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High hopes for native sandalwood

Reporter: Sean Murphy

First Published: 27/04/2007

SALLY SARA, PRESENTER: Our next story is about a native crop which is thriving in salt-affected areas in Western Australia. Native sandalwood produces a high-value nut within five years, and within 20 years the mature sandalwood is worth up to $10,000 a tonne. As global supplies of Indian sandalwood decline, the native variety is delivering a triple bottom-line from its timber, nuts and landcare benefits.

SEAN MURPHY, REPORTER: They're the trees that helped build the West Australian economy in the early days of European settlement. And now, native sandalwood holds the promise of a new golden era.

This tree is just seven years old and is being harvested by University of Western Australia researchers to help gauge its potential at age 20. (To Geoff Woodall) You're looking at similar aged plantations around the wheat belt. You know, what have you detected so far, in terms of different growth rates and quality and things like that?

GEOFF WOODALL, UNIVERSITY OF WESTERN AUSTRALIA: There's quite a bit of variation between sites. Certainly, the higher rainfall sites are growing a little bit faster. However, there are some really productive sites in some lower rainfall areas as well. But there's quite a lot of within-site variation, and essentially that's related to not really the host, but the quality of the soil that the plants are growing in. And we're getting a sort of four- or five-fold difference between the best soil and the worst soil.

SEAN MURPHY: On this 2.5 hectare plot near Narrogin in the central wheat belt, a high-density combination of acacia species is proving an ideal host for the sandalwood parasite and production of its oil-rich scented heartwood.

GEOFF WOODALL: That's really exciting, yeah. To get that amount of heartwood in a seven-year-old tree, that's brilliant. But given we're already starting to put heartwood down, and significant amounts of it, at year seven, it means we can be pretty confident that by year 20 we'll have a pretty nice grade of product to sell on the market.

SEAN MURPHY: It's encouraging news for landholder Don Moir, who has also harvested 450kg of seed this year, worth about $14,000.

DON MOIR, SANDALWOOD GROWER: Well, we've had an income from the seed after the first three years, which I never expected. And that's been quite significant for the small amount that we've got in. Plus, of course, there's the harvest in the future - 20, 25 years. And some of the hosts, all the host stray acacias, and they're native to the area, and also it's... One of the hosts, the saligna, is a good sheep fodder.

SEAN MURPHY: The biggest benefit, though, has been in landcare: helping to deal with potential salinity problems.

DON MOIR: This area is prone to salt scald, salt problems, and it's dried the paddocks, the subsurface profile. We can see that already.

SEAN MURPHY: In the 1840s, native sandalwood was WA's biggest revenue earner, with shipments to the Far East accounting for more than half of the young colony's earnings. And as new settlers began clearing what is now the nation's largest wheat belt, the high demand for sandalwood-scented heartwood paid for much of the new development.

Today, as global supplies of Indian sandalwood are in decline, WA's wild-harvested native resource supplies 40 per cent of the world market, mostly made up of Asian incense makers and essential oil producers supplying high-value cosmetics and pharmaceuticals.

GRANT PRONK, WA FOREST PRODUCTS COMMISSION: The prices for West Australian sandalwood has risen fairly sharply in the last three years. And that's all riding on the back of the Indian sandalwood, where the Indian sandalwood is becoming more and more less available throughout the world, so there's a high focus on West Australian sandalwood. And as a result of that, we've found that we can increase our price fairly significantly, particularly, in the last two years.

SEAN MURPHY: Most of WA's native sandalwood harvest ends up at the Mt Romance essential oil factory in Albany, on the south coast of WA. It's converted into liquid gold, fetching as much as $1,000 a kilogram.

ADRIAN BROWN, MT ROMANCE: Our finished product goes into the fine fragrance industry. It ends up in Europe, in EU, in the Middle East, as well as in a small range into the Americas.

SEAN MURPHY: Mt Romance also produces its own range of sandalwood-infused cosmetics, and its research and development effort points to even further potential from the therapeutic goods industry.

VALERIE GEARON, MEDICAL SCIENTIST, MT ROMANCE: It's a very complex oil. It's probably the most complex, in terms of number of chemicals, of all the species. It has at least 125 chemicals in it, many of which are unknown.

