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Agarwood--Update from Laos 2013

This article is based up my personal experiences involving numerous trips to Laos and India starting in 1985. I have been interested in aromatics my entire life and have started and then owned Enfleurage, a small, New York based company specializing in Aromatics from the Natural World, since 1996.
I am not a scientist, and this work is in no way meant to represent my findings as scientific in any way. It is also not meant to be indicative of any opinions I may have on agarwood from places other than Laos and India, as those are my areas of interest. While I have explored agarwood in Thailand, Vietnam and Malaysia, my visits were  swift in passing and not objective as my contacts are limited in those countries and therefore any observations would be merely parroting what I’ve been told with no meaningful analysis. In both Laos and India I am well-invested.

The road through Southern Laos, from Vientiane south through Paxsan and Pakading, Savannakhet to Pakse, is lined with agarwood plantations, almost all of them sickly, the trees meagre and frail, their leaves denuded by caterpillars.

There are a few reasons why agarwood plantations have fallen out of popularity and why people are selling the trees for next to nothing, sometimes even burning them, planting anything in their place.

One reason is the caterpillars, which starting attacking the young foliage with gusto a couple of years ago and could be a culprit for a 40% reduction in productivity. Yield is down so far that at the distillery we visited, which is trying to make actual Oud oil instead of its poor cousin, Boyah, a 180 kilo batch of wood made 10 ml of oil only. The yield should have been 10 times that, which is still minuscule, considering the amount of time and fuel it takes--altogether perhaps 60 days soaking and 10 days distillation, all using firewood. At 10 ml, even the astronomical price I paid for it couldn’t account for the production cost.

Another, even bigger reason for the worthlessness of agarwood trees these days is the lack of a market. I know that sounds crazy for a plant that was just declared an endangered species a few years ago and today enjoys a trendiness among hip small perfume houses, but let me explain.

What is it?

There are two main odiferous liquid or semi-liquid products coming the agarwood tree: Oud and Boyah. Oud, as you most likely know, is the divine oil from wood riddled with the resin and essential oil blend the tree produces as a response to trauma and infection. The infection can naturally occur and this type is the most prized; the best wood will be a naturally occurring infection. This type of infection usually comes from an insect infestation or even a trauma to the tree; it can be anything, but without the hand of man. (Some say that the presence so many land-mines and other randomly exploding ordnance throughout SouthEast Asia actually helped the trees produce nice wood, in Laos, Cambodia and Vietnam, although that is technically the hand of man.)  Or the trees can be infected, using any of a number of highly secretive agents--sugar waste, chemicals, bacterial blends.....many producers make their own; some are government supplied. Some buy their inoculations from other farmers or companies that have popped up to specialize in this “medicine” trade. Additionally, there is wild wood, and farmed wood, both of which can be naturally infected or artificially inoculated.

Endangered de facto or de jure?

Aquilaria trees were harvested enthusiastically, then recklessly. The trees, and the wood, became rarer and rarer, due to its high value. Stripping the forest of Aquilaria trees speeded up in tempo, particularly since the 1980’s, and since; much like mahogany and teak had. Plantations popped up, as people saw the way agarwood’s future was headed. At the same time, the Lao government was allowing forest “concessions” from interested parties. This has now stepped up in intensity. Timber and mining companies, predominantly from China and Vietnam are allowed to build roads, log the area, build arterial roads, log that area, etc. Basically, the companies build an infrastructure for their own uses, paying whomever they need for access. They built Laos a Sports Stadium too. And there are now roads covering Laos, extending to the Chinese, Vietnamese and Thai borders. Timber, minerals (copper, tin and gold,) rubber, and now electricity (via dams) are exports. Thailand is also a big trading partner. Laos’ 2012 GDP was $ 19,160,000,000. This has largely come at the expense of the forest. Both “legal” and “illegal” logging and mining continue apace.
Is there any species that can survive in a destroyed forest?

Agarwood was initiated into the fraternity of CITES in 2004, I believe. It landed with an “appendix 2” classification, meaning it wasn’t outright banned, but the agarwood trade was to be “controlled.” This is to be achieved by requiring a CITES certificate for both import and export of agarwood and agarwood oil.

