Situation Report June 2024

This has been a very exciting month, with the harvest coming in fast.? Last month we had a little extra investment come in, which has allowed us to buy a ton of green vanilla, now in the curing warehouse.? We have seen the quality increase as well, with the message getting through to farmers who are delighted to understand what is required.

We also have buyers waiting for this vanilla, but we can sell at better prices in smaller quantities.? We’ll probably do both!

I’ve decided to do the report slightly differently today, to further reflect our business.? Let me know what you think.

Phase 1

This is where we grow the crop ourselves, to gain better understanding of the crop and to gain trust with farmers.? We are farmers as well.? Important.

Well, we’ve learnt a great deal, not least that experts, whether online or in the flesh, are not as expert as they would have you believe.? It is plain that growing vanilla is not just complex, but the requirements vary from location to location.? The basics are dry roots, plenty of wind and humidity and height.? Like any orchid, direct application of fertiliser, even compost, is lethal.? Spraying a very dilute fertiliser helps, the question is finding the right fertiliser.

All of this gives us wonderful problems to solve, not least with height.? How do you pollinate vanilla that is flowering 4m up?? I’ve left this to the farmers to solve, and they come up with lots of ingenious ideas, as well as some bloody stupid ones.? We don’t micro-manage, and this has allowed the workers to flower with their own creativity.? It does take a little time, but it is worth the wait.

We have encountered problems, of course, and we have solved these along the way, at a cost of the Production Director and some of the gardens for which he was responsible being delayed.

But right now, the gardens are doing very well.? The year is a bit wetter than usual; after all the rain from the Tonga volcano will take 5 years to come down all around the world.? But the vanilla likes it!

Our harvest hasn’t started properly, we have harvested less than 5% because we are waiting for the vanilla to ripen fully.? This is absolutely crucial for improved quality and why our vanilla is better than most Indonesian vanilla.

At present, we lack the volume or resources to track each garden individually, so we are measuring grades and weight of each from each garden before putting it all together.? This will give us percentage from each garden going in, and thus we know what percentage of the results coming out.? We are not very happy about this, as it doesn’t give us an idea of the source of the very best quality, but it is a step in the right direction.? We cannot expect to be perfect instantly, just head in the right direction.? Our own beans are higher in quality, because they are picked when ripe, but also a higher proportion of split beans.? Just today we decided to increase the picking schedule from weekly to bi-weekly, which should reduce the split bean count.? But it does demonstrate that we are picking at exactly the right time.

The right time is not a proven science.? The problem is that beans in different locations show their ripeness in different ways, from just being pale to completely yellow.? Each garden supervisor has to learn the characteristics of their own garden.

Phase 2

This is where we buy from the farmers.? This has four purposes.? First, it makes us a great deal of money, being very profitable.? Secondly, it keeps these farmers growing vanilla, giving them somewhere to sell their produce.? Thirdly, it helps them to improve their quality, and this is a BIG reason.? They just don’t know what is required.? We do this financially, paying them up to 4 times as much for good quality, and actually rejecting bad vanilla unless it comes with good vanilla.?

The final reason is the most important, it gives us actual facts and figures to persuade them to join us on Phase 3.

We have purchased about 950kg of vanilla so far, and we are seeing improvements in quality as the farmers begin to understand what we want.? We grade the vanilla by length and colour; however, we are beginning to feel that thickness and colour is more important.? We have refined our prices, keeping the high price for quality and lowering it for poor quality.?

Nest year, we plan to open purchase depots in Sulawesi, Flores and Java to increase the amount of vanilla we can obtain.

Phase 3

This is where we persuade the farmers to join with us in a cooperative.? The inducement is money, of course, and we can show them how much money we made in Phase 2 to persuade them to join us.

Here, they give us the vanilla to process and sell.? They get between 50 and 70% of the sale profits, depending on how we sell it.?

Now, one of the reasons farmers harvest early, is they don’t have enough money.? So, this option isn’t appealing to them, despite the increased sums, as they just cannot wait.? The rich ones can, of course, but we want to help the poor.? So, we shall probably have to buy 75% and take 25% for the programme.

Currently, we have one associate farmer signed up, who is busy bringing on board farmers about 2 hours away, on the Batukaru volcano.? We don’t really expect to get into this Phase until next year, which is a pity.

Phase 4

This is where we process the vanilla and develop new products from it.? We currently have a ton of green vanilla in the factory being processed which is an impressive sight and gladdening to shareholders, the first truly visible sign that your investment is working!? It’s been a very long time for some of you, and thank you for your patience.? The quality of the vanilla is excellent, based on the only meaningful measure, the taste in the kitchen.? While some small buyers have refused because they say the aroma is insufficient, as indeed it is compared to vanilla stored for a year, others have returned unrequested to say what a great flavour, better than any other they have tried.? We must work on aroma, but sadly my office is surrounded by drying vanilla so my nose no longer detects it!? As I write this, a zephyr of breeze wafts a lovely smell to me.

We don’t have a laboratory yet, which hinders us, but the equipment is expensive.? In the meantime, we get a blessing from the Café, which is the chef’s ability to taste flavour and acts as a vanillin tester.? We are currently working on a showcase for guests to sample different strengths.?

