Dodgy tea tree oil being investigated by the ACCC
THE national consumer watchdog has launched an investigation into the alleged dilution of tea tree oil with "industrial waste".
The head of the ACCC Scott Gregson confirmed it had launched the inquiry during a Senate estimates committee when probed by NSW Senator John Williams.
Tea tree oil is a huge industry on the Northern Rivers, with local growers producing more than 60% of Australia's production in 2015, worth $22 million.
But the industry's peak body says unscrupulous operators have for years been cashing in huge profits from diluting the oil and selling it as pure.
Chief executive of the Australian Tea Tree Industry Association (ATTIA), Tony Larkman, said the issue was global but did not involve any Northern Rivers growers or manufacturers.
The ATTIA developed a "very accurate" test for adulteration in 2009 after becoming aware of the problem and has been testing store-bought samples from around in the world.
In one series of tests in Europe, it found seven out of 10 samples were diluted.
"The profits are obscene," Mr Larkman said.
"Adulterated tea tree oil appears to be available for around half the price of pure Australian tea tree oil," he said.
"So when a customer in Spain is looking for some tea tree oil they contact suppliers and say 'how much is tea tree oil', and they say 'Australian for $40 a kg, or the other one for half the price'."
Buyers assumed both were pure so would opt for the cheaper, driving an axe into industry profits.
Mr Larkin said tests showed the oil was being diluted with the by-product of the distillation process of other essential oils - what he called "uncontrolled industrial waste".
He said the supply chain was "incredibly complicated" and many businesses did not realise they were marketing dodgy oil.
The first complaint as made to the ACCC in 2012, but no action was taken until February this year.
If breaches are found, the companies could face fines of up to $1.1 million fine per offence.
The ATTIA is seeking to introduce a national levy to fund research and biosecurity which the Federal Government will match dollar for dollar.
Mr Larkin said one of the outcomes would be crack down on the practice of adulteration and ensure the tea tree oil industry continued to grow.
Producers have until the end of June to consider the levy proposal.