The kava konundrum

 

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This item was first published in the Vanuatu Daily Post on March 24th, 2017

Discussions about kava are endlessly fascinating. There are always new things to learn about how it is grown, how it is prepared, and various rules and protocols around how it should be served and consumed.

Many of these conversations operate at the micro-level but increasingly we need to look at some of the macro issues that are relevant in this area.

Kava is something of a touchstone when it comes to many areas of public policy and the debates that surround them. Earlier in the year, I referenced issues about kava quality to illustrate the importance of law enforcement rather than simply more law enactment. During several discussions about the pros and cons of introducing income tax, a number of people raised with me the question of how (if at all) it would affect kava growers. I’ve been in numerous discussions about inter-island shipping where the ability of kava growers to get produce to market is a key consideration.

And in the aftermath of Cyclone Pam in 2015 when the disaster response experts were trying to work out how to get relief supplies to rural communities, one of the best pieces of advice they received was ‘follow the kava’.

It seems to me that we are at something of a kava crossroads. There are a number of new factors at play that mean the economic potential of kava, particularly as an export crop, is being given additional attention.

We are already seeing an increased demand from overseas markets and there is potentially more to come. Recent reports have documented an increase in Fiji importation of Vanuatu kava to plug holes in their supply caused by the impacts of Cyclone Winston in 2016. We have also heard that kava is becoming increasingly popular in the USA, and importers from that country are busy establishing supply chains with our growers. Although we have yet to see any impact from the revocation of the import ban on purchases from within the European Union, it is likely that this will become part of the picture in the short to medium term.

And now that Australia has removed its import restrictions in relation to kava for research and medicinal purposes, we can expect to see an increased demand from there as well.

We are in a demand-rich environment and this brings many opportunities. But there are downsides. Some of them are already becoming apparent and we can expect to see more evidence of them in the future. The Kava Strategy 2016-2025 does not address these impacts. They are missing from the macro conversations but they are very significant for those that are caught up in them.

Whilst the Kava Strategy makes numerous references to the existence of the domestic kava market and its relationship with exporting, one thing it does not do is discuss the negative impacts on the domestic market that increased export demand can create.

The result of high demand is that the price goes up. In relation to kava, this is compounded by supply constraints, which is pushing up the price even more.

This is good news for sellers. It is manageable news for those who are buying to value add and then export as they are selling a premium product and their markets are buoyant.

But what about people who rely on money they make selling kava in the bars of Port Vila or Luganville? If they own the whole value chain from garden to shell and their kava bar is on their own land, they are fine. For as long as they want to continue to supply the domestic retail market they will be able to do so. If they decide to close down their retail operation and focus on exporting, it will be a decision they make for themselves.

But for some, other people are making decisions that affect their ability to sustain their livelihoods.

If a kava seller is renting a stall at someone else’s kava bar and buying green kava in town, it is hard to see how they are making anything other than a loss.

That is before kava bar owners start increasing the rent they charge for stalls to counter the reduction in the number of available tenants. Why are there fewer tenants? Because the combination of reduced supply and higher price means they have decided it is no longer economic to sell kava.

And then there are those who sell the VT20 at kava bars, most of whom are women. If kava bars close, because they can’t make money, these stallholders have reduced opportunity to make money whether as their primary source of cash or to supplement other activities.

These activities are key components of the informal and semi-formal economy. They are part of how a large number of people in urban areas support themselves and their families. If these opportunities were to be reduced or removed altogether, it is not clear what is available in their place.

A conundrum indeed – one I look forward to discussing further over kava when I’m in town this weekend!

 

We need a white paper not a white wash

This item was first published in the Vanuatu Daily Post on January 27th, 2017

In my recent ‘Pacific Predictions’ I noted that in 2017, the Government of Australia will prepare and release a white paper on foreign policy.

A white paper is something similar to our Vanuatu 2030 — it sets out the framework for a particular policy area that will guide the state machinery in the medium to longer term.

The Department of Foreign Affairs and Trade is currently accepting submissions from anyone who cares to make one. We are also expecting the release of a new ‘Pacific Strategy’. (Which begs the question, should Pacific island countries have an ‘Australia Strategy’?)

 The Foreign Policy White Paper is something of a big deal. There hasn’t been one since 2003 and, as DFAT tell us, ‘the international environment has changed profoundly over the past 13 years’. Julie Bishop is generally recognised as one of the better Australian foreign ministers of recent times so it is not surprising that she should be prosecuting an exercise of this type. Having said that, foreign affairs do not figure very highly in Australian political discussions, with little attention if any given to them during election campaigns. And within the small amount of bandwidth accorded to foreign affairs, Pacific issues rate very low on the scale.

Even so, the policy processes referred to above present an important opportunity for Australian policy makers to think about how their country can regain and maintain its status in our region. Admittedly, global events of 2016 have created some conundrums that will test Canberra’s creativity. But that must not detract from the importance of Australia’s relationships with its nearest neighbours.

