SUB-REGIONAL WORKSHOP ON THE TRADE AND ENVIRONMENT DIMENSIONS IN THE FOOD AND FOOD PROCESSING INDUSTRIES IN THE PACIFIC THE MINISTRY OF TRADES, COMMERCE & INDUSTRY 7TH - 8TH JUNE 2006 SUVA, FIJI ISLANDS THE VANUATU COCONUT INDUSTRY COUNTRY PRESENTATION ON COPRA Introduction: This presentation will be in 5 parts; 1. The valuation of total production 2002 – 2005 2. The new directives taken by the Government through the VCMB 3. The achievements observed in our Coconut sector 4. The vision for Vanuatu in the South Pacific coconut sector 5. conclusion 1/ valuation of total production 2002 to 2005 2002………...Total production. - 18 thousand metric ton 2003………...Total production. - 30 thousand metric ton 2004………...Total production. - 37 thousand metric ton Evaluation of the financial injection in the rural area for copra production 2002………...450 million vatu (USD 3.8 million) 2003………...750 million vatu (USD 6.4 million) 2004………...925 million vatu (USD 7.8 million) 2/ New directives taken by the Government through the Vanuatu Commodities Marketing Board or VCMB When we look back at datas produced by the data section of the Vanuatu Commodities Marketing Board, we can observe three problems or irregularities; o The irregularity of the production going up and down. The farmers are only cooking copra when they are forced to it for school fees, and big events such as Christmas events and independence celebration. No real commitment for commercial production and supply o The fluctuation of prices due to world price fluctuations. That has caused discouragement of copra farmers and a direct factor to the low production season. o The over aging of trees and less production of nuts. No clear program in the replanting of new trees in place of the old. No expanding of new plantations. 80% of the trees are 40 years plus. The Vanuatu Commodities Marketing Board has been instructed by the Ministry of Trade Commerce and Industry to try and take measures to answer these issues. Since then the VCMB has negotiated with the main power supplier of the country which is UNELCO Vanuatu. UNELCO is the power supplier in Vanuatu, currently using 15 to 20 million liters of Diesel a year. It is the biggest consumer of diesel in the country. The VCMB has managed to go into contract with them for the supply of coconut oil. The coconut oil used is produced by a subsidiary company of VCMB the Vanuatu Coconut Production Ltd. The first trial began with one of the five power generators in Luganville on Santo. We started in June 2005 to supply UNELCO (Vanuatu) 5% of the consumption for one generator. In a week an equivalent of 700 liters coconut oil is used. In September 2005 we moved up to 10% of the consumption which is 1400 liters a week. In Vila the trials have started on the first of November 2005 with 5% of the consumption of the main power generator that represents 6 000 liters of filtered coconut oil a week. These trials are necessary because the Generators have not been designed to run on coconut oil. UNELCO (New Caledonia) is also the power supplier all over New Caledonia and had installed in the Loyalty Islands American made power generators running on 100 % coconut oil. So the idea we have in Vanuatu is to make trials on the existing power generators until we reach ceiling tolerance for coconut oil. And for the 5 other power stations to be built in other provinces, UNELCO will install the similar engines that they have installed in the loyalty islands of New Caledonia. Currently a contract was signed in December 2005 for the whole year 2006. The contract clearly stated the supply per month, and the fixed price across the year. The Ministry of Trades and Industries through dialogue with the Ministry of Agriculture has put together a program through the research center in Santo to oversee the replanting of coconuts in areas with over aged trees and the prospect of the coconut timber industry. The program is seeking financial assistance in the distribution stock of seedlings and young coconuts. The programs will be supervised by agriculture field officers. Current trials supply and projection in the future; From 2005 to May 2006….Total supply to UNELCO 29.600 liters per month…….59.20 tons of copra May 2006 to December 2006…..56.400 liters per month……………112.80 ton of copra. VCMB is aiming at supplying at a first stage 5% of the total consumption of UNELCO after December 2006 ~ 2000 metric tons of copra in 2007; In 2008 …10 % total consumption….4000 ton of copra. In 2009….20% total consumption…..8000 ton of copra. In 2010….30% total consumption…...12000 ton of copra. The present purchasing price for copra the Vanuatu Coconut Product Limited is offering now to farmers to supply oil to UNELCO is VT 30 000(USD 254.07) per metric ton. The price will remain until, December 2006 when UNELCO and VCMB will review the contract for 2007. We are already