VANUATU: RESHAPING THE COCONUT INDUSTRY

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PORT VILA, Vanuatu (July 6, 2000 - Islands Business magazine/PINA Nius Online)---In good years Vanuatu's coconut growers produce in excess of 45,000 tons of copra. In bad years, when output is driven down by the disincentive of low world prices and/or damage inflicted on trees by hurricanes or unfavorable weather, production might drop below 30,000 tons.

Copra amounts to about half the value of all exports. In 1998, 40,344 tons were exported for 1,704 million Vatu ($US 13.1 million). Until January all copra was exported except for small amounts milled by a couple of small mills that cater to the local coconut oil market.

In January, a new company, Coconut Oil Production Vanuatu Limited (COPV), owned by American and Australian investors, opened a $A 6 million (US$ 3,539,658) copra mill at Luganville. Its two expellers extract 1200 tons of oil monthly from 2000 tons of copra.

Two more expellers soon to be added to it will lift crushing capacity to a thousand tons a week, enough to handle all the copra now produced by Vanuatu.

The mill is the most important single investment in the country for years. It is bound to reshape the nature of the coconut industry in the most positive way possible, by presenting producers with a steady market at better prices and by doubling the foreign exchange-earning value of coconut products.

Grahame Hack, the Australian business consultant hired to get the mill up and running, says its owners are not stopping there. They intend to add to their $A 6 million (US$ 3,539,658) investment another $A 8 million (US$ 4,719,544) in buying the extra expellers, probably an ingenious new Solomon Islands developed machine to extract copra from nuts and in moving into the production of coir (coconut husk fiber) products and, from the middle of 2001, activated carbon, made from coconut shells and sought for such purposes as water filtration and gold refining.

Problem: "The biggest problem we have at the moment is that Vanuatu has never really had a mill of this size," Hack said. "Copra quality is okay for export, but no good for high grade oil.

"We are putting a lot of time and effort to putting hot air pipes into the field and training to produce Grade A1. The quality of copra is limiting the quality of oil. By the end of the year we will be buying whole nuts. We are negotiating to buy a Solomons husker that does one nut a second."

COPV's owners are led by Don Fleming, a Los Angeles businessman who has an association with Vanuatu dating back to before independence in 1980. Two other shareholders are Australians and the company's chairman is Sitiveni Rabuka, the former Fiji prime minister.

The mill employs a hundred people. Getting it open, said Hack, was a victory over the disbelief of people who had watched other efforts to get a mill built flopped against locals walls of red tape and difficulties in securing a site.

Hack is an Adelaide businessman with a record of developing housing, factory buildings, shopping centers, mining camps and, he said, a longish list of other building projects of one kind or another.

With the copra mill in place he will soon leave its management to work on number of other projects, financed by other investment groups. "They are Australians and Americans, not billionaires, but they all work hard and they are looking for investment outside of Australia."

Planned projects in the feasibility phase included a five-star resort hotel at Santo, copra mills in other parts of the Pacific and, back in Vanuatu, cocoa and kava processing ventures and a fishing scheme entailing the use of eight to 10 small boats fishing for high value bottom fish.

Three sets of local crew would operate one boat for a week on a three-week rotation. "That is the secret of operating in this region – adapting industry to the local environment."

He regards Vanuatu as a "new frontier" and Santo a regional center of "huge potential. I see this country quite differently from a lot of other people. A lot of people see it as a difficult place to do business in.

"The fact is you really have to live here to make it. You can't do it by remote control. You have to be part of the place. I see people from Australia moving back and forth like a yo-yo. They are not accepted."

For additional reports from Islands Business, go to PACIFIC ISLANDS REPORT News/Information Links: Magazines/Journals/Fiji Islands Business.

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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