Fragrant oil from Agar wood:
A rare luxury commodity becomes an export industry in Thailand
By Jon Fernquest |
Agarwood is the source of a rare oil valued in many cultures from the Middle East to India and Japan for its distinctive fragrance.
For hundreds of years the oil has been used to make expensive perfumes, fragrances, and incense.
The oil is also also used by the Japanese pharmaceutical industry and in the production of scented incense sticks. (On right photo of jars of Agar oil)
The Agarwood industry
Thailand's largest agarwood producer is Asia Forestry Management Co (AFM) founded by Chokechai Lavichant. Other prominent business people in this this emerging industry include the hospital owner Boon Vanasin and former defence minister General Chettha Thanajaro.
Thai exports of agarwood rose to 20 billion baht during the years 2006-07 according to the Thai government's Export-Import (Exim) Bank.
A very large amount of initial capital is needed to start an agarwood plantation. Before AFM began its operations last year, the company raised 20 million baht in initial capital. An additional 50 million baht is planned for the next stage of the business.
The initial capital funds for the business were raised by offering investors two very attractive options: a return of 21.4% for a two year investment and 168% for a four year investment.
AFM started to build its agarwood plantation four years go and has just finished refining the first batch of oil from the first crop of its agarwood plantation early this year. AFM has its factory on a 500-rai agarwood plantation in Trat, which it plans to expand to double capacity to 1,000 tora (12cc) a month.
Why Agarwood is rare and expensive
Until recently, agarwood only grew in the wild and had to be collected from forests. This eventually led to the depletion of agarwood in most of the forests of Asia.
In the wild, Agar wood takes 10 to 40 years to grow to maturity and even then only about 5% of the trees produce oil depending on soil quality and humidity. Only the parts of the tree that react to the fungal infection that produces the rare and wonderful scent can be harvested.
Agar wood became a rare commodity sold at very high prices because it was so difficult to find and took so long to grow. As the forests of Asia have slowly disappeared, Agar wood became even rarer and more expensive.
Nowadays, "premium agar oil extract is priced between 5,000 and 8,000 baht per tora (12cc) or 400,000 to 700,000 baht per litre."
Grown artificially on a plantation it only takes three years before oil can be extracted. This increased cultivation speed has made agarwood plantations a viable business in Thailand and Asia.
Agarwood has been listed and protected as an endangered species for many years:
"Since 1995 Aquilaria malaccensis, the primary source [of Agar wood], has been listed in Appendix II by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). In 2004 all Aquilaria species were listed in Appendix II."
Cultivation of Agarwood trees was prohibited for centuries in Thailand and was also on a list of protected plants. Seven years ago agarwood trees were removed from the list and commercial cultivation in Thailand was allowed. Still, before Agar oil can be exported a special export license has to be obtained from the CITES. AFM has already obtained this license.
Read an article about how rare and difficult to find Agar wood is.
(Source: Bangkok Post, business section, 16-09-08, YUTHANA PRAIWAN, temp-link)
Vocabulary:
Agar wood, Oud - wood from the Aquilaria tree, a large evergreen native to Southeast Asia, these trees occasionally become infected with mold and begin to produce an aromatic (fragrant) resin in response to this attack, as the infection grows, it results in a very rich, dark resin within the heartwood (See Wikipedia)
Agar oil extract - oil taken from Agar wood
a distinctive fragrance - a special smell easily remembered
a perfume, a fragrance - a liquid people put on their bodies to make them smell nice (a mixture of fragrant essential oils and aroma compounds, fixatives, and solvents used to give the human body, animals, objects, and living spaces a pleasant smell) (See Wikipedia)
incense - a stick or lump that releases smoke with a pleasant smell when burned, popular for religious use in worship (See Wikipedia)
scented - given a pleasant smell
a pharmaceutical - medicine to cure a disease
prominent business people - well-known business people
an emerging industry - an developing industry, just starting to becoem successful
capital - money invested in a business (See glossary)
a tora - 12 cc (a standard quantity used to measure Agar oil)
grew in the wild - grew in the jungle (not grown by farmers)
depletion - when a supply of something is reduced
grow to maturity - grow to the point where it can be harvested
a fungus - a plant that has no flowers, leaves, or green colouring, a mushroom, mould on old food, and athlete's foot if you don't change your socks are examples
a fungal infection - when a fungus starts growing on a plant or animal
a plantation - a large farm growing crops such as sugar cane, coffee, or rubber
a viable business - a business that can make money and survive
an endangered species - a kind of animal or plant that has almost disappeared with very few members remaining
protected as an endangered species - taking action to prevent a kind of plant or animal from disappearing
Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) - an international agreement between governments to ensure that international trade in wild animals and plants does not threaten their survival (See Wikipedia)
commercial cultivation - growing the crop for profit
an export license - permission from the government to export the good or crop
