Tahitian pricing

[Acksim]

Hi guys! I haven't been around here in awhile, was drawn back in while researching my wedding pearls (ordered some Freshadamas, yay!) but I have a question about Tahitians.

I read somewhere in here (maybe in the rope challenge?) that Tahitians are experiencing a temporary price drop. Is this correct? If so, when are prices expected to head back up? I am dying for a strand of super-circled baroques, but am mid-wedding planning and wondering how long I can put my desire off without risking some insane price raise.

This has to do with export taxes, correct?

Also, if the taxes come back, how much will the prices rise? Approximately, obviously.

Sorry if these are stupid questions, I tried to search for an answer but may have been using the wrong search terms

Thanks!

[jshepherd]

Tahitians have had a temporary price drop, but that is more or less over now- at least to some extent. There are a lot of goods still in the pipeline, but when those are gone, the prices will be up substantially.

The tax was reinstated last month. This means there is a $2.5 tax on every gram of Tahitians exported. This does not make a tremendous difference in the price of strands, but can have the effect of nearly doubling the price of circles, increasing the prices of circle strands dramatically.

Prices over the past six months have been far below production cost. We've been able to sell strands for less than they would have cost us just over a year ago. This isn't sustainable. Production as dropped as a result, and more farms than not have closed up shop.

In my honest opinion, I think prices are going to go up by at least a factor of three over the next two years. If that doesn't happen, there won't be any industry left.

[pearlysmile]

Tahitians have had a temporary price drop, but that is more or less over now- at least to some extent. There are a lot of goods still in the pipeline, but when those are gone, the prices will be up substantially.

The tax was reinstated last month. This means there is a $2.5 tax on every gram of Tahitians exported. This does not make a tremendous difference in the price of strands, but can have the effect of nearly doubling the price of circles, increasing the prices of circle strands dramatically.
Prices over the past six months have been far below production cost. We've been able to sell strands for less than they would have cost us just over a year ago. This isn't sustainable. Production as dropped as a result, and more farms than not have closed up shop.

In my honest opinion, I think prices are going to go up by at least a factor of three over the next two years. If that doesn't happen, there won't be any industry left.

This goes for all strands and not just circle, right? I'm a little confused by the first part of the highlighted sentence.

[Mervione]

This is just a guess but maybe it effects circled strands more than strands with smooth pearls? I think the circled pearls might be a bit heavier.

[Miriam Reed]

The circled strands are less expensive than the round AAA quality strands, so the added tax per gram would result in a higher percentage of price increase.

[pearlysmile]

The circled strands are less expensive than the round AAA quality strands, so the added tax per gram would result in a higher percentage of price increase.

Oh, I get it. You're so smart. Approximately, how much more expensive do you think round strands will be?

[jshepherd]

This goes for all strands and not just circle, right? I'm a little confused by the first part of the highlighted sentence.

My mistake. I meant it does not make a tremendous difference in the price of round strands. Take a small circle strand in the 8-11 mm range, however. A small strand may have an average weight of 50+ grams. This means the price of a single strand increases $125. This may not sound like a big deal, but that is $125 of every strand coming out, including those with D-grade pearls. Of course they don't export as strands (for the most part), they export as loose pearls. If you are buying an entire lot of circles, you may have 30-40% you won't use. That increases the average cost of each circle strand dramatically.

Drop strands will increase substantially as well, but as drops are more expensive than circles, the percentage is not as high.

Round strands will increase in cost too, but the difference will not be such a large percentage, except in the low-end commercial stuff.

However, I don't think that primary issue facing Tahitian prices is the tax. Market prices are below production cost. Farmers can really only sell their harvests (if they sell) at a loss right now. This can't continue. Prices have to go up.

Before anyone sends me a message to ask, I did pay Josh a premium for his pearls. I paid him market pricing of approximately two years ago- before the bottom fell out.

[Acksim]

Thank you all so much for chiming in. Very interesting that circles are heavier.

So, what will that mean as far as difference in price between a round strand and a circle/baroque strand? Now there seems to be a fair bit of room between the two, will that gap close?

[pattye]

No, I don't think the circled pearls are heavier.

[Acksim]

Oh, I see. I misread above. My mistake! Thanks

[pattye]

Hi Mervione,

I think the circled pearls might be a bit heavier.

Where did you get this idea? Did I miss something??

[Heidi]

Hi Mervione,

Where did you get this idea? Did I miss something??

It was from the way Jeremy framed the price difference in his earlier post. He later explained that the reason for a "bigger" price change with the circle pearls is due to the larger relative percentage of the tax on a lower-priced item, not from a significant difference in the weight.

[Mervione]

I think that the circled pearls are heavier because the circles add extra mass to the pearl.

It's probably not noticeable at all though.

[pattye]

Mervione,

So--if two round pearls are 10mm in diameter and one has circles, you think the circled one would weigh more?

[Sueki]

Hmmm,
I reckon the round pearl should weigh more as, on a circled pearl, the circles are areas without nacre, whereas on the round pearl, those circles are filled in with nacre...... If you see what I mean.....

A bit like Emmental cheese should weigh less, area for area, than, say, cheddar cheese.....