Summary of Agarwood Market Report by Sustainable Asset Management

As what I found in this report is very informative in agarwood (gaharu) worldwide market. Thus, I would like to summarise the important details in this report. 

Gaharu is being highly prized as a non-timber forest product which has a history dating back thousands of years. As recorded, gaharu had been used for cultural and religious purposes dating back over 3,000 years spanning the Middle East, Egypt, Japan, China and India. As reported, gaharu had been used in Islam in celebrating important life events; Buddhism used gaharu in ailing people and Christianity used gaharu to embalm the body of Christ. 

Gaharu trees in the wild
Gaharu trees are the most important source of gaharu. Gaharu trees are an indigenous species to the Southeast Asia region such as India, Thailand, Malaysia and eastwards to Papua New Guinea. The healthy wood of gaharu trees is white, soft and without resin. These parts cannot be processed into timber, thus, the value is very low. 

When the trees are being affected by certain external factors such as the lightning strike, animal grazing, insect attack or microbial invasion, it will produce resin as the defensive reaction and this resin is known as gaharu. Estimates suggest the naturally occurs infection in the wild are as few as 3 - 7% only. Nevertheless, it is difficult to know from the exterior whether the tree is infected or not. Consequently, many gaharu trees are illegally logged in order to find this small number of infected trees. 

Protecting the species today
The two most notable protectorate bodies involved in active preservation of the gaharu tree are IUCN and CITES. Both organisations are critical in the drive to eradicate the illegal trades, protect the species and identifying pragmatic and effective methods to sustainably develop a legal market place for gaharu. 

Gaharu trees plantation
With the regulation and certification fo trade in the gaharu products, there comes an opportunity for businesses to develop a sustainable market based solution - gaharu trees plantation. Science nowadays has been able to recreate the infection process in plantation grown trees which is known as inoculation. As a result, gaharu trees plantation owners can now produce commercially viable quantities of gaharu for sales and distribution. 

Commercial application
There is many commercial application for the gaharu, from cultural, social and medicine to haute couture. The high global demand, with limited supply, makes it the most expensive wood in the world. It is used in cancer research, to treat respiratory disorders; given as gifts and used in ceremonial practices for both religious and non-religious all over the world. It is also carved into sculptures, beads and boxes; and luxury perfumery houses also use the oil in their fragrances. It is also used in making gaharu tea that believes can bring health benefits. 

Gaharu market
It has been estimated that the worldwide annual trade in gaharu is somewhere between USD 6 - 12 billion of which it is estimated that only about 20% is legal and carries the appropriate CITES permits. The worldwide trade in gaharu volumes is extremely difficult to ascertain because the vast majority of the business is undocumented. Data on pricing and values are therefore not easy to obtain. The price of high quality gaharu oil varies and can range from USD 50,000 to USD 80,000 per litre, depending on perceived quality. 

Another type of common gaharu product sell is gaharu chips. It may sell for several hundred to several thousand US dollars per kilogram. Gaharu chips and flakes are the most common forms of gaharu traded. 

Retail prices of gaharu oil per tola (USD)

Price per kilo of gaharu chips (USD)

The same observation can be made for both the market for gaharu chips and gaharu oil. A combination of factors such as: stock depletion in the wild leading to reduced supply, tighter regulation imposed by protectorate bodies has fueled the perception of rarity leading to rising prices.

Gaharu grading
The market and pricing for gaharu chips and gaharu oil can be subjective and dependent on unofficial grading and pricing mechanisms - generally determined by market experts as opposed to a common set of market standards. When considering the quality of gaharu chips and oil, the following characteristics are taken into account. 

• Gaharu chips
• Aroma,
• Country of origin,
• Duration of fragrance,
• Colour of wood, and
• Size and thickness.
• Gaharu oil
• Aroma ,
• Country of origin,
• Duration of fragrance, and
• Colour/Thickness/Density.

Conclusion
The gaharu tree is a special story. In its uninfected state, the tree has limited value and only when it becomes infected, does it then contain the illusive resin that makes the value soar. 

An investment in gaharu trees plantation is an investment in forestry and should be considered a medium to long term opportunity underpinned by minimal supply and demand fluctuations. It's durable nature and its varied applications offer stable and constant returns. It is widely accepted that investment in forestry assets, especially those with specialist applications, will offer lasting benefits not only to the investor, but also the forestry industry and the environment as a whole.