So much has happened in March that I am going to change the style of this report slightly, for better understanding.  Progress has speeded up, I am glad to say.

Plantations

I had been a little concerned that in the rainy season, there wasn’t much growth.  It was like winter in Europe for an evergreen.  But in this last month the vines have all started to sprout new branches and they are thriving.  My test tree had put out a couple of thin new shoots.  Now, a month later, it has 5 good thick shoots that will flower and fruit in season, in addition to existing shoots.  Growing stronger and bigger each year, which is what we want.

The beans are maturing nicely and we are learning new lessons, as always.  As suspected, the number of flowers to pollinate depends totally on the thickness of the vine.  Thin vines and the pods are small and fall off before they are ripe.  Thick vines produce excellent large pods, if not too many flowers are pollinated.  The number of flowers to pollinate varies totally from vine to vine.  Some can handle 20, others, 3 is enough.  We really need vines with huge vegetative power, which comes from lots of circled vines.  After 3 years, the vines are thinner, which indicates they need some fertiliser, we think.  But if we put fertiliser on the roots, we kill them and lose the plant.

Currently, we are putting compost about half a metre from the roots and are also making compost tea which we spray once a month onto the leaves.  Also, something called JADAM which is a microbial tea that encourages the microbacteria in the soil and brings nutrients up from deep underground.  These are all efforts to increase the vegetative power of the plant, and thus the harvest.  Yet it is still possible that as we get less rain and more sunshine the vanilla will thicken up – after all, it feeds on moisture in the air, humidity, with very little from the soil.  That’s why it needs humidity and wind to give it constant food.  The rain tends to come too fast to fatten the vanilla.  Better is immediately after the rain, so if we get lots of burst of rain, that’s perfect.

I have stated that we will get 5kg of green beans per plant, and been laughed at by experts…  Well, we have some that are producing 10kg…  not many, but they are teaching us how to do it. We get almost half a kilo from a trailing vine – trailing is what persuades the vanilla to flower.  A big plant can have 25 or 30 trailing vines – provided it isn’t too close to another plant.  We have learnt to space the vanilla further away.  Our original hopes of creating walls of vanilla haven’t been successful, as the plants run out of nutrients.

The shade trees are still Gliricidia, which are suffering their own problems as they don’t really like being pollarded as much as we do.  Pollarded is being constantly cut back to 2m.  The best alternative seems to be the Amazonian butter nut, mainly because it is a serious fruiter and we are creating demand for the nuts.  BUT I am concerned that these will deplete the soil and cause reduced cropping of vanilla.  I think my trial of the Pakistani red mulberry will need to be repeated, as the trees we have are producing tiny berries.  Maybe the altitude, maybe the strain.  Our latest exciting test is with a eucalyptus native to Maluku, which produces an oil in massive demand in Indonesia for its healing properties.  This seems to be perfect for vanilla, as it is pollarded to create the leaves and branches from which the oil is harvested.  Minyak kayu manis can be found everywhere in Indonesia.

We still have 25 Gardens, as we have been focused on improving them and recovering from the washed-out year that was 2023.  We are just looking around for more partners to grow some more.  Discussing some as we speak with several landowners, enough to double our growing gardens.

Processing

We’ve made great strides in processing vanilla and are producing some beautiful cured vanilla.  I still have to keep an eye on the workers, or they will dry the vanilla too much.  It is a fine line between getting sufficient vanillin into the bean to stop mould and getting it too dry.

We are well into Phase II now, which is buying in vanilla from other farmers.  Currently, there isn’t any but we are expecting a lot very soon.  The only issue is that we want them to wait until it is properly ripe, which they are not used to.  Currently, we pay for bunches of vanilla, which is not the best, and I want to increase the amount we pay for sorted vanilla, picked individually and graded.  We shall do that as the season progresses and farmers begin to understand what is required.  This is important, as we need to soon start opening buying stations around the country.  As ever, this needs more investment!

We have refined the way we process vanilla, and within 4 weeks we can get very sellable vanilla.  But we prefer to store it and wait.  First, we need plenty of stock before we start marketing.  Second, it improves in storage as more vanillin is developed.  It will stay for years as long as it has access to oxygen.

Packaging is the issue.

Sales

Everybody wants to buy our vanilla, especially after they see it, and frankly we don’t want to sell it yet.  Every week it improves in quality

Once we have the vanillin content up high enough to protect from mould, which we assist with regular sun exposure, we are packing the vanilla in polystyrene boxes and letting it mature.  Polystyrene is a relatively benign hard foam – it can be eaten by morio mealworms for recycling.  And it provides a very stable atmosphere for the vanilla to mature.  And it does.  We are seeking the next level – crystallization.  This is when the vanillin content is above 3% and crystals of vanillin form on the outside of the beans.  It is the holy grail of vanilla production, providing the most expensive, in-demand beans.  A grade that seems to have been forgotten by the trade.  You can find crystallised vanilla still in Madagascar and I saw some from Uganda recently.  Not something I have encountered in Indonesia.

We have made some boxes from white teak, kiln dried.  We have 1kg, half kg and 100g boxes.  The hundred-gram boxes have a glass sliding lid which we intend to engrave.  On order are boxes made from the lighter cempaka wood which will be carved with scenes of Balinese life – and mythology.  We will also test stiff 3-ply cardboard boxes.  All of these to be lined with wax paper in the time-honoured method.

Although this is just experimentation, guests are taking one look at the 100g boxes and buying them.  Paying US$50 a box without a quibble.  That’s US$500 a kilo, at a time when extraction grade is going for US$50 a kilo.

Of course, there is a world of difference between selling retail boxes to guests, and shifting several hundred tons of vanilla for the same price.  This is the very top grade, and we shall be focusing on selling it direct.  We have lower grades which will sell for less.