Agarwood’s listing as a CITES plant means that the trade is supposedly controlled by a disinterested, non-profit wildlife monitoring agency and all countries who joined the CITES convention, meaning they are CITES signatories. These signatories have agreed to not allow the import or export of any wood or oil (except for personal use) without a certificate from CITES. Laos is a member, as are Vietnam, Cambodia, Thailand, Myanmar (Burma,) India, China, Bangladesh, Indonesia, Malaysia, and Papua New Guinea. Those are the main agarwood countries.

In Their Own Words:

“Appendix II includes species not necessarily threatened with extinction, but in which trade must be controlled in order to avoid utilization incompatible with their survival.”

A specimen of a CITES-listed species may be imported into or exported (or re-exported) from a State party to the Convention only if the appropriate document has been obtained and presented for clearance at the port of entry or exit. There is some variation of the requirements from one country to another and it is always necessary to check on the national laws that may be stricter, but the basic conditions that apply for Appendices I and II are described below.

Appendix-II specimens

An export permit or re-export certificate issued by the Management Authority of the State of export or re-export is required. 
An export permit may be issued only if the specimen was legally obtained and if the export will not be detrimental to the survival of the species.
A re-export certificate may be issued only if the specimen was imported in accordance with the Convention.
In the case of a live animal or plant, it must be prepared and shipped to minimize any risk of injury, damage to health or cruel treatment.
No import permit is needed unless required by national law.

In its Article VII, the Convention allows or requires Parties to make certain exceptions to the general principles described above, notably in the following cases:
for specimens in transit or being transhipped [see Resolution Conf. 9.7 (Rev. CoP15)];
for specimens that were acquired before CITES provisions applied to them (known as pre-Convention specimens, see Resolution Conf. 13.6);
for specimens that are personal or household effects [see Resolution Conf. 13.7 (Rev. CoP14)];
for animals that were ‘bred in captivity’ [see also Resolution Conf. 10.16 (Rev.)];
for plants that were ‘artificially propagated’ [see also Resolution Conf. 11.11 (Rev. CoP15)];
for specimens that are destined for scientific research;
for animals or plants forming part of a traveling collection or exhibition, such as a circus [see also Resolution Conf. 12.3 (Rev. CoP15)].
There are special rules in these cases and a permit or certificate will generally still be required. Anyone planning to import or export/re-export specimens of a CITES species should contact the national CITES Management Authorities of the countries of import and export/re-export for information on the rules that apply.
When a specimen of a CITES-listed species is transferred between a country that is a Party to CITES and a country that is not, the country that is a Party may accept documentation equivalent to the permits and certificates described above.”

This supposes that all parties (governments) involved have the necessary monitoring infrastructure in place and the will to implement it. And it supposes that such certificates will be distributed on the merit of said plants and their growing conditions; not on merely the ability to pay for one, whether to official or unofficial bodies. It’s naive and foolish to pretend this is actually the case.

In the case of Laos, my earlier arguments against Agarwood’s inclusion on the CITES listing, that it was the forests themselves which were being logged, and nothing to do with Agarwood and, in fact, Agarwood itself was being farmed all over Laos before the inclusion in CITES, has proved to be the case.

You might ask, What harm can it do? Certainly there can be no downside to controlling the trade in a threatened species? After all, CITES has been trying to control the trade in endangered animals for years. With limited success, I think, as the prices for these seriously exploited animals has increased, possibly increasing the trade as well. But still, the case can be made that at least they have managed to call attention to the trade in Rhino Horn, Elephant Ivory and Tiger Parts.

The CITES inclusion immediately inflated the prices of agarwood so that even more trees came under cultivation; everyone wanted in on agarwood plantations. The prices began to drop even as the inoculations did not produce the vast quantities of high quality agarwood expected, within a suitable timeframe. At the same time the price for wild wood and oil continued to grow.

The current caterpillar infestation has grown steadily in the past decade, as there are more and more agarwood trees to eat. The caterpillars existed before this rush for plantations, but not in as great numbers. As the number of trees increase, so do the amount of caterpillars, who eat the leaves. And at the same time, in addition to the logging, mining and damming already listed, there is more of the same going on privately. There is also a big trade, recently exposed by the NY Times, involving endangered animal species, operating from central Laos in complete safety from international law and reprisals.

