Too Many Tahitians?

Tahitian pearls are French Polynesia’s biggest source of export revenue and its second biggest economic contributor after tourism. Millions of dollars are generated annually from exported Tahitian pearls, which are counted among the world’s unique luxury items.

But there’s some trouble in paradise.

Although prices on top-quality Tahitian pearls remain high, less-than-perfect strands are available from some U.S. wholesalers for as little as $450, and prices on some Tahitian pearl jewelry items are half of what they were a year ago. Andre Asher, vice president, Albert Asher South Sea Pearl Co., New York, was alarmed at the low prices he saw at the Jewelers of America show in July. “What we think we should be making on pearls doesn’t correspond to the prices dealers were selling them for,” he says.

During the 1970s and 1980s, as pearl production increased, so did the overall price per gram. But in 1995, the average price per gram began a decline that continues. (See chart on p. 100.) For example, in 1986, when 104 kilograms were produced, the average price of Tahitians was $76 per gram—the record high. Last year, 11.4 tons sold for $13 per gram, the third-lowest price per gram in the 28-year history of Tahitian pearl sales.

One reason for the drop in the average per-gram price is simply a function of the law of supply and demand: Tahitian farmers are harvesting such a large number of pearls that many are being sold to dealers for low prices. The French Polynesian government, concerned about the reputation of the black beauties, has responded by implementing new measures to protect the lucrative pearl industry.

The root of the problem. Nearly 1,100 Tahitian pearl farms dot French Polynesia, which comprises five island groups in the South Pacific covering a total area of 2,589 square miles (about one third the size of Connecticut). Just 25 farms existed 25 years ago when Tahitian pearls were first marketed. It reportedly has been been easy to acquire the necessary “maritime concession” from the French Polynesian government to become a small-scale pearl farmer, and the government has been eager to see population increases on outlying islands.

But according to Martin Coeroli, general manager of the trade group Perles de Tahiti, the government has not granted new maritime concessions for several years. “Since Aug. 1, 2001, all French Polynesia lagoons are closed to new maritime concessions, so no more pearl farms will be authorized from now on,” Coeroli says. “Furthermore, some pearl farms are closing operations due to the downturn in the American economy.”

But some pearl experts fear a rerun of the Japanese akoya overproduction of the 1960s and even the recent “virus-induced” blight. Research conducted by the Secretariat of the Pacific Community, which provides advice and training to island member countries and territories, indicates that when operations share lagoons, overgrowing could affect housekeeping, allowing a buildup of “dumped” shells on the ocean floor to ruin growing conditions and heighten the oyster mortality rate.

Coeroli believes such concerns are misplaced. “There still is a lot of room for pearl farming in French Polynesia,” he says. “And there are no worries about pollution or any diseases. Tahiti’s pearl oysters are in very good health. The cultivation techniques have so positively improved that the mortality rate has been reduced and the success rate has increased.”

U.S. sales outlook. Sales of all qualities of Tahitians are up in the United States, according to suppliers like Imperial-Deltah, Honora, Frank Mastoloni & Sons, Albert Asher South Sea Pearl Co., and Shogun Trading Co. In some cases, sales of Tahitian jewelry are up as much as 30%. Inexpensive prices on loose pearls have made some unique designs possible, and “staples”—such as 8-mm and 9-mm pearl studs—more affordable.

But opinions are mixed as to whether this could backfire, leaving the pearls with a lower perceived value. Jewelers who didn’t previously stock Tahitians now are doing so because of the price points. Imperial-Deltah increased its stock of Tahitian jewelry (excluding strands) by 30% because they’re selling so many. But there’s a trade-off, says Banice Bazar, CEO of Imperial-Deltah: “There’s no bottom to the prices.”

Asher agrees, adding that permanent harm is being done to black pearls. “When the Chinese overproduce freshwater pearls [at the expense of the akoya], that’s a completely different market,” he notes.

Overproduction also raises problems for Tahitian residents, including debt from pearl investments and increased inequality between successful pearl farmers and other families. “Pearl farming seemed like a good idea to these people at one time,” says Stuart Robertson, director of research for The Gem Guide, Northbrook, Ill.

There are six annual pearl auctions, including three that take place in Tahiti. The other three take place in Hong Kong and are hosted by Tahiti Perles chairman and designer Robert Wan. All six auctions allow connoisseurs to bid on the very best pearls. But the first two lots of the February 2001 Tahiti Pearl Producers auction went unsold, possibly a sign that buyers are concerned about quality, price, or the mix of pearls. “Dealers don’t want to get stuck with a product they can’t sell,” says Robertson. Devin Macnow, executive director of the Cultured Pearl Information Center, New York, offers a different perspective on the leftovers: “Dealers need quality pearls they can make a good profit on.”

Problem solved? In response to worldwide demand for Tahitians, the French Polynesian government created the Tahitian Pearl Ministry to support the quality control efforts of the already-established Tahitian Pearl Department. The government aims to halt sales of inferior quality pearls based on specific criteria, including:

  • Enlarging the “rejects” category so that fewer—but better-quality—pearls reach consumers.

  • Leaving seeded oysters in lagoons for at least 18 months to achieve a minimum nacre thickness (pearls will be checked by an X-ray machine before export).

