Another excellent month.

Vanilla

The vanilla is growing very fast at present.  A new leaf appearing in 2 days rather than a week when they are young.  We are light pruning the shade trees to get much needed light down to the very roots, which is exposing the fact that much of the vanilla is too light in colour.  We think this is a hangover from root rotting in the rainy season.

The new trial of extra height is netting excellent results.  As it goes past 2 meter, the vanilla starts to get really thick and strong, ideal for production.  Some we have up to 4 meter with amazing results, and it seems that more branches appear from nowhere to charge up the heights.

Essentially, we find that about 60% of the vanilla benefits superbly and we don’t know why it isn’t all of them.  Some continue as previous, but all with a good dark green.  On one vine we can find a strong branch and a weak branch.  I suspect it is still down to root damage from the La Nina rains, but the extra height is certainly helping the recovery.

Yield.  We have been working on a yield of 5kg of green vanilla per vine.  This is based on producing cut branches for flowering with about 8 leaves.  Over three years, each leaf will produce a bunch of ten beans, average weight 15g.  Each branch to produce 2 bunches, 300g, per year.  So about 3 branches for a kilo, 15 branches for our target of 5kg.  With the extra height, we are getting 20 leaves per branch.  6 bunches or 900g per branch.  Meaning we only need 5 branches to get 5kg.  This is why we think we will get a lot more than 5kg per vine.  However, we still need to confirm the extra nutritional requirement.

We have conducted a survey of the vanilla, which is the first time for the garden workers so it isn’t as accurate as it will be.

Key:

Zigzag is the first shoot of the vine, indicating about 6 months old.  Sometimes the vanilla takes a long time before it starts, sometimes it dies and is replaced.

Putaran is circling, which we do in the second and third years, so the vine is long but manageable, in usual practice about 1.5m in diameter.  We are increasing this.

Tebal is thickness, when it is thick enough to flower.  The workers didn’t quite get this, so haven’t recorded the number in many gardens.

PC is Potong Cabang, or cut branch.  In other words, a flowering branch.  We used to expect 3 bunches of flowers and beans per branch.  Our new method is bringing 6 and more.  Each bunch provides 10 beans weighing 15g each, so half a kilo of green beans.

The Yield is our estimate of how much dried vanilla we shall get.  This will become more accurate as the year progresses – in July we shall prune the vanilla, when we will turn all the Tebal and much of the Putaran into PC, which will increase the estimated return.

At this stage we are expecting to get $145,000 next year, which will cover the year’s costs.  We also expect this amount to increase after the next survey in July, and because with the small amounts we shall be selling retail vanilla in wooden boxes.  Higher value.  This could double the income, but we don’t yet know what it will cost to achieve that.  The planning for this will be done nearer the time.

How accurate is this?  In truth, we don’t know.  We think it is a good guide, but time will tell.

In the meantime, we are seeing a fall in the price of vanilla, mainly caused by a concerted effort by American buyers to get the price down to $100/kg.  The French haven’t entered the market yet, and they will push the price of quality back up.  The retail price in Indonesia is Rp2.5 million, in Singapore $350.  So, I double checked our cost price.  I was working under the impression that it is $20 a kg.  It isn’t.  That’s if our production is 10 tons.  We have the capacity to produce 40 tons per year, and when we do our break-even price is $5 a kg.  Thus, we aren’t too bothered about the price falling to $100!  In fact, we plan in a few years to set that as the standard price, so we can increase the market.

This shows our annual profit at different prices for vanilla.  The different coloured bars show the profit according to how many vines we have in production.  In two years, we shall have 10k in production.  In four years, it will be 40k and perhaps another 5 years after that to 100k.

We are aiming to enter the market and buy some green vanilla this year, so we can start to develop relationships with buyers.  We shall probably buy about a ton of green.

Lobsters

Rather than repeat, please read these reports on the site: https://www.royalspicegardens.com/article/lobsters-the-story-now/?fbclid=IwAR0jD6eeqLH4JC6N2Xjj_CBSbecdh9TiVl8xJWFl88C0rg6FD6mIfrWnJ_o

You can also find them on Facebook and LinkedIn.

We are testing new types of weed to see if the lobsters like them.  I hope to have each pond a mixture of different weeds, and to understand the benefits of each to the lobsters.

In the meantime, we don’t have enough lobsters to fulfill a restaurant contract, but we can start selling lobsters.  This is the current availability and pricing:

50g       Lots      Rp15,000 each

80g      Lots      Rp 25,000 each

100g    100      Rp30,000 each

125g    20        Rp 40,000 each

Mixed   Lots      Rp300,000 per kg

Free delivery to Ubud & Gianyar Daily, to Sanur twice a week.  Rest of Bali, on application.

There is a shareholder discount, of course.

We are considering doing Garden Tours followed by a Lobster Lunch, keep an eye on the website for availability.

Administration and Marketing

Fundraising.  To date, we have raised Rp 7,180,580,183, which is over half a million dollars.  This has given us 25 gardens containing 36,791 vanilla vines, 18,000 m2 factory and laboratory unit and 32 lobster ponds.  We employ around 40 people.

The original target was Rp 45 billion, so we have plenty to go.  However, we are most unlikely to reach this amount before profits overtake the need for fundraising.  Indeed, we will be content with getting to Rp 15 billion.  Interest in the project within Indonesia is growing and more and more enquiries come in, from people who appreciate our Profit – People – Planet philosophy.  We now have some very wealthy Indonesians showing interest, as well as international visitors coming back post covid.

Considering the change in the investment world, with many economies under stress, it makes sense for investors to diversify their portfolio not just to vertical markets but also through different countries and currencies.  Indonesia with its vibrant and growing economy, forecast to be the 5^th biggest in the world by 2030 – just 7 years away – is fast becoming an economy that people should have in their portfolio.

Your company is in pole position to benefit from this.

Best wishes,

Rex Sumner

Chairman at PT Royal Spice Gardens