“The world market price for copra and oil has plummeted compared to last year,” said Pacific International Inc. CEO Jerry Kramer, whose company manages the Tobolar Coconut Processing Authority for the government. “Prices are at one-third (of the 2008 prices).”
Copra — dried coconut meat, which is processed into coconut oil — is the main export product produced by Marshall Islanders, netting the country about $2 million annually.
World market prices skyrocketed in March 2008, hitting $1,400 a ton. But that meteoric rise was followed by a dive to about $500 a ton earlier this year.
Responding to the rocketing world market prices, the Marshall Islands government increased the price paid to copra makers three times in early 2008 to 22 cents per pound — a nearly 50 percent hike over 2007 local buying prices. But Tobolar’s financial situation is rapidly deteriorating because the Marshall Islands slashed its normal $1 million annual price support subsidy based on last year’s high world market prices, Mr Kramer said.
“The price support subsidy was reduced to less than half this year as it appeared the world market price would remain high,” said Kramer. “It didn’t, and the present price support subsidy is not sufficient to maintain the present price to producers.”
Further complicating the picture “is the difficulty of selling our oil because there is a glut of low-priced oil in world wide inventory.”
Mr Kramer said Tobolar management “has asked for the price to be reduced, for approval of an increased line of credit facility with Bank of Guam, and for emergency funds to maintain purchasing power until an oil sale can be made — all this until next budget session of Nitijela (parliament) in August to determine how much subsidy Nitijela will provide for the next financial year.”
In response to the high price, Marshall Islands copra production in 2008 peaked to its third highest total — over 7,000 tons — since statistics began being kept in 1951.
But the volume of copra milled by the Tobolar plant the first quarter of this year dropped by 33 percent from the quarter ending December 2008, though Kramer and others believe that is related to shipping delays from remote outer islands where the bulk of copra is produced. The 1,307 tons milled was the lowest three-month total since July-September 2006, according to Tobolar statistics.
Underlining the stagnant economy in Majuro, the capital, is the high copra production in Majuro, historically an island that has produced little dried copra meat because most people work in government or business jobs.
“Copra production in Majuro seems to be increasing, which is a direct sign of the poor job market in Majuro,” Mr Kramer said.
The statistics bear him out. In all of 2003, Majuro produced only 22.57 tons of copra. In only the first three months of 2009, Majuro copra makers have more than doubled the 2003 figure with 58.1 tons. In fact, Majuro’s pace of copra production in 2009 is out-doing nine outer islands that historically are higher producers.
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