Fiji Should Expect Sugar Export Revenue Reductions In 2017

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Despite reform efforts, EU quota expiration to have major impact

By Litia Mathewsell

SUVA, Fiji (Fiji Times, Feb. 13, 2015) – Despite extensive Government efforts to revitalise the country's sugar industry, Fiji will need to prepare for a reduction in export revenues before 2017, Prime Minister and Minister for Sugar Voreqe Bainimarama warned.

This is when the quota for the European Union's sugar production expires.

The PM said the abolition of the EU sugar production quota on September 30, 2017, would consequently have adverse implications on sugar prices.

"Moreover, EU sugar prices have already come under pressure, with significant falls compared to prevailing prices over a year ago," he told Parliament this week.

"So suppliers like Fiji are having to prepare for a reduction in our export revenues ever before 2017, a sobering prospect for any developing nation."

Fiji is among the ACP countries supplying sugar to the EU, which in 2013 deferred the initial deadline for this quota from 2015 to 2017.

Mr Bainimarama said the costly effort of revitalising the industry included the $175m funding to FSC in 2010 and $36.5m in 2012 to reduce accumulated losses.

Government, he noted, had not needed to provide FSC funding since 2013.

The search for new markets began last year with a delegation opening talks in the Middle East and Asia, which the PM said were encouraging and would be pursued this year.

He also emphasised a gradual shift from reliance on raw sugar as a commodity as it would no longer be viable, and the need to exploit new revenue opportunities and open up new markets.

He added the provision of $8.4m for a cane development grant to help plant 3000 new hectares of cane had also progressed well.

"By the end of the extended planting season last December, the industry managed to plant more than 5600 hectares, exceeding our target by 2600 hectares. The total area under cane production now stands at 40,418 hectares."

About 200,000 Fijians depend, either directly or indirectly, on the sugar sector for their livelihood.

In response to the ministerial statement, NFP leader Biman Prasad agreed the prospect of losing the EU quota in 2017 was sobering, especially with the number of people who rely on the industry.

He said what was needed was a long-term plan and offered to assist the Government through a joint parliamentary committee.

"A long-term plan, a four-year plan, a four-year minimum guaranteed price for the farmers, because the confidence of the farmers in the industry is a real issue. There are no labourers, farmers are moving out and 70 per cent of the farmers earn a net income of less than or roughly about $9000."

He said in 2007, the industry had about 18,000 active growers. Today, this number has reduced to 13,000.

He called for "proper boards at the FSC" because the company had "not produced the Annual Reports for 2012, 2013 and 2014".

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