Los Angeles Times
December 24 2001

Grenada in a Spicy Dilemma

Tradition and innovation collide as entrepreneurs seeking to modernize the
island's nutmeg industry face a growers co-op suspicious of their intentions.


GRENVILLE, Grenada -- For half a millennium, the aromatic little seed of the Myristica fragrans tree is said to have cured everything from boils and backaches to
strokes and the plague.

Arabs and Indians swear that it's an aphrodisiac. Malcolm X smoked it in jail when he ran out of marijuana.

Wars were fought over it--including one that rendered the obscure New World island of Manhattan to the British. Today it's in toothpaste, perfume, sausages and
soap--not to say countless cups of eggnog. And on this tiny island, where it's dubbed "black gold," nutmeg has become both a metaphor and the prize in a raging
debate over growth, modernization, globalization and economic survival.

The clash, like similar conflicts in agricultural economies throughout the developing world, pits tradition against innovation. And its outcome could reduce the price of
not only the little seed but also the myriad everyday products that contain some of it.

On one side is a farmers cooperative that has provided hand-to-mouth nutmeg growers with a steady but meager income for half a century. To most Grenadians, the
cooperative is a symbol of nationalism, patriotism and stability during the last half of the 20th century, when the country attained independence.

Opposite are a dynamic entrepreneur and an ardent young chemist struggling to usher the nutmeg industry and the nation into the 21st century and to provide more
young Grenadians with a reason to remain on the island. The duo's centerpiece is a new factory that went on line this month.

Caught in the middle is the island itself--a tropical paradise about twice the size of Washington, D.C., tucked into the southeastern corner of the Caribbean. Grenada
appeared on many people's radar screens in 1983, when President Reagan sent in Marines to topple its Marxist, pro-Cuban government. But the island is also the
world's second-largest producer of nutmeg. In the largest, Indonesia, a separatist insurgency on the remote islands where the spice tree was spawned has reduced
production, providing a boon to Grenada's exports in recent years.

As a result, Grenada now supplies well over a third of the world's nutmeg: 5.4 million pounds from the island sold for nearly $20 million worldwide last year. And
more than a third of Grenada's 100,000 people depend on the crop. A nutmeg even appears on Grenada's national flag.

Never mind that the Grenadians use only a pinch of it: as a garnish on rum punch, a folk remedy for achy joints and the key ingredient in a line of syrups and jams.

As in ancient times, nutmeg's greatest value lies in the billions in profits its complex insides have brought to manufacturers, agents, brokers, processors and retailers
outside the lands that provide it.

A detailed chemical analysis of nutmeg's hidden riches done for the U.N. Food and Agriculture Organization by Grenadian scientist Dilon Daniel documents its wealth
of trimyristin and myristic acid. These are not only the stuff of its narcotic and erotic legends but basic ingredients of the world's cosmetic, pharmaceutical and food

That fact, and the value those components add to the simple seed, lies at the heart of what 61-year-old Daniel Hypolite, a lifelong Grenadian nutmeg farmer, calls "an
industry in crisis."

The status quo is embodied by the Grenada Cooperative Nutmeg Assn., a powerful collective with roots as broad as those of the Myristica fragrans. The association
was a pioneering model of progressive, Third World self-determination when it was born amid anti-colonialist fervor in 1947.

The cooperative ended nearly a century of exploitation of Grenada's nutmeg farmers dating back to the mid-1800s, when Britain's royal botanist brought the first
nutmeg seedlings to the colony from Indonesia. That was about two centuries after Britain formally traded Indonesia's nutmeg-rich Run Island to the Dutch in
exchange for the then-barren Manhattan.

From the start, the association's founders held to a single principle: The nutmeg belongs to farmers, and farmers alone should reap its rewards.

The Nutmeg Ordinance of 1947 became the industry standard for Grenada. Besides creating the association, the law limited its membership to farmers and gave the
cooperative the sole right to buy and sell Grenadian nutmeg. The resulting monopoly eliminated the colony's half a dozen wealthy nutmeg brokers overnight.

