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Fiji Sugar industry faces bleak future

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Image source: youtube.com

Auckland, New Zealand: The sugar industry of Fiji degrades due to damage from Cyclone Winston in February and an impending expiry of crucial low-tariff exports deal with the European Union.

Winston, one of the strongest cyclones ever in the South Pacific, slammed into Fiji on February 20. The storm claimed 44 lives in Fiji and caused damage valued at $226 million, including $48.4 million to the sugar industry, according to preliminary estimates by the Fiji National Disaster Management Office.

A village destroyed by Cyclone Winston on Fiji's Koro Island. Image source: asia.nikkei.com
A village destroyed by Cyclone Winston on Fiji’s Koro Island. Image source: asia.nikkei.com

The industry, the country’s largest employer, employs about 40,000 people, with up to 250,000 of the country’s 881,000 population relying on it when extended families are included. About 80% of the current crop was destroyed, and two of four crushing mills run by the state-owned Fiji Sugar Corporation were damaged.

Fiji Prime Minister Voreqe Bainimarama said the cyclone was a terrible blow, coming just after a glowing economic report on Fiji from the International Monetary Fund. “Now all of that may be in doubt,” he told diplomats.

The IMF report, released on February 5, said Fiji was “enjoying strong growth momentum, due to higher investment, robust tourism and strong remittances, supported by an improvement in the terms of trade.”

More presciently, the IMF noted that significant risks to growth were “largely related to external developments, including Fiji’s exposure to natural disasters.” The rains brought by Winston followed two years of drought.

Praveen Singh, the leader of a cane producers’ association, said the combination of the drought and Winston had created a bad situation ahead of the harvesting season between June and September. “We may have to forego the 2016 harvest and plan for a bigger harvest next year,” he said.

Last year’s crop of 1.84 million tons of cane produced 222,000 tons of raw sugar, one of the country’s lowest harvests. In 1996, a record 4.4 million tons of cane was crushed. Around 75% of Fiji’s arable land is planted with sugar cane and the crop is Fiji’s biggest export, valued at $52 million in 2015.

A sugar cane train in Fiji delivers the crop to the mill. Image source: asia.nikkei.com
A sugar cane train in Fiji delivers the crop to the mill. Image source: asia.nikkei.com

Most of Fiji’s sugar exports go to the UK, where it has preferential access to EU support measures, and prices are up to four times the global sugar price. The EU is due to scrap the measures next year, leaving Fiji to compete for head on with sugar producing giants such as Australia, Brazil, India, and Thailand.

EU-Pacific ambassador Andrew Jacobs has hinted that Brussels might develop proposals to help Fiji. “The EU recognizes that the sugar industry is very important to Fiji,” he said, without offering specific measures.

However, Fijians appear divided about whether the industry has a future, and what its long-term impact will be on the economy, relations between the country’s indigenous Fijian and ethnic Indian population groups, and stability in the coup-prone political system.

About 16,000 cane growers are Indian, according to the Fiji Bureau of Statistics.

Addressing the International Sugar Organization in November, Bainimarama said the future for Fiji sugar after the end of the EU deal would lie in extracting “the maximum sugar possible from every stick of cane.”

“We must extract every economic advantage we can from the sugar cane plant and the more productive and resilient varieties we continue to develop,” Bainimarama said. India has provided Fiji with a $70 million line of credit to build a co-generation plant, but a small pilot plant was affected by Winston.

Bainimarama said the industry was irreplaceable. “It cannot and must not be allowed to decline… [despite] the odds that are stacked against us; we do not intend to give up on sugar cane in Fiji,” he said.

Institutional analysts said the industry faced major structural problems. The IMF report also said that “modernization of the industry is urgently needed to improve international competitiveness.”

Padma Lal, an economist who has specialized in studying the Fiji sugar industry, said the damage to mills, irrigation and drainage systems, roads and rail links made it imperative for Fiji to diversify its rural economy away from sugar by increasing production of vegetables, poultry, ducks and goat meat.

“I would use this opportunity to rationalize the industry, however painful it may be,” said Lal.

(The article was first published in asia.nikkei.com)

Next Story

Brexit Deadlocked: “The Only Option Is To Find A Way Through Which Allows The U.K. To Leave With A Deal”

Brexit minister Steven Barclay said after the results were announced that the default position was still that Britain would leave the EU on April 12 without a deal, the nightmare scenario for many international businesses.

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Brexit
A pro-Brexit protester demonstrates outside the Houses of Parliament in London, Britain, April 1, 2019. VOA

Britain was no nearer to resolving the chaos surrounding its departure from the European Union after parliament failed on Monday to find a majority of its own for any alternative to Prime Minister Theresa May’s divorce deal.

After a tumultuous week in which May’s divorce strategy was rejected by lawmakers for a third time, despite her offer to quit if it passed, the future direction of Brexit remains mired in confusion.

In a bid to break the impasse, lawmakers on Monday voted on four last-minute alternative Brexit options for what is the United Kingdom’s most far-reaching policy change since World War II. All were defeated.

Britain's opposition Labour Party leader Jeremy Corbyn speaks after a round of voting on alternative Brexit options at the House of Commons in London, Britain, April 1, 2019 in this still image taken from video.
Britain’s opposition Labour Party leader Jeremy Corbyn speaks after a round of voting on alternative Brexit options at the House of Commons in London, Britain, April 1, 2019 in this still image taken from video. VOA

The option that came closest to getting a majority was a proposal to keep Britain in a customs union with the EU, which was defeated by three votes.

A proposal for a confirmatory referendum on any deal got the most votes, but was defeated by 292-280.

Brexit minister Steven Barclay said after the results were announced that the default position was still that Britain would leave the EU on April 12 without a deal, the nightmare scenario for many international businesses.

“The only option is to find a way through which allows the UK to leave with a deal,” Barclay told parliament.

He hinted that May could put her deal to a fourth vote this week in the hope of securing an orderly exit before European elections are held from May 23 onwards.

“If the house were to agree a deal this week, it would still be possible to avoid holding European parliamentary elections,” Barclay said.

Sterling Falls

Sterling fell almost 1 percent to $1.3048, after the vote results were read out by the speaker, John Bercow, to stand around 0.5 percent lower on the day.

Speaker of the House of Commons John Bercow announces the results of a round of voting on alternative Brexit options at the House of Commons in London, Britain, April 1, 2019, in this still image taken from video.
Speaker of the House of Commons John Bercow announces the results of a round of voting on alternative Brexit options at the House of Commons in London, Britain, April 1, 2019, in this still image taken from video. VOA

Last Friday, the third defeat of May’s own withdrawal agreement left one of the weakest British leaders in a generation facing a spiraling crisis over Brexit.

Her government and her Conservative Party, which has been trying to contain a schism over Europe for 30 years, are now riven between those who are demanding that May pilot a decisive break with the bloc and those demanding that she rule out such an outcome.

Also Read: Asteroid That Wiped Out Dinosaurs, Fossils Reveal The Story Of Extinction

If May were to throw her weight behind either camp, she would risk tearing her party apart and bringing down the government. Some Conservative lawmakers have warned they will support a motion of no confidence if she accepts calls for a Brexit that maintains many of the existing close economic ties with the EU.

Britain had been due to leave the EU on March 29 but the political deadlock in London forced May to ask the bloc for a delay. As things stand, Britain will now depart at 2200 GMT on April 12 – unless May comes up with another viable option. (VOA)