Sandalwood growers demand free market trade

With India set to surpass Australia in the export of sandalwood worldwide, growers called on the state to scrap the system of selling to a government corporation and invite e-tenders to attract international buyers, during a national conference on sandalwood in the city on Monday.

“Although growers in other parts of India have access to free trade, growers in Karnataka, Kerala and Tamil Nadu can only sell to the government,” explained Dr H S Ananthapadmanabha, an industry expert. Ananthapadmanabha has previously served as a consultant on advisory boards in Fiji, Papua New Guinea and Australia.

Karnataka accounts for nearly 70% of all sandalwood grown and cultivated in India. But the growers are required to sell their produce to the state-owned Karnataka Soaps and Detergents Limited (KDSL), which offers a non-negotiable sum of Rs 3,500 per kg of sandalwood. The company then turns around and sells the product for nearly Rs 16,000.

This has local growers outraged. A Bengaluru-based IT entrepreneur, Satish B V, who has invested in a sandalwood nursery in Tumkur, said that the government should scrap the existing system of purchase and “allow sandalwood to be legally auctioned by private companies.”

Another grower, Kavitha Mishra of Raichur, said the government should invite e-tenders to attract foreign buyers. International buyers pay as much as Rs 22,000 per kg of sandalwood.

Proponents of this move argue that the KDSL is incapable of handling the increased supply of sandalwood that the state expects to produce within a decade. The current global demand for sandalwood hovers around 6,000 to 7,000 metric tonnes per year. India currently produces about 200 tons a year, with other foreign nations contributing 400 tons, leaving a shortfall of nearly 5,400 tons.

Eager to close the gap, the Centre set aside Rs 100 crore for agri-forestry in its interim Budget. Under the budgetary allocations, the government proposed awarding farmers Rs 100 for every sandalwood sapling planted. “Therefore, under the current system, a farmer who plants 300 saplings on a one-acre parcel of land is therefore entitled to Rs 30,000 incentive,” said Dr P V Somashekar, treasurer of the Sandalwood Society of India.

Added to this is a further government subsidy which will cover 75% of costs for farmers to set up a sandalwood plantation, according to Kishor Rathod, Regional Director of the Sandalwood Society of India.

“India is in an enviable position,” said Dr Ananthapadmanaban. “Within 15 years, we will be in a position to supply the world with a majority of its sandalwood requirements.”

In 2014, Australia possessed 9,000 hectares with sandalwood, while India had 20,725 hectares.

By 2018, Australia’s total had shrunk to 7,500 hectares, while India’s share had grown to over 25,899 hectares, with 14,163 of these hectares being in Karnataka, most of which can be harvested in the year 2026.