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“Hunter hunting pearls, preserving paradise” (FT 1/11/2017)

01/11/2017

Hunter hunting pearls, preserving paradise

I know, I know, the more accurate title should be “Hunter growing pearls preserving paradise”.

But authors of articles, just like newspaper editors, are allowed some “poetic license” with the titles to attract readers.

Especially if what Justin Hunter is doing for Fiji’s pearl  industry is far more difficult than “hunting” in the wide Pacific ocean for the  wild oysters or  mollusks, which might occasionally yield the valuable pearls.

In putting his unique Hunter pearls on the world’s markets, Justin is not just earning money, being innovative, and scientific but, as a canny entrepreneur, he is limiting his sales by aiming for the luxury market.

On the way, he is also attempting to preserve Fiji’s pristine marine paradise not only because that helps in the marketing of his pearls, but also for environmental protection and sustainability as desirable objectives in themselves.

Fiji’s marine environment needs all the help it can get.

Can any Fijian villager do it?

Can any Fijian villager with marine rights over some bit of Fiji’s pristine ocean and reefs can plant a bit of sand grit or some organism into a live oyster or mollusk, hang a string of them into the  blue ocean and a few years later harvest some beautiful pearls, sell them for a few hundred or thousand dollars each, and become a millionaire?

Unfortunately, ordinary villagers cannot grow pearls commercially and consistently in terms of quality, in the steady volume that international buyers require- which is what Justin Hunter has achieved over the last two decades or so in creating the Fiji pearl industry.

How Justin got into the pearling industry may be an accident of history such as his family connections and commercial activities in Savusavu and USA, and coming into contact with some early Japanese initiatives.

But it was no accident to have the passion, dedication, perseverance in the face of adversity, the hard slog, and rare marketing skills which prioritized quality and high value over quantity, in contrast to his competitors in Tahiti.

Nevertheless, Justin Hunter’s pearl enterprise is one that other Fijian villagers can piggy back onto for the greater good of Fiji, as explained below.

Fortunate family connections

Justin was not just fortunate in being born into a wide extended family with wealth and entrepreneurship, both in Fiji and USA, but he was astute enough to learn from them, unlike many children of other wealthy entrepreneurs in Fiji.

Justin’s grandfather was a Lepper who owned Wine Estate Plantation in Savusavu, all linked to the wider community of Part-European settlers such as Whippy, Simpson, Hazelman, Smith, and many others.

Justin’s father was Bob Hunter who was an American real estate tycoon, having sold many of the most valuable freehold properties in Fiji such as Laucala, Wakaya, and more. He married Justin’s  mother (Annette) and Justin was born in USA.

But Justin grew up in Savusavu and attended Buca Government School, Khamendra School (which his boys currently attend) and a year at Savusavu secondary.

But when his father died, he and his mother went to live in Seattle (Washington, USA)  with his father’s sister’s incredibly hard-working family who put him through school and university.

Far more important for Justin’s eventual pearl-farming business, Justin’s uncle in Seattle (Taylor) had a company called Taylor Shellfish which produced oysters, clams, mussels, geoducks in the Puget Sound of Washington State, eventually becoming  the largest oyster and clam producing company in the US with farms in Washington State, Oregon, California, Canada, Mexico.  The company had three state of the art “bivalve hatcheries” in Oregon, Washington and Hawaii.

Not surprising, Justin became a “water boy” spending many years during and after university working with his uncle’s company (NELHA Hawaii)

Justin not only  helped in the building of a huge hatchery/nursery complex in Hawaii but worked with the best technical people in the world doing aquaculture research in the industry.

By coincidence, there were two research pearl oyster hatcheries right next door facing a major problem that black lip pearl oysters were not conducive to commercial hatchery domestication.

Back in Fiji

Justin acknowledges that even before Tahiti and his own enterprise, there had been earlier Japanese attempts to start pearl farms in Fiji  under what was known as the Diamond Policy.

In the sixties, Japanese national Tokito  came to Fiji with a Japanese pearl technician Wada and set up their first pearl farms in Namarai, Gau and a few other places.

Unfortunately, Wada was attracted away to Tahiti by the French Government and businessman Rosenthal (with jewelry connections in France) and the initiatives in Gau and other places shut down. But Tokito stayed.

