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

Box 2. Industry weaknesses and threats
• Large volumes of plantation sandalwood from
Australia will likely enter the market from
2014 onwards.
• The impact of this on world sandalwood
prices cannot be determined with certainty.
Consequently, the Vanuatu industry must
undertake strategic market planning and ongoing
market monitoring and competitor analysis.
• No Vanuatu sandalwood industry peak body or
strategic plan currently exists.
• The declining natural resource is reducing
the size of the Vanuatu sandalwood industry,
which will reduce Vanuatu’s market presence
in the short to medium term until an expected
upturn in 2020 as more substantial volumes of
plantation sandalwood come on line.
• There are likely to be regulatory and technical
challenges associated with the ‘merging’ of
native and plantation systems.
• The size and value of the current and projected
resource in Vanuatu limit production and marketing
options relative to high-volume producers.
• Introduction of other sandalwood species
potentially threatens the genetic purity of the
Vanuatu resource and limits the opportunity for
differentiation in the market relative to higher
volume Indian and Australian species.
• Vanuatu’s very small size means limited
economies of scale in purchasing, processing,
distribution and marketing.
• Vanuatu has high internal transport costs and
geographical isolation from large markets.
• Unique economic and social challenges
exist at the interface between the ‘traditional
economy’ and the ‘modern economy’ (Bazeley
and Mullen 2006).
• Natural disasters such as cyclones can cause
significant production disruptions.
• No industry grade standards or certification
protocols have been determined or
implemented.
• There has been limited investment in market
research and development to date.
• Vanuatu’s small domestic population limits
domestic marketing opportunities relative to
Australia.
• Land ownership constraints can inhibit investor
confidence.
• conduct research and provide information on
sandalwood, to identify and promote the best
sandalwood variety
• conduct an inventory survey to establish information
on sandalwood stock, to identify and promote
appropriate management measures
• establish a proper control measure for better management
of sandalwood harvesting and trading
(Gillieson et al. 2008).
Santalum austrocaledonicum has some populations
containing trees with a heartwood oil of a quality
that meets the international standard for S. album.
While this identified genetic material is of significant
importance to the sandalwood industry in Vanuatu, its
commercial value will only be realised if a planted
sandalwood industry can be established. A priority in
Vanuatu is therefore to stimulate and promote rapid
development of such initiatives.
Research has identified sandalwood selections with
high-quality heartwood oil (Page et al. 2010) that are
now being used to develop superior seed stock. Such
research, combined with the extension work carried
out by the VDoF and its research partners, has
contributed to the stimulation of interest in planting
by both smallholders and investors. The department
has also been encouraging industry to adopt processing
technologies to increase the quality of Vanuatu
sandalwood products and their export value (Gillieson
et al. 2008).
Options for future market development
Tourism has become an increasingly significant
industry in Vanuatu, representing approximately
20–25% of gross domestic product since 2005 (TRIP
2008; AusAID 2009). The Vanuatu Statistics Office
reported that 196,795 visitors (including air and
cruise ship visitors) entered Vanuatu in 2008. This
was up from 99,328 visitors in 2004 (VNSO 2008).
Expenditure by tourists in the category of ‘local shopping’
alone (excluding purchases of food, drinks and
duty-free shopping) was estimated at 2.181 billion vatu
(approximately A$24.5 million) in 2007 (TRIP 2008).
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