Looking ahead – global sandalwood production and markets in 2040, and implications for Pacific Island producers

ABSTRACT Sandalwood has distinct, high-value end uses that function to underpin its price and maintain demand in different market segments and regions. These uses and markets include essential oil from its heartwood as an ingredient (providing woody base notes and fixative properties) in fine perfumes, exclusive natural body-care products and new pharmaceuticals, especially for European and North American markets; in solid furniture, carvings, traditional medicines and religious uses in China, the Republic of Korea and Japan; for attars 1 1 Attars are fragrant essential oils used pure or as a base for perfume in South Asia and the Middle East. funeral pyres and chewing tobaccos in India; and customary uses in the Middle East. The markets for sandalwood heartwood and oils from Pacific Island countries have been strong and have continually diversified since exports to China commenced over 200 years ago. The global sandalwood market remains buoyant, with 2019 wholesale prices of Santalum album oil ranging from USD 1750 kg−1 (unlicensed production through Dubai) to USD 2100 kg−1 for licensed production from India and USD 2000–2500 kg−1 as wholesale price for Australian S. album plantation oil. The wholesale price for S. austrocaledonicum oil is USD 1500–1750 kg−1. The heartwood (air-dried) of S. album is mostly traded by growers for more than USD 100 kg−1. The price for Fiji’s S. yasi heartwood (partly to fully air-dried, ‘village gate’ price) for carving, furniture, and oil distillation has increased steadily to USD 50 kg−1 in 2019 while the price for grade 1 S. austrocaledonicum heartwood (partly to fully air-dried; ‘on the beach’ price) is USD 35 kg−1. The global market for sandalwood products, sustainably sourced from a growing plantation resource in Australia, Asia and the Pacific Islands, is predicted to remain strong up to and beyond 2040. The high rate of increase in sandalwood prices in recent decades is unlikely to continue, however, due to both an expanding supply from increasingly better-managed plantations and the likelihood that, in the longer term, genetic improvement and the adoption of technological innovations will induce earlier and greater heartwood yields in planted sandalwood. Nevertheless, sandalwood prices will remain sufficiently high to make agroforestry cultivation a commercially attractive proposition for efficient Pacific Island sandalwood growers. This paper provides a prognosis for the production of and demand for sandalwood in 2040 for major sandalwood producer regions (Australia, India, Indonesia, Timor-Leste and the Pacific Island nations) and markets (China, Europe, Japan, the Republic of Korea, the Middle East, North America and the United Kingdom). These estimates of production and demand were made to inform prospective sandalwood growers, and especially smallholders in Pacific Island countries, on the likelihood that the current strong demand and prices will continue and the extent to which export/international markets will be affected by the large sandalwood plantations now being established in several countries.