In 1982 research began into the possibility of creating a cultured-pearl industry similar to that of French Polynesia. The first commercial farms were set up on Manihiki in 1989 and more than two million cultured oysters are now held there. By 1994 the Manihiki lagoon was thought to be approaching its maximum sustainable holding capacity and farms began being established on Penrhyn. Hundreds of thousands of oysters are presently hanging on racks in the Penrhyn lagoon, and a hatchery is adding to their numbers every day. Oyster farming has also begun on Rakahanga. A proposal to establish a pearl farm on uninhabited Suwarrow atoll was rejected in 2001 over fears that the atoll's large seabird colonies would be disturbed.
To build a farm, an investment of NZ$5,000 is required, and no return will be forthcoming for five years. There are now more than 300 farms with just 20 percent of them accounting for 80 percent of the oysters. The oysters are seeded once or twice a year by Japanese, Chinese, and Cook Islands experts screened by the Ministry of Marine Resources. The pearl industry has reversed the depopulation of the northern atolls and brought a degree of prosperity to this remote region. Thanks to pearls, Air Rarotonga can afford to operate regular flights to Manihiki and Penrhyn, making life a little easier for the 1,750 inhabitants of the Northern Group.
Fluctuations in water temperature and overstocking can affect the amount of plankton available to the oysters and reduce the quality of the pearls. In 2001, a bacterial pearl shell disease outbreak at Manihiki, caused by a combination of overfarming and high water temperatures, wiped out almost half the juvenile oyster population, proving what some had been saying all along the rapid growth in pearl farming had pushed some sections of the Manihiki lagoon well beyond their maximum carrying capacity of oysters. The algal bloom killed 15 percent of seeded oysters, leading to an estimated loss of NZ$34 million over five years.
Despite this setback, annual production is around 200 kilograms and black pearls are the Cook Islands' largest export, bringing in millions of dollars a year and employing 700 people. Japanese and Chinese dealers the main buyers of the official production, and it's believed the industry is actually worth much more than is officially claimed, since large quantities of pearls are smuggled out of the country each year to avoid customs duties. Pearl prices are falling as production increases, and the pearl boom seems to have already peaked.