Rural Industries Research & Development Corporation

The New Rural Industries
A handbook for Farmers and Investors

Tea Tree Oil

Introduction

The production of oil from tea tree is one of the few agricultural industries, excluding forestry, that uses an Australian native plant. Several species of Melaleuca can be used to produce Australian tea tree oil, but most plantations use Melaleuca alternifolia. The industry originally harvested trees growing naturally in bush areas, but plantations were established when the demand for oil exceeded the capacity of bush production. The first successful plantations were established in the mid-1980s and the shift from bush to plantation production created a need for new technology to address cultural issues such as establishment, and weed and insect control.

Australian tea tree oil is marketed as a natural antiseptic and antifungal agent. It is used in a wide variety of health-care products for topical application. While there is ample anecdotal evidence as to the effectiveness of the oil, the industry can make only limited claims on the efficacy of the oil until they can be supported with evidence from clinical trials. Progress on this aspect is slow because of the cost of trials and the small size of the industry.

The production of oil has increased from a base level obtained from bush stands of about 12 t/year to 180-220 t in 1996-97. Concurrently, the farm-gate price of oil increased from $15/kg to $45-55/kg.

Once established, tea tree is a hardy perennial crop which survives well. However, production is very sensitive to management, and yields can easily drop to less than 50% of potential with poor management.

Markets and marketing issues

Reflecting the introduction of plantations, the production of oil has increased markedly over the past decade (Fig. 1 - not available in this html version). Further increases are assured as new areas, already planted, come into production. Coinciding with the increase in production, the farm-gate price of oil increased to $55/kg in 1989-90 and has moved in the $45-55/kg range over the past 8 years (Fig. 1 - not available in this html version).

One study estimated that the equilibrium price for oil was $34/kg with a total oil production of 360 t/year; the equilibrium being between the industry demand curve and the supply curve from existing producers in 1993. To some extent these projections have been overtaken by the creation of new markets, but the $34/kg price should be kept in mind.

It is difficult to obtain accurate information on marketing, but it is commonly accepted that more than 80% of Australian production is exported. Most is shipped as bulk oil. The oil is sold both as neat oil in small bottles, and in a wide range of toiletry and health-care products. Overseas production is currently very low, but there are indications that a number of countries will soon produce a significant volume of oil.

Production requirements

The oil is extracted from tea tree leaves and the level of production depends equally on the yield of leaf and the concentration of oil in leaves at harvest time. The yield of leaf is strongly correlated with the overall growth and yield of biomass. The oil has many chemical constituents and the international standard (ISO 4730-1996) requires oil to have more than 30% terpinen-4-ol and less than 15% cineole. It is generally accepted that terpinen-4-ol is an active ingredient in the oil and a high concentration is desirable. The cineole concentration is more controversial. Though there is no scientific justification to do so, the market seeks the lowest possible concentration of cineole and pays a premium for oil with less than 5% cineole.

Tea trees grow best with ample supplies of heat and moisture. Tropical and subtropical districts provide the required temperatures, and plants approach dormancy when the soil temperature is below 17°C. The trees are susceptible to frost damage. Light to moderate frost will affect only young growth, but a severe frost will cause extensive defoliation and kill some trees.

The plants have a poor regulation of water use and growth will decline markedly as the soil begins to dry out. However, shallow groundwater can maintain much of the turgidity and growth of plants when the topsoil dries out. Hence, the need for irrigation is determined by both the local rainfall and groundwater supplies. The trees are tolerant of wet conditions, and given the need for good water supplies, plantations are commonly situated in high rainfall districts (>1000 mm/ann) or where there are plentiful supplies of irrigation water.

Growth is best on medium-textured soils and since a good water supply is vital, plantations are usually sited on bottom country or alluvial flats.

Quite apart from its effect on growth, the climate also affects the concentration of oil in leaves. The oil concentration is usually highest during summer, and least during late-winter to early-spring. This seasonal trend is more pronounced in the cooler growing regions. There is also evidence that the oil concentration can vary between, and even within days, but the reason for such fluctuations is not known.

The main production area is the north coast of New South Wales. This area was selected for the first plantations because Melaleuca alternifolia is native to the region and it is also home to the bush industry. Tea tree grows well on the north coast, but subsequent experience has shown that it can also be grown successfully in many other districts. Significant plantings have been made in the Mareeba-Dimbulah district of far-north Queensland where tea tree is being grown as a substitute crop for tobacco.

Varieties

To date, seed collected from bush plants has been used to establish most plantations. Whilethe mother trees are usually selected on the basis of the composition of their oil, the progeny can vary somewhat because of the strong outcrossing during pollination. Also, the growth vigour of the seedlings is unknown unless a separate and time consuming step of conducting yield trials is included before seed is sold.

The shortcomings of using bush seed are well recognised and its use is viewed as a short-term expedient. A major plant-breeding project, based at Wollongbar Agricultural Institute, is selecting improved types based on oil concentration and composition, growth and coppicing ability. The project released its first seed in 1997. Other workers have selected superior trees and are using clonal methods to propagate large numbers of plants. The latter approach provides a quicker route, albeit at a much higher cost per plant, towards using improved types in plantations, but the narrow genetic base requires careful selection and testing of the parent trees. There is every expectation that improved types will substantially outyield those used to date. In the Wollongbar breeding project, seed collected from one provenance gave plants with 3.4 times the oil yield of the mean from typical industry plants, and twice the oil from four improved selections provided by industry sources.

