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Video Pacific Regional Conference on kava

Kapmcrunk

The Kaptain (40g)
KavaForums Founder
For real, if you enjoy kava, its history, and function behind it, I highly suggest joining us. There is some really cool stuff going on in these meetings with some huge names attached to kava.
 

Kojo Douglas

The Kavasseur
Wow, these discussions are super interesting. Thanks for sharing!

My initial takeaway is that there are a lot of perspectives and different understandings of what needs to be improved, regulated, tested, evaluated, etc. Also that there seem to be a lot of different groups with different understandings, and that coming together in this format demonstrates all the fault lines between country level, organizational-level, interests. There seems to be a need for a coordination mechanism to get all of these groups talking on a regular basis and with a defined discourse.

I will be calling in sick today, mixing some Kava, and diving in. :)
 
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Kojo Douglas

The Kavasseur
The price of Kava has gone down 50% in Vanuatu ? :oops:

Why hasn't the price changed for exported Kava? If local prices have plummeted by 50%? This kind of reminds me of some of the questions I used to have about the price of Hawaiian Kava vis-a-vis other Pacific Islands.

Also, interesting to see how our demand for better and more specific Kava in the "West" is creating cleaner and better sorted supply.
 

Kojo Douglas

The Kavasseur
It makes sense that prices should go down if Kava bars were closed for 1+ years. There must be a glut. This makes me wonder whether vendors are taking higher profits? That would be concerning, especially if Kava farmers are absorbing the hit.
 

Alia

'Awa Grower/Collector
Wow, these discussions are super interesting. Thanks for sharing!

My initial takeaway is that there are a lot of perspectives and different understandings of what needs to be improved, regulated, tested, evaluated, etc. Also that there seem to be a lot of different groups with different understandings, and that coming together in this format demonstrates all the fault lines between country level, organizational-level, interests. There seems to be a need for a coordination mechanism to get all of these groups talking on a regular basis and with a defined discourse.

I will be calling in sick today, mixing some Kava, and diving in. :)
Yes I sure agree with what you write and mainly communication on a regular basis with a defined discourse.
The conference was long but folks can go through it in sections and they will learn a great deal.
 

Alia

'Awa Grower/Collector
Wow, these discussions are super interesting. Thanks for sharing!

My initial takeaway is that there are a lot of perspectives and different understandings of what needs to be improved, regulated, tested, evaluated, etc. Also that there seem to be a lot of different groups with different understandings, and that coming together in this format demonstrates all the fault lines between country level, organizational-level, interests. There seems to be a need for a coordination mechanism to get all of these groups talking on a regular basis and with a defined discourse.

I will be calling in sick today, mixing some Kava, and diving in. :)
There were several points brought out in the conference that I found surprizing.
One was the presentation from the World Trade Organization guy and the exchange between him and the Tongan representatives.
If I interpreted the exchange correctly the WTO was saying they would have provided a forum* for Pacific kava producers to at least try appealing the issue of the ban in Germany over a decade ago. They could have presented the many studies demonstrating the liver issue was specific to products, not kava as it is traditionally used there.
*if only they had brought it up to the WTO, but they did not. If I heard it correctly this would be a classic example of what you are saying regarding communication. My example is simplistic and let me know if you saw that exchange differently.
 

TheKavaSociety

New Zealand
Kava Vendor
The price of Kava has gone down 50% in Vanuatu ? :oops:

Why hasn't the price changed for exported Kava? If local prices have plummeted by 50%? This kind of reminds me of some of the questions I used to have about the price of Hawaiian Kava vis-a-vis other Pacific Islands.

Also, interesting to see how our demand for better and more specific Kava in the "West" is creating cleaner and better sorted supply.
The price of green kava is only one element making up the final price of the product. Processing costs (including the cost of imported machienry, materials + electricity - almost all power generated on the islands is produced with imported petroleum) have been up, but also (or perhaps above all) the shipping costs and times have just gone up all the way to the moon. It used to cost $5 per kg to airfreight kava to NZ. Today it's closer to $15 or more. I hear things are (not unexpectedly) even more tricky and expensive when it comes to shipping it to America (not to mention elsewhere). To put in perspective, if you buy 1kg of kava for $100 then it's likely that $30 (if not much more) goes directly towards direct and indirect shipping charges shipping (within country of origin, between country of origin and america and between vendor and your home + shipping/oil/energy costs hidden in the cost of materials, labour, taxes etc).

