Why is agarwood so expensive?

Agarwood is expensive because it cannot be farmed on demand the way ordinary timber can. A tree has to be wounded, the wound has to trigger a resin response, and that resin has to accumulate for years before the wood becomes usable. Add a long history of overharvesting, an international conservation framework that adds friction to legal trade, and a grading system where resin content alone can separate a low value piece from a high value one, and you have one of the few raw materials where ordinary chips sell for relatively little while the rarest pieces have been reported at millions of dollars per kilogram.

None of these factors works in isolation. They compound, which is part of why agarwood pricing can look so uneven from one piece to the next, even when two pieces appear similar to an untrained eye.

It cannot be produced on a predictable schedule

Most agricultural products scale with land and time. Plant more trees, wait the standard growing period, and yield rises roughly in proportion. Agarwood does not work this way, because the valuable resin is not a normal product of tree growth. It is a defensive response to injury, and not every tree responds the same way, even when deliberately wounded.

Plantation growers have developed induction techniques, generally some combination of mechanical wounding, drilling, or inoculating the tree with substances meant to trigger or accelerate a resin response. These methods have made commercial agarwood production possible at meaningful scale, particularly in Vietnam and Indonesia, and plantation material now makes up a growing share of the legal supply. Even with induction, though, resin formation still takes years rather than months, and the result is generally considered less developed than resin that formed slowly over decades in an undisturbed wild tree. That difference is one of the clearest dividing lines in the market, covered in our guide to wild vs plantation agarwood.

Genuine wild agarwood is rare

Even setting plantation material aside, wild agarwood formation is uncommon. Most mature Aquilaria and Gyrinops trees in the wild never sustain the kind of injury and infection that leads to meaningful resin, and among those that do, most produce only a small amount of usable, high resin material. Harvesters historically had no reliable way to tell from the outside which trees had resinated, which led to widespread felling of trees that turned out to contain little or none once cut open. That waste has contributed to the depletion of wild stock in many regions.

At the extreme end of rarity sits a small category of agarwood known as kỳ nam in Vietnam and kyara in Japan, generally regarded within the trade as the rarest and most aromatically complex resin a tree can produce. Reliable figures on its price are hard to pin down, since so few transactions happen at this level and most reporting comes from individual traders describing specific sales rather than from any standardised market data.

That figure is a single reported account, not verified market data, and should be read as a description of an exceptional sale rather than a typical price. The overwhelming majority of agarwood, including most wild material, sells for a small fraction of it.

The same rarity is why illegal harvesting remains a problem in several producing regions, despite decades of CITES regulation. Every illegal shipment that reaches the market adds to the supply of material with no verifiable origin, which undercuts legitimate sellers on price and makes provenance a real question for buyers trying to source responsibly. Our guide to fake oud covers what that means in practice.

Grade is the biggest lever on price

Within any single origin, grade is usually the largest factor separating a low price from a high one. Grading generally comes down to resin content, the proportion of the wood that has converted to dark, aromatic resin rather than remaining plain wood, along with the depth, evenness and character of that resin once heated or burned. A chip with light, patchy resin and a faint scent sits at the bottom of the range. A piece with deep, even saturation, a complex scent and enough density to sink in water sits much higher.

Because resin content is visible but not always obvious, especially once wood is cut into small chips, grading is also where the market is most exposed to misrepresentation. A seller describing a piece as a higher grade than its resin content supports is one of the most common ways buyers overpay. There is no single international grading system, and the systems used by Vietnamese traders and by Middle Eastern oud markets differ in both terminology and structure. They are covered in how agarwood is graded.

Conservation status adds real cost to legal trade

Every species in the genera Aquilaria and Gyrinops is listed in CITES Appendix II, the part of the treaty covering species that are not necessarily threatened with extinction but whose trade has to be monitored and regulated to stay sustainable. In practice, a country exporting agarwood, whether as wood, chips or oil, generally needs a non-detriment finding, a study showing the level of export will not harm wild populations, before it issues export permits.

India offers a useful example. Its native Aquilaria malaccensis was placed under CITES Review of Significant Trade in 2023, a process for species whose trade raises concern. In 2024, after the Botanical Survey of India prepared a non-detriment finding report, India was removed from that review and its annual export quota was raised, from 25,000 kg to 151,080 kg for chips and powder, and from 1,500 kg to 7,050 kg for oil. The report concluded that exports from cultivated trees do not harm wild populations, and the export quota for wild material was set at zero. Producers without an accepted non-detriment finding can find legal export far harder, which adds documentation costs and delays and pushes some trade into unregulated channels.

Format changes the price too

The same underlying resin costs different amounts depending on the form it takes by the time it reaches a buyer. Raw chips, distilled oil, and finished products like beads or carved pieces are not priced the same way relative to each other, since distillation and craftsmanship both add labour, equipment and losses on top of the raw material.

Oud oil in particular takes a large quantity of agarwood to produce a small volume of oil, since the aromatic compounds make up only a fraction of the wood's mass and some is lost during distillation. That is part of why a small bottle of good oud oil can cost as much as, or more than, a much larger quantity of chips of similar grade. Distillation method matters too. Slower, more careful distillation is often said to capture a more complete aromatic profile than fast, high volume methods, and the extra time is generally reflected in the price. Comparing chip and oil prices gram for gram usually means comparing two products with different production costs. The practical differences are covered in our chips vs oil comparison.

Origin affects price independently of grade

Two pieces of similar grade do not always sell for the same price, because origin carries its own weight in the market. Vietnamese agarwood, particularly material described as trầm hương or the rarer kỳ nam, is widely regarded among traders and collectors as commanding some of the highest prices of any origin, a reputation built over centuries of trade and reinforced by limited remaining wild stock. Cambodian agarwood carries similar historical prestige, even though much of what is now associated with the country is plantation grown. Indonesian and Malaysian agarwood are produced in much larger volumes, which tends to keep typical prices lower, although exceptional pieces from both can still reach high prices.

None of this means one country's agarwood is objectively better than another's. Preferences for a particular origin's scent are subjective and vary by buyer, market and tradition, and the characteristics traders associate with each origin are explored in our regional comparison. What is measurable is that reputation and limited wild stock both act as price drivers on top of a piece's actual grade.

What this means if you are buying

None of these factors means every expensive listing is legitimate, or that every cheap listing is fake. They mean agarwood pricing reflects several compounding variables at once: formation, rarity, grade, regulation, format and origin. A price that seems unusually low for something described as high grade, wild agarwood is a signal to ask more questions, not a bargain. Our guide to how much agarwood costs sets out realistic price expectations, and red flags when buying agarwood covers what to watch for.