Agronomy

Tea tree is a perennial row crop and many of the husbandry practices are similar to those used with other row crops. Being a perennial crop, a good establishment provides benefits over many years. Another important requirement is the provision of good drainage to permit access during all but the wettest periods. Timing is important for weed and insect control, and poor drainage can restrict these operations at critical times. In many instances laser levelling is used to optimise paddock drainage and facilitate flood irrigation. The design and depth of drains is especially important in areas with acid sulfate soils.

The exceptionally small seed gives weak seedlings of which only a small proportion will survive from a direct seeding into a field. Consequently, seedlings are raised in nurseries and planted out at 10-16 weeks.

Large numbers, up to 40,000/ha, are transplanted. The first two months after transplanting is a critical phase for the plantation since the seedlings have a poor competitive ability and the survival and vigour of adult plants is dependent on good husbandry during this phase. The two most important factors are weed control and provision of adequate water. Weed control remains important issue even in established plantations.

The nutritional requirements of tea tree are not well understood. Each harvest removes a large quantity of biomass and some return of nutrients is essential for long-term productivity. Nevertheless, a number of trials have given small or no response to conventional fertilisers, possibly because the tea trees tap into soil nutrients below the rooting depth of previous crops. If so, the lack of a fertiliser response should be viewed as a short-term condition. There are some indications that tea tree requires a slow, steady supply of nutrients as can be obtained from organically bound nutrients.

On the north coast of New South Wales, a crop is ready for the first harvest 18-24 months after planting. Thereafter it can be harvested every 12 months. Oil concentrations are generally highest in late-summer, but regrowth tends to be best after a spring harvest. In one experiment, these two effects balanced out between different harvest times and there was no consistent effect of month of harvest on the oil yield.

In the warmer environment of north Queensland, the harvest interval is 8-9 months. The different interval between the two areas reflects the 3-4 month period of winter dormancy in New South Wales and the absence of a dormant period in Queensland. This suggests that the growth rate during the growing season is similar at both locations.

The crop is harvested by cutting the stems near ground level, chopping the biomass with a heavy duty forage harvester, and feeding the chopped material into a transport bin.

The bin can also be designed to act as the distillation vessel. Steam distillation is used to extract the oil from the biomass and, after the vapours are condensed, a flotation procedure is used to separate the oil from condensed steam.

A plantation will require the normal machinery that is used for row cropping, together with specialised harvesting and distillation equipment. Small producers can pool their resources and use a single distillation unit. In some districts, harvesting and distillation can be done under contract.

The oil yield reflects both the oil concentration and biomass yield. With current knowledge and using bush seed, the target oil yield from a plantation should be in the 170-220 kg/ha range. This is slightly higher than the
150-200 kg/ha range published earlier and reflects the increased management skills in the industry. Yields from the new selections should be higher but yield trials are required to quantify the amount. The above yields relate to a single harvest and they tend to be similar in all regions. However, where the harvest interval is shorter as in north Queensland, the oil yield per annum will be greater.

Pest and disease control

Tea trees can be damaged by a number of insect species. Most damage is done to young growth and the plant generally recovers by reshooting from dormant buds. Thus, the insect problem is one of reduced growth rather than the death of plants. The most important insect pests are pyrgo beetle (Paropsisterna tigrina), a psyllid which forms pits on the leaf, and a gall forming fly (Dasineura sp.).

Sometimes the impact of these pests can be reduced by beneficial insects. Hence, an integrated pest management program should be adopted. Some insecticides are registered for use on tea tree.They were selected for lack or persistence and hence low risk of remaining in plants and contaminating oil.

There are no known serious diseases of tea trees.

Postharvest treatment

The oil has a long shelf life and can be stored to suit market considerations. Issues to address are the use of clean inert containers that are sealed to prevent the diffusion of water vapour, and storing under nitrogen to reduce the formation of oxidation products. The containers are commonly of stainless steel and there is an increasing trend to use stainless steel throughout the distillation pathways.

A gas chromatograph analysis is used to define the chemical composition of the oil, and some merchants require a chemical profile with each batch. There are various registered laboratories able to undertake this analysis.

Economics of production

Tea tree oil is a high return crop. It is expensive to establish but the perennial habit and high value of the oil can give high profits. Establishment costs, including equipment purchase or lease but excluding the cost of land, are about $7000 to $9000/ha. Subsequent maintenance costs approximate to $2500-$3500/ha.

The economic return is very sensitive to the yield and price of oil, as is illustrated for a large plantation in Table 1 (not available in this html version).

Key contacts

Key references

Australian Tea Tree Export and Marketing Ltd 1996. Tea Tree Oil into the 21^st Century. Proc. National Conference, Sydney, October 1996.

Brophy, J.J., Davies, N.W., Southwell, I.A., Stiff, I.A. and Williams, L.R. 1989. Gas chromatographic quality control for oil of Melaleuca terpinen-4-ol type (Australian tea tree). Journal of Agricultural and Food Chemistry,. 37, 1330-1335.

Colton, R.T. and Murtagh, G.J. 1990. Tea-tree oil -plantation production. Agfact P6.4.6, NSW Agriculture & Fisheries.

Murtagh, G.J. 1991. Tea tree oil. In `New Crops', Eds R.S. Jessop and R.L. Wright. Inkata Press, Melbourne, pp. 166-174.

Murtagh, G.J. (Ed) 199). Reports: Tea Tree Marketing & Planning Conference. Ballina, October-November 1991.

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