We've managed to keep our prices stable (or even lowered some of our prices slightly), but I think it's fair to say that most vendors face higher, not lower, costs of doing business right now than before Covid
 
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Kojo Douglas

The Kavasseur
So basically, if Kava prices had stayed where they were we’d be paying 50% more per pound? That is, a bag of Kava that used to cost $60 would now be $90 if the local price didn’t decrease by 50%? I want to understand this correctly.
 

Nodsey

Kava Curious
Did anyone happen to catch this part?

09:00 - 10:00 Kava export to regional and international markets III. Australian market (Kava pilot 1 & 2) • Mr Avi Rebera Assistant Secretary Regulatory Services and Drug Control Branch, Department of Health, Government of Australia.

I connected but missed this! I did see one of the participants when I was connected had 'kava forums' appended to their name... :)
 

TheKavaSociety

New Zealand
Kava Vendor
So basically, if Kava prices had stayed where they were we’d be paying 50% more per pound? That is, a bag of Kava that used to cost $60 would now be $90 if the local price didn’t decrease by 50%? I want to understand this correctly.
Hard to tell exactly (it's actually not totally clear prices have decreased that much outside of Port Vila's local market, see on this point below), but I suspect that potentially lower raw material prices may have provided a bit of a cushion. In general, price movements depend on every actor's ability to absord extra costs/lower margins, it also depends on the elasticity of demand etc. If anyone pays $10 USD per kg of green then this works out to be about $50 USD per kg of dry kava powder (just the raw material cost). If the price is $5 USD per kg, then the raw material cost of dry kava powder is $25 USD. The cost of shipping by air has possibly gone up by $15 USD per kg or so. Other costs have also increased. But again, things are always more complex than this. If kava was to be more expensive, the demand for it might drop, people would buy smaller quantities, demand only the best quality (though some might accept rubbish!) etc.

In any case, my understanding is that if kava costs $150 per kg in a physical shop in, say, Chicago, then the price of raw material (that gets paid to the farmer) constitutes at most 30% of the actual retail price. The rest is freight (within island countries, between the islands and the States, within the states), taxes, consumables, payment processor charges, insurance, labour, wastage/risk, profit margins, warehousing, rent, etc etc. I actually suspect this is actually a much higher % than producers of other simple produce get (I mean, if you buy a cup of coffee, how much of the price reflects the actual $ received by the coffee farmer?), but the point is still that a 50% drop in raw material price may at best reduce the retail price by 15%.

Also note that the price decrease in Port Vila is directly related to the decline in the local demand for nakamal kava. Kava isn't like cryptos or precious metals. The market can offer different prices for green in different places. Many of the current suppliers of green kava going to the Port Vila nakamals don't have alternative customers to supply it to as few people process it from green and even fewer people would be keen to cover the extra logistical costs of getting some excess green kava from a small community on an island next to the main island. This is a purely theoretical scenario, but we know that the island of Emao (just immediately north of Efate) grows excellent kava that is sent to Port Vila. If they can't get a good price for it there they can't just call someone in New York to come and pick it up at a slightly higher price. They likely can't even send it to a processor on a different island.
 
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Kojo Douglas

The Kavasseur
Hard to tell exactly (it's actually not totally clear prices have decreased that much outside of Port Vila's local market, see on this point below), but I suspect that potentially lower raw material prices may have provided a bit of a cushion. In general, price movements depend on every actor's ability to absord extra costs/lower margins, it also depends on the elasticity of demand etc. If anyone pays $10 USD per kg of green then this works out to be about $50 USD per kg of dry kava powder (just the raw material cost). If the price is $5 USD per kg, then the raw material cost of dry kava powder is $25 USD. The cost of shipping by air has possibly gone up by $15 USD per kg or so. Other costs have also increased. But again, things are always more complex than this. If kava was to be more expensive, the demand for it might drop, people would buy smaller quantities, demand only the best quality (though some might accept rubbish!) etc.

