Investing in Kava

[Zaphod]

Curious what people think the best way would be to invest in the "kava market"? I still think kava will be a special niche market but it does appear to be gaining traction and certainly has greater potential going forward. So if you had a let us say $10-30K US in available funds that you wanted invest, and a return on investment horizon of say 5-10 years what do you think the best way to spend that money would be?
(1) Invest in an existing farm
(2) buy your own land and start learning to plant
(3) kava accessories (ex. prep bags)
(4) kava importer
(5) kava bar
(6) Kava services (ex. testing)
(7) Partner with existing suppliers to distribute more?
(8) other?

 

[nabanga]

That's a good thread question, and something I -and no doubt lots of other guys - have thought about for some time.
Having known many kava investors both before and after the international interest started, I think that unless you have family or close contacts growing, it either has to be in growing yourself - being at the start of the value chain - or in distribution, at the end of the chain.
Everyone in between grower and distributor has no control on market forces, and there are far easier products to be a wheeler-dealer in than kava, if financial investment is your key driver. Lots of kava investors have fallen away over the last 25 years, losing lots of money, and this was at a time when it was $5-10/kilo, not $80 or so.
If you don't own suitable land to grow on, have family growing in the Pacific, or have lots of money to buy/lease some in a suitable country and a group of partners you trust implicitly, then the only choice is to join the ever-increasing number of international distributors - and your reputation would be starting from zero at a time when there are lots of vendors already well established and respected.

I came to.the conclusion that unless you are from Melanesia or Polynesia and own land, it's probably better to just enjoy the root and invest any spare cash in something easier. Owning a couple of acres of plants with a little bamboo shack at the back is a nice mental image though - but may be a retirement plan more than an investment strategy...

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[Edward]

Set up as a European pet supplement supplier, there's plenty of room yet

 

[kasa_balavu]

(1) Invest in an existing farm

The risk is very high. You're at the mercy of the weather (and changing climate) and what cyclones don't damage, thieves will run off with. You have to completely trust your farming partner too, because it would be very tempting and virtually risk-free for him/her to report the kava stolen after having harvested it themselves.

(2) buy your own land and start learning to plant

This is the only way one should grow kava. I've never heard of a Pacific Island farm with an absentee owner being a success... at least not at a small scale. Growing kava is easy, read the Kava Producers Guide (SPC, 2001) and you're good to go. However, 30k won't be enough to do build a new life in the Pacific Islands. Your home will cost more than that.

(3) kava accessories (ex. prep bags)

There's no money in that space. Prep bags are dime-a-dozen, there's no barrier to entry, every vendor will eventually be selling their own bags, and there wouldn't be frequent return business.

(4) kava importer

You wouldn't be able to make much money just being an importer. There are so many other importers/vendors who import in large quantity for onward wholesale. Only do this if you have a good connection in the Pacific Islands who can get you good quality kava consistently.

(5) kava bar

If you live in or near an area where there is a significant population of potential customers, then this might be the best option on your list. It's hard to make money on kava alone though (as evidenced by the dearth of kava-only bars). Bonus points to this one if you have previous experience in the food-service industry.

(6) Kava services (ex. testing)

TK Labs needs funding! You could invest there and turn it into a more pro org with a staff and paid testing.

(7) Partner with existing suppliers to distribute more?

I don't think distribution is a problem right now, but if you can find a partner interested in this, then why not?

 

[kasa_balavu]

On a serious note starting a kava farm in South America or Southeast Asia might be a very good idea. Last month Dr Lebot said there were already some farms in Brazil (I think?).

Damn, that's bad news for us in the Pacific. South American kava farms, without cyclones and theft, would have massive advantages over Pacific Island farms.

 

[kastom_lif]

To be honest, a couple acres and a bamboo shack sounds like a nice retirement.

Heck, if the climate permitted I'd be growing kava where I am now. Sweet potatoes, peanuts, kokihi and taro do quite well here. Too chilly for the good stuff, though.

