19 Jun 2013

Vanuatu copra companies to fight for money owed by Government

5:31 pm on 19 June 2013

At least two of Vanuatu's copra exporters are rallying against the government, which they say owes them huge sums in subsidies.

The government has traditionally paid subsidies in order to help farmers, but says that will end soon, and the minimum price per tonne of the coconut extract will increase again.

But the companies say the subsidy is vital for their survival and they haven't been paid since last year.

Alex Perrottet reports:

The Vanuatu government's decision to again raise the price of copra is sure to help farmers in a market down-turn.

But the purchasing companies say it's impossible to operate when the set price is going in the opposite direction to the global market.

Sethy Lui from Vanuatu Cocoa and Copra Exporter says the government is already way behind in the subsidies it has committed to pay.

"SETHY LUI: The outstanding which we've got now is 71 million vatu, which already exceeded demand. So that's our main concern. I am worried that the government is not telling us where the other part of money will come from to compensate what we already have outstanding."

The minister, Marcellino Pipite, says Mr Lui is just one buyer and he needs to show more proof of the outstanding debt. He accused Mr Lui of buying copra well below the minimum price and looking after his own interests.

MARCELLINO PIPITE: He is the one who is not complying and he is the one who is writing things in the newspaper. And I am asking him to co-operate, his company to cooperate, because we must see Vanuatu as a whole country.

But Wayne Webb from Coconut Oil Production Santo Limited says he and others are out of pocket and he hasn't been paid since last year. He accused the minister of lies, and says he buyers need to be consulted on the price issue.

WAYNE WEBB: How can we pay 35,000 vatu for a commodity that when we sell it on the world market we get 22,000 for it? This has to be driven by world prices. We can't control world prices any more than politicians can control world prices. For him to say you have to pay at 35,000 is just absurd.

Sethy Lui says the new minimum price per tonne of copra is $US130 above the world market price and is unsustainable for companies without a government subsidy. The Chief Trade Advisor for the Pacific, Dr Edwini Kessie, says susbsidies distort trade and production in the long term, but developing countries don't have much choice but to protect their industries.

SETHY LUI: That is the challenge, because of the excess being dumped in world markets, they tend to push down prices and that is why some governments respond by setting minimum prices.

The minister says if companies don't stick to the price he will have to revoke their licence. But the companies say they will be put out of business before that if they are not paid what the government has already committed. Wayne Webb says he has been operating in Vanuatu for four years, but will have to go elsewhere if the minister doesn't face the fact he currently has a large outstanding debt.