SEAN MURPHY: Medical scientist Valerie Gearon believes the true value of native sandalwood's unique chemical structure may be helping to save lives. VALERIE GEARON: The chemicals in sandalwood oil are very biologically active. We have done a lot of work looking at basic screening, anti-microbial, anti-inflammatory activity, and the degree of activity is high. There are a couple of constituents that are specific to Australian sandalwood that are, in particular, highly active. One of those is trans, trans-Farnesol, which in vitro demonstrates killed cell death on a number of different cancer cell lines, this is in vitro, obviously, with no effect on normal cell lines. That's a very powerful effect, and somebody has recently patented a natural product, primarily containing Farnesol, for cancer treatment.

SEAN MURPHY: Mt Romance is now the world's biggest supplier of sandalwood oil, with about 12,000kg produced annually.

The company is confident a predicted fivefold expansion of plantation sandalwood by 2023 will not flood the world market.

ADRIAN BROWN: At the moment, we can process every bit of oil that we can get our hands on, and we build up a capacity to process more wood as well, so we think the plantation industry is very beneficial for the sandalwood industry in general, and we're looking to secure large quantities of privately grown sandalwood.

SEAN MURPHY: Although in its infancy, WA's native sandalwood plantation industry is booming. From as little as 700 hectares under cultivation in 2000, the industry has grown to nearly 6,000 hectares this year, and an expected 8,800 hectares next year. It's now the highest growth tree crop in the wheat belt.

AARON EDMONDS, AUSTRALIAN SANDALWOOD NETWORK: The sandalwood tree is an amazingly logical fit for the Australian wheat... well for the West Australian wheat belt and that's mainly because it's native. So it allows us to, basically produce within the constraints that each season throws us. They're adapted to drier conditions. They can grow in wetter conditions as well. And the other beautiful thing about the crop being a perennial, it allows us to manage environmental issues, like salinity, and hosting on legume trees, or leguminous trees, it removes the need to apply fertilise, and that's very topical at the moment. You've had urea prices rise by 70 per cent in the last five months.

So, clearly, there's the need for agriculture, broadacre agriculture, to start looking for ways in which we can move to systems that don't rely so much on fertiliser for profitability.

SEAN MURPHY: At Ongerup, in the south-eastern wheat belt, Ernie Jaekel and Toni Powell grow wheat and sheep on an average of 400mm of rain a year. Their 4800 hectare property was once covered in native sandalwood.

TONI POWELL, SANDALWOOD GROWER: The sandalwood cutters came through in the 1880s and took it all out. So, yeah, it was all natural sandalwood, so I think that's why they're growing so well.

SEAN MURPHY: Toni Powell planted 40 hectares of sandalwood along this degraded creek line four years ago, and is already seeing the landcare benefits. She's now collecting seeds to extend the plantation.

TONI POWELL: Got a lot of creek line where we can plant them, and then perhaps sell them for other people to plant or for bush foods.

SEAN MURPHY: In making your decision to plant sandalwood, how important was the potential to harvest the sandalwood in 20 or 25 years, and actually make...

SEAN MURPHY: No, probably not that important, because you never know, a bushfire could come through and wipe it all out or frost hits them. There's some this year, with the drought, that are a bit sad and looking for a drink. So, yeah, no, that's just a bonus at the end, I guess.

SEAN MURPHY: But that bonus at the end is attracting huge investment, with predictions that sandalwood plantations could grow to 50,000 hectares in 20 years. On this wheat and sheep farm at Beverley, in the north-eastern wheat belt, about 400 hectares of weed-resistant, salt-prone country has been converted into an investment which its owners hope will yield millions of dollars.

RON MULDER, WA SANDALWOOD PLANTATIONS: What we are finding is it is a farm of many different soil types, so we have to... we have a bit of a battle in some areas to get the soil prepared correctly to be able to plant trees into, but what we're finding... Even though it was considered to be a low production farm for wheat and grain and your traditional farming methods, we're finding that we're getting very, very healthy tree growth in that situation as well.

SEAN MURPHY: Ron Mulder manages the West Australian sandalwood company - a limited shareholding, which includes investors from the Indian sandalwood industry. He claims the company's expansion plans are being hampered by a lack of seed stock. The State Government's Forest Products Commission, or FPC, has cut his supplies to expand its own commercial operations, which he says are also distorting land values.

RON MULDER: The FPC has moved in with share farming options for a lot of farmers here and then paying them very good rates for long-term leases. Where we're looking to purchase land and that's actually, we believe in this immediate area, in Beverley here, it's driving up the land price as well for suitable tree-planting land.