Mmm, mangos. Bananas. Breadfruit. Jackfruit. Papayas. Vanilla. Citrus. Ginger. Pineapple. Nakatambol. Kauri. Koa. Sandalwood. Coconuts. ....sigh...

 

[kastom_lif]

South American kava farms, without .... theft.

Ummm... no offense to Krunky and our South American forum friends, but I'm pretty sure kava theft levels in Brazil would be rather high. Especially once people realized what it was.

Without irrigation, the place to grow kava would be in the far north of Brazil. A remote kava plantation might hide for a while, but being remote, there's not much out there to prevent crime, either.

 

[verticity]

Set up as a European pet supplement supplier, there's plenty of room yet

I don't think there is any easy money in kava. There probably is money to be made in Europe, because there is demand but no large vendors there right now. But the lack of ease in that case would come from the risk that you would assume because of the confusing and changing legal situation there. If you stay small enough to fly under the radar that may not be a problem, but a large scale European vendor would inevitably have to deal with the kind of crap that drove GKE out of business..

 

[Edward]

I don't think there is any easy money in kava. There probably is money to be made in Europe, because there is demand but no large vendors there right now. But the lack of ease in that case would come from the risk that you would assume because of the confusing and changing legal situation there. If you stay small enough to fly under the radar that may not be a problem, but a large scale European vendor would inevitably have to deal with the kind of crap that drove GKE out of business..

Yes, I'm keeping my stocks low for when I get a knock on the door or a letter telling me to stop. For the meantime though there are some relaxed pets over this way.

 

[kastom_lif]

The relaxed pets appreciate it, Edward. Are the kava laws easier on the Isle of Man, or Jersey and Guernsey? Maybe having an "office" there could be insurance against late night knocks on the door.

Not saying you'd actually store your kava there in real life unless the situation were dire, though having it look that way on paper might help? I have no idea really.

 

[Zaphod]

The risk is very high. You're at the mercy of the weather (and changing climate) and what cyclones don't damage, thieves will run off with. You have to completely trust your farming partner too, because it would be very tempting and virtually risk-free for him/her to report the kava stolen after having harvested it themselves.


This is the only way one should grow kava. I've never heard of a Pacific Island farm with an absentee owner being a success... at least not at a small scale. Growing kava is easy, read the Kava Producers Guide (SPC, 2001) and you're good to go. However, 30k won't be enough to do build a new life in the Pacific Islands. Your home will cost more than that.


There's no money in that space. Prep bags are dime-a-dozen, there's no barrier to entry, every vendor will eventually be selling their own bags, and there wouldn't be frequent return business.


You wouldn't be able to make much money just being an importer. There are so many other importers/vendors who import in large quantity for onward wholesale. Only do this if you have a good connection in the Pacific Islands who can get you good quality kava consistently.


If you live in or near an area where there is a significant population of potential customers, then this might be the best option on your list. It's hard to make money on kava alone though (as evidenced by the dearth of kava-only bars). Bonus points to this one if you have previous experience in the food-service industry.


TK Labs needs funding! You could invest there and turn it into a more pro org with a staff and paid testing.


I don't think distribution is a problem right now, but if you can find a partner interested in this, then why not?

I think you just about nailed it on where my head was at for each category. I don't see any easy money or simple money only investments right now....but I was curious to see what others thought. Maybe I was missing something. It will be interesting to see how the market grows (or doesn't) and changes over the next few years.

 

[Zaphod]

That's a good thread question, and something I -and no doubt lots of other guys - have thought about for some time.
Having known many kava investors both before and after the international interest started, I think that unless you have family or close contacts growing, it either has to be in growing yourself - being at the start of the value chain - or in distribution, at the end of the chain.
Everyone in between grower and distributor has no control on market forces, and there are far easier products to be a wheeler-dealer in than kava, if financial investment is your key driver. Lots of kava investors have fallen away over the last 25 years, losing lots of money, and this was at a time when it was $5-10/kilo, not $80 or so.
If you don't own suitable land to grow on, have family growing in the Pacific, or have lots of money to buy/lease some in a suitable country and a group of partners you trust implicitly, then the only choice is to join the ever-increasing number of international distributors - and your reputation would be starting from zero at a time when there are lots of vendors already well established and respected.

