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

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Australian consumer price index
Vanuatu consumer price index
Vanuatu sandalwood price index
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Figure 20. Relative changes in consumer price index and minimum price paid to smallholders for sandalwood
heartwood in Vanuatu between 1980 and 2009. Prices are indexed to a unit value of 100 in the year
2000. (Sources: Australian Bureau of Statistics; Vanuatu Statistics Office; Vanuatu Department of Forests
Annual Trading Season Announcements)
While native supplies of Indian sandalwood
have declined considerably, demand has remained
relatively constant, and has pushed the price of the
commodity up significantly over the past few years.
Legally sourced Indian sandalwood currently trades at
between A$30,000 and $85,000 per tonne, with sapwood
prices ranging from $1,000 to $2,500 per tonne
(Adviser Edge 2008). A 17-fold increase in the price
for Indian sandalwood has been recorded since 1990
(Figure 21), which is also reflected in the fivefold
increase in price for Indian sandalwood oil in the
7 years from 2001 to 2007 (Figure 22).
The price growth for Indian sandalwood is
considered to be unsustainable at its current levels
(approximately 23% compounded over 15 years),
with a proportion of Indian sandalwood remaining
unsold at recent auctions in India (Adviser Edge
2008). The introduction of high-quality synthetics
into the market may also reduce the potential for
further sandalwood oil price increases.
Over the past 10 years, the price of Australian
sandalwood has also continued to increase, indicating
an unsatisfied demand for the commodity worldwide.
Yet despite the market potential and demand for
Australian sandalwood, it still does not attract the
premiums of Indian sandalwood. Heartwood prices
for Australian sandalwood range between AU$3,000
and $16,500 per tonne (AAG 2006).
Despite recent activity in planting S. album and
S. spicatum in Western Australia, the majority of current
product on the market continues to be sourced
from natural populations. Due to overexploitation and
lack of protection for the resource in many producing
countries, India and Australia are the dominant suppliers
of sandalwood in global markets (AAG 2006).
Supply and demand challenges
Reliable supply
As sandalwood supply has been constrained,
some purchasing companies, including perfume
companies, have not been able to obtain the critical
mass needed to justify featuring sandalwood in their
products. The global fragrance market favours natural
products, such as sandalwood, and will therefore
prefer these products over synthetic ingredients, but
only when a critical mass supply can be guaranteed,
at a commercially viable price (Adviser Edge 2008).
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