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

It is also possible to publish drafts at different
stages in the standardisation process. This is currently
being done with Australian sandalwood (S. spicatum),
for which a standard is under development (ISO/
FDIS 22769).
Most standards require periodic revision. ISO
has established the general rule that all ISO standards
should be reviewed at intervals of not more
than 5 years. On occasion, it is necessary to revise
a standard earlier. To date, ISO has produced over
16,000 International Standards, published in English
and French (ISO 2009). No internationally recognised
standard currently exists for Pacific sandalwoods such
as S. austrocaledonicum. Many industry stakeholders
interviewed suggested that development of an appropriate
Vanuatu Product Standard is a high priority.
Position of Vanuatu sandalwood
Existing products and markets
Current export markets for Pacific sandalwood are
predominantly in Asia—in particular, China, Taiwan,
Singapore, Korea and Japan, none of which have natural
resources of sandalwood themselves. India, while a
major producer, is also a major importer due to supply
shortfalls in its domestic market (Thomson 2006).
The Government of Vanuatu has exerted a level
of control on sandalwood harvesting and marketing.
At present, there are only two licences to buy
sandalwood issued to Vanuatu processors, each with
demonstrated capacity. These licences represent a
maximum 80 tonnes of sandalwood per year combined.
This limit represents the current estimated
annual sustainable harvest from the native resource
as estimated by the VDoF.
Market demand and prices for low-value sandalwood
products are said to be limited due to the availability
of synthetics and substitutes. Opportunities for
commercial sapwood production in Vanuatu are also
said to be constrained or unviable due to internal and
external transportation costs.
Future value of the Vanuatu sandalwood
industry
Preliminary forward estimates provided by different
stakeholders in the industry as to the future
value of plantation sandalwood from Australia range
from A$20,000 to A$41,000 per tonne for Indian
sandalwood (S. album) and A$3,000 to A$16,500
per tonne for Australian sandalwood (S. spicatum)
(AAG 2006). This variance in the estimates of future
market returns for sandalwood shows that all such
data should be treated with extreme caution.
Vanuatu sandalwood (S. austrocaledonicum)
is rated in quality somewhere between Indian and
Australian sandalwood, primarily based on its percentage
oil yields and quality. Therefore, assuming
a scale based on a conservatively low market return
for Vanuatu sandalwood (S. austrocaledonicum) of
A$10,000 per tonne and a conservative top market
value of A$30,000 per tonne, it is possible to speculate
on the broad scope of the future value of the
Vanuatu sandalwood industry (Figure 23). As other
sandalwood species have limited wild resources available
and limited plantings for commercial production,
such price trends may be expected to continue
into the future.
Niche marketing
Declining global stocks of natural sandalwood, coupled
with rising market prices, have led to an increase
in the establishment of commercial plantations, particularly
in Australia. Increases in commercial plantings
are likely to lead to increases in global supplies;
it is therefore important for Vanuatu to differentiate its
sandalwood product from international competitors.
Opportunities for Pacific island sandalwood,
including Vanuatu sandalwood, are likely to involve
niche marketing, focusing on unique cultural dimensions
and oil profiles (Thomson 2008). The Pacific
Economic Survey (2009) reported that niche marketing
can provide valuable opportunities for Pacific
island countries, especially commodity exporters.
The report found that product differentiation through
branding, certification and value adding offered
potential for improved returns (AusAID 2009).
Developing certification programs can be expensive
and problematic where demonstrating legal supply is
difficult, such as in Vanuatu. Certification schemes
may therefore need to be based on simple methods
for identifying and registering plantings at the time
of planting. These certificates may then be used to
demonstrate to the market that the product is sourced
from sustainable agroforestry.
One issue that the Vanuatu sandalwood industry
must consider is the potential niche market advantage
of differentiating product from S. austrocaledonicum
from the Indian and Australian bulk product—and the
potential market disadvantage of producing Indian
sandalwood and hybrids in Vanuatu, thereby negating
the opportunity for definitive species differentiation.
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