The current pricing set by farmers in Vanuatu over kava is taking its toll in the USA as reports indicate the Kava Bar Market in America could collapse due to the rising prices being set in Vanuatu.
There is widespread fear that the current market rate of VT3,000 per kilo is being inflated by competitors to scare potential buyers from going into certain markets.
There is confirmation that a certain buyer has promised farmers on Ambae he will buy kava at VT6,000 per kilo. The current promised price has prompted farmers to head into the bushes and plant kava.
This price alone will upset the current market price and can potentially lead to inflation in other sectors such as transport and retail.
For the USA market, given the logistics cost, the rising Vanuatu kava prices are creating a very expensive exercise for kava bar owners in America.
The American kava market only imports from exporters certified by the Food and Drug Administration. There are strict regulations in place to import kava into the U.S now and importers from America cannot buy directly from Vanuatu Farmers anymore.
Pentecost has witnessed a price surge from VT3,000 to VT6,000 which has now collapsed and the kava price has now dropped down to Vt1,800 on South Pentecost.
Sudden price surge in the kava market cannot be maintained as is the experience in Vanuatu due to other rising cost and the kava supply in Vanuatu is relatively small when looking at the demand.
Farmer’s though feel this is a good thing and say it is the best way forward but if the prices are maintained at the proposed VT6,000 for Ambae, the contributing factors will be more negative than positive both for the farmer given the Ambae supply is still small.
Normalising kava prices have been an agenda for quite some time and the unfeasible pricing will prompt buyers who do have options to buy kava elsewhere.