I realize that the point of CITES is to control trade with the idea to benefit the species as it exists in the wild. My claim that Aquilaria should not be considered endangered is largely based on the fact that it’s the wild areas which are being destroyed and disappearing. And that has nothing whatsoever to do with agarwood. The inclusion or exclusion of Aquilaria on CITES, or any other organization will have no effect whatsoever on the future os Laos’ forests. What the CITES classification has done is ensure that the people who benefit are those well-placed and rich enough to take advantage or it. In other words, a mafia.

The agarwood gold rush

In the middle of the 00 decade, agarwood was considered to be a sure-fire investment. It seemed everyone was buying plantations, even if, especially if, they had no idea about agarwood at all. Many of these people used to email me with questions I couldn’t answer: Was it a good investment? Where should they buy land? How much return on it? What to infect the trees with? How to infect the trees? Will I buy the trees? Can I find someone to buy the trees? Etc. Almost none of them had any idea about who buys agarwood, why, and for how much. They didn’t understand about the infection and failed to perceive the relevant nuances in quality.

Wild wood, long ago, was left alone until the tree died, and the uninfected parts naturally eaten away there on the forest floor, leaving the dark, rich infected resinous wood. This was gathered and sold to traders; mostly Chinese, Korean and later, Japanese. Agarwood grew in popularity, and a market emerged; including more of the Middle Eastern Arabs and less of China. More care was given to the state of the wild trees, and these were watched for signs of infection and harvested once the time was right.

As the trade grew, particularly from the late 1970s onward, trees were harvested with greater and greater alacrity, The finest pieces of wood went to Japan, Korea and Taiwan, with the rest going to the Arabian Gulf. Good, “sinking quality” wood also went for Traditional Chinese Medical apothecaries throughout the world.  Lesser quality wood was distilled and the oil went mostly to the Arabian Gulf via markets such as Singapore, Bangkok, Hong Kong and Bombay. It’s important to note that, despite a few claims to the contrary, highly aromatic wood is not distilled. And sinking wood, meaning that wood with an oil and resin content great enough to make it sink in water, (about 25%) is never distilled. It doesn’t pay; it can’t. It goes to wealthy collectors, in the countries mentioned above. Or for Chinese medicine. It’s worth far more as a wood, or a medicine, than an oil. Far more.

Top quality oud, the very best agarwood oil, comes from wood riddled with resin and oil, usually from a natural infection, but it’s wood that cannot be sold as incense or medicine as is. It’s lower quality, always, if it’s used for oil. And small pieces. Even super grades are from this mildly infected wood. The main reason is cost, of course.

As the quality of oil lessens, it reflects the decreasing quantity and quality of infection in the wood. This can still be from a natural, wild tree, but in 2013, in Laos, it’s very rare. It’s even rarer in Thailand, Cambodia, and many of the other agarwood countries.  As the wild trees decrease, plantation trees, until recently, increased. Agarwood farming became extremely popular, fueled in part by Aquilaria’s inclusion in CITES. This obviously pushed agarwood prices further into the stratosphere, and in the first decade of this century, 2000-2010, people everywhere saw easy money to be made from this fast growing, extremely resilient, potentially valuable, easily maintained tree. All it seemed to require was land and, after a couple of years, the inoculation. Agarwood oil (oud) prices of $25,000 and up (way up) per kilo spurred this on. It seemed like a simple and sure thing. I talked to many people who were convinced of it.

Unfortunately for many farmers, the introduced inoculation, pretty well no matter what their methods or mixes, doesn’t do as much as they probably hoped. And even when it does, the results are not going to be anything like those old wild trees produced. The end product wood chips are low quality, and worth about $100/kilo but need to be sold for $1000/kilo at least, to recoup costs. This according to a CITES certified Australian company trying unsuccessfully to sell its wood chips in Vientiane in 2009. At $1000/kilo their chips were unsalable and the company refused to consider their lower value--they couldn’t understand why the wood, which smelled so nice to them, wasn’t easy to sell, at the prices they thought reasonable and fair.

Distillation of this infected wood at first produced a passable quality of oil, but the market price of oil was not enough to recover costs and so many of these farmers have gone out of business, or are selling infection kits or seedlings to other farmers.

