September 2023 Report

September has been a dry month, overall, with just a little rain here and there.  Nevertheless, the strong vines are sprouting buds right left and centre, but the weaker ones are wilting for want of rain.  We are not really bothered, because we know that the rain will be here soon and they will be fine.  Agung Jaya our manager in Tegalsaat has proposed that we keep little canals going around the vanilla in certain gardens, particularly Garden 21, which I have agreed so long as we don’t start it until next February.  We know December and January will be wet.

Overall state of play:  Garden 5 flowering strongly.  Gardens 2, 3 and 5 are doing ok.  Garden 6 is coming along, 1, 4 and 6 are recovering from flooding.  Garden 15 is doing well for less than 3 years old.  10, 11, 12 and 17 are giving their first flowers.   Next year is looking good for 14, 16, 18, 19 and 23.  21, 22, 24 are at the top and beginning to circle for the first time, 25 is starting.  We are negotiating for 26 which is flat land below 18 and would give rise to a lovely stretch near 10.

Still on course for 4 tons of green beans next year.

We are finding it not necessary to prune the vanilla.  Indeed, we find the beans bigger and better quality if left unpruned.  I suspect that the pruning fashion is to get the vanilla to flower more easily when farmers become impatient, or possibly just necessary in microclimates that are slightly inclement.  Indeed, we can see by the variation in the progress of our own gardens that micro climate is very pertinent and is affecting our future choice of gardens.

Following the Gianluca method precisely is not effective.   Oh, it produces a number of superb beans, but the failure rate is high where the beans are dried too much before successfully converting the sugars to vanillin.  This is again down to our climate.  So, we are fiddling with the method and making progress.  Difficult, as there is not much green vanilla around for experimentation.  Enough to confirm the method for next year.  What is blindingly obvious is that we need a climate-controlled room in the factory.

Enter Global Asia, a Singaporean based investment company with an arm in Bali.  We have agreed verbally to receive a million dollars’ worth of investment from them that can only be spent on capital expenditure, buildings and transportation.  This deal is not set in stone, we expect to have confirmation in the coming fortnight that the money is indeed available, but it has resulted in a new business plan.  Paul is interviewing architects to design the factory, where he will at long last have his state-of-the-art laboratory and can tell me the vanillin content of our beans.

At the same time, we have a great deal of interest from companies seeking to move into Indonesia.  It seems that the threat of economic instability in Europe, America and Australia is causing a number of companies to liquidate assets and move into SE Asia.  Indonesia is a prime destination, and your company is well placed to assist these people, especially as we are able to move rapidly from vanilla into other spices.

Vanilla extract is sold in folds, where 100g of extraction grade vanilla is marinated in 1l of alcohol.  This gives single fold, while double fold is 200g.  The problem for the manufacturers is that the standard vanilla, Madagascan gourmet is seeing reduced vanillin content – down to 1.8% I am informed.  Which means that single fold vanilla extract is a lower quality.  This is why we seek to create an extract that is based on vanillin content, not fold.

This reduction in quality, possibly due to the Madagascan government insisting on set days by which the harvest must be complete and other regulations, is having a knock-on effect.  I hasten to add that there are of course wonderful Madagascan producers who have managed to maintain their quality in adversity.  A further issue is that American producers of extract, the biggest market share by far, use Ethylene oxide, which the EU banned in August.  While these enormous companies will of course reconfigure their export recipes, we still expect them to lose export share, which will advantage us, and reduce the amount of vanilla they sell, which will lower the demand for vanilla.

We expect that the demand for Italian style high vanillin content, 40% moisture vanilla will remain high.  We expect to open new markets for vanilla extract, however we will not do any marketing to America and only through personal contacts and shareholders to Europe.  This is because from our remote view of the world, we think these areas are unstable.  Tucker Carlsson, who tends to be on the money, thinks the chances are high that Trump will be assassinated and gave a 60% chance of US attacking Russia next year.  He probably wildly exaggerates, but even a small chance of these events means that we cannot entrust shareholder funds in these areas.  Our focus is on the vast internal Indonesian market, where prices are higher, and Asia, primarily Singapore and Japan.  We have already opened a client importer in Brazil.

To that end, we have agreed in principle to a distribution contract with Primo Chocolab to include our vanilla as one of their products.  Negotiations ongoing.

In a similar vein of interest to shareholders, we are thinking of how you can exit from the company, very difficult at present.  We are talking to British banks and an Australian expert with a view to floatation in due course, primarily so shareholders can be assured of an exit.  One of our shareholders, an Indonesian investor, is explaining to us a method of using a minor Indonesian exchange for share sales, outside of the stock market.  This may be perfect for the purpose – after all, at this stage we won’t need to raise money.

We have orders for 4,000 lobsters per month but are still not able to supply, due to mortality rates.  Enquiries to Australia have produced the answer that all the Australian crayfish farmers have struggled with identical problems and the answer is sunlight.  This seems weird for a nocturnal animal, but indeed we see poor results from shaded ponds and increased depth has not seen a reduction in mortality rates – indeed an increase in escape attempts.  We are experimenting to find the ideal depth – 10, 20 and 30 cm.  We are still trying to raise spirulina organically, one minor attempt sabotaged by my daughter in her attempts to help.  I am running the medium through a pipe in the sunlight, to raise the temperature and give the light it needs, which fascinates her.  Once the principle is established, which I do on a very low budget of less than $50, we can expand to a more extensive network of sun filled large pipe.

We are planning to put in a small restaurant on the ponds, serving lobster, giant freshwater prawns, gourami fish and snails plus local vegetables including wild collected fern tips.  This will allow us to completely cover our costs and fund expansion, while production is too small to sell to local restaurants who need fixed quantities.  The capital investment covers this.

Incidentally, Asia Global are building a drink production facility and a sales team.  We have great synergy with this, they are already ordering our vanilla, want us to supply them with extract from other herbs and spices and we can share their sales team.  The factory is attracting interest from other companies with synergy and there may be further developments.

September investment was Rp 150,000,000, investment in 2023 is Rp 1,424,873,067 and total investment so far is Rp 9,417,680,887.

We are really beginning to take off now, and if we close just 20% of current interest, we will be able to close further investment in the near future.

Rex Sumner


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