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GDP (2008):                                                           $574 million.
Per capita income (2008):                                        $2,257.
Real growth rate (2008):                                           6.6%.
Avg. inflation rate (2009):                                          3.7%.
Natural resources:                                                   Forests, agricultural land, marine resources.
Agriculture: Products--                                             copra, cocoa, coffee, cattle, timber.
Industry: Types--                                                     copra production, beef processing, sawmilling, tourism, financial services.
Trade (2007): Exports--                                            $29.9 million: coconut oil, copra, kava, beef. Major markets--
Average exchange rate (2008):                                 U.S. $1 = 112.62 vatu.


Vanuatu's economy is primarily agricultural; 80% of the population is engaged in agricultural activities that range from subsistence farming to smallholder farming of coconuts and other cash crops. Copra is by far the most important cash crop (making up more than 35% of the country's exports), followed by timber, beef, and cocoa. Kava root extract exports also have become important and, despite a ban by EU due to be lifted soon due to legal action, should soon be growing again. In addition, the government has maintained Vanuatu's preindependence status as a tax haven and international off-shore financial center. About 2,000 registered institutions offer a wide range of offshore banking, investment, legal, accounting, and insurance and trust-company services. Vanuatu also maintains an international shipping register in New York City.
Coconut oil, copra, kava and beef account for more than 75% of Vanuatu's total agricultural exports, and agriculture accounts for approximately 20% of GDP. Tourism is a key driver of the economy and contributed 20% of GDP in 2006 and 2007.
The area devoted to the main agricultural crops in Vanuatu was:
Coconuts 76,000     
Roots and Tubers,5,100
Cocoa beans 2,500
Groundnuts, with shell 2,400
Maize 1,450

Bananas 1,300

Vegetables 750

Coconuts dominate the area devoted to crops in Vanuatu. Over 76,000 ha of coconuts are grown. In theory that suggests a production of up to 760 million coconuts but actual production is quoted as being only just over 300 million which implies either an ageing population of trees or an underestimate of actual production. We suspect both are true and that production is over 300 million but below 700 million with many unharvested nuts. We believe that 500 million coconuts per annum is nearer actual production but only 300 million are harvested. That is really not surprising in the Pacific since production is scattered over many islands, some of which are remote and do not enjoy regular shipping.
 2008 Export Values

They are also by far the most valuable agricultural export from Vanuatu. Yet the value derived is only low value earnings paid for crude commodities-copra and coconut oil and meal. Even fruits are added to vegetables in the chart above they do not come near the export earnings from coconuts.

Coconuts also absolutely dominate the tonnage of crops produced. 308 million coconuts were reported as being harvested and, if these, copra and oil from around 75 million coconuts was exported from Vanuatu in 2007. Fresh consumption is likely to account for a majority of the remainder although they are also being used to feed animals.
In tonnage, Vanuatu exports are dominated by copra. Over 10,000 tons is exported. There is also over 2,000 tons of coconut oil being sent out in bulk. Cocoa beans and meat are the next two important cargoes. Over one-third the total value of exports is derived from coconuts.

70 million coconuts are used to produce copra, some 10,500 tons, equivalent to 55 million coconuts are then exported with 2,800 tons, equivalent to around 25 million nuts exported as coconut oil. The availability of bulk transport is facilitating the export of oil. Taken together the exports revenues from copra and coconut oil account for half the annual export earnings. Vanuatu is thus dependent on coconuts for agricultural exports.
The implication is quite obvious. any increase in value added for coconuts would have a major impact on agricultural export revenues. there are earnings from some modest soap production. and the EC has set up a pilot oil mill operation to supply fuel for a generating plant in Santos. 9 other such pilot plants are planned.
Santo is Vanuatu's largest island, 4010 km2 in size and is fascinating in its diversity. Santo has Vanuatu's highest mountains; Mt Tabwemasana, over 1700 m., rises out of dense vegetation covering an entire chain which runs along the full length of the island on the western side. The southern and eastern parts of the island are quite flat, covered with plantations and fine grounds for cattle grazing.

The local people make their living by supporting the tourist trade, by cash-crop farming, mostly copra but some cacao and kava as well as peanuts, or by subsistence farming and fishing.

