but
is both culturally and linguistically diverse, with at
least 80 language groups (Crowley 2000).
Vanuatu is a developing country with a small
economy that, in 2008, had an estimated annual per
capita gross domestic product (GDP) of US$2,388
(UNdata 2010). In 2006, agriculture employed an
estimated 98% of the rural population, and produced
17% of the GDP and 73% of export earnings (VNSO
2007). Swidden agriculture is a prominent feature
of the industry and contributes to the livelihoods of
most of the population. Export agriculture consists
of copra, coconut oil, cacao, kava, beef and timber,
while smaller rural activities involve fishing and the
production of coffee, vanilla and pepper (Figure 5).
The reliance on so few export commodities results in
highly variable export earnings between years, caused
by fluctuations in global prices for these products.
Vanuatu consistently runs a significant trade deficit
due to the disparity in value between imports and
exports, and thus requires export products of higher
value with smaller price fluctuations.
Forestry sector
Approximately 75% of Vanuatu has natural vegetation,
including grasslands, rainforest, dry forest and
secondary growth (VNSO 2007). All islands are generally
well forested and provide essential resources
for the domestic economy, including materials for
housing, food, fuel, medicines, rituals and trade. The
export of timber contributed approximately 11% of
total Vanuatu exports in 2000; however, this fell to
3% in 2007 (Figure 5). This decline in exports has
been caused primarily by the decline in accessible
commercial timber resources.
A significant proportion (73%) of Vanuatu’s
export earnings come from agriculture and its
timber resources, including sandalwood. Vanuatu
has a good capacity to source foreign exchange and
royalties from processed timber exports and taxes
(Bond 2006). However, decreasing national timber
volumes in Vanuatu over the past 10 years (Figure 6)
have reduced royalties available to the Vanuatu
Government. This decline in timber resources has led
to a substantial increase in community and private
interest in producing commercially significant forestry
species, primarily sandalwood and whitewood and to
a lesser extent mahogany, nangai, natapoa, kauri and
namamau (Figure 7).
In its National Forest Policy (1997), the Vanuatu
Ministry of Agriculture, Livestock, Forestry, Fisheries
and Environment set a sustainable yield for logging
from native forests of 63,000 m 3 . Since 1997, timber
production peaked at just over 40,000 m 3 in 1999,
with a more recent decline to 5,000–11,000 m 3
between 2005 and 2008 (Figure 6). This abrupt drop
in production was due primarily to the departure of the
largest timber exporter based in Santo. Their departure
was partly due to the exhaustion of commercial
timber volumes in accessible areas and the associated
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