Fiji sugar industry: assessing international sugar market reforms and their impacts and defining appropriate responses

Project ID

ADP/1996/136

Project Country

Fiji

Commissioned Organisation

Australian National University, National Centre for Development Studies, Australia

Project Leader

Dr Padma Lal

Email

padmal@forumsec.org.fj

Phone:

+679 3220329

Fax:

+679 3300192

Collaborating Institutions

University of the South Pacific, Fiji

Sugar Commission of Fiji, Fiji

Fiji Land Information Council, Fiji

CSIRO Tropical Agriculture, Australia

Ministry of Planning, Fiji

Ministry of Agriculture, Fisheries and Forestry, Fiji

Project Budget

$806,781.00

Start Date

01/01/2000

Finish Date

31/12/2004

Extension Start Date

01/01/2005

Extension Finish Date

30/09/2005

ACIAR Research Program Manager

Dr Ray Trewin

Overview Objectives

The project should provide the government, the sugar industry and the farmers with a range of options to help them effect the necessary changes, by:
assessing the economic viability of sugarcane-based farming systems under current and alternative sugar price scenarios,
assessing the financial and economic implications of various land tenure options proposed in Fiji, and
evaluating the economic merit and sharing of the industry profits of the current and the proposed industry restructure and identify appropriate institutions - including facilitated markets - that could encourage economic efficiency in the sugar industry.

Project Background and Objectives

The sugar industry in Fiji accounts for about 40 per cent of the value of agricultural production, and 22 per cent of the country's entire GDP. Sugar is also Fiji's largest export earner and a major employer, providing work for about one quarter of the country's active workforce. Fiji has negotiated preferential arrangements with importers of its sugar, guaranteeing quotas at agreed prices. In 1997, about 56 per cent of the country's total sugar production was sold in this way. It is expected that preferential access for Fijian sugar to US and European Union markets will be lost as these nations review their agricultural policies. This will expose Fiji to international competition in the world sugar market where prices have been about half of those that Fiji sugar was enjoying under the preferential agreements. This is likely to have serious effects on the local industry and on the entire country's economy.

Fiji therefore needs to identify options that could help farmers adjust to the likely long-term loss of preferential access. But doing so is not possible without the relevant information and data. Once gathered, these will also form a useful basis for necessary policy reform. It is clear that the sugarcane farming system must adjust to remain viable.

Progress Reports (Year 1, 2, 3 etc)

Year 1:

Harmonisation and validation of data from various sources (Fiji Sugar Commission (FSC), Native Land Trust Board, SIT and soils data) has been completed. Computerisation of the FSC mill data (mill work advice) has been completed, and preliminary FSC mill efficiency analysis was undertaken.

Geocoding of about 70% of farms has been completed. The rest cannot be done either because the farms have not been surveyed or, if surveyed, the results are not available. Land use classification for each farm has been completed. This information will be used in the econometric analysis once the validated farm survey data is available.

The farm economic survey is completed for two of the four mill areas (the remaining two mill areas were to be completed in January 2004). A detailed analysis of milling performance and farmer performance has been completed, and key areas of efficiency gains that the industry needs to target have been identified.

Year 2:

The year started off with the completion of the farm survey in March 2004, with another three months spent data entry, data clean up and preliminary data analysis. The survey was highly successful, covering a 10 percent of stratified sample of farmers from each sector and each mill area, further stratified by ethnicity.

The survey results have been analysed and a draft survey report has been completed.

The results of the survey were presented to the stakeholders for comment. The survey results were used to prepare a paper on the Impact of the EU reform on the Fiji Sugar industry. A PowerPoint version of this paper was presented to the industry stakeholder (FSC, SCOF, SIT, SCGC, FSM). The results were also fed into the preparation of the Fiji Paper for discussion in Brussels.

Year 3:

Year 4:

Year 5:

The survey results have been analysed and a draft survey report has been completed.

Project Outcomes

Originally the project was conceived as an integrated international trade, bioeconomic and institutional framework. However, following the political events of May 2000 the project was resurrected in 2002 with a revised set of project objectives. The scope of the project was reduced, removing international trade, a land use suitability assessment, and alternative land use options and crop modelling, and the CGE modelling) components of the project.

Given the changed priorities in Fiji and the need to focus on the sugar production and land tenure issues, the objects of the revised project were to:
assess the financial and bioeconomic viability of sugar cane based farming systems under current and alternative sugar price scenarios;
assess the financial and economic implications from the perspectives of the growers, landowners and the sector of various land lease options proposed in Fiji
evaluate the economic merit and sharing of the industry profits of the current and the proposed industry restructure and identify appropriate institutions, including facilitated markets, that could encourage economic efficiency in the sugar industry

The project was designed using the philosophy of 'adaptive decision-making process' (ADMP) articulated in Lal, P., H. Lim-Applegate, and M. Scoccimarro. 2001. The adaptive decision-making process as a tool for integrated natural resource management focus, attitudes, and approach. Conservation Ecology 5(2): 11. [online] URL: http://consecol.org/vol5/iss2/art11.

The project has:
produced several journal articles and reports, some of which are currently being revised for publication, including the farm economic survey.
made submissions to the Parliamentary Cabinet Sub-Committee on Sugar,the Parliamentary Select Committee on Sugar, the Parliamentary Select Committee on Land, and to the Government on the Indian Team Mission Report.
prepared policy briefs for use by the Fiji Project Leader in the Sugar Restructure Committee.
gave several presentations to stakeholders, including the Prime Minister's Office, the Native Land Trust Board, the Sugar Industry (FSC, SIT, FSM, SCGC), to the Indian Mission Team.
provided inputs into the preparation of the Fiji Paper for discussion in Brussels and the industry meeting on prioritisation of issues for submission to the LMC.
provided analysis of alternative farm productivity, harvest and transportation costs to the LMC's assignment for the Fiji Sugar Industry in preparation for the forthcoming study by the European Commission
produced integrated decision-support systems (DSSs) supported by Sugar GIS databasea computer-based database of validated and harmonised and linked system of databases on cadasteral (Land Department), native land tenure (NLTB), farmer characteristics (SIT), farmer production statistics (FSC), soils (MASLR). The DSS can be used to determine, for example, the potential impact of changes in the EU sugar prices, changes in farm level productivity, changes in the cost of harvest and transport. The project has also produced an information-based decision-support system that can be used in land rent negotiation.
produced newspaper articles, as well as an indepth-TV interview.

Location

There are no project locations defined for this project.