SEAN MURPHY: The Western Australian Government established the Forest Products Commission in 2000 to deal with a perceived conflict of interest between commercial forestry and conservation and land management. Since then, the FPC has become a significant player in the plantation sandalwood industry and critics argue there is now a clear conflict of interest between its commercial ambitions and what they say is a responsibility to share taxpayer-funded research.

GEOFF WOODALL: Bit hard to smell now, but there was plenty of smell in there when we were cutting it.

AARON EDMONDS, AUSTRALIAN SANDALWOOD NETWORK: Yeah, right.

GEOFF WOODALL: Freshly cut.

TIM EMMETT, AUSTRALIAN SANDALWOOD NETWORK: Nah, you can smell that really strong. It's great.

GEOFF WOODALL: So that's good.

SEAN MURPHY: Aaron Edmonds and Tim Emmett represent the Australian Sandalwood Network, a group with 130 members who believe it's in the public interest for the government to encourage more sandalwood in marginal cropping country.


AARON EDMONDS: We would like to have fair access to all research that is done with public money. There is a conflict of interest, because, you know, this is... if you consider that this is one of the few tree-cropping industries that is attracting private investment, just off the fundamentals of the industry alone, they then have to go out and compete with, you know, the government, in effect, who is using public funds to, I guess, subsidise their systems, and that's probably not the fairest way that we'd like to see the industry grow and develop.

KIM CHANCE, WA MINISTER FOR AGRICULTURE, FOOD AND FORESTRY: If that were true, of course, there would be reason for people feel dudded, but of course, it's not taxpayer-funded research. The FPC is a statutory authority, and it's required by its legislation to operate commercially in the interests of its shareholders, who are the people of Western Australia. It does generate, from its research, sometimes with private partners, sometimes on its own, intellectual property, which it is bound by its statutes to protect by way of patent or copyright, in the same way as any commercial entity is.

SEAN MURPHY: The FPC has rapidly expanded its share-farming operations in the last two years, and the government is now considering amending legislation to give the commission a lead authority role. This would mean all of its research could be used to benefit the entire industry, as had occurred with the Indian sandalwood plantation industry in the far north a decade ago. But its commercial partnerships would continue.

KIM CHANCE: Generally, in forestry, that you require a degree of public investment to actually get an industry up and running. And that was true in both pines and in bluegum, and I'm hopeful that it's also going to be true of the southern sandalwood industry. Bearing in mind our investment is co-investment, and we invest along with the private sector in partnership agreements, and those partnership agreements are available to people who want to enter into them.

SEAN MURPHY: The Australian Sandalwood Network believes the biggest potential for further research will be into sandalwood nuts. In about three years, nut production will exceed the demand for growing more plantations.

AARON EDMONDS: The tree produces an oil seed or a nut, which is 60 per cent oil and 18 per cent protein, so it's highly nutritious, and that production of the nut begins after about year five. And we're finding that we can get, you know, equivalent of say 25 per cent of broadacre crop yields with the sandalwood, with the sandalwood nut and obviously with the nuts currently fetching anywhere from $25 to $40 a kilo, there's quite attractive gross margins there for no or little inputs, 'cause you don't have to fertilise and there is no irrigation infrastructure necessary. It's a dry-land crop.

GEOFF WOODALL: So, these are dry-roasted kernels and then I've... they've then been lightly salted. And, yeah, they're quite pleasant to eat. Very nice.

SEAN MURPHY: Geoff Woodall has been investigating potential markets for the nuts, their husks and, also, soap made from their oil.

GEOFF WOODALL: There is quite a lot of interest from various players in the body-products sort of arena and I guess the thing we're looking into at the moment is the potential to use that oil for... to exploit its potential anti-fungal properties and anti-bacterial properties. Not as the oil itself, but when the oil is modified chemically, then it imparts strong anti-microbial activities.

SEAN MURPHY: Developing products and markets from their nuts is likely to make sandalwood plantations a short-term viable option for more broadacre farmers. It could mean a new era where natural resource management turns a profit, and the native trees, which were cleared to help create the West Australian wheat belt, are now replanted to help it survive into the future.

AARON EDMONDS: I can foresee that we won't be able to keep up with demand as it grows, because it's got such an amazing story to the tree. Environmentally, it's such a great advantage to be producing this sort of crop in Australia. What producer wouldn't back a product that utilises that sort of commodity with that sort of story attached to it?