  • Tightening customs controls at Tahiti-Faa’a International Airport to ensure that no “reject” pearls or undeclared pearls leave the country. Local sale of “rejects” also is forbidden.

  • Indemnifying farmers for reject pearls at 38 U.S. cents per gram or a maximum of 10% of any single export declaration.

  • Increasing export taxes to help defray costs of the new controls.

According to French Polynesian president Gaston Flosse, the “complete elimination of reject pearls” will boost the confidence of overseas clients. (For specifics of the new measures, visit the Web site www.tahiti-blackpearls.com.)

Some pearl dealers are dubious about these efforts. “They’re not going to help,” says Avi Raz, owner of A & Z Pearls in Los Angeles. Raz believes the cost of implementing the measures will prove to be too high.

But Macnow, while conceding that smuggling is a possibility, is confident that increased customs’ efforts will ameliorate the situation.

Wan is “very pleased” with the French Polynesian government’s efforts. He also believes that “the greater the nacre thickness, the better the quality of the pearl.” Wan maintains that 18 months is the minimum amount of time pearls should remain in lagoons. “But 24 months is better,” he told JCK.

Thicker is better. Unlike diamonds, which are so heavily price-shopped that some consider them commodities, there is no industrywide pricing grid for pearls. However, the French Polynesian government’s mandate on nacre thickness is a start … or is it?

In the photo, the Chinese freshwater (top) is pure nacre; the Japanese akoya (middle) is .3 mm of nacre over a mother-of-pearl bead (which is standard and accepted among pearl experts); and the Tahitian pearl (bottom) looks to have a nacre depth of 2 mm.

According to new mandates out of Tahiti, growers may export only pearls with a nacre depth of at least .6 mm. In the summer of 2002, that figure will increase to .8 mm. These figures suggest that current lots of low-quality pearls in the U.S. market might have nacre below these standards. “The nacre thickness we’re talking about now is significantly lower than previously accepted numbers,” says Robertson. Wan adds that nacre on “inferior” pearls could be as thin as .4 mm.

Coeroli says .6 mm is the “common thickness accepted by gemologists throughout the world as top gem quality” and cites the Japanese Pearl Inspection Office’s chart and the United Kingdom Gemmologist Institute as evidence. And Macnow points out that “sunlight can only penetrate to .5 mm of nacre.”

The Gemological Institute of America’s “Pearl Course” textbook has this to say about the nacre quality of Tahitian pearls: “During the cultivation period (about two years), P. margaritifera produces nacre that is typically 2 mm thick all the way around.”

Effects on the U.S. market. In the United States, sales margins have been good. Markup on the pearls is keystone, say U.S. jewelers, and in many cases, triple key.

Industry experts agree that price directly affects buying confidence. To keep value high among jewelers and consumers, “Quality items should command a good price,” says Ray Mastoloni Sr., owner, Frank Mastoloni & Sons Inc., New York, and president of the Cultured Pearl Association of America. A number of suppliers, including Joe Nakamura, president of Shogun Trading Co. Inc. in Harrison, N.Y., say prices on mainly low-quality pearls have come down in the past year, but Nakamura acknowledges that high-quality pearls are a different story. “Prices of high-quality pearls remain the same,” he says.

The status of Tahitian pearls as a luxury item hasn’t been harmed, says Macnow, but he’s eager to see consumer and retailer confidence in the value of Tahitians grow. The new standards should help. Supply levels will deflate by about 15%, according to French Polynesian estimates, which for U.S. jewelers will mean better-quality Tahitian pearls and higher prices. “We need these efforts to help create a long-term vision of how the Tahitian pearl market should evolve,” notes Macnow.

Says Wan: “They’ll be better-quality pearls, and that’s the industry’s objective.”

Gary Roskin, G.G., FGA, senior editor, provided research for this article.

For What They’re Worth 28 years of Tahitian Pearl Production

Year Weight Value (U.S. $) Price per Gram
1972 1.6 kilograms 3,663 $2
1973 800 grams 24,871 $31
1974 3.9 kilograms 153,815 $40
1975 15.6 kilograms 114,077 $7
1976 6.1 kilograms 169,694 $28
1977 6.1 kilograms 204,155 $33
1978 50 kilograms 1.6 million $31
1979 86.1 kilograms 2 million $24
1980 28.8 kilograms 1.3 million $46
1981 85.2 kilograms 4.1 million $48
1982 32.3 kilograms 820,816 $25
1983 139.9 kilograms 5.1 million $36
1984 112.2 kilograms 2.8 million $25
1985 206.5 kilograms 8.5 million $41
1986 104.1 kilograms 7.9 million $76
1987 407.6 kilograms 20.5 million $50
1988 446.8 kilograms 23 million $52
1989 608.9 kilograms 32.2 million $53
1990 575.0 kilograms 37.8 million $66
1991 786.5 kilograms 42.9 million $54
1992 1.1 tons 43.5 million $41
1993 2.1 tons 75.1 million $36
1994 2.8 tons 116.6 million $41
1995 3.2 tons 103.5 million $32
1996 5.1 tons 152.4 million $30
1997 4.8 tons 136.2 million $28
1998 6.1 tons 134.5 million $22
1999 8.2 tons 152.5 million $19
2000 11.4 tons 148.2 million $13
Source: Perles de Tahiti at www.tahiti-blackpearls.com and JCK research.