In any case, my understanding is that if kava costs $150 per kg in a physical shop in, say, Chicago, then the price of raw material (that gets paid to the farmer) constitutes at most 30% of the actual retail price. The rest is freight (within island countries, between the islands and the States, within the states), taxes, consumables, payment processor charges, insurance, labour, wastage/risk, profit margins, warehousing, rent, etc etc. I actually suspect this is actually a much higher % than producers of other simple produce get (I mean, if you buy a cup of coffee, how much of the price reflects the actual $ received by the coffee farmer?), but the point is still that a 50% drop in raw material price may at best reduce the retail price by 15%.

Also note that the price decrease in Port Vila is directly related to the decline in the local demand for nakamal kava. Kava isn't like cryptos or precious metals. The market can offer different prices for green in different places. Many of the current suppliers of green kava going to the Port Vila nakamals don't have alternative customers to supply it to as few people process it from green and even fewer people would be keen to cover the extra logistical costs of getting some excess green kava from a small community on an island next to the main island. This is a purely theoretical scenario, but we know that the island of Emao (just immediately north of Efate) grows excellent kava that is sent to Port Vila. If they can't get a good price for it there they can't just call someone in New York to come and pick it up at a slightly higher price. They likely can't even send it to a processor on a different island.

Thanks for this, it's super helpful. The economic impacts of COVID-19 are also quite complex and variable, so it could be that decreased costs in raw materials (or dried Kava) were absorbed in higher costs elsewhere. One would have to also consider the economic hit across the board with lower demand and lower exports, and the desire to stabilize the price across the value chain. I'm also aware that some Kava vendors in the US sit on a lot of Kava - enough Kava to last for years esp when demand is lower at bars (during the lockdowns, etc.). Since Kava can be held for a long time, it wouldn't make sense to sell at a lower price because these suppliers would potentially just be losing money for no reason.

I know how prices work for produce like maize, sorghum, rice, etc. so my mind kind of immediately goes there, which may not be the best way to think about Kava.
 

Bula Kava House

Portland, OR
Kava Vendor
Kava Bar Owner
The price of Kava has gone down 50% in Vanuatu ? :oops:

Why hasn't the price changed for exported Kava? If local prices have plummeted by 50%? This kind of reminds me of some of the questions I used to have about the price of Hawaiian Kava vis-a-vis other Pacific Islands.

Also, interesting to see how our demand for better and more specific Kava in the "West" is creating cleaner and better sorted supply.
When kava prices exploded about 6 years ago due to shortage from drought, storms, increased demand, etc., I always said they'd never come back down for the international market, no matter how much kava was available. Producers know what they can get and have never seemed too willing to take less, outside of a catastrophe such as a near worldwide ban on kava products. We definitely haven't increased our profits. In fact, my margins have drastically decreased as kava prices have stayed the same or even increased, and freight charges have increased dramatically.
 

Kapmcrunk

The Kaptain (40g)
KavaForums Founder
When kava prices exploded about 6 years ago due to shortage from drought, storms, increased demand, etc., I always said they'd never come back down for the international market, no matter how much kava was available. Producers know what they can get and have never seemed too willing to take less, outside of a catastrophe such as a near worldwide ban on kava products. We definitely haven't increased our profits. In fact, my margins have drastically decreased as kava prices have stayed the same or even increased, and freight charges have increased dramatically.
I'm beginning to hear that wholesale vending of kava is an incomeless job in today's freight climate.
 

Bula Kava House

Portland, OR
Kava Vendor
Kava Bar Owner
I'm beginning to hear that wholesale vending of kava is an incomeless job in today's freight climate.
Importers that do a lot of wholesale are getting containers, which are still cheap. Although getting a container docked and unloaded right now is quite a long term adventure.
 
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