Administration
The project was formally approved on 1 August 2005. The initial administrative tasks involved formalising the research team and establishing lines of accountability and financial control between Deakin and project staff within the Ministry of Agriculture in Suva (MA) and the Secretariat of the Pacific Community.
We have established:
A good working team with members from Deakin, MA the Fiji Islands Bureau of Statistics and the Secretariat of the Pacific Community.
Appointed a project officer within the MA.
Financial systems for ensuring the smooth flow of funds from Deakin to our counterparts in Fiji and Noumea and acquittal mechanisms to ensure accountability.
A project planning seminar was held in Suva to bring together interested parties from the groups formally associated with the project plus staff from the University of the South Pacific, Ausaid and The Ministry of Planning and importantly the Fiji Islands Bureau of Statistics.

Research
Sound progress has been made by the project team. The initial tasks related to Objective 1 and involved:
refining the research plan
developing a detailed primary data collection plan
undertaking a comprehensive overview of the existing agricultural systems in Fiji
reviewing the policy environment in Fiji
reviewing data reliability and
familiarisation of the Fiji team with different policy evaluation approaches.

The planning of the primary data collection has involved the development of a set of questionnaires for use in the surveys. In doing so we trialled alternative ways of eliciting estimates of production and consumption from smallholders. The end result has been the development of 2 comprehensive surveys that address issues not adequately tested in the past. The production survey focuses on measuring producer responsiveness to output price changes as well as measuring input and output information. The consumer survey will provide estimates of household responsiveness to food price changes. These surveys are to be considered by the Deakin Ethics Committee as the next stage in this process.

The study of the exiting data sources involved extensive consultation with staff from The Bureau of Statistics in Suva and the MA. As a result of these consultations a system has been established for leveraging our survey work on that already undertaken by the MA and the Bureau of Stats. This review procedure highlighted issues associated with the existing data collection processes in Fiji. For example, the estimates of the value of Agricultural GDP have been critically analysed. As part of this analysis apparent inconsistencies with the current procedure were identified and a set of alternative estimates were derived. These estimates were published in a conference paper that is attached. A version of this paper will be published later this year in the collection of papers from the Conference on Governance and Accountability in the Pacific.

As part of the review of the agricultural systems and existing data sources a paper was prepared on the structure and vulnerability of smallholder agricultural systems to shocks. This paper was presented at the 2006 Annual Conference of the Australian Agricultural and Resource Economics Society. (See attached.) A related paper has been submitted to the Journal of Pacific Studies. This paper highlighted the dual nature of the smallholder agricultural system in Fiji. The Indo-Fijian and Fijian smallholders operate very different agricultural systems and have very different interactions with the commercial sector. While the members of both groups are heavily involved with the commercial sector, the nature of this involvement means that the impact of market shocks such as the sugar price regime change will have very different impacts on these 2 groups. This is a finding of importance in the formulation of adjustment policy.

Trip reports covering the first 12 months are attached.

Data Availability
A major success has been obtaining the agreement of the Fiji Islands Bureau of Statistics (FIBoS) to the use of data from their Household Income and Expenditure Survey, 2002 - 2003 (HIES) in the project. The HIES data will provide the sampling frame for both the urban and rural surveys so the project will have the benefit of a recent and full enumeration of urban and rural households to work from. In addition FIBoS have - very generously - agreed to the "importation" of their unit record data into the unit record sets for the project surveys. This means that our consumer can now include a food expenditure diary (more accurate than recall) and once the survey is complete we should be able to construct a cross section/time series data set that should provide a back-up to the principal ie survey means of deriving the consumer demand elasticities required for the project.

During the period covered by this report the field work for the project has been completed. This involved 2 major surveys and some informal pilot testing of the survey approach and instruments. The first survey targeted consumers in urban centres. This survey involved face to face interviews and the completion of food expenditure and consumption diaries. The urban survey sought information on responses to food price changes as well as information food consumption and expenditure patterns The survey covered some 600 households in all major urban centres in Fiji. The survey was based on a stratified random sample. The stratification was carried out on location, income and ethnic background.

