Vila Times

Vt150 million copra subsidy approved by COM

Vt150 million copra subsidy approved by COM
Vt150 million copra subsidy approved by COM
Vila Times’s Mobile Application

The copra producers on the islands have all the reasons to smile again following the move taken by the government to eject some money that will see the new increase on the market price per ton.
This move was recently taken after some negotiations within the government. On Thursday 6th December, the Council of Ministers (COM) approved the establishment of a Copra Subsidy of up to a value of Vt150 million.
The COM also agreed to source funding of this copra subsidy from Infrastructure Development Fund to be reimbursed from the copra subsidy budget once the budget of 2019 has been ratified by Parliament.
Vanuatu being a price taker for copra prices, meaning that Ni-Vanuatu copra exporters and producers depend on the world market price for copra, and cannot influence it. There is not a world market price for copra, so the copra price is determined as the 60% of the daily world price for Crude coconut oil CIF Rotterdam.
Hence, 60% of the daily world price for crude coconut is the price faced by the exporters. Conversely, the price to producers is a function of the exporters’ costs, the world market price for copra, the SESS (the tax to the provincial government, which is 2% of the total price per ton), Vanuatu Commodities Marketing Board’s fee per ton (Vt800) and exporters’ expectations on future world copra prices.
The crude coconut oil world market price, and consequently the copra world market price, has fallen dramatically in the past year. In particular, the copra world market prices decreased from roughly Vt104,000 per ton on 20th November 2017 to roughly Vt53,000 per ton on 19th November 2018. Exporters currently pay copra producers only between Vt15,000-Vt25,000 per ton, which results in small if not inexistent gains for both parties and leads to a slow-down of production or, in some cases, a ceasing of operations.