We intend to sell direct to restaurants and hotels in Bali.  We already have serious interest, but have yet to pursue it.  That is on the agenda for the next few months.  We expect that international hotels will want to buy our vanilla for hotels in the group, and that will expand our reach globally without further investment.  Slowly, but that is fine.  At the same time, reducing courier rates mean we can supply Singapore at a cost of $10 a kilo, which immediately brings Singapore into our target market.  We already have orders to America where it costs $60 to ship.

New Developments

We wish to understand exactly what end users of vanilla want, so it makes so much sense to open a café.  The Royal Spice Café.  Which we shall do this month.  There are several purposes for the café.

First and foremost, as a showroom for the vanilla and Royal Spice Gardens.

Secondly, to experiment with vanilla, determine different ways of using it, and the best uses for the different grades.  It also helps confirm the quality of our vanilla.  Already we are finding that increasing the amount of vanilla in a recipe is transformative in a very good way.

Thirdly, as an easy and simple outlet for the lobster from the farm, while we still build up to commercial export quantities which is taking time.  And let me tell you, we have a signature lobster and vanilla sauce that is unique and out of this world.  Already.

Fourthly, to bring in money to the company and increase the dividends for you shareholders.

Fifthly, to start implementing our CSR ambitions, employ more locals, encourage local art and culture and develop the nature reserve long planned.

We are repurposing the villa at Garden 10 and have so far gutted the kitchen and are making it suitable for commercial premises.  Place is being redecorated and refurbished on a shoestring, most of the work done by the garden workers.  Balinese are versatile.  We have employed an Indonesian lady from Bandung, Samantha Travis, as the manager.  She is an experienced chef and her trial was based on the excellence of her cooking and ability to turn our ideas into a stellar reality.

So far, we have created the following recipes for the menu:

Chicken liver pate; fried spinach leaves filled with chopped crunchy vegetables and a lobster and vanilla sauce, topped with lobster; asparagus in lobster and vanilla sauce; forest salad, using local wild greens, in bacon vinaigrette; bacon sandwich – local pork cured by ourselves, no additives, West java salad with a twist; lobster and asparagus in lobster and vanilla sauce; local tenderloin steak; possibly chilli lobster; sticky chocolate and vanilla pudding.

The basic premise of the menu is to use local ingredients, especially the lobster and vanilla that we grow ourselves.  The furthest we go is for asparagus, but we shall grow our own as well.  However, we go to ventures with similar CSR ideas as ourselves, like Primo Chocolab in Tabanan and Pasti Enak in Klungkung for cheese.

The result of this is spectacular.  Sam and Rex are combining to make sumptuous meals, as you may note on Facebook and all who taste the food are highly complimentary.  This has expanded our thoughts to go from starting with 14 seats to a great deal more and we have expansion capability.  The excellence of the food has opened a window to the possibility of expansion.  Of course, there are steps to fulfil first.  We must confirm we can produce this food on a production level suited to a restaurant while keeping the quality.  We must have enough supplies for our speciality foods, for that is what makes us unique and impossible to copy.

I should mention that the original premise of coffee is not forgotten!  We don’t wish to make a typical café.  We are original.  We will offer 5 single origin Arabica coffees where we know the farmer.  We will offer ways of serving this coffee:  French Press, Dutch Drip and perhaps Turkish as that is radically different.  We will not offer expresso.  Our small, unsellable vanilla we are using as coffee stirrers… a great way to utilise an unsellable by-product.

The café will not be expensive – we have been told our steak plate is better than one costing $100 in Ubud.  The guests were offended that we intend to sell it for $30 including taxes, which they considered far too little.  And, of course, all shareholders get an automatic 20% discount and a free vanilla bean!

New Products

We have been looking at the sap of a local tree, taken from the flower stalks to make arak, the local spirit.  We have worked out how to turn it into syrup and it is very low cost and in huge supply.  It is like honey, or maple syrup. Perhaps we shall call it Baple, Balinese Maple syrup.  For now, Balinese Flower nectar syrup.  We shall use this in the café as the main sweetener for drinks and over the pudding, while we confirm its properties.  Once we are happy with the quality, bearing in mind we are almost perfectionists in this area, we shall obtain a PIRT license required for home produced products and start selling it to cafes where there is huge demand for syrup.  Especially vanilla syrup…

The market for this syrup alone is enormous,  every café in Indonesia purchases syrup at a price from $5 to $15  a bottle.  Our syrup is better and less expensive.  It’s like honey, and we believe even healthier, although I am suspicious of claiming anything sweet can be healthy.

We will not attempt to grow these trees, instead purchase the nectar from the impoverished hill farmers.

Investment

It usually costs us about Rp 160 million per month to operate, but this figure is increasing with the costs of the café, still very low, less than Rp 50 million, and the need to buy in vanilla so we can process it and sell it.  We shall start to see money coming in from the café and vanilla sales, but if we reap a 50 million profit this month, that will be outstanding, so further investment is still required.  However, very shortly we shall not need any more and we can start to build on our progress and you will see the fruits of your investment next year.  Nevertheless, we are still looking for investment to create the laboratory and factory for larger scale production of syrup, extract and essential oils.  Nor have we forgotten Oud oil, and we still have an agreement to utilise 100,000 Agarwood trees in Sulawesi.

February investment banked was Rp 125,000,000, giving us a total to date of Rp 10,703,735,570.   Original target was 45 billion, but we can manage with 20.  And the way things are going, we might only need another 1 billion, although the returns are greater with more.

Your shares have already increased in value, and when we stop selling shares, in the near future, that value will start to snowball.

Rex Sumner