The second survey covered food producers in rural areas. Approximately 900 rural households were interviewed to determine what they were producing and what production was being undertaken. As for the urban survey, a key part of the rural survey was the collection of stated preference data on the likely household production responses to food price changes. The survey was stratified on the basis of, location, farm characteristics and ethnicity.

Reports from the field staff suggest that the surveys were undertaken without major problems and the survey instruments were appropriate. Some difficulty was encountered in finding some of the identified sample households as there has been significant mobility in the population in Fiji in recent years.

The data from both surveys have been recorded in a data base and the records checked and cleaned. Data analysis to derive estimates of food demand elasticities and food supply elasticities has commenced.

Two conference papers were presented at the 2007 annual conference of the Australian Agricultural and Resource Economics Society in Queenstown. The first paper presents preliminary estimates of food demand elasticities from the consumer or urban survey. This paper uses data drawn from responses from the Suva region only. The results are encouraging in that they show the elasticities derived from our stated preference approach appear to be consistent with theory and local market knowledge. In the second paper we analysed the efficiency of food markets in Fiji. This paper raised issues concerning the lags in food price adjustments between local markets in Fiji. While we found prices do move together, the extent of the adjustment lags - sometimes 2 months - suggests market price information services could be improved.

The market price efficiency paper has been submitted to the Australian Journal of Agricultural and Resource Economics. An earlier paper concerning the agricultural policy responses to shocks to household incomes in rural areas has been accepted by the Journal of Pacific Studies. In the latter paper we report a case study of the income position of rural households in the Northern Region of Fiji. The potential sensitivity of these households to likely market changes is reviewed and the likely efficacy of possible government policy responses is analysed. Particular attention is given to the history of government intervention in agriculture in the region to encourage pineapple production and the reasons for its limited success.

Perhaps the most significant development of the past year - at least administratively - was the early retirement of the Project Leader Associate Professor Phillip Hone at the end of 2007. His retirement left a substantial gap in the Project's staff resources. Henry Haszler has taken on the role and has recruited Professor Ron Duncan (Crawford School of Economics, ANU) and Dr Mary Graham, (Lecturer, School of Accounting Economics and Finance, Deakin University) to undertake some of the planned research. Prof Duncan and Dr Graham will take lead roles in two of the Project policy case studies.
The main research publication in the period was a paper by Hone, Haszler and Natasiwai on agricultural supply elasticities in Fiji. The paper was presented to the annual conference of the Australian Agricultural and Resource Economics Society in Canberra in February 2008. The paper subsequently appeared - in a somewhat shorter form - in the Pacific Economic Bulletin ((23(2) 2008). These papers are companions to the earlier paper on demand elasticities and report elasticity estimates based on the producer survey completed in 2006-07.
Some effort also went into showcasing the Project and its outputs. Of these activities, the one with the most significant immediate impacts was the invited presentation to the ANU-USP Fiji Update 2008 meeting in Suva in July 2008 The Update Forum also travelled to Lautoka where a similar presentation was made.. The Suva event was a very public affair with a number of media organisations present and with the event reported in the evening TV news. The presentation by Haszler and Natasiwai was entitled "The Fiji Islands Sugar Shock: Some Implications from a Micro Case Study" and drew on an earlier study. Based on household level data for a sugar growing region, its main points were that when the incomes of farm households are adjusted for farm costs, the income distributions of ethnic Fijians and Indo-Fijians are really very similar, at least in the case study area - that is Indo-Fijians are not really so obviously the "rich" group in Fiji. Moreover, the EU Sugar Shock is likely to have profound impacts on the relative income distributions of the two ethnic groups.
In the past there has been some difficulty in accessing unit record data from the Agriculture Ministry's Tikina Profile Survey Over the course of this Project Fiji's ministry concerned with agriculture has been known as the Ministry of Agriculture Sugar and Land Resettlement (MASLR), the Ministry of Primary Industries (MPI) and the Ministry of Agriculture and Primary Industries (MAPI). Following the resignation of the Finance Minister, responsibility for sugar has now been returned to the agriculture Ministry. It remains to be seen whether this change generates another change of name.. The TPS is a progressive census of all rural households in Fiji. It was designed initially to benchmark farm circumstances in sugar growing regions prior to the EU Sugar Shock but is now being extended to other farming areas. The TPS is a valuable data base and we will be drawing on it further. As a Project initiative a new data interrogation front end is being developed for the data base that should make data access much easier in the future. Another Project data related activity was a submission on agricultural statistics to an FAO funded review of the structure and operations of the agriculture Ministry.
One of the reasons for the emphasis on the TPS data is that we have not been as successful as hoped in deriving elasticities for the policy model by survey methods and so we will estimate supply elasticities using the TPS data. The consumer elasticities will be derived using data from the latest Household Income and Expenditure Survey by the Fiji Islands Bureau of Statistics. A significant advantage of switching to these alternatives is that the resultant policy model should be rather more comprehensive in terms of its commodity detail than originally envisaged.

