STATUS OF THE KAVA INDUSTRY

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Presentation by Mr Jaindra Kumar Director, Trade & Investment Division Pacific Islands Forum Secretariat at the Kava Symposium Suva, Fiji 6-7 November 2002

Background

1. The growing significance of the kava industry as a source of foreign exchange earnings for the region came to a halt in late 2001 after import restrictions were instituted by some members of the European Union (EU). This followed claims that liver damage was attributed to the consumption of kava-based medicines. Given the considerable impact of the restrictions on the economies of the concerned Forum Island Countries (FICs), the region has adopted a proactive and co-ordinated approach in addressing the issue. This paper thus provides an update on the kava situation in the region with respect to the following:

· The current situation on measures taken by EU countries including Germany, France, United Kingdom, Switzerland, Spain and Italy, and the United States of America (USA) to restrict or ban the sale of kava and other kava-based products in their respective markets; and,

· Actions undertaken by the region and the Pacific Islands Forum Secretariat and what needs to be done in future.

Ban on Kava by European and Other Countries

2. On 8 November 2001, European Country Regulatory Authorities placed restrictions on the sale of food supplements and herbal medicines containing kava and/or the kava extract and kavalactones. The action came after a paper, originating from Germany, claimed that up to 30 persons had suffered liver damage as a direct result of consuming kava-based or kava containing medicines. Switzerland, Spain, Italy and France issued warnings to alert their populations on the sale of herbal medicines or food supplements that had kava extracts as their main ingredients. The UK asked for a voluntary withdrawal of such medicines and supplements from sale, whilst companies in the concerned European countries made voluntary withdrawals of relevant products from the market. Investigations into the possible adverse effects on the liver of persons taking these products are continuing in Germany but as of 14 June 2002, the German health authorities (Bundesinstitut fur Arzneimittel und Medizinprodukte, or BfArM) had cancelled the registrations of all German manufacturers of products containing kava.

3. In Australia, a cautionary advice on the consumption of kava-based products was issued by the Assistant Federal Minister for Health. The action was directed at products containing extracts of kava or kava lactones. This followed claims that the death of one person in the country was associated with the consumption of herbal supplements that contained kava and two other herbs.

4. The restrictions resulted in the loss of kava export earnings from the region and particularly the four major kava producing FICs namely, Fiji, Samoa, Tonga and Vanuatu to the European markets and to the USA. This has caused considerable loss of exports and falls in the domestic price of kava, resulting in declining incomes for farmers and businesses. In Fiji alone, monthly kava export earnings were around FJ$300,000-500,000 during most of 2001, reaching up to FJ$886,000 (April 2001) and FJ$797,000 (October 2001) before falling to FJ$363,000 and FJ$153,000 in November and December 2001, respectively. For January-May 2002, kava export earnings hovered between FJ$103,000 and FJ$148,000 per month. Quarterly kava earnings in Fiji fell from a high of FJ$1,313,000 in the 4th quarter of 2001 to a mere FJ$323,000 in the 1st quarter of 2002. This represents a total fall of 75 per cent over the period. In Vanuatu, a fall from 174 MVT to a mere 42 MVT was experienced during that period. This represents a fall of 76 per cent. In Tonga, exports to UK in 2001 amounted to just 27 kg and valued at T'$500. There have been no records for exports to EU during 2001 and first half of 2002. However, figures for exports to the USA during 2000, 2001 and first half of 2002 amounted to 5,177 kgs (T'$102,223), 2,420 kgs (T'$46,125), and 1,322 kgs (T'$28,052), respectively3. Figures for Samoa are not available but it is estimated that they have also experienced significant losses to their total export earnings since late 2001.

Actions Taken by the Region

5. Soon after the announcement in November 2001 of restrictions by European authorities on the sale of kava and kava-based food supplements and herbal medicines, Members formally requested assistance from the Forum Secretariat to address the inevitable impact of the restrictions on the their kava industry. In particular, there was concern on the imminent and substantial decline in their foreign exchange earnings from the lucrative European kava market.

