World Bank highlights impacts of downturns in sugar industry

The poor performance of the sugar industry is expected to have far reaching implications on Fiji's economic performance for 2010 according to the last economic update by the World Bank.

In its review for October 2010, the World Bank said the main downside risk to economic growth in Fiji will stem from the even lower than anticipated performance of the sugar industry as the economy is currently forecast to grow by 0.5 to 1 percent this year, only partially recovering from the 3 percent contraction last year.

The report said that the higher export earnings from gold, fish, timber and mineral water is expected to be more than offset by the lower earnings from sugar exports, largely due to the announced EU preferential price cut.

The World Bank said the structure of Fiji sugar industry - the backbone of the rural economy - requires an overhaul to realign incentives across the sector, encourage viable growers to remain in the industry and improve the efficiency of both the intra-industry transport system and the sugar mills.

It said supply chain management and the marketing of non sugar agricultural products also needs to be addressed, particularly with respect to forging backward linkages from the tourism industry, which is now the engine of Fiji's economy.

The World Bank report said the success of both the sugar and non-sugar agricultural reforms will depend on the effective resolution of the long standing and very complex problem of ensuring secure land tenure in Fiji.

Meanwhile, World Bank economist Vikram Nehru told Radio Australia that unless the agriculture and specifically the sugar sector are reformed, seeing long term growth in Fiji will be a significant challenge.

source: fijivillage