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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!

 

About Tess Newton Cain

With more than 20 years’ experience of living and working in the Pacific, I understand its needs, local customs, issues and challenges, and have built strong networks and productive relationships with policy makers, opinion formers, key institutions, private sector operators and development partners. If you are a development agency or NGO needing more and better information about the Pacific context for your work or a business looking to enter a new and unfamiliar Pacific market, I can provide you with the research, analysis and strategy you will need.

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