Australia could soon dominate the world sandalwood market, with both plantation-grown Indian sandalwood and sustainable wild Western Australian sandalwood showing promise as growth industries.

A recent Rural Industries Research and Develeopment Corporation (RIRDC) scoping study on the sandalwood industry has found that Australia is set to dominate world supply, and targeted research and development initiatives would serve to bolster this strong position.

“As the R&D provider for the essential oils industry, RIRDC will play an important role in developing the industry’s knowledge in relation to processing, plant physiology, markets, sustainability and industry development for both species. RIRDC is committed to providing public-good research to fill the breach between industry need and non-proprietary research interests,” said Dr Roslyn Prinsley, RIRDC General Manager for research in new rural industries.

Indian sandalwood oil, a premium product sourced mainly from wild stocks, is used for a range of religious purposes and is a valuable fixature and base for luxury perfume manufacture.
Indian sandalwood oil is currently limited to a supply of around 200,000 kg of oil a year, and prices have increased significantly since 1995.

In response to high prices for Indian sandalwood oil and moves to reduce natural harvest, an Indian sandalwood plantation industry has emerged in Kununurra, WA, with trial plantings established in other Australian locations.

Australia is now the world leader in plantation establishment, with an industry dominated by corporate investors using managed investment scheme principles.  The RIRDC study estimates that Australian plantations will produce an additional 130,000 kg pa of Indian sandalwood oil, equivalent to 60% of current world production, by 2023.

Western Australian sandalwood oil attracts lower prices than Indian sandalwood oil and, like Indian sandalwood oil, it is currently sourced from wild stocks.  Unlike Indian sandalwood oil, Western Australian sandalwood oil is sourced from a sustainably managed supply.
Demand for WA sandalwood oil is determined, in part, by luxury perfume interest in the product, and efforts using R&D to reassure perfume producers about the product’s suitability are paying off.

In addition to sandalwood oil, the WA sandalwood tree also produces a fruit, which is similar to a macadamia nut.  Commercialisation of the WA sandalwood nut, which is available four years after plantation establishment, may assist with the commercial viability of WA sandalwood plantations.
Plantations, which are dominated by a managed investment scheme in the Western Australian wheat belt, are likely to increase the supply of WA sandalwood from 12,000 kg of oil per annum in 2006 to more than 60,000 kg by 2023.

Because of the tree’s suitability to low-rainfall areas, it is an ideal plantation species for areas of cleared land which are too dry to support other plantation species.
The report Australia’s Sandalwood Industry – An overview and analysis of research needs (Pub No. 06/131) is available from RIRDC – call 02 6272 4819 or visit www.rirdc.gov.au

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Media enquiries:  Dr Roslyn Prinsley -  02 6272 4819 / 0409 661 087