While relatively resource rich, the Fiji Islands economy has been performing poorly and the prospects for reinvigorating economic growth rest in part on the implementation of appropriate food and natural resource policies. The ability of Fiji's decision makers to develop the required policy regimes is constrained both by a lack of fundamental economic information - much of it agriculture related - and a lack of the analytical tools required to translate this information into appropriate policy initiatives.
Ministry of Agriculture (now Ministry of Primary Industries, MPI) staff suggested the current project as a means of improving the quality of official agricultural and food policy advice in Fiji. During subsequent regional priority setting meetings with ACIAR, the pressing need in policy making for more reliable production and income information, especially related to smallholders and subsistence producers, was emphasised.
The tangible outputs from the project have included the development of interactive software to facilitate policy analysis at the industry and commodity level as well as an analytical framework for estimating smallholder production and income on an ongoing basis. In addition, a number of policy research papers on issues central to agricultural policy in Fiji have been prepared.
The most significant of these research projects focused on deriving a robust set of supply and demand elasticities for the major food items produced and consumed in Fiji. This involved the development of a novel technique to estimate elasticity parameters in the absence of time series data sets. The technique used here utilised individual household/farm surveys to derive stated proference data on response to food prices. This data was then used to derive distributions of household elasticities using a non-parametric approach.
Other papers explored the extent of inefficiency in production in the semi-subsistence food sector, the scope for, and value of, reducing this inefficiency through R&D, and ways of providing governments with more timely and accurate measures of the contribution of agriculture to national GDP. These outputs form the basis for the end of project workshop designed to promote the project outcomes to the wider policy community in Fiji, neighbouring Pacific Island Countries and to the research and policy community more generally.
The project has added to the professional capability of MPI staff in Suva. It has done this by enhancing the human capital of the Suva based staff with extensive hands-on training, providing these staff with the simulation model to ensure better information goes into the local policy processes and by directly providing information on important policy issues through formal project papers. In addition, members of the Deakin project team have prepared less formal analyses designed to help inform policy making in Fiji and to improve some of the internal procedures of MPI. Capacity building through the interactions between Australian and Fiji based project staff has been an important part of the project. Fiji based staff have undertaken key components of the work under the supervision of experienced team members based in Australia, and Noumea. In addition, training has been provided to Fiji based team members to enable them to carry out their on-going roles. This one-on-one training has covered areas such as survey design and management, production theory, and simulation modelling. Policy evaluation papers for professional journals and conferences have been prepared with substantial contributions from Fiji based team members.
The professional capacity of the policy staff in Suva is a key input into improving the policy framework for Agriculture in Fiji. The continuing development of this group is important if the potential of this project is to be realised. To achieve this development, ongoing professional support from, and interaction with, groups outside the Ministry both in Fiji and overseas will be required.