The paper highlights the dire state of the coconut industry in the country which explains the big drop in Vanuatu copra production for the last 2 years. Vanuatu Commodities Marketing Board (VCMB) has become a regulatory body since May 2003 and opened the copra market for free competition. Being a copra dominated country, the Board has to address the need to increase copra production and improve quality. It is working on construction and certification of hot air dryers at the moment. The Vanuatu Government is putting more emphasis to value added products and recently VCMB purchased Vanuatu Coconut Product Ltd. (VCPL) to lead the coconut industry to a greater progress. A coconut oil mill was also constructed with a capacity of 200 tons a day and have recently signed a partnership agreement with an Australian company. As a product diversification effort, VCPL produces crude oil, body oils, powder soap, and soap in cube. There are plans to produce peanut butter and cooking oil from peanut and coconut. As for market, the focus is now on the local market rather than foreign ones.