On a trip back to Fiji, Justin found that the Department of Fisheries had a pilot pearl farm in Savusavu which he took over in 1999 and benefited from the assistance of Tokito.

By 2004 Justin had built his first commercial Black Lip Pearl Oyster hatchery in the world (even Tahiti does not have one).  By 2017, they had produced some 12 million baby oysters and will probably have about 20 million set by the end of the year.

Unfortunately it takes five years from coming out of the hatchery to producing a pearl, and even that is not guaranteed, other the result being a “trial and error” method. And lurking in the shadows are lots of stories about problems that Hunter had to overcome before he got to where he is today.

Technical problems and risks

While one might think that the pristine Fiji marine environments ought to be ideal for pearl farming, the reality is that Fiji does not have a sufficient stock of the right kind of oysters needed for pearl farms and paradoxically, apparently the fringing reefs may have too much nutrient for pearl farming.

Fiji oysters are apparently a cousin or sub species to that found in the atolls of French Polynesia (Pinctada margaritifera cumingi) and oysters in in Western Pacific (including Australia) known as Pinctada margaritifera typica .

According to Justin, Fiji oysters are a cross between these two subspecies which may also partly explain why Fiji pearls are uniquely different from both the Tahiti pearls and those of the Western Pacific.

Unfortunately, the oysters that are ideal for pearls do not reproduce as healthily as they do in French Polynesia, hence Justin Hunter’s drive to build hatcheries.

Principally, Hunter’s hatcheries ensure through selective breeding that the shells produce not black pearls but unique earthy colored pearls which created a stir their first auction in 2007 in Yokohama Japan, although they were initially viewed somewhat suspiciously by the market.

The pearl industry also suffers toxic algal blooms and of course, the periodic tropical cyclones like Winston that severely damage infrastructure and production.

Hunter also faces another competitive disadvantage from Tahiti pearls not only in that French Polynesia has much larger natural stocks of oysters, but their enterprises also have French government subsidies  and the support of French scientific institutions.

Shocking given Fiji laws against counterfeiting, there are apparently some retail outlets in Fiji who import pearls and sell them as Fiji Pearls.

Aiming for luxury not volume

Justin Hunter has aimed to make his pearls a luxury product of great quality, hence  he has limited production batches in order to obtain higher prices. This strategy is clearly aimed at the relatively smaller number of wealthy consumers in the world, not mass consumption.

Hunter aims to have his pearls placed alongside expensive Rolex time pieces, not cheap Seiko watches, alongside diamonds not cheap jewelry.

Here, Hunter has learnt a valuable lesson from Tahiti pearls which increased their pearl production to four times what they were producing twenty years ago, and in the process reduced the total value of their sales from $300 million a year to less than $100 million.

Nevertheless, Hunter is also aware that when the world faces a recession, wealthy persons whose incomes are under pressure respond by first cutting back on luxuries which are not necessary to their everyday life.

Ironically, the marketing methods of Fiji’s tourism industry can also work against the pearl industry.  If Fiji tourism goes for volume by discounting air fares and accommodation, this also brings in tourists who are not wealthy enough to want to buy the relatively expensive Hunter pearls.

These are lessons that some highly successful entrepreneurs in Fiji have learnt by focusing on “bread and butter” products which are bought by poor consumers regardless of the state of the economy.

Spreading the benefits

Hunter has the formula that NLTB uses for tourism leases by paying Traditional Fishing Rights Owners (TFRO) roughly 2.5% of farm production as a royalty payment to fishing right owner’s as well as 5% equity in the company with options to buy more.

By involving them in his enterprise, Hunter enables village women and youth put significant funds back into village projects such as community halls, footpaths, flush toilets and electrification for their villages.   Hunter also provides scholarship funds and finances youth foreshore clean up campaigns to assist the communities.

In return, the TFRO’s declare the marine farm area as “tabu” in order to protect them.

Fijians as producers?

A major development problem in Fiji historically has been Fijian people, and especially land and marine owners,  have become too used to hand-outs while someone else does the hard work and takes all the risks.

Justin Hunter is quite prepared to help start up community owned farms as long as they have integrated resource management programs in place to protect the oceans and maintain an acceptable quality of the pearls produced.