The oil “come hard” -- Boyah

As long as there is some resin, some infection, in the wood, you will get agarwood oil if you distill it, at least for the first part of the distillation. Agarwood oil, or “oud” is mobile; it’s brown, red, yellow and green, not black, and it’s delicious, magnificently nuanced. Chemically, it’s mostly alcohols (agarospirol, valerianol, etc.) There are many ways it can be diluted, extended, and chemically enhanced, and 99.9% of oud has been tormented in a sweet, animalic or fruity direction, depending on the expectations of the target market. It’s completely unrealistic to think otherwise.

When there is no infection present, when you have white wood, or in the latter parts of a distillation of very low quality infected wood, a different oil comes out. It’s technically agarwood, as it’s from Aquilaria, but now the oil is solid at room temperature and this is called Boyah. Boyah is very different from oud, and contains less agarospirol and valerianol and more acids such as pentadecanoic acid and tetradecanoic acid. It smells agarwood-like, especially with enhancements, and is comparatively cheap (in 2013 appx $5,000/kilo and down versus oud at $25,000/kilo and up) enough to make it a viable alternative for western perfume houses wanting to use actual agarwood and also as an addition for the commercial “ouds” still available to the Middle Eastern market. Boyah, while still expensive by essential oil standards, is costly because of the time and energy involved in its extraction. The wood may be had for next to nothing; the biggest expense is firewood, to keep those boilers going for 10 full days and nights.

The cost and rarity of oud oil, and its inclusion on CITES and the ICUN red list has helped prices soar even more. It’s simply not possible to make Oud from farmed trees, except by luck. The inoculated trees will give you Boyah. Left to themselves, agarwood will naturally occur in perhaps 1 in 50 trees, and there is no time frame. It may be 5 years, or 50. Clearly this is not a rational or feasible business. The stories of pure, farmed “ethically harvested” oud are just that, stories. Although occasionally good oud oil will still appear, it’s not going to come from farmed, human-infected trees.

Boyah is farmed, though, and there is a market for it, but prices continue to drop. Boyah, being Aquilaria, is also tied to CITES, and the high cost of a CITES permit for the buyer means even as the price drops, the price rises. This has been a disaster for farmers, who are now faced with worthless agarwood plantations, and the choice of leaving their trees to chance and caterpillars, inoculation and boyah production, or just cutting down the entire grove, burning the trees or selling them for pennies, and planting rubber, teak, tapioca or palms.

The main Boyah market is the Middle East. Of the suppliers I know, there is one buying from Laos (and other countries) and most of the rest are Indian companies. That means they are making most of their own Boyah, in India, and they distill right to the end. That can mean a three month distillation and the boilers can hold several tonnes of wood. The biggest expense will be the fuel, of course. Unless you own a coal mine, or a diesel plant, you are most probably using local firewood. While the price of white wood has fallen, the price of firewood has not. The main expense incurred with distilling an oil is fuel. Most Boyah goes directly into the Middle Eastern market in perfumes. It doesn’t go on the open market as far as I know. Don’t forget, India’s bureaucracy makes sure that there is no legal agarwood in India, except that which is re-exported through an export zone. So the entire trade in India is controlled by one very large company (Ajmal Perfumes.)

I did see, in Central Laos, a pile of very low quality agarwood waiting for pick-up to be shipped to one of the export zones in India. The wood, nearly worthless, is being sold for pennies, plus shipping costs and the price of the CITES papers. Once it arrives in India it will be discarded, decent quality Indian wood chips substituted in its place, and re-exported, this time to the Middle East. And it will still have its legal documents. All CITES certified.

The market, with respect to Laos, is that nice pieces of agarwood still sell, and the Chinese are the main customers. It was part of their culture, they lost it (PRC, not Taiwan) for some time and now they are buying what they can because it’s almost gone. The pieces they want are the old, wild wood pieces, naturally occurring infections, and large, beautiful pieces. They are the main collectors at this moment. They know the value, and they have the money. Lesser quality pieces of agarwood, smaller pieces, those from inoculated trees, occasionally farmed trees, younger trees, etc; these pieces are sold as well, but for less. You can find some of them for sale in the shops of Mumbai, Bangkok, Singapore and the Arabian Gulf. Less quality pieces, meaning the majority of agarwood,  is distilled. Some of this is makes oud oil; the mobile, nice one. The vast majority, white wood, nearly white wood, most of the plantation wood, the young wood, all comes out as Boyah, and it’s added to Middle Eastern oud, and maybe bought by some western companies. That part I can’t verify. As soon as the oil coming out of the still turns solid, you know you’ve got Boyah.

