Soaring prices push sandal’s spread north

Soaring prices push sandal’s spread north
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First Published: Mon, Mar 24 2008. 12 33 AM IST

Seedlings being raised in beds at the Institute of  Wood Science and Technology in Bangalore. (Hemant Mishra/ Mint)
Seedlings being raised in beds at the Institute of Wood Science and Technology in Bangalore. (Hemant Mishra/ Mint)
Updated: Mon, Mar 24 2008. 12 33 AM IST
Bangalore: One of the world’s largest consumer of sandalwood, Karnataka Soaps and Detergents Ltd is the manufacturer of the famous Mysore Sandal Soap. But, earlier this month, when it launched four new soaps, they were all herbal and had nothing to do with sandal other than the brand name.
Seedlings being raised in beds at the Institute of Wood Science and Technology in Bangalore. (Hemant Mishra/ Mint)
The company’s forced diversification is a reflection of what has happened with the fragrant sandal tree in Karnataka.
The 90-year-old government-run soap factory requires at least 100 tonnes of sandalwood a year, while Karnataka, long considered the home of sandalwood, sells only around 50 tonnes, a mere 2% of the 2,200 tonnes the state used to sell just four decades ago.
While the company, which has annual revenues of Rs125 crore, did manage to find 118 tonnes in 2007 from Maharashtra, which had stockpiled supplies and included sandalwood seized from smugglers, a steady supply of sandalwood is simply not something it can bank on, thanks to decades of stringent government policies on growing sandalwood trees and rampant smuggling.
Karnataka and Tamil Nadu account for nearly 90% of India’s natural sandalwood growing area of 9,600 sq. km. Karnataka auctions its sandlewood and Karnataka Soaps has to compete with private companies for sandal. Sandal-wood can be stored in theform of logs or as sandlewood oil, though Mint couldn’t ascertain how much inventoryis held by Karnataka Soaps.
While planting restrictions, including by Karnataka in 2001, have been relaxed, it hasn’t had a discernible impact on supply because of the long gestation periods.
Part of a 29-year-old sandalwood tree at the Institute of Wood Science and Technology in Bangalore. (Hemant Mishra/ Mint)
Still, the dire supply situation that has resulted in soaring prices is turning into renewed hope for the tree species, which is used for creating fragrances and handicrafts.
Farmers in states such as Gujarat, Andhra Pradesh and Maharashtra are now raising plantations, attracted by the price of sandalwood: about Rs3,500-4,000 a kg. Officials at the Institute of Wood Science and Technology in Bangalore say they receive at least three-four enquires a week from farmers who want to buy sandalwood seedlings.
“Over the last three years we have found there is a lot of demand for sandal seedlings for planting,” says Suresh Gairola, director. The institute is planning to increase production of seedlings to 100,000 from around 65,000 seedlings it sells each year.
“People are taking up cultivation on a much larger scale,” he says.
The bulk of the new demand for the institute’s seedlings, priced at Rs10 each, is coming from Gujarat and Maharashtra. “Sandal cultivation is at an initial stage (in Gujarat),” says Tulsibai Patel who, apart from running a nursery, has planted sandal in about 15ha in the Mehsana district of Gujarat. He says more farmers will switch to sandal once they notice the new plantations that are coming up.
Both the institute and Karnataka Soaps, which also sold 200,000 seedlings in 2007, try and encourage farmers to grow more sandal using various combinations of horticultural crops. Sandal seedlings are a semi-parasite and extract nutrients from plants around them.
Three-month-old sandalwood plants at the institute. (Hemant Mishra/ Mint)
Karnataka Soaps estimates that around 500 trees can be grown in 1ha and the cost of raising the plantation—more than 15 years—would amount to Rs48 lakh. At the end of that period, the hectare would yield up to 9,000kg of heartwood, the oil-rich inner portion of the trunk, and around 13,500kg of the exterior portion or sapwood, which does not contain oil.
At a minimum of Rs2,000 per kg of heartwood, that means a revenue of Rs1.84 crore. “When the trees’ girth increases, it will kill my coffeeplants,” says B.T. Rangappa Gowda who grows sandalwood along with coffee and arecanut on 14 acres in Shimoga, around 300km from Bangalore. “But, until then, I would have made some money from my coffee.”
None of the plantations raised after the Karnataka government relaxed rules in 2001 are ready for harvesting. “It would take another five years before they can be cut,” says V.S. Venkatesha Gowda, a deputy general manager at Karnataka Soaps.
In Karnataka and Tamil Nadu, sandalwood can be harvested and purchased from farmers exclusively by the government. The sandalwood policy these states followed was handed down by Tipu Sultan who ruled Mysore between 1783 and 1799. He declared the sandal tree as a royal tree, which could be owned only by the state.
Until 2001, when Karnataka and, subsequently, Tamil Nadu amended the rules, a resident could be prosecuted even if poachers cut down a tree growing on his property.
“The decline (in sandalwood production) was because if you grow sandalwood in your yard, you have a problem. So, there was a positive disincentive to grow sandalwood,” says M. Govinda Rao, director of New Delhi-based National Institute of Public Finance and Policy.
“Once the tree is about six years old and heartwood starts forming, it is under threat,” said Karnataka Soaps’ Gowda.
In Karnataka and Tamil Nadu, 1,134 cases of sandalwood smuggling involving more than 55 tonnes of the wood have been reported between fiscal years 2005 and 2007, while 2,666 trees were cut down in Kerala in the last three years.
While most of the poaching takes place in forest areas, urban areas in cities such as Bangalore also report several hundred cases of theft a year, once even from a high-security area including the state governor’s official residence.
“We found that some people we caught on our campus were not the people actually involved in smuggling,” explains Gairola, adding that they were typically middlemen paid by smugglers.
“Protection will be an issue (in commercial cultivation),” says Karnataka’s principal chief conservator of forests A.K. Varma. However, some farmers are considering installing sensors in their plantations, something that large plantations already do. “These devices would cost between Rs15,000 and Rs1.2 lakh, which is not much when you compare with the returns you will get,” says J. Sharma who runs a nursery, Chandana Plantations, in Shimoga.
According to Syam Viswanath of the wood science institute, most farmers keep dogs to guard their property, while a few also electrify their fences. “When my trees mature, I will employ security guards,” said planter Rangappa Gowda.
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First Published: Mon, Mar 24 2008. 12 33 AM IST
More Topics: Gujarat | Andhra | Maharashtra | Farmers | Price |