Presumably interested villagers would negotiate with Hunter Pearls to buy the cultured oysters (perhaps with the support of Fiji Development Bank) and set up their own  oyster farms in their marine areas.

They would take care of the oysters until maturity, with the pearl harvests sold back to Hunter Pearls who would then market them internationally as part of under the Hunter brand, with strict export quality control.

No doubt there would need to be negotiations about the price of baby oysters and the commission that Hunter Pearls should charge for marketing the pearls.

It should be noted that Fijian pearl farmers would not only be benefiting financially from the “brand” established by Hunter Pearls, but they would be taking all the risks during the pearl growing stage.

A similar but possible worse scheme is already in operation in the chicken industry in Fiji where a giant company supplies baby chicks to small farmers, who raise them by buying chicken feed from that same company which then buys the grown chicken for slaughter and sale throughout Fiji. The small chicken farmers not only take all the risks, but unfortunately, they can also be squeezed by the chicken company which can monopolistically increase the price of baby chicks and chicken feed,  and reduce the price paid for grown chickens. Hopefully this is not a future strategy for Hunter Pearls.

Preserving environments

There are many instances the world over where aquaculture industries have faced local opposition despite the jobs and incomes being generated.

In Tasmania for instance, because of the environmental pollution they cause and the risks posed to other marine species, there is passionate opposition to the new salmon farming industries being established in the once pristine coastal ocean areas.

It is positive therefore that Justin Hunter is committed to the sustainable and environmental methods they use to grow their pearls, which is also extremely important for their “branding” as a luxury product and product differentiation from other pearls..

At a recent UN Oceans Conference in New York, Fiji was able to give a voluntary commitment “aimed at developing a community based pearl farming industry that will enhance the effectiveness of locally managed marine areas…done so through the Fiji Pearl Development Plan.”

The President of the World Jewellery Confederation (Gaetano Cavalieri) noted that the “The Public Private Partnership being proposed in Fiji offers the promise of building an industry, from the grass roots up, founded on a sustainable and valuable product that is supported by responsible and sustainable environmental practices.

Government inputs

Because their pearl farms are not in “foreshore” areas but located in water twenty to thirty meters deep, Hunter is waiting for a proper aquaculture lease which could alleviate some problems.

While Hunter has roughly 360 kilometers of long-lines on his pearl farms, some 60 kilometers have been lost when ships have dragged their anchors through sections of the pearl farms. Without a proper lease Hunter is unable to claim for damages, get insurance or even use his stock and equipment in the water for financing.

Hunter acknowledges that government did come to their assistance after Cyclone Winston.

Diversification

Hunter is well aware that the market for luxury pearls is quite limited given the limits on the number of wealthy individuals in the world who want to buy pearls..

As with many other creative entrepreneurs, Justin Hunter is therefore also looking at diversification into the commercial production of giant clams and sea cucumbers, a much bigger market than pearls, possibly worth a hundred million dollars a year for Fiji.

Given Justin’s track record with pearls, I suspect that Fiji is looking at another marine industry in the near future, if government and local resource owners cooperate for the greater good.

Hunter’s entrepreneurial lessons

Justin’s first and obvious lesson is that Fijians can create an incredibly valuable industry anywhere in Fiji where there are suitable marine environments, far more valuable than the current outputs of fish and shellfish.

His second lesson is that one does not have to be an “initiator” of an industry. Entrepreneurs can also be those who see a greater potential in some industry that others may have started but have not been able to grow, for whatever reason.

Hunter’s enterprise has a third lesson for other potential entrepreneurs in Fiji: that financial success can sometimes be greater if the producer focuses on enhancing and marketing quality rather than maximizing quantity or sheer volume of lower quality products.

Hunter has a fourth lesson that aquaculture entrepreneurs must pay heed to sustainability and preservation of the marine environment.

Fifth, Hunter’s industry illustrates that many broad development objectives, including the preservation of the marine environment and distribution of economic benefits are greatly assisted if local resource owners are themselves integrated fairly into the production process and industry.

All these lessons have great relevance not just for the  other pearl producers, but for many other potential industries and products in Fiji.

 

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