experiencing in Santo a sensitive decrease of electricity bills and this will happen in Port Vila as from July 2006. On the issue of continues production at the farmers level the Vanuatu Commodities Marketing Board is planning to enroll all the copra farmers in the Banking system. We have the sad situation in our Country where around 150 thousands coconut farmers are not using the banking system. This has amounted to an estimated 2 billion Vatu not circulated in the banking system according to reports from the Reserve Bank of Vanuatu and this makes it very hard for farmers to develop with new investments in the sector of copra towards their farming and marketing opportunities. By creating farmers associations and enrolling them into commercial centers & cooperatives, they are able to open bank accounts under savings accounts. All their sales will be then credited to their accounts. The system the government is putting in place will allow them also to purchase shares in their commercial and cooperatives centers. The government believes that by giving incentives of ownership, farmers will start to manage their plantation in a commercial manner. The program has attracted donations of two ships by the Chinese government with the help of the government through the Ministry of Public Utilities. These 80 ton capacity ships will be in charge of getting goods to commercial centers and copra back to Santo. With all these in place the final objective is to create out of the farmers savings scheme the Agriculture Bank of Vanuatu. 3/ Achievements observed in our coconut sector The big change we can observe today is that copra is not only exported but gradually crushed into oil as a value added product. From that Vanuatu is exporting coconut oil and copra meal. The total production of Coconut oil is 2100 ton a month, and the copra meal production is 1300 ton a month. The coconut industry has managed to attract a regular monthly shipment of Bank Line International shipping. The copra that is exported goes to Germany for processing for the coconut oil. The Commitment of the Government to the coconut sector has allowed our coconut sector to even go a step further from oil production to bio-fuel production. In Port-Vila, there are two blending and bio-fuel plant; • The Vanuatu Sea Transit (VAST) Company. • The Motor Traders. In Luganville, Santo there is one blending and bio-fuel plant; • Vanuatu Coconut Production Limited The three distributors of Bio-fuel have different mixtures; • VAST……………70% filtered and blended coconut oil + 30% diesel. • Motor traders…….80% filtered and blended coconut oil + 20% kerosene. • VCPL………….100% filtered and blended coconut oil ( Government owned) To promote these technologies, the Government has decided to use them as exampleS to find their reliability to private owners. As from July the first 2006 all government vehicles running on diesel will be switch to bio-fuel. Few months after the private sector started to get in the system of using bio- fuel. We have private trucks running on Bio-fuel and we have few inter islands shipping company running their vessels with Bio-fuel too. 4/Vision for Vanuatu in the South Pacific coconut sector The Vanuatu Commodities Marketing Board is putting upfront a policy that should get Vanuatu towards the leading force of oil industry in the Pacific region in the near future. From exporting copra to production and export of oil to production of 100% bio-fuel We have the biggest crushing capacity of the South Pacific region and have the intension to use it at the benefit also for the other small island countries. The recently closed down COPV mill is now being negotiated for purchase by the government. We are already importing copra from Kiribati and Solomon Islands. Our strategic location via Australia and New Zealand is also supporting oil from countries such as Kiribati to transit and them to use our export facilities. The Vanuatu Commodities Marketing Board has the intention to offer shares to Island member countries in their subsidiary company (Vanuatu Coconut Product Ltd) in the near future. The Vanuatu Commodities Marketing Board has the firm opinion that Pacific Island countries should work together to develop different sectors of the coconut processing. Vanuatu is also convinced that the Pacific Island Countries have to ensure that they are represented in Regional organizations in order to benefit in the development of trading markets and newly advanced technologies for the development of the sector. 5/ Conclusion To conclude, I would like to stress the importance of the work that is before Vanuatu with the establishment and production of bio-fuel. In relation to our regional partners we look forward in working together to enhance the processing of another level of copra to the final stages of having a regional program on bio-fuel. Thank you for your attention.