Agarwood’s rarity, high value, and complex grading make it particularly vulnerable to fraud, laundering, and substitution. These practices distort markets, expose buyers to risk, and unfairly penalize legitimate farmers and plantations.
Understanding these risks is the first step toward prevention.
1. Agarwood Fraud
Fraud occurs when agarwood is intentionally misrepresented to increase its market value.
Common Forms of Fraud
- False origin claims
Wild-sourced agarwood is claimed to be plantation-grown, or vice versa, to exploit price differentials or evade regulations. - Age and maturity falsification
Young or low-resin wood is presented as mature, high-resin material. - Inoculation misrepresentation
Untreated or poorly treated trees are claimed to be professionally inoculated. - Grade inflation
Low-grade chips or oil are sold as premium grades.
Impact
- Buyer mistrust and rejection
- Price suppression for honest producers
- Legal and reputational risk for exporters
2. Agarwood Laundering
Laundering disguises the true origin of agarwood to make it appear legal, sustainable, or compliant.
Common Laundering Methods
- Mixing legal and illegal wood in a single batch
- Re-labeling wild-harvested agarwood as plantation-grown
- Using shell cooperatives or traders to obscure origin
- Document recycling, where permits are reused or altered
Impact
- Increased regulatory scrutiny
- Shipment seizures and export bans
- Damage to national and cooperative reputations
3. Substitution & Adulteration
Substitution replaces genuine agarwood with inferior or non-agarwood materials.
Common Substitution Practices
- Look-alike woods treated with fragrance or chemicals
- Low-resin species sold as high-value agarwood
- Blended oud oil diluted with synthetic or other botanical oils
- Powdered or reconstituted materials passed off as natural chips
Impact
- Loss of buyer confidence
- Product disputes and returns
- Long-term market damage
4. Why These Practices Persist
- Fragmented supply chains
- Cash-based trading
- Weak documentation systems
- Lack of standardized traceability
- High price incentives
In many cases, fraud is not malicious—it is enabled by lack of transparent systems.
5. How Traceability Prevents Abuse
Digital traceability and blockchain systems directly address these risks by ensuring:
- Tree-level identity from planting to harvest
- Immutable records for inoculation, harvest, and processing
- Batch integrity that prevents mixing and substitution
- QR-based verification accessible to buyers and regulators
- Audit-ready documentation for compliance and export
Transparency removes the opportunity for manipulation.
6. The Cost of Non-Traceable Agarwood
- Lower prices
- Buyer skepticism
- Increased inspections
- Export delays or rejection
- Long-term loss of market access
In today’s market, unverified agarwood is high-risk agarwood.
7. The Industry Shift
Premium buyers are no longer asking if agarwood is traceable — they are asking how it is verified.
Traceability is no longer optional. It is the new standard for legitimacy.
Key Message
Fraud, laundering, and substitution thrive in opacity. Transparency eliminates opportunity—and restores value.