I came to.the conclusion that unless you are from Melanesia or Polynesia and own land, it's probably better to just enjoy the root and invest any spare cash in something easier. Owning a couple of acres of plants with a little bamboo shack at the back is a nice mental image though - but may be a retirement plan more than an investment strategy...

Sent from my BLL-L22 using Tapatalk

Well I have no family, and no land in any kava growing regions - and no background in farming....I can barely keep my house plants alive.

 

[Zaphod]

On a serious note starting a kava farm in South America or Southeast Asia might be a very good idea. Last month Dr Lebot said there were already some farms in Brazil (I think?).

This would be a very interesting development. I wonder compared to other Brazilian cash crops where kava would fall in terms of profitability for them.

 

[kastom_lif]

This would be a very interesting development. I wonder compared to other Brazilian cash crops where kava would fall in terms of profitability for them.

It could be an incentive not to clear cut forest. Kava does well in agroforestry. The modern land usage pattern is to clear cut, grow grains with synthetic fertilizer until the soil is depleted, then run beef cattle. It's not sustainable.

The soils in the Amazon could be an issue. Rather than young, mineral rich volcanic soil, rainforest soil is rather poor. Strong kava might favor certain soil regions. Maybe regions of tera preta, or eroded igneous soils.

 

[SelfBiasResistor]

The point is that at the moment nobody knows what it is, how to process and sell it. If someone really had planted kava between mango trees in Ecuador or Brazil, it's very unlikely that they need to worry about security anytime soon.

And in any case, the aim of growing it there is to drastically reduce the price (and incentives for stealing) via greater economies of scale, cheap land, cheap transportation, easy access, potential for mechanisation etc etc.

So what are the normal security measures employed by farmers in Pacific Island growing areas? I would think that a US state like Hawaii would be similar to S America since kava farming and processing doesn't seem to be widespread knowledge among modern day Hawaiians. There are also only a couple of large scale farmers at the moment.

TK Labs needs funding! You could invest there and turn it into a more pro org with a staff and paid testing.

It would be a great idea to fund a testing org that would be completely independent of the vendors it is certifying. As it is now, TK has very close ties with a few of it's member vendors. We need a certifying authority that will hold all vendors equally accountable.

 

[TheKavaSociety]

So what are the normal security measures employed by farmers in Pacific Island growing areas? I would think that a US state like Hawaii would be similar to S America since kava farming and processing doesn't seem to be widespread knowledge among modern day Hawaiians. There are also only a couple of large scale farmers at the moment.

In the South Pacific people either keep their gardens secret or grow kava right next to their house to prevent theft.

 

[Krunkie McKrunkface]

I can’t grow kava but I’m in the kava recovery business. Most packages direct you to yield 4:1 or even 3:1 and then chuck the makas. I yield 24:1 plus kava flakes and kava powder. I “produce” more kava through recovery than if I grew it and sold it through standard practices.

It’s just like your finances, you can make more money or spend less. With a nation’s energy you can produce more, look for more coal and oil, or look at other energy sources, or develop techniques and technologies of conservation.

We only consume a fraction of the kava we consume, with gross inefficiency. We have barely even considered scratching the surface with this, let alone actually scratched a surface.

Furthermore, and even more interesting to me, 4th and 5th and 6th wash, and kava flakes and powder, have a different character than the crude and brutal grogs we are used to. Somewhat more refined, complex, warmer. Again, we are at very early stages with this.

If I ran a nak i’d Really be all over this.

Finally, without wanting to sound too much of a chump, there are millions of poor people in this worl with either no access to health care or only access to unaffordable health care of absolutely terrible quality, who suffer horribly from anxiety, insomnia, inflammatory conditions, addiction, depression, who could be helped immeasurably by the existence of techniques that make kava a feasible and affordable option for healing and health maintenance. I think we maybe need to start thinking about humanity here. It’s great to get Krunk and all, but there’s also massive human suffering we could be alleviating at the same time.