Program Overview

Background and Long-Term Strategy

The industry comprises about 100 growers and is located principally in northern New South Wales and on the Atherton Tableland in Queensland. About 3,000 hectares of cultivated tea tree grows in these locations. In 2005-06, 522 tonnes of oil were sold, more than double the volume sold in 2001-02.

In 2006-07, production was adversely affected by crop losses due to frost. About 500 tonnes were produced. Gross value of production in 2006-07 was about $15 million. The crop for 2007-08 was adversely affected by flood losses, and it is expected that at least 50 tonnes will be lost. As a consequence, oil rose to $34 per kilogram farmgate.

The market for tea tree oil in the cosmetic and personal health areas is maturing with the oil no longer being sought for its novelty value but continuing to be valued by consumers for its effectiveness. Oil is a component of a very wide range of personal health care, cosmetic and animal care products. The research supported by RIRDC on tea tree oil's therapeutic value provides critical credibility to it as a natural product, as opposed to other essential oils for which this information is lacking.

There are many opportunities for tea tree oil to be used as a natural product ingredient to the mass market via multinational companies. A significant barrier to this development will be research information on safety, similar to that available for other chemical ingredients. About 90 per cent of Australian tea tree oil is exported, principally to North America and Europe. Currently production in other countries is not significant, however this could change as the price increases.

R & D to develop a successful tea tree oil industry has several spillover benefits. These include:

• benefits to other rural industries from development of alternative agricultural and veterinary chemicals as traditional chemicals are withdrawn from the marketplace by the APVMA on the grounds of consumer protection and resistance to the actives
• leading the way to other Australian natural product industries in how to address major regulatory requirements in major export markets, and providing a precedent to other Australian natural products to enter a variety of growing markets
• potential significant health benefits from addressing serious infectious disease problems in hospitals as well as potentially cancer
• environmental and regional benefits as tea tree is one of the few crops that can withstand and address the problems of acid sulphate soils
• contribution to carbon sequestration.

A long-term approach with continued seed funding is required to demonstrate the oil's capability and to stimulate research by others.

Key long term strategies

• enhancing production systems to maintain the competitiveness of Australian growers 
• identifying regulatory regimes and market barriers, and enhancing the ability of industry to meet safety standards
• demonstrating proof of concept/efficacy for innovative applications of tea tree oil 
• fostering communication that increases understanding and thereby encourages greater use of tea tree oil