The ordinance also enshrined a system that remains the industry's backbone. The association pays farmers an "advance" based on world market prices when they
deliver raw nutmeg and then distributes a "surplus" to them just before Christmas, based on the actual profits the co-op made on the year's total sales.

Today, Grenada's top economists and senior government officials say the association, with its 19 buying stations and behemoth processing centers, has become a
dinosaur. They say it has cost the farmers and the nation because of its failure to invest in high-tech plants that would process nutmeg locally and thus keep most of
the profits at home.

The farmers are conservative, their critics say, and the advance-surplus system has reduced the potential yield for the growers of what ranks among the planet's most
perfect lazy-man crops: Besides being in demand, nutmeg is low-maintenance and high-yield. Throughout its life, the nutmeg tree needs only occasional pruning, and it
reproduces like a giant weed.

A nutmeg tree begins bearing fruit about age 7. It produces year-round for the next 45 years, and it drops its treasures conveniently to the ground when they are ripe.
The nut is easily harvested and separated from its mace--the even more profitable weblike red aril that encases the seed inside the fruit.

As a result, analysts say, the farmers have become complacent and their association moribund.

An Industry in Need of Modernization

Denis Noel, the grandson of a nutmeg trader, started producing a successful, homemade and Internet-marketed arthritis remedy called Nut-Med in a backyard shed
last year. Here's how he characterizes the situation:

"The association has proposed holding back millions of dollars for development in the past. But the farmers have always said, 'No, just give me my money.' The
result: Well, the nutmeg industry here looks pretty much as it did more than a half-century ago."

In fact, the daily scene at the association's largest processing facility, in the east coast town of Grenville, is almost biblical.

From dawn to dusk, scores of women sift the nuts by hand. Scores more seated before ancient wooden boards peel the shell from each nut--500 pounds of them
per eight-hour shift. Other women, using baskets made from jungle vines, spend their days dunking the nuts into tubs of water to separate them according to quality:
Lower-grade seeds float, while the better ones sink. Dozens of men lumber through the warehouse using carts or their shoulders to move 150-pound burlap sacks of

The only machine in the Grenville center's "machine room" is a crude device that cracks the nuts before the women peel away the shells.

Grenadian economist George Brizan, an authority on nutmeg, says improving this state of affairs must go beyond mechanizing what's already here.

For more than two decades, Brizan, a former minister of agriculture and finance, has urged the association to invest in factories that would manufacture nutmeg oil,
then refine the fatty waste from that process into the essential oils and oleoresins that have made such huge profits for Grenada's industrial customers abroad.

The cover of Brizan's 1979 book, "The Nutmeg Industry: Grenada's Black Gold," tells much of the story. It pictures a fattened sow, her hide branded with dollar
signs and the words "Foreign Enterprises in Developed Market Economies," dwarfing a scrawny rooster labeled with the association's initials. The chicken is nibbling
at a pile of nutmeg.

In the detailed economic analysis inside, Brizan concludes that the island's farmers received just 6.6 cents of every dollar Grenada's nutmegs earned as they moved
through the global market between 1966 and 1977. More than 90%, he writes, went to foreign enterprises.

"The percentage remains the same today," Brizan said in an interview. "What we are seeing today is worse than colonialism. It's mercantilism, which gave birth to
colonialism. It's what keeps developing countries poor. And the crime is, we've yet to do anything serious about it.

"My message is still the same as it was 21 years ago: Don't export your wealth by losing your value-added."

Enter entrepreneur Joel Webbe--and a 26-year-old nutmeg-obsessed Grenadian chemist named Leonard St. Bernard.

Under the banner of Webbe's newly formed company, W&W Spices, the two this year broke ground on a 25,000-square-foot factory complex carved into
Grenada's lush interior. There, the island's crop can be processed into nutmeg oil and then refined into the more valuable essential oils and oleoresins.

The factory began operations a week ago and will be in full production next month, Webbe said.

