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

Table 6.
Comparison of sandalwood oil content
Species Origin Oil content (%)
S. album India, Indonesia 6–7
S. yasi Fiji 5
S. austrocaledonicum Vanuatu, New Caledonia 3–5
S. spicatum Western Australia 2
S. lanceolatum Queensland 1
Source: AAG (2006)
Table 7.
Product
Price for sandalwood products from different sandalwood species
Price (US$/kg) a
S. album S. yasi S. austrocaledonicum
S. spicatum S.
lanceolatum
S.
macgregorii
Carving log 74 44 38 13 6 na
Oil 1,250 1,050 950 700 – na
Pre-grind heartwood 40–45 30 29 10 3 na
– = not applicable; na = not available
a Prices are for 2008–09.
the greater the level of santalol in the powder the higher
the price and size of the market. The upper end of the
agarbatti powder market is about US$18/kg, and the
lower end is about US$1.20/kg for spent charge (wood
residue after most oil has been extracted). Substitution
is prevalent in the agarbatti market and puts pressure
on price increases of pure sandalwood products (Cogo
2006). Reputable suppliers of powder need to ensure a
consistent supply of powder at consistent quality.
While the proportional value of the species remains
somewhat constant, there is great price variation within
each species, depending on oil concentration and quality.
Therefore, opportunity exists to improve the value
of a planted resource through selection of high-quality
trees as source planting material. Such initiatives over
the long term have the potential to increase the value
of a given species to a higher relative position in the
market.
Domestic value of sandalwood in Vanuatu
In Vanuatu, the Vanuatu Department of Forests
(VDoF) regulates the minimum price paid per
kilogram of desapped heartwood for wild-harvested
trees. The minimum price is reviewed annually and
publicised in a VDoF Service Message issued at the
start of the sandalwood-harvesting season. The price
paid to villagers is colloquially known as ‘beach price’
as the harvesters often bring the sandalwood from the
forest to the beach, and after a trade is completed the
buyer meets all costs for transport to the factory in Port
Vila. The minimum price for desapped heartwood has
been increasing at an annual rate of 10% since 1990
and 7.5% since 2000, which is substantially greater
than the average annual increase in the consumer price
index (CPI) for both Australia (2.5%) and Vanuatu
(2.6%) across both decades (Figure 20). For high-quality
sandalwood consignments, the beach price is also
often higher than the minimum price set by the VDoF.
Although sandalwood may have been undervalued in
the early 1990s, the fact that prices have continued
to rise above the average CPI increase since 2000
indicates an increase in demand and/or a decrease in
supply beyond that of the general marketplace.
Market demand and price
Current world market demand for sandalwood is
thought to be around 5,000–6,000 tonnes per year.
This figure incorporates demand for a number of
different products, sourced from a variety of sandalwood
species. As the gap between sandalwood supply
and demand has widened over time, there has been
a simultaneous increase in the price of its products
(Adviser Edge 2008).
The lack of transparency in the production and
marketing of Indian sandalwood means that supply
and price trend information is extremely difficult to
obtain. The problem in determining price trends is also
complicated by the extensive trade in illegal wood, as
this harvest is not reported (Adviser Edge 2008).
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