Stimulating investment in pearl farming in ... - World Fish Center

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Page 24provide them with technical and material support, including marketing. It could be envisagedthat the process of spat collection could progressively be upgraded to small-scale pearlfarming through a process in which communities or individuals form partnerships withcommercial pearl farms. In that case the commercial pearl farm would provide support in theform of materials, technical assistance and, importantly, seeding. In exchange the smallfarmer would be obligated to have his pearls harvested under the supervision of thecommercial operator, and included in that operator’s marketing arrangements. Therelationship would need to be laid down in clear and immaculate detail under a bindingcontract that committed both parties to pre-determined and transparent dealings with eachother. Similar arrangements would apply in the case of partnerships or joint ventures thatmight develop between the commercial pearl operation and domestic investors. Licensing ofsmall farms could be a useful stage for the encouragement of the nucleus-estate model.This is unlikely to be a perfect arrangement in all cases, or universally supported.Smallholders in other countries have entered into arrangements with large-scale operators andsubsequently claimed to have been cheated on marketing deals, especially where complexmulti-company arrangements permit transfer pricing and somewhat subjective attribution ofcosts. Conversely, larger operators often lose patience with small farmers whose demands forfinancial and material support become excessive, who fail to follow proper husbandry or farmmaintenance practices, or who persist in trying to market inferior quality pearls despite themarketing agreements in place. However in the absence of better alternatives the nucleusestatemodel seems to be the option of choice. This approach is being used in another pearlfarming operation in the region but is relatively new and thus has not so far stood the test oftime.In any case this is not likely to be an issue in the near future. It will probably take 5 to 10years at least before the industry develops to a point where small-scale pearl farmingbecomes a management issue. However the problems need to be anticipated so that, in theevent that an industry does develop, it does not then become undermined by the qualityproblems that have arisen elsewhere. Government policy on pearl farming needs to recognisethe need to control indiscriminate pearl marketing, possibly by licensing marketing as aseparate activity to farming itself. Under such an arrangement pearl marketing licences wouldonly be issued to larger-scale operations with sufficient demonstrated production volume toparticipate in industry auctions and major marketing events.7. INVESTOR INCENTIVESThe main natural attractions for pearl farming in Solomon Islands have already beenidentified in section 4.1 as multiple farming sites, high pearl oyster growth rates, and lowlabour costs. Additional incentives that could be offered by Government or the WorldFishCenter are described by Hughes (2008) in an accompanying report and are summarisedbelow.7.1. Duty and tax reliefGiven that pearl farming is an industry that requires long time and investment horizons thereare strong arguments for providing full or partial duty relief on the importation of materialsand supplies needed to establish the pearl farm, and tax relief for an initial period of tenyears. Many other countries offer such concessions for pioneer and rural industries, and forSolomon Island not to do so would reduce the relative attractiveness of the country to foreigninvestors.
Page 257.2. Employment of seeding techniciansAs noted earlier, any pearl farming industry that develops in Solomon Islands will depend onthe services of foreign seeding technicians, the majority of whom are Japanese. In othercountries regulations requiring localisation of this work has led to a variety of problems forthe industry. A clear statement by the Solomon Islands Government that licensed pearlfarming operators will be entitled to receive work permits for foreign seeding technicians willbe an encouragement to investors with long-term investment horizons.7.3. The Worldfish facilityOne drawcard for a pearl farmer considering an investment in Solomon Islands is the existingWorldFish aquaculture facility at Nusa Tupe, in Western Province. Any investor who couldgain access to this facility would immediately short-circuit the process of identifying asuitable culture site and negotiating a lease agreement, and constructing basic operatingfacilities, including a hatchery. The stock of 2-3,000 adult shell currently being held at thefacility could be implanted with nuclei immediately, so that the farm would commencegenerating revenue in two years rather than the usual 4-5. Spat collection and/ or hatcheryproduction arrangements would still need to be developed so that the size of the farm couldbe progressively increased, but the existing stock would accelerate the process of achievingpositive cash flow and profitability.A cooperative venture with the WorldFish Center should thus be a significant attraction toany investor interested in exploring pearl farming in Solomon Islands. This should make itpossible to leverage a cooperative venture which allows WorldFish and the Solomon IslandsGovernment to continue research on aspects of pearl oyster biology and life history (growthrates, spat collection success, etc) or to access research information obtained by thecommercial partner. Ultimately, if initial success was achieved at the WorldFish site, thecompany would need to negotiate its own site and facilities.8. FUTURE MANAGEMENT ARRANGEMENTS FOR PEARL FARMINGThere is currently an absence of appropriate management legislation and procedures relevantto a pearl farming industry, should it develop in Solomon Islands. A relatively simple initialmanagement framework is proposed during what will hopefully comprise the industry’s startupphase. This is in three parts:• a Pearl Farming Policy Statement, for government consideration and approval;• a Pearl Farming Regulation, laying out the rules under which pearl farming must becarried out and including a schedule that stipulates the data to be provided to theMFMR by licence-holders; and• Pearl Farming Licence application and issuance forms, which stipulate specific termsand conditions for two types of licence:o Commercial Pearl Farming Licence, intended for larger-scale operators withsignificant numbers of shell under culture and who need to bring into SolomonIslands expatriate managers and pearl seeding technicians;o Pearl Hatchery Licence, intended to supplement the Commercial PearlFarming Licence in the event that farmer wishes or needs to operate ahatchery. (This also caters for the possibility that a hatchery operation mightdevelop to service multiple pearl farms);These documents, which integrate the principles and recommendations presented in thisreport, have been drafted in late 2008, in consultation with MFMR, the Solomon IslandsAttorney General and their advisors. The focus at this stage is on pearl oyster health
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Stimulating investment in pearlfarm
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Appendix IAppendix IIAppendix IIIAp
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various project elements to describ
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PNGSolomon IsPNGCook IsVanuatuFijiF
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Figure 2. Typical coastal habitat f
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to work alongside WorldFish science
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least two weeks before the main sur
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duration of the dive, maximum botto
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3.7 Natural disastersEnvironmental
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• Legislative review is underway
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− Manning Strait islands− Suava
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incentive treatment that fits the l
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continuing to enter the market. Thi
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Provisions for further aquaculture
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• licences will relate to a parti
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species in Australia are 5 - 10 tim
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6.3 Investor’s recommendations fo
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Report on an EU project grant to th
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Summary• Historically, the blackl
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1. IntroductionBlacklip pearl oyste
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3. Nationwide surveysIn May-June 20
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10 spat collectors were attached at
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On a local scale, it was found that
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3025Normalised catch201510500 2 4 6
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30Spat collector -125201510a. NoroL
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Figure 10. The number of Cymatium,
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Figure 11. Intermediate culture tra
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% survival10090HatcheryWild80706050
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Thus, under the regime developed in
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7.3 Retention and mortality after s
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7.5 Seeding of hatchery-produced sp
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have used average values of $25, $3
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9. ReferencesBraley, R.D. 1997. Fin
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depend mainly on the quality of the
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Report to:World Fish CenterSuitabil
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Suitability of Habitats for Growth
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Report to:World Fish CenterWater Te
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Water Temperature and Cyclone Frequ
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Report to:WorldFish CenterAbundance
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Abundance, Size Structure and Quali
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Page 216 and 217: Abundance, Size Structure and Quali
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Page 224 and 225: 1. Governance and political stabili
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Page 244 and 245: Page 21. EXECUTIVE SUMMARYPearl far
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Page 258 and 259: 5.2. Stocking densityPage 16Mature
Page 260 and 261: Page 18or harmful fouling organisms
Page 262 and 263: Page 20In addition to licensing und
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