6. To help find a solution to the crisis, the Secretariat took the opportunity to meet with the kava exporting FICs at the margins of the Pacific Herbs Business Forum (PHBF) that the Commonwealth Secretariat (COMSEC) and Centre for the Development of Enterprise (CDE) had co-organised in Port Vila, Vanuatu in February 2002.

7. A number of resolutions were agreed upon at the PHBF. Although implementing agencies were not determined then, the Secretariat took the lead in following-up on most of the resolutions and undertaking other actions that included the following:

· Establishment of a Kava Task Force, whose membership covers relevant Suva-based organisations including the Fiji Islands Trade and Investment Bureau (FTIB), Fiji School of Medicine (FSM), Fiji Ministry of Agriculture, Sugar and Land Resettlement, Secretariat of the Pacific Community (SPC) and representatives of the Fiji kava industry.

· The Secretariat is working closing with the COMSEC and CDE on following developments in Europe on the sale and restrictions on kava-based products.

· As a direct result of the above collaboration, a consultant from the Phytopharm Research in Berlin, has been engaged through CDE to work with European Authorities, importers and manufacturers to identify the basis for actions to be taken with a view to restoring the lost kava market. His report should be available by January 2003. * * FSM, the Pacific Health Research Council (PHRC) and the University of the South Pacific also have stepped up their kava research activities in response to the crisis. A considerable amount of knowledge on kava is reportedly available but have not been collated and organised into a coherent and accessible database.

· The kava export ban was discussed at length during the Forum Economic Ministers Meeting (FEMM) in Port Vila, Vanuatu in early July 2002. The outcome of that discussion was as follows:

"Ministers expressed their concern over the bans placed on kava and the resultant economic losses, and requested the Forum Secretariat, Commonwealth Secretariat and other relevant agencies' assistance in addressing these bans, including through obtaining scientific research and investigations, and agreed to bring the issue before the forthcoming Forum Leaders meeting and the ACP Summit".

· Tonga, in a statement which was delivered during the ACP Heads of State Summit in Nadi, Fiji, also in July 2002, on behalf of the Pacific ACP States, brought the issue of kava bans and its adverse impact on the region's export revenues to the attention of the EU.

· Forum Leaders, during their annual meeting in Suva, Fiji, in August 2002, also endorsed the FEMM decision on kava.

· The kava issue was also raised during the 2002 Post-Forum Dialogues with Canada, EU, UK, and USA. In response, the EU and UK highlighted that independent laboratory tests were being conducted on kava and kava-based capsules. They also emphasised that there was no ban in force on kava but that companies had voluntarily withdrawn kava-based products from the market.

· The Kava Crisis Committee formed at the PHBF had the opportunity to meet together with the Secretariat during the wings of the CDE-organised Pacific Regional Private Sector Meeting in Nadi, Fiji, in early October 2002. Whilst the Committee appreciated the Secretariat's efforts to address the kava issue, they urged that stakeholders including the industry be kept informed of developments associated with the issue.

· The Secretariat, through the Pacific Islands Forum Trade Office in Beijing is undertaking a research on the promotion of kava in China and looking at scientific analysis. The Secretariat also raised the issue with the Indian High Commission in Suva.

· The Food Standard ANZ (FSANZ) is currently reviewing kava standards in Australia and New Zealand. A regional submission is being prepared by the Secretariat whilst it has also urged the concerned FICs to make submission to FSANZ as well.

Conclusion and Actions to be undertaken

8. The endeavour of the Kava Research Organising Committee such as the present Symposium is appreciated and deserve to be supported. Similar support is to be extended to FSM, the PHRC and USP, in spearheading research on the effects of kava on human health.

9. Collaboration involving FSM, PHRC, USP, SPC, industry representatives and the Secretariat is being encouraged to remedy the damage that has been done to the region's kava industry and most importantly to ensure our people's good health. The technical nature of the problem requires a scientific approach if a solution is to be found. This Symposium and the International Kava Conference proposed for April 2003 are anticipated to achieve this and thus provide opportunities in which we can systematically put in place scientific knowledge on kava as a food product, that will either prove or disprove the negative image of kava in the global market. This necessitates independent "inter laboratory kava testing", which is to ensure creditability to any scientific evidences.

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