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Fiji Kava Limited (FIJ.AX) Modernisation of Vertically Integrated Supply Chain
Brisbane, Australia, July 7, 2022 - (ABN Newswire) - Fiji Kava Limited (ASX:FIJ), an Australian-Fijian medicinal Kava company which produces natural Noble Kava products for the natural medicine market, has entered a number of multi-year operational partnerships designed to streamline, vertically integrate, risk manage and expand the Company's supply chain in Fiji.
- Modernisation of supply chain model which now spans across geographic regions and encompasses both community based and commercial farming operations.
- Execution of the first commercial farming and collection hub on Taveuni Island in Cakaudrove Province with Fiji's most successful agricultural program, the Tutu Rural Training Centre, in partnership with iTaukei Trust Fund Board.
- Signing of two key commercial farm supply agreements with Green North Kava, in Dogotuki and "The Old Plantation" in Fawn Bay, Savusavu.
- Establishment of regional collection hubs for Kadavu and Koro Island.
- Termination of lease agreement by South Pacific Elixirs Pte Ltd for the Cawatara Estate effective from 1 September 2022.
- Formalising a long term partnership with KaiMing Agricultural Processing (KAP) to collaborate on the production of drinking kava products as well as ginger, turmeric, and kava juices, and in developing a framework to consolidate key business activities.
Supply Agreement with Grass Root Farmers and Collection Hub
As part of the Company's strategy to modernise a vertically integrated supply chain, Fiji Kava has entered an agreement for a commercial farming and collection hub with Fiji's most successful agricultural program, the Tutu Rural Training Centre, in partnership with iTaukei Trust Fund Board.
The farming and collection hub will be based on Taveuni Island in Cakaudrove Province.
The Company has identified key locations for establishing regional collection hubs, including Koro Island, Kadavu and Taveuni, with Fiji Kava Founder, Zane Yoshida, having travelled with the TTFB and PHAMAPLUS teams to inaugurate the first of these hubs co-located at the Tutu agricultural college last week.
The establishment of these hubs, will results in streamlined logistics for the transportation and processing of Noble Fijian Kava, thereby improving efficiency and potentially reducing costs through economies of scale.
Established by the Society of Mary on Taveuni in in 1969, the Tutu Rural Training Centre traces its origins to a Sydney monastery that ran a Marist Brothers training course for Pacific islanders and aims to equip young men and women with the skills required to excel as self-employed farmers and craftspeople in Cakaudrove, Fiji, and is seen as the most successful training program in Fiji, if not the Pacific.
iTaukei Trust Fund Board is an institution established under the iTaukei Trust Fund Act, for the purposes of fostering the advancement of the iTaukei and Rotumans by promoting initiatives that will better their standard of living and enhance appropriate cultural traditions and values.
Commercial Farm Supply Agreements
Fiji Kava has signed two key commercial farm supply agreements with Green North Kava, in Dogotuki and "The Old Plantation" in Fawn Bay, Savusavu, that will form the basis for ongoing high-quality supply.
Two of these farms are in Vanu Levu, The Old Plantation and Green North Kava, and in both cases are predominantly growing the varieties required for the Company's medicinal extract production process. Collectively, Fiji Kava now sources from regions which account for more than 70% of kava farming locations in Fiji, with the Company geographically positioned to be robust to a single severe weather event.
Termination of Farm Lease Agreement
Subsequent to Fiji Kava establishing relationships for the supply of Noble Kava with both commercial and grass root farmers, the Company's subsidiary, South Pacific Elixirs Pte Ltd, has terminated the lease for its Kava farm the Cawatara Estate effective from 1 September 2022.
MOU with KaiMing Agricultural Processing
Fiji Kava has signed a Memorandum of Understanding (MOU) with KaiMing Agricultural Processing (KAP), which defines a long-term partnership intention to collaborate on the manufacture and production of drinking kava products as well as ginger, turmeric and kava juices, and in developing a framework to consolidate key business activities over time.
KAP is a family-owned business that has been in operation since 2005, with its factory located on the bank of the Navua River near Fiji's capital city, Suva. KAP employs over 100 people predominantly from the surrounding areas and prides itself on providing a modern employee focussed work environment.
Fiji Kava CEO, Dr Anthony Noble, commented: "Following the recent completion of our upgraded processing facility, we have taken steps to implement more robust commercial supply arrangements, by entering key agreements with both commercials farms and grass root farmers, that will provide a backbone of high-quality Noble Fijian Kava supply. Importantly, by having geographically diverse supply, we are mitigating against the risk of a severe weather events."
"Over the course of the pandemic, we relied heavily on the farmers of Lomaiviti province, our local region, to provide us with ongoing supply. This has been a win/win for both Fiji Kava and these farmers on Ovalau, Moturiki and Koro. Given the strength of these relationships, and the large amount of Noble Kava, we can now reliably source in our home province, the decision to cease operations of our own farm was logical and strategic step. We will now focus on our main value adding activities of manufacturing, sales, and marketing, with the knowledge that the network of farmers we now have spanning the Islands has never been stronger or more committed to work with us."
"Most exciting for us is moving towards the formalisation of our partnership with KaiMing Agricultural Processing. Through their sister company, KaiMing Agro, we have been able to source an ongoing supply of drinking kava inputs. We have also utilised the processing capacity at their Navua site, to increase our drinking kava production volumes, with Australian and US demand growing strongly.
We now plan to commence development and pilot production of a range of kava juices. We are working with KAP to develop this product line, utilising their existing plant and know-how from ginger and turmeric processing. Both root crops organoleptically pair well with kava, have established functional benefits for consumers, and are grown extensively in the Fiji Islands."
"Further expanding and developing the partnership with KAP is a natural fit for us, as it gives Fiji Kava a production footprint on the main island of Fiji, access to best-in-class supply chain and a commercial distribution hub for our local market logistics and fulfilment."
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About Fiji Kava Limited:
Fiji Kava Limited (ASX:FIJ) is a health and wellness company with operations in Australia, Fiji and the USA. The company produces a range of natural products to reduce anxiety, promote relaxation, improve sleep and support sports recovery. These include dietary supplements and complementary medicines in solid dose forms, medicinal tinctures and teas, powdered drinks and functional beverages. Their products are marketed though major retail grocery and pharmacy chains, direct to consumers online and as bulk ingredients though B2B channels. Backed by years of independent research, Fiji Kava medical kava products are produced by high quality GMP and HACCP processes which are fully compliant with TGA and FDA requirements.
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