FIJI SUGAR DOWN BUT NOT OUT

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SUVA, Fiji Islands (April 26, 2000 – Fiji’s Daily Post)---Research has shown that sugar productivity has been in a period of recession since 1996, but the industry remains Fiji’s major export commodity.

Prime Minister Mahendra Chaudhry's budget report last year stated that there was a fall in sugar production in 1998. But Mr. Chaudhry said there was an increase in real economic growth between 1998 and 1999. He added that there will be strong recoveries in all sectors of the economy, particularly the sugar industry, which will boost economic growth.

Fiji Sugar Corporation's (FSC) last five-year trend shows a tremendous decline in output.

In 1996, it had the highest production recorded. From 1994 to 1996 there was a constant increase in production from all the four mills: Lautoka, Labasa, Rarawai and Penang.

But there was a sharp decline in 1997 and then a further constant decline in 1998. The reason for the decline was the drought.

A new agreement completed in Japan calls for the Asian nation to buy sugar from Fiji. The deal was confirmed by Ratu Tui Cavuilati, Fiji's Ambassador to Tokyo. The exports will sell at the world market price, which is lower than the preferential trade prices.

Another major problem for Fiji is the distance from major world markets.

The corporation said the prices offered by the European Commission in December 1998 for the guarantied prices of sugar for the 1998/1999 delivery period remained the same as the previous year. There hasn't been any improvement for the last two years.

"While taking note of the offer, the African Caribbean and Pacific highlighted the loss of earnings resulting from agri-monetary adjustments due to the sterling as well as the potential loss expected with the introduction of the Euro currency," noted a statement by the corporation earlier in 1998.

There also has been a downward trend in the world market prices throughout 1998 and the peak of over US 13 cents per pound in December 1997 has not returned.

The local prices during the drought period were quite high. In the same period, the industry had to import a total of 35,742 tons of sugar: 14,300 from Thailand, 16,500 from Guatemala, and 4,942 from Australia to meet local market demands

But a total of 92,489 tons of molasses, the by-product of sugar, was exported at fixed price basis on preferential agreements. Apart from exporting to other distant countries, it exports to neighboring countries.

Edgar Cocker of the Forum Secretariat said Fiji exports 3,000 tons to Kiribati and Tonga, 800 tons to Tuvalu, 100 tons to the Solomons and 5,800 tons to Samoa under the quota system.

Still the future looks bleak.

Will the quality of our sugar improve? Can it stand the competition from other sugar producers? Is the industry going to get a better price for its sugar and molasses?

The industry reviewed its five-year corporate plan (1997-2001) and is now in a process of finalizing a three-year corporate plan (1999-2001).

The year 1999 showed some signs of improvement.

"Due to the installation of standby diesel generator sets at the largest sugar mill in Lautoka and more training provided to staff members and movement of staff within the four mills, production at Lautoka, Rarawai, Labasa and Penang mills increased," the statement said.

The chairman of the company, Hafiz Khan, said the corporation must function as a modern commercial organization in a competitive marketplace.

"It is a matter of survival," said Mr. Khan. He said they needed to provide appropriate training and skills, the right working environment and good career opportunities.

"The goal is to improve the company's operational performance, productivity and efficiency," he said.

Agricultural Landlord and Tenants Act is another major issue that affects and will affect the industry.

Quite a few leases have expired and some of the farmers are dislocated from their settlements.

Most of the farm leases will expire in the next five years and only renewal of the leases will enable the industry to grow.

The outcome of the act is significant because the majority of the farms are under the native land lease program.

The question of what the future will bring remains a question, but continuous investments are being made in the industry to improve productivity.

For additional reports from Fiji’s Daily Post, go to PACIFIC ISLANDS REPORT News/Information Links: Other News Resources/Fijilive.

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