A breeding program to enhance the economics of producing essential oil (Australian tea tree oil) from Melaleuca alternifolia plantations in eastern Australia by improving oil yields and oil quality commenced in 1993. This paper reports the results of the first (2003) and second harvests (2004) of a yield trial established by the program in 2002. The trial compares the performance of three grades of seed (clonal seed orchard, first generation seedling seed orchard and selected provenance) released to the industry by the breeding program against an unimproved seedlot (industry standard). Industry standard is representative of seed available to growers in 2001 from alternative sources within the industry. Progeny from the clonal seed orchard had the highest oil yield, giving an estimated average improvement in yield over industry standard of 83%. This was followed by selected provenance and first generation seedling seed orchard with 55% and 43% improvement, respectively. These yield improvements were accompanied by desirable changes in oil quality traits among breeding program seedlots which gave lower 1,8-cineole and higher terpinen-4-ol levels than industry standard. Economic analyses have demonstrated that, with current prices less than $20 per kg of oil, older plantations need to be replanted with new germplasm that will yield 90% more oil per hectare than plantings based on unselected seed if they are to deliver a 10% rate of return on investment. Gains of this magnitude are possible through the use of the breeding program’s clonal seed orchard seedlot. If the price drops further, then even greater yield gains will be necessary for farms to remain profitable. These gains will be delivered by the breeding program in the coming years through the release of seed from a second generation seedling seed orchard and fully tested clones suitable for mass propagation.