"The biggest question for me is why no such plant has ever been established on Grenada," Webbe said recently. "I've been asking God, and the answer I keep getting
is, 'Go do it.' "

Webbe added that he is especially mystified that the association never built a plant--that a collective formed to develop the industry and cut out fat-cat middlemen
chose to relinquish millions of dollars to the European and U.S. agents and brokers who are today's middlemen. They are the ones who market the nutmeg to foreign
manufacturers who in turn make millions in profits.

Project Meets With Suspicion, Protest

The answer, analysts here say, lies in the same traditional ethic that has greeted Webbe's project with a firestorm of suspicion and protest.

In announcing his plans for the factory, which he says will initially employ about 60 Grenadians, Webbe also suggested the once unthinkable: He could buy the
nutmeg from the farmers at higher prices than the association pays in its advances and surpluses.

Webbe now insists that he has abandoned any such plan and intends to buy from the association at the world-market price or more, while also leasing nutmeg-rich
land from the farmers and harvesting some of the crop himself. His original proposal, though, spread like a deadly nutmeg-wilt epidemic through the fields and
fantasies of the island's approximately 7,000 nutmeg farmers.

The farmers' ultimate fear, fueled by the association's board: Webbe was out to dismantle the co-op and take over the industry.

"It would be a disgrace to our parents' generation, who left this industry in trust for their children's future," said veteran association board member Lennox Purcell, a
nutmeg plantation owner whose family also owns several large retail stores on the island.

"Without the association, we'd go back to square one. It would take us back 60 years."

Webbe, 49, bristles at such talk.

"I don't plan to break up anything," he said. "All I'm hoping to do is improve the nutmeg industry in Grenada, by the grace of God."

In the absence of divine intervention, Webbe says his personal history has prepared him for the struggle to break new ground for nutmeg here.

Born and reared on the island of Montserrat, about 300 miles to the north, the Boston-educated electrical engineer built--and twice rebuilt--a high-tech electronics
enterprise that flourished despite the catastrophes of Hurricane Hugo in 1989 and a volcanic eruption in 1997, which left two-thirds of Montserrat uninhabitable.

After that disaster, Webbe moved his W&W Electronics to Grenada. Again it thrived, making connector components for such American computer and
telecommunications giants as Wang Labs and Intel.

Then, about a year before America's technology sector crashed, ultimately forcing Webbe to lay off 500 of his 600 local employees, St. Bernard approached him
with the young chemist's lifelong dream.

For St. Bernard, the leading-edge factory he designed to process Grenada's nutmeg into value-added products and export them directly to the U.S. is nothing less
than the future of Grenada's next generation.

Armed with a master's in chemistry--and the knowledge of scientist Daniel, the nutmeg researcher who was one of his teachers--St. Bernard says he tried to
persuade the association's board members to build such a plant during the year or so he worked for them.

"I have always been passionate about doing something with our nutmeg, and the association didn't want to listen," he recalled while standing ankle-deep in mud and
vicious fleas at the mountainside construction site where his dream factory was going up.

"Part of what really has hurt me as a young man is that nothing was ever done to create opportunities to keep me in Grenada. Most of my classmates are abroad
now. One is a cardiologist doing open-heart surgery in New York. Another works for NASA. Another has 20 patents with Witco Corp.," he said.

"Finally, along comes a guy like Joel Webbe. He's willing to invest capital in people like me--in our country's future."

The island's nutmeg establishment remains wary. The association has already passed a resolution requiring the board to take a general vote before agreeing to sell
nutmeg to any enterprise on Grenada. The dispute wound up in court this month.

But Webbe and St. Bernard are not without their powerful backers. Prime Minister Keith Mitchell, who has endorsed the project, recently said: "I can't tell you I'm
particularly happy with the way the nutmeg association has run the industry through the years. . . . Not enough was done to provide a future for the industry."

Economist Brizan, now retired, believes that Webbe's venture is bound to succeed. Like nutmeg itself, he said, "it's the perfect combination of good economics and
good chemistry."

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