Agarwood can be extracted from eight species belonging to the Aquilaria genus. The four principal species are Aquilaria sinensis, Aquilaria malaccensis, Aquilaria agallocha, and Aquilaria crassna. There are references to agarwood incense in the Bible.

Trees older than 60 years are best for extracting resin. Dark wood without white streaks indicates the presence of resin, which is produced when the heartwood is infected by a fungus. These fungi include Aspergillus spp., Botryodyplodia spp., Diplodia spp., Fusarium spp, Penicillium spp., and Pythium spp. (Anon., 1998a; Santoso, 1996, cited in Soehartono and Mardiastuti, 1997; Wiriadinata, 1995). As the wood rots, it produces a resin. This process can take centuries, making agarwood resin a scarce resource. Furthermore, in nature, only seven percent of the trees are infected by the fungi.

High demand for the resin has led to overexploitation. The tree is not conducive to agroforestry cultivation either, as slow growth and low infection rates have reduced the return of investment substantially. The International Union for Conservation of Nature classified it as vulnerable, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora placed it in Appendix II. Appendix II species trade is constrained to protect their numbers to be so depleted that they are likely to go extinct.

Today, the Middle East is the largest consumer of agarwood products. The oil is a principal ingredient in 400 fragrances. Oudh wood chips are used in rosary beads and necklaces, incense, powders, and green tea. Incense is used to perfume clothes before prayer, and wood chips are burned to welcome and honor guests. Efforts to create a synthetic substitute for oudh have been unsuccessful. Thus, authentic oudh continues to attract high prices and high demand.

The United Arab Emirates often serves as a distribution center between the Middle East, India, Indonesia, Malaysia, Hong Kong, Singapore, Taiwan, Vietnam, and Cambodia. One Saudi Arabian agarwood retailer has more than 500 specialty retail stores in 17 countries, with a customer base of 600,000. This retailer imports five metric tons of unprocessed agarwood annually.

Clearly there is a demand and supply mismatch. No wonder, agarwood is so expensive.

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