The hold up in shipping was resolved last Friday and ships headed out earlier this week when the Ministry of Finance released its first funding of the new fiscal year that started October 1 to the Marshall Islands Shipping Corporation so it could buy fuel for overdue field trip service.
At the same time, the Tobolar Copra Processing Authority announced a two-cent bump in price for copra, increasing the price to 17 cents per pound on the outer islands. The copra plant is hoping to stimulate copra production above 2010 levels, which dropped off after several years of strong production above 6,000 tons annually, government officials said.
Coupled with the price increase, Tobolar and Marshall Islands Shipping Corporation have established a new payment system that is allowing copra makers to get paid immediately, eliminating the problem of late payments that plagued the outer islands service in 2009 and 2010.
Instead of releasing parliament-approved funding as usual in early October, the Ministry of Finance demanded that the Shipping Corporation and other agencies sign an agreement to bring their pay scales into line with the government’s or it wouldn’t release money. The Shipping Corporation refused to sign, and acting Attorney General Tubosoye Brown agreed with the Shipping Corporation and other agencies. Brown said the government’s Public Service Commission salary rules do not apply to agencies, which are established by law to be independent of government. “They are independent by statute,” Brown said. “They have their own processes, hiring procedures and pay scales.” He said the Ministry of Finance was in “error” and corrected the problem. But the government’s action delayed shipping for six weeks, including the quarterly shipment of food to one its largest outer islands boarding high school on Jaluit Atoll. This week, three ships began making the rounds of the remote outer islands where about 17,000 Marshall Islanders live.
Shipping Corporation board Chairman Alson Kelen said that together with the Tobolar Copra Processing Authority, an earlier problem of not paying copra makers immediately has been solved. Over the past two years, copra makers received “receipts” but not cash for their copra — the dried coconut that produces coconut oil — and it sometimes took weeks or months before they could collect their payments from Tobolar because of cash shortages.
A challenge faced by Tobolar is the processing plant usually sells coconut oil for export only once a year, and relies on government subsidies to maintain the price paid to producers. Its most recent export sale was in September for more than $2 million, improving the plant’s current cash flow situation.
The old copra buying system has been done away with as Tobolar and Shipping have agreed to a new system that is helping to maintain cash available for ongoing purchases. “When our ships return to Majuro, they submit a copra tonnage report to Tobolar and Tobolar pays us 80 percent of the total,” Kelen said. When Tobolar completes the weigh in of copra from the ship, then the 20 percent balance is paid. “This way we can maintain money in our copra buying account so we can keep paying copra makers,” Kelen said.
The new system “is good for Shipping, Tobolar and the people,” he said, adding that the two-cent increase in price “is a good Christmas present for outer islanders.”