At the time of this writing, March 2013, oud oil was selling for $25,000 USD and up, and  good quality Boyah for up to $5000. Lesser quality Boyah sells for a lot less and I have heard that it’s possible to find Indian Boyah for as low as $180 Kilo. I can’t even imagine the quality of it--the tail end of a three month distillation, following a 6 month soak perhaps. This happens. At the end of such a distillation foam will be coming out.

Boyah’s main function is to stretch perfumes for the Arab market. Whether these be “pure oud” or dehn al oud, or any other perfume or oil sold, Boyah can give the oud-like note, balsamic, animalic, “barnyard” or “butt.” Some western perfume houses also use it, to keep their expenses down. They may not be buying it as “Boyah” but as “farmed agarwood.” It’s the same.

Rules in Practice

Agarwood is being grown all over Laos and India. These are the main two countries I have visited agarwood plantations in. But I have also personally seen plantations in Thailand, Malaysia and Vietnam. There are also plantations in Bhutan, Indonesia, Burma, Papua New Guinea and China.
In India, Agarwood grows wild and also is cultivated in the NE States: Assam, Nagaland, Tripura, Mizorum, Manipur, Meghalaya and Arunachal Pradesh. I have visited Assam. In addition to big plantations, containing millions of trees, often owned by Ajmal Perfumes, a huge, Hojai-based company catering to the Middle East, many homes, especially in Upper Assam, have a few trees growing in their yards, for harvest when money is needed, i.e. for weddings, college, etc.
Unfortunately, the Indian government will only recognize agarwood oil that has been distilled in Guwahati, the capital of Assam, as legal. Since the people growing agarwood don’t live anywhere near Guwahati, and the wood is distilled in Upper Assam on-site, it’s not legal oil. No one would send their wood to Guwahati. It would get stolen. The idea is ridiculous and unrealistic.

Growers were told at the beginning of this century to refrain from harvesting their trees until a solution was found. Needless to say, a solution has still not yet been found. So private companies can take over, if they posses the clout, connections, money and power to do so. Ajmal would be the best known of these. To my knowledge, there are also a couple of tiny distillers who mail their oil directly to parties in the US and Europe because of private arrangements they have made to export small amounts quietly. The huge majority of oil (and wood) is controlled by Ajmal. Small distillers in the area have the option to sell their oil to Ajmal. So in addition of their own considerable plantations, Ajmal sets the price and quality for most small farmers.

India also allows for re-export of agarwood, meaning, at least in theory, that agarwood can be shipped in, (with its CITES paperwork,) processed, and exported. Theoretically, this means what it says. But the worthless white wood I saw in central Laos was sold to the price of sea shipping and its CITES documents, shipped to India, and Indian wood substituted, with the same CITES papers. Then it’s sent to the Gulf.

In Laos, people with CITES certification will tell you how good it is for business, in order to sell large amounts of oil to Europe, whether oud or boyah. Whether they actually have the customers to buy it is another story. I’ve met some hopeful people. No one that I’ve met have ever sincerely expressed the sentiment that the Aquilaria species benefits in any way.
Small distillers and local plantation owners have not had an easy time. Even though Agarwood is fast growing and hardy, the inoculation has been trickier than expected and despite promises of agarwood harvests in 5-7 years, or less, the huge majority of wood is low quality and the oil is Boyah.

Ironically, the agarwood trees needn’t be killed to take the resin. They can be coppiced. A coppiced tree will grow in girth exponentially, quickly sprouting new branches. Twins, triplets, and more will give you continuous harvests. In India they have been doing this for years. In Laos they are starting to do it now. And perhaps after a few years the trees can be cut back to one branch if desired.

The inoculation provided opportunity for business for many. One US company was trying to sell kits to Lao famers for $100 US per kit, per tree. Clearly this is unreasonable and shows little understanding for the situation in Laos, where the annual per capita GDP at $3000 USD. The inoculation is a secret blend of chemicals, or sugars, or simple bacteria and fungi, or poison, which is then driven into the tree trunk. Those with plantations will buy or make inoculation kits to increase the value of their trees, of course. But whether the cost of the land, the seedlings (also a profitable side business,) the inoculation kits and the time involved, the years to grow and infect the trees, will pay, is another question.

