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OverviewAgrawal Wood Tree   High DemandDepleted SupplyProject DetailsProject Returns  Risks and Safeguards

High Demand for Indian Sandalwood

 

Sandalwood has been an integral part of Asian culture and religion for thousands of years, and remains a key ingredient in leading fragrances and cosmetics.

The Indian species of Sandalwood (Santalum album) commands the highest price at auction due to its superior oil yields and long-term market acceptance. The current price for Indian Sandalwood logs averages over Rs. 45 Lakhs per tonne confirming Indian Sandalwood’s status as one of the world’s most valuable tropical hardwoods.

The demand for Sandalwood is centered on a number of markets in India and around the world i.e. France, Taiwan, Hong Kong, Japan, Malaysia, Singapore, Dubai, South Africa, the UK and the USA.

The majority of wood is sold for the extraction of sandalwood oil, however the heartwood is also used in the production of Attars, Betel Nut (Pan masala, mouth fresheners), Soaps and Toiletries, carving industry and has many important cultural, Medicinal and therapeutic and religious uses.

It is estimated that the global demand for Indian Sandalwood is well in excess of 8,000 tonnes per annum supported by growth in demand in the global cosmetics, fragrance and toiletries market. In India alone the demand for Sandalwood is estimated to be 5,000 tonnes per annum to satisfy the multitude of domestic Sandalwood markets.

The average price of wild Indian Sandalwood heartwood has had a compounded increase of 21% per annum over the last 16 years due to strong demand and diminishing supply that has seen the tree recognised on the World Conservation Union’s (IUCN) Threatened Species Redlist.

 

Market Trend of Sandalwood per Tonne

Year

Ave. Rupees in Lakhs/ Metric Tonne

1998 – 99

5.1

1999 – 00

6.5

2000 – 01

7.2

2001 – 02

9.5

2002 – 03

12.5

2003 – 04

17

2004 – 05

30

2005 – 06

35

2006 – 07

38

2007 – 08

45

 

 From 1990 to 2008, the sale price of sandalwood in India has increased from 5 Lakh per tonne to Rs. 45 Lakh per tonne. This rise in sale price, which has become a trend over the past few years, is due to increased demand for sandalwood and its oil. It is likely that this trend will continue due to dwindling supplies.

High Demand for Agarwood

“The value of Agarwood exported from Singapore alone has been estimated to exceed $ 1.2 billion per annum.” – Food and Agriculture organization of United Nations.

Agarwood has been an integral part of Hindus, Buddhists, Muslim, Christians, Taos, Sufi culture and religion for thousands of years. In the very words of Buddha, “The aromatic fragrance of agar takes one to the stage of nirvana.”

It is widely used in medicinal practices of Ayurveda, Unani, Arabic, Tibetan, Sufi and Chinese and is the main ingredient. It is widely used in the treatment of respiratory, stomach, heart related problems and aromatherapy.

The strong and dense aromatic fragrance of agar oil lifts our spirit like no other. Because of this quality of agar, its popularity is unequalled. No other natural aromatic and essential oil even comes close to the reputation agar enjoys. There is a great demand for agar oil in the Gulf countries where it is also known as Agar-attar as no alternative synthetic oil equal to superior grade agar oil has been manufactured till date.

It remains a key ingredient in leading fragrances and cosmetics. The Agar oil is one of the perfumery’s oldest and costliest perfumery raw materials used in high class perfumery as base oil and as a fixative, imparting a lasting balsamic odor to the product. Globally, over 500 perfumes have agar as one of the ingredients.

Incense sticks in India are called ‘agarbathi’ and there is a lot of demand from agarbathi industries which can only be met once sufficient production is regained. The soft pulp of the tree that ultimately remains after it is processed for oil is one of the main raw materials in the paper industry.

In retail stores, agar oil and agar attar rates depend on demand. While first grade oil is sold at US $25,000-30,000, second grade oil is sold at US $5,000-10,000. In effect, they are costlier than gold.

Indonesia’s international market grade & rate/kg is noted below.

Grade

Wood Quality ( Indonesia )

Rate/kg (in US $)

Super ‘A’

Deep black, heavy and high resin

650-850

Super ‘B’

Black, heavy and medium resin

400-550

Super ‘C’

Attractive black, heavy and medium resin

250-350

 Though the export, import and re-export trade of Agarwood products is widespread among the various countries of South East Asia, Taiwan and Singapore lead the group. While Indonesia and Malaysia are major exporters of Agarwood products, other countries like Australia, Cambodia, Canada, Hong Kong, India, Indonesia, Israel, Laos, China, Malaysia, Myanmar, Pakistan, South Africa, Thailand, USA and Vietnam are also in the export trade. Taiwan has imported about 68,43,514 kg Agarwood from 1994-2003. In the later years, the export and import of Agarwood has considerably reduced, while the demand has increased.

Agarwood produce from north-eastern states & the price fixed by the government (before 1998).

Grade

Wood Name ( India )

Rate/kg (in Rs.)

‘A’ First Class

Black Agar

30000 – 50000

 ‘B’ Second Class

Buntang

20000 – 30000

‘C’ Third Class

Puthas Kalaguchi

7000 – 10000

High Demand for Rosewood

D. latifolia is native to India and Indonesia, but is also grown in Nigeria, Kenya, Vietnam, the Philippines, and other parts of tropical Africa and Asia as an ornamental plant. It can be 40 m tall and grows quickly under the right conditions. D. latifolia is well known for producing very hard and durable wood with a long straight bore, which makes it highly valued on the international market. Its bark is also used for medicinal purposes in its natural range.

In India, the average price of D. latifolia timber is higher than that of teak. It is used for furniture, plywood, veneer, decorative wood products, construction, musical instruments, and other wood products.