Tea tree growers on the Northern Rivers are facing a second harvest without a market for their antiseptic, antibacterial oil and will store it for another year.
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Other growers who cannot afford to pay the high cost of harvest and distillation are opting to slash their crops so that biomass doesn't become too woody. Grown trees cost the same to distil but yield less oil because of the declining twig-to-leaf ratio.
Oil stored in stainless steel drums or coated plastic (in the case if IBCs) are "sparged" with inert gas - either nitrogen or argon - to keep the oil from oxidising.
"We recommend that stored oil is tested after two years," says Lauren Hamilton, CEO of the Australian Tea Tree Industry Association.
She says the factors behind the stagnant market are numerous.
"First there was an oversupply coming out of COVID then there were the floods, "she said.
"Third has been the economic downturn due to rising costs. Essentially tea tree oil inhabits the luxury space but we didn't see that during the pandemic because it was a need," she said.
"Some growers are organic so there's not a lot of inputs but by far the biggest costs involve harvesting and distilling. If you put the biomass on the ground that helps suppress weeds."
Ms Hamilton left the pork industry for a role in Tea Tree during this challenging time but has been impressed by the way growers have banded together to hold their line and refuse to drop the price.
"I've never seen an industry like it," she said. "They believe in what they sell. There is massive love for tea tree oil and this industry."
In the early 2000s, the tea tree oil market was swamped by oversupply and growers out-bid each other in a race to the bottom with the commodity selling for as low as $13 a litre.
The move didn't work and suppliers were still left holding the barrel. Today the price of tea tree oil remains at $45/l and growers are prepared to wait out the dip in demand.
Processor Jonathan Bryant, T-Tree Holdings at Bora Ridge via Coraki, is adept at storing oil for the long term. This year he says sales of mulch left over after the distilling process have maintained cash flow, with strong demand from south east Queensland nurseries.
He was involved in the industry during the last market crash two decades ago and recalls growers dropping their price for no gain.
Mr Bryant says oil recovery has almost doubled due to the lack of sticks and leaves in the green biomass, a result of a flood delayed harvest last year and little rain.
"At this harvest there is 30-40pc less biomass and more oil," Mr Bryant said. "We're up to 1.8pc recovery per bin while normally it is 1pc."