You would be forgiven for thinking otherwise. Browsing the internet, it’s easy to find agarwood “consultants” to help you in all areas of your plantation. Promised return on the investment is 7 years. “1 Acre, 1 Thousand Trees, 7 Years, 2 Million” goes the legend on one Malaysia-based site. This promise is common.

The trees will grow, most probably. But even though they can be inoculated at just a couple of years of age, and even though they can technically be harvested at 3-7 years, the possibility of harvesting good agarwood to make Oud is slim. To make good Oud, the trees should have a naturally occurring infection, not an inoculation. And most probably the trees will need to be much older, maybe 15-20 years. But the biggest obstacle is that none of it is sure. It’s all chance. If you had 100 trees and endless time, eventually, maybe 2 trees would infect themselves every 5 years. (I have heard there is a higher ratio of self-infecting trees in India.)

The infection can take any time to occur, and it might not ever occur. Plantations, who need to turn a profit, can’t follow such a flexible timetable. So they infect the trees themselves. But as this showed the Australian Company I visited in 2009, the wood they produced was worth about $100/kilo but they needed to sell it for $1000 and they were angry and frustrated. I don’t know what they did in the end. Their wood chips had all their CITES certification, but no one wanted to buy.

In Summary

By its very nature, bureaucracy exists only for itself and those who can benefit themselves by playing by its rules. For a modern state to function, there is need for it. But in the case of these CITES certificates, who can get them? Theoretically, “anyone.” Or, rather, anyone who harvests agarwood “responsibly.” Meaning, exactly? I have never seen that defined.

Realistically, only those who understand the gestalt of the certification process have any shot at getting it certified. This usually means large companies. In my experience, the idea of a little farming co-op carefully ensuring it has all necessary permits and documents for exporting their own products for their own shared welfare is a remarkable vision. It may exist, perhaps, in isolated circumstances, usually with the help of an NGO. But in Laos the agarwood plantations were started by people who wanted to earn a lot of money, quickly, not groups of indigenous farmers seeking to “certify” their product. That would be folly anyway, as they wouldn’t have the power, even collectively, to stand up to local mafias. Costs for CITES permits are mostly taken on by the buyers, meaning their products suddenly costs more. So the price of agarwood goes down to make up for the additional costs with the certification. Who is going to lose there? The costs are passed back to the farmers, of course.

The point seems to be to make sure the oil (or wood) comes from a “legitimate” source. What makes a source “legitimate?” In Laos? It means they can pay. That’s all.

Corruption and Con Artists--A World-Wide Problem

So now the agarwood “industry,” what there is left of it, at least in Laos and India, is controlled by a few large players. How is that helpful to anyone except those few large players and the governments and organizations they pay??

It feels nice to think of ourselves (westerners) as stewards of the land, environmentally conscious, aware of the greater good, conservation minded, and racing in at the last moments of the earth’s annihilation to “save” the planet from a fate we had the lions share in creating.

It feels nice to be positive, and think humankind is entering a new age of growth, spirituality and consciousness.

It feels good and positive to think we can share our mistakes with the up and coming new guard--China, India, etc, and it will change something.

It’s a mistake and futile to approach global problems such as deforestation, climate change, resource destruction, poverty, and water consumption as simple problems we can fix by a legislation here, a conference there. Or by proclaiming an essential oil to be “ethically harvested.” That label can apply to many things, as can “organic.” It’s about as meaningful a label as “Therapeutic grade.” In other words, valueless.

While obviously there are benefits to trying, in the ways we are capable, to slow down the destruction of the planet, I think it’s a mistake to sit back satisfied with an “ethically harvested” label, and think it really means anything. It may mean anything at all.

Due to the vagaries of this website, I can't seem to post photos on this page. To see photos, please visit our continously updated facebook page


Thanks to

Christopher Hoeth-distiller, Laos
James Compton--senior director TRAFFIC SouthEast Asia
Anders Jensen, PHD, Agarwood researcher, Ghana
Mr K, distiller and trader, Laos
Mr C, distiller and trader, Laos
Anonymous Distiller, Laos
Syed Qavi-- facilitator between farmers and Ajmal Perfumes, Assam, India

other references
CIA world factbook--Laos


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