However, we are able to produce many new products:

Vanilla caviar.? We take this from the shorter beans, and it is all a chef needs providing they want seeds in the dish.? The process consists of splitting the beans with a knife and scraping out the seeds.? We are at the packaging and branding stage.? Smear a touch of caviar over your steak and the flavour goes through the roof.

Vanilla extract.? This is for the baking trade that don’t want the seeds but want the flavour.? A bit behind the caviar, because it takes longer.? The vanilla beansare immersed in a mixture of alcohol and water to extract the different flavours.? Many are soluble in water but not alcohol, others the reverse.? Later, we plan for a vacuum CO2 extractor to make halal extract.

All the dishes in the Café are with vanilla, and it is proving itself a great taste enhancer.? We can sell more vanilla from the Café, and persuade more outlets to use more vanilla.? Some of these dishes are actual products we can sell:

Pate, with vanilla.? Delicious.? We are creating packaging for this at present.

Vanilla and garlic butter.? Just imagine.

Flower nectar syrup with vanilla.? A premium product.? We are slowly tracking down reliable sources of the nectar, which tends to be adulterated, and working on packaging as it is a favourite in the café and virtually every guest wants some.

Butternut jam.? The butternut is a support tree for the vanilla, and the jam is wonderful.? The very nuts are in demand by other restauranteurs, but our present output is insufficient for our own requirements.? We use the rind for the jam and the kernels for other dishes.? Sadly, it doesn’t have a long shelf time, because we add absolutely nothing.

Chocolates.? We can make a variety, but the profit is small so this is not a priority.

Cocktails.? Trust me, vanilla enhances all of them!? We are working on different versions incorporating vanilla.? These won’t be a product, of course, just available in the café.

Phase 5

Here, we focus on sales and marketing, and we are just beginning.? The plan is to use the Café for the main part, as people can conduct the taste test after which they are keen to buy the better and more expensive grades.?? We have a difference of opinion on the board, split between those who wish to sell in large quantities to big buyers for a fast return and none of the expenses of retail, and those with retail experience who see the much greater profits from retail.? And indeed, from wholesale.? Of course, we shall do both and the correct route will make itself evident in due course.? I suspect we shall always do both.? One of our target markets in July is the hotels, for if they like our vanilla, they should purchase it for the rest of the chain.

A final phase will be when we are ready to duplicate the process with other good crops rather than vanilla, and of course we have started this already:

Lobsters

We still do the lobsters, but we have run into repeated issues, the biggest one from mortality and losing 10% of the crop every month.? We enquired to Australia, who essentially said, we have the same problem.? Another expert said, sunlight is the answer.? Strange in a nocturnal crustacean, but they do better when they have sunlight.? We are in the process of re-configuring the ponds, with greater range of depths so they can sun themselves if required.? We have made a design alteration to give a greater flow of water, but had to clean out the ponds recently to remove blanket weed, which sadly they don’t eat.? They eat everything else, so we have to grow the weed before putting lobsters in the pool.? Lobsters are about breaking even at present, because they sell really well in the café, with a vanilla sauce.? We are selling them at 75g and smaller, as garnish, because it is hard to keep them alive at the bigger sizes.? We do think that the death rate is caused by the stress of our previous practice of monthly counting for accounting and control purposes.? So, we are binning that.

We are a long way from the dream of supplying Singapore with 100 tons of lobsters a month, but once we work out the final method, we can expand.

Blue Lotus.

Inspired by buyers, we have started planting blue lotus in the lobster ponds.? Of course, the lobsters ate them.? At first.? But we are solving that as well, and creating our favourite, double use of the ponds.? We have orders already for Blue Lotus from three companies, and soon we shall start harvesting tiny amounts.? This is really exciting because we don’t currently have a crop able to make money for the farmers in the lowlands.

Agarwood and Oud Oil

This is very much on the back burner.

The Royal Spice Café

This has proven to be an inspired move.? First, it has given us a display location for the company.? This has already resulted in more than $20,000 of investment and great interest.

It has given us a method for gauging the quality.? This has resulted in us having a better sales pitch for the vanilla, and customers can actually taste the difference.? It has allowed us to refine our grading, based on the strength of the flavour.

It gives us a way of testing new uses for vanilla.? In savoury dishes as well as sweet.? As mosquito repellent.?

It gives us an outlet for vanilla.? We sold Rp 11 million in one week.

It gives us an outlet for the lobsters, and ensures they break even.

The Café has already broken even, and we are rejigging the accounts to get the correct information from it, regarding exactly how much of each product goes into each dish.

Investment

We have been focusing on green vanilla this month, and no new investment came in.? We are running on fumes right now, time to focus on investment again.? Zac has been otherwise occupied in Jakarta, and we are hoping to see him back in Bali next month where he can look after this side.

Financial Outlook

We have enough vanilla in the warehouse already to cover our costs for next year.? If we get sufficient investment in to continue purchasing green vanilla, which looks probably, we will be paying a dividend next year.? The amount of that dividend depends entirely on how much investment we receive before the end of harvest.

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