One significant,
and nearly unique, export of Vanuatu is kava. Kava is a root that's
pounded into a paste and made into a drink. In the capital of Port Vila
(pop. 30,000) alone there are hundreds of kava bars, or nakamals. Elsewhere
in the islands the bars, basically just open spaces in the bush with some
logs to sit on and a tin shed or two for shelter, are the centers of local
civilization. Following in what I think would have been the footsteps of
Sir Richard Burton if he'd been here, I always try to log a few evenings
in one. About US$.50 will get you a big cup of the mud-like drink, which
you'll imbibe slowly while conversing slowly, in a whisper, with whoever
you sit next to.
Kava
is now sold in U.S. health food stores as a nerve tonic, and a number of
studies have shown it to be efficacious. But the effect of the stuff you
get in a nakamal seems more recreational than therapeutic. After only one
cup you'll notice your tongue and mouth going numb, a sensation identical
to the novocaine shots the dentist would give in the 50's. After three
or four, the mind becomes clouded, and all the world, even the nakamal
itself, seems as mellow as can be.
It occurred
to me that if one was running a club in the United States, selling kava
could be a very high-profit adjunct to alcohol. Amazingly, the stuff is
legal in the United States as yet. Not that it shouldn't be, because kava
is perfectly benign, and is acknowleged as a major reason that violence
is extremely rare in Vanuatu. But in the worlds of the DEA and FDA, where
everything that's not compulsory should be prohibited, I'm sure its availability
is just a temporary oversite. In addition, it occurred to me that someone,
somewhere, would find grounds to sue anyone providing the drink to the
public. So it's probably a bad idea, at least in the United States. If
you want to explore the opportunity, however, get in touch with Roxanne
Naylor, the proprietress of the
Kava Kompani, for complete information
on how to buy the product, either retail or wholesale. Tel 011-678-26330,
fx 011-678-26-331, e-mail: kava@vanuatu.com.vu.
Let me know if you do anything.
Plantations
In The South Pacific
Right now you
may be asking yourself: "Fine. It's nice to know about this backwater,
but I'm subscribing to this newsletter for money-making ideas. What does
Vanuatu mean to me, besides the longshot of becoming a kava importer?"
Well, if you're looking for a steady diet of stock touts, International
Speculator will be slim pickings for the next few years (except in the
ultra-depressed resource sector). The stock market is tough any time, but
during what may prove the bear market of the century, not to mention the
Greater Depression, you don't want to be in stocks. That limits us to special
situations.
But special
situations always make for the most interesting investments anyway. If
you only know what everyone knows, then what you know is hardly worth knowing.
The real intent of this letter (other than to act as a running commentary
on what I'm doing and thinking) is to keep readers informed of things not
one person in 10,000 has even heard about. Property in the South Pacific
falls into that category.
There are
perhaps three ways to look at property: As a productive asset, as a
speculative holding, or as a lifestyle proposition. I've spent a fair amount
of time and money flying around Vanuatu to get a grip on property, and
I think it's worth considering, possibly on all three bases.
With
the exception of some developed property in Port Vila and Luganville (pop.
3,000), all land in Vanuatu is held in what is known as "Kustom" ownership,
which means it is the property of the locals. Since their ownership is
informal, as is typical of a pre-literate society, there's not much in
the way of written documents to determine exactly who owns exactly what.
So buying most land is extremely aggravation and time intensive. And you
can't really buy it anyway, you must lease it, generally on a 75-year term,
with payments adjusted every five years or so. This is a concept that is
somewhat foreign to most Americans, but we're using it more and more today
Lease payments
are typically a small fraction of a percent annually of the price of purchasing
the lease itself, and there are no real estate taxes. I would prefer freehold,
fee-simple ownership, but the system works fairly and well, in practice.
Vanuatu is
certainly one of the world’s more beautiful locations. James Michener used
it as the model for Bali Hai when he wrote Tales of the South Pacific while
he was stationed here during WW II. The French developed numerous copra
plantations on the islands over the 100 years up to independence in 1980,
and they're still the dominant factor in today's economy.
Copra, which
is dried coconut meat, is Vanuatu’s main export. When you get visions of
being a planter in the South Pacific, this is what you’ll be dealing with.
They use the stuff for soap, vegetable oil, and margarine. All over the
country you’ll find palm trees planted in neat rows to grow copra. Depending
on the species of palm, you get between 100 and 160 trees per hectare (approx
2.5 acres), and each tree yields from 50-100 nuts. It takes about 8 nuts
to yield a kilo of copra, so each hectare theoretically yields about two
tonnes, and a tonne goes for about US$55. But you've got to get the meat
out of the nut, and dry it. Those, in a nutshell, are the basics of the
copra business. But it’s hard work husking and shelling and drying coconuts,
and it requires cheap labor. One problem here is that labor tends to work
not on a schedule, but intermittently, when they need money for a new radio,
or shirt, perhaps.
Copra is
a
romantic, but not especially profitable business at the moment. Cattle
is the second largest business in the country, but not a very big one since
there are probably only 120,000 head in Vanuatu. Good sized copra plantations
usually run cattle as a sideline, since the critters are symbiotic to the
nurture of palms. The cattle business is notoriously marginal eveywhere,
but the fact is that Vanuatu is one of the best, if not the best, places
in the world for raising them. The climate is perfect—balmy, and
never too cold—year round, the volcanic soil supports highly nutritious
grass, and there aren't any pests, predators, or diseases. The beef is
truly tender and excellent, even though it's 100% grass fed. As you know,
almost all U.S. beef comes off feed lots, which are at once inhumane, unsanitary,
unsightly and ecologically problematical. Feed-lot beef is full of fat,
as well as artificial hormones and antibiotics and is not nearly as tasty
as the free-range product.
Right now production
in Vanuatu is too small to be worth building a slaughterhouse that would
meet US/EC standards to export, but there's a future here, because production
costs are certainly, and by far, the lowest in the world.
The business
doesn't expand, however, because the market is strictly local, and local
beef prices are also far below world levels.
A Little
Grass Shack, Etc....
Those are some
broad generalities. The specifics are what I think will really get your
attention. For some years I've coveted a ranch about 10km outside of Luganville.
It's 20,000 acres, with 14 miles of beachfront.