Santo probably accounts for over half the value of total agricultural exports of the country. Together with the surrounding small islands, over 60 million coconuts are grown every year. The beef from Santo is very famous and there are large Japanese cattle farms as well as a number of smaller ones operated by Australians.
The biofuel energy plant at Port Orly based on coconut oil and financed by EU (Vinay inspecting above), in the north-east of the island, has been producing 45 kva energy for 3 years without brealdowns. It has a copra crusher, filter and feeds oil into a generator. Electricity is piped underground to the largest village in Santo and citizens have prepaid cards they can slot into metres at home to buy the electricity that they need. The electricity is priced at 15 US cents per kw hour instead of the 40 cents being charged by the utility and common in thePacific region.
Orly coco diesel plant being visited by Vinay Chand
The coconut oil biofuel plant at Port Orly has tremendous implications for small isolated island states in the tropics. They can all use their coconuts to provide fuel for generating electricity for their needs. Advances on the prototype would allow sale of the waste heat produced in the process. The choice is between biogas or biomass if shells are used but oil where there is copra.
The use of 70 million coconuts for copra and oil already opens up the inviting possibility of an activated carbon plant. The setting up of such a plant would create a market for coconut shell charcoal.
Madame Claire Dornic was the largest copra trader and briefly exporter of coconut oil in Santo, she is convinced that Vanuatu needs to move to higher value coconut products and has spearheaded the lobby to obtain finance for the entire region. Claire is considering the production of coconut milk on Santo as well as making use of husks and shells. There have long been plans for setting up an activated carbon plant on Santo and it now looks likely that there will be one.
Project formulation was undertaken on an integrated coconut facility to be located on the Eastern side with some parts in Luganville, the capital of the island. The system will have a kernel processing plant that will produce an ice cream mix as well as mature coconut water. It will also burn shells for energy and then use the charcoal for processing into activated carbon. A coir plant would extract 2,700 tons of coir fibre and would include a rubberised coir plant that would export finished mattresses.
The project is now moribund due in part to donor reluctance to actually work with the private sector on the ground but chiefly due to the point blank refusal of the current Government to do anything objective, anything outside their personal influence, thus substantiating widespread distrust of governance in the country. 
Vinay Chand, seated next to the Honourable David Tosul, now former Minister of Agriculture with Derek French now Deputy Prime Minister's first PA on Vinay's left and Madam Claire Dornic of CL on the Minister's other side with Ambassador Roy Mickey Joy seated on the extreme right. As always Howard Aru, the respected Director General stands behind the Minister in the photograph. All the officials in the picture above have lost their positions. 5 prime ministers in the past endorsed the project, the current one says he supports it but refuses to act. Fortunately, the Foreign Minister, a chief opponent of action has now been replaced and this may bode well for the project.
The ideal model for the coconut project is now considered to be along BOT (Build, operate and transfer) with the private sector taking the lead in setting up the project and transferring ownership over a 3-5 year time span to the farmers. This should allow enough time to establish an effectice association with good governance safeguards.
The coconut project as visualised would be able to five every member of a farmer household a US$ 100 per annum. For a family of 5 this would mean getting $500 every year worth of cash or support.
At long last 3.5 million Euros has been allocated by EU to the Pacific project in Vanuatu with the representatives of the Region agreeing to share the 7 million originally set aside with the Caribbean. SPC was appointed implementing agency with support from CFC for the 3.5 million which was from unspent EDF X funds. The remainder of the finance will come from EDF XI funds. The Pacific Region absolutely refused to work with ITC which will now manage the Caribbean part with CARDI.
Ambassador Roy Mickey Joy  Vanuatu       Ambassador Fatumanava Luteru Samoa    Claire Dornic CL Agencies
        Tuvalu                                Lionel Warimavute Vanuatu     Vinay Chand           Narendra Singh Fiji
The photograph is from the ACP/EU meeting for the Ambassadors from the Pacific and the Caribbean to finalise implementation arrangements. SPC now has to complete its paperwork with ACP and discuss implementation with Vanuatu. It is quite a breakthrough for SPC to be allowed to play the lead on a project, albeit so far only the 3.5 million Euros part and they have implemented projects of that scale before, instead of merely acting as a Regional partner for a UN Organisation.
The meeting as above was important as an event because there have been so many hold ups and obstacles that have delayed the project that it is good to make a beginning.

The EU appears to have agreed that the coconut project can begin with a tiny allocation of 1.75 million Euros. There are still those who oppose the project as being too big, too sophisticated and too bold. But the regional EU offices don't appear to be singing from the same page. A report by Garth Atkinson, not a coconut expert by any description,  in October 2015 for the EU has stated that there is no one silver bullet to develop the coconut sector in Vanuatu, he favours a lot of mini silver bullets in the way of cute little projects (including extraction of coconut oil by isolated communities when the major mill in the country is in trouble as are all oil mills in the Region) mostly run by well meaning expats only he would like the farmers to join in. To us, that is a very colonial attitude, also rather backward, since his recommendations would lead to a negative impact on the country's economy.

The approach is essentially amateurish. It was very common two decades ago as an approach with small is beautiful and resulted in a lot of mini coconut ventures with none of them having critical mass, particularly today when the big players such as Franklin Baker in the Philippines are going into commercial scale production of virgin coconut oil. The Region is actually host to a number of such mini ventures.

It would take 20 mini ventures, for which there are no funds available and no interested investors, to equal the plant proposed for Santo in the EU coconut feasibility study in 2011.
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