I will be preparing a submission in relation to the white paper and I’m not going to give away the punch line here. But I will raise one aspect that I’ve been thinking about for a while that I don’t believe gets enough attention. In Vanuatu, our primary experience of Australia’s government is by way of our interactions with DFAT. But our bilateral relationship with Australia is affected by numerous other government departments and agencies that we don’t necessarily deal with directly. Part of DFAT’s role is to liaise with the rest of the Australian government machinery to try and ensure that what they are doing is in line with and supportive of foreign policy objectives. This is an area where we need to see more and better activity and it needs to be examined closely in this year’s policy development activities in Canberra.

Let me give you a couple of examples to consider. The government of Australia has made significant investments of aid money in restoring and further developing our tourism sector. This is part of their economic diplomacy platform, which is based around a belief that small countries such as Vanuatu need opportunities to grow their economies, create jobs and improve livelihoods more than they need aid. As we are realising, Vanuatu is an attractive destination for Chinese tourists, as that market matures and we see a rise in independent, well-funded travellers. In the 12 months to November 30, 2016 the number of Chinese tourists to visit Australia was just over one million. If 2% of those visitors to Australia included a side-trip to Vanuatu as part of their itinerary, the number of air arrivals would increase by 50,000. There are several reasons why this might be difficult to achieve but perhaps the most significant one is the refusal by the Australian government (via the Department of Immigration and Border Protection) to provide multi-entry visas to visitors from China. So it is not possible for Chinese tourists to add a ‘side trip’ to Vanuatu into their itinerary because once they leave Australia they have to apply for another visa to re-enter.

And then there are our agricultural exports to Australia, such as they are. Here we face a double whammy. Australian domestic policy is the reason for the ban on commercial importation of kava, which means that our producers have to seek more distant (and more expensive) markets. In relation to other products such as root crops, nuts and spices a very serious (but insufficiently discussed) impediment is getting products approved by Australian quarantine and biosecurity agencies. This is a hurdle faced by other Pacific island countries as well. You might think that the problem is that Pacific agricultural products are poor quality and do not pass the tests for biosecurity. And you would be largely wrong. As Wes Morgan has educated me the issue is not that the products are not good enough, it is that the Australian processes take so long that producers have to go elsewhere to find a value chain that works. So an agreement like PACER Plus that (we are told) will make it easier for our country to trade with Australia will struggle to deliver on that promise if the relevant bits of government machinery don’t get the memo.

Australia’s foreign policy white paper and, perhaps more so, its Pacific strategy need to demonstrate that these issues (and others) have been well thought out and factored into the blueprints for our future relationship.

Photo Credit: Dan McGarry

 

My island home: the first week after Cyclone Pam

Usually the phrase ‘coming home’ signifies a return to all that is familiar and predictable. On Monday I came home to something that is far from familiar and to a situation characterised by frenzied activity, heightened awareness and rapid-fire exchanges of information and decision-making.

Nothing looks the same. Where once there was green, now there is brown. The wholesale destruction of vegetation has revealed buildings that were previously surrounded by bush. Landmarks that were present this time last week have gone. This does nothing to assist my already very flaky sense of topography. Nothing sounds the same. Usually when I write in my lagoon-side office, I hear birdsong, occasional barking from dogs and maybe the voices of people going past on canoes or kayaks. Now I work with the sound of chainsaws and bush knives in the background interspersed with the sound of military and civilian aircraft criss-crossing the skies.

Vanuatu has experienced cyclones before and will undoubtedly experience them again. Cyclone Pam is significant in terms of her impact both in breadth and depth. Initial assessments are still being conducted but preliminary information is that all of the occupied islands of the country have been affected, with the possible exception of Malakula. Reports from aerial assessments undertaken during the past couple of days are indicating extensive damage, especially in the southern part of the country, affecting buildings, airstrips and gardens. This last is of particular concern in terms of longer-term food security as over 70% of the population relies on subsistence farming. For now people will eat what can be salvaged from the storm. Some will have livestock that they can kill. I just read that in Middle Bush, Tanna, where all are safe (largely thanks to having endured the cyclone in daylight hours), people are making use of solar powered driers to convert manioc into flour before it rots. That will be a much valued resource in the weeks and months to come.

Those of you who have visited Vanuatu (and certainly if you have visited me) will know that drinking kava at the end of the working day is an important activity for a sizeable segment of the community. We get to sit outside, chat quietly, do some networking and drink the most foul tasting substance you would ever voluntarily put in your mouth – it is a mild soporific that produces effects such as numbed lips and general relaxation. I had expected that kava bars would be either non-operational or out of stock (most of the kava sold in Port Vila comes from other islands such as Pentecost, Ambrym or Ambae). Never have I been so pleased to be proved wrong. I spent Monday evening with some friends at one of my favourite kava bars. The two wooden huts where kava and food are sold are intact but the rest of the place is trashed. This kava bar was burned to the ground in October 2012 and only reopened late last year. The owners (who I have known for 18 years) told me – “last time we waited two years to start selling the kava again but this time we waited two days”. They were doing a roaring trade, lots of it being sold as ‘plastics’ (recycled drink bottles filled with kava for take-away). But there was enough for those of us who were there to enjoy a couple of shells in the peace and quiet.

I’ve been asked “How can Vanuatu recover?”, and the answer I have given is: we are recovering. This is a resilient country populated by resourceful people and we are working together to get things back on track. There are many challenges ahead: logistical, political, economic and social. There is need for much assistance and we know it is on its way. When it gets here, it will find us already working hard in our island home.