King Copra in the Marshall Islands
Knowing the strict demands of his readers well, the Captain often finds himself leaving the world's most powerful newsroom and traveling far and wide to get them the news that is shaping the world today. He knows no bounds; from overturning trash cans in East Timor to wrestling crocodiles in Vanuatu, nothing escapes the Captain's reach.
In continuing with his pledge, this week he has gone coconuts in the Marshall Islands. Come and watch as he sends them tumbling from the trees.
The continually hot and dusty conditions found on the Marshall Islands' island capital of Majuro can be rough on the interior of any car, explains Joe Heran as his brown 4-door sedan taxi rumbles down the one main road from the airport.
"I fill this up with coconut oil - $2 a gallon," he says, producing a spray bottle of light brown liquid from beneath the driver's seat. "It helps to clean the inside of my car. I just wipe it down." He then pats the dashboard just below the yellow fuzzy dice dangling from his rear view mirror.
Adding a little sparkle to a car's interior is just one of the many uses for products coming from the coconut. As a result, its dried meat, or copra, has become a major source of income for many resource-poor nations in the Pacific over the last couple centuries. However, in the last few decades the copra market has hit upon tough times. But the Tobolar Copra Processing Plant in Majuro is still going strong; hoping to put a little glimmer back on the commodity that was once known as "king copra" in the Pacific.
With the Marshall Islands being a collection of tiny coral atolls, revenue is left to only a few options; a small number of tourists come to dive at Bikini Atoll; fresh fish is exported; international assistance is received from Japan, the United States, and China; and, as far as production, there is copra.
"There is nothing else," says Jerry Kramer, the CEO of Pacific International, Inc (PII), the company that holds the contract with the Government of the Marshall Islands to manage the Tobolar Copra Processing Plant in Majuro.
The plant is a quasi-government operation with PII handling the purchasing of the copra, the hiring and firing of the employees, the product sales, and anything else involved in running the business.
The actual processing of copra into its main marketable products - coconut oil and "copra cake" - is really quite simple. Copra arrives by ship from the plantations in the outer islands and is stored in the plant's large warehouse. At this point, the copra is white, but its outer skin is brown due to contact with the shell and from the fire used in the drying process by the pickers.
First, the copra is ground and cooked at the plant. It is then fed into a large expeller (at Tobolar this is a recently refurbished meat scrap machine). Here it is placed under enough pressure in the machine's central barrel that coconut oil "squirts out." The oil is then filtered before being stored in one of two 16,000-ton capacity tanks. What remains is copra cake, a perfect high protein animal feed for farmers in Australia and the United States. Kramer says that the dairy cattle farmers like it because the cows like it, and, because of the residual oil, it increases the butterfat content. As a result, the cow's milk becomes more valuable.
Coconut oil, which is nearly three times as valuable per pound as the cake, goes out on parcel oil tankers to primarily the United States where it is used in the processing of food, alcohols, and cosmetics.
The Tabolar plant opened for business in 1979. It processes 5,000 tons of copra on average each year. But as the Japanese showed during their occupation before WWII, this total is a far cry from what those same tree plantations are capable of.
"From these same islands before the war, the Japanese processed 30,000 to 33,000 tons of copra per year," says Kramer. "It was a part of the war movement and there was a lot of forced labor to do it, a lot of whipping."
So why has there been such a falloff in production today? The answer lies in basic economics: supply and demand.
The workers in the outer islands usually won't make much more copra than they can store for the next arriving ship. Thus, if there is a shipping problem (a common occurrence), nobody works. Also people tend to work heavily only when they need money; before Christmas and summer when the kids are out of school. In other words, the plantation pickers only pick the coconuts when they want to. Additionally, if the world demand for coconut oil is low, then production at Tobolar's ceases and its tanks sit full.
"Over the past year, the price was very low. A low price means there is no demand. As a result, we weren't able to make a sale for close to 2 years. We had a full warehouse of copra, a full tank of oil, and we couldn't run the machinery," Kramer says waving his right hand in the direction of the plant just one block from his office.
A full tank of oil is a two-fold problem. In addition to a stagnating inventory, there is also the issue of the accumulation of free fatty acid. This acid, which increases over time, is one of the impurities that must be refined out of coconut oil before it can be consumed. Therefore, a high acid content means more costly refining for the purchaser and, as a result, a lower sales price for Tobolar. Kramer's motto for selling coconut oil has thus become: "The fresher the better."
After the war, the Marshall Islands outer island producers shipped their copra (without processing) to Japan and its one buyer - Fuji Oil. One buyer meant one price. This lack of competition eventually led to a change in how Marshall Islands' copra was sold internationally.
"We decided that we could add value, produce some jobs, and come up with a product that we could market internationally by going into processing," Kramer remembers of his reasoning for constructing the Tobolar plant in the late '70s.
Then came the battle with the mighty soybean.
"All the crap that the soybean people did was wrong," Kramer says of the soybean industry's big public relations campaign from a few decades ago to knock out copra and the tropical oils because they were competitors.
During this time, high profile studies - many from the U.S. - were done to show that coconut oil raised cholesterol levels. A high cholesterol level is said to put one at a high risk for heart disease. Coconut backers saw this as being premature because they say there is still no definite scientific link between high cholesterol and heart disease. Kramer remains one of the skeptics, maintaining that "coconut oil is perhaps the healthiest oil you can eat."
Copra's world market price slowly fell in the '80s. It was taken off the U.S. commodity exchange and has yet to regain its luster from years past.
There was a time when copra was a highly valued crop. "Copra was king," Kramer says. "Pound-for-pound it was more valuable than rice." Merchants in the South Pacific in the middle of 19th century traded extensively in the crop between ports.
Today, even with the market still not near what it once was, Tobolar charges on. Recent machinery changes have increased oil extraction yields and a small in-house refinery has been added that allows for the production of soap. Perfumes are added and the colors changed so that the soap can be marketed internationally. "Marshallese women use it as a post-natal treatment for wrinkles," Kramer claims.
Kramer's office is a jumble of activity. The phone rings every few minutes. Employees continually rush in asking for his signature or opinion concerning any one of the many businesses that PII operates. However, the heavy-set 40-year resident of the Marshall Islands remains unflustered in his Hawaiian shirt amid stacks of documents swallowing his desk. He has seen nearly everything there is to see in the Marshall Islands. But there are some issues in the copra business that still trouble him, government interference being number one.
The government sets the price that Tobolar must pay to the producers. Many times the price is excessive relative to the copra's worth, essentially becoming a subsidy. Since the capital Majuro is low on living space and resources, it is beneficial for the government to provide an incentive for people in the outer islands to stay there. It is also beneficial for the Senators. With copra being all there is in the Marshall Islands, a little subsidy can mean a lot of votes.
"The only thing they [Senators] can do for their people is copra," Kramer says. "So come election time..."
Come election time, Tobolar gets screwed; sometimes paying twice the price for copra to the producers than what it winds up selling the finished products for on the open international market.
With this sort of subsidy in place it is very difficult to invest in producing better products for the future. But if given the chance, Kramer would put a lot of money back into the industry, mainly on the supply side. In the plantations, there are no beasts of burden or motorized vehicles. If a worker wants to carry copra from one spot to another he loads it on his back in a bag and carries it. Even a simple wagon is very rare.
The old ways are today's ways, he says rather glumly: "You know, husk on a stick, crack it with a machete, dig out the meat with your hand, and put it over a fire." As he speaks, he mimics each activity with his hands.
He pauses and then adds, "There is only so much a man can do."