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Challenges for Rural Development

inTailevu, Rewa and Naitasiri

provinces

Professor Wadan Narsey

School of Economics

Faculty of Business and Economics

The University of the South Pacific

wadan.narsey@gmail.com

[Keynote Speech at Development Partners Consultation and Planning

for Tailevu, Rewa and Naitasiri 20th to 23 October 2009]

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Outline of presentation: 5 challenges

I wish to present a number of challenges in front of you, all extremely difficult, and likely to arouse much oppposition from vested interests:

• 1 challenge at the personal level: the food you eat.

• 1 challenge at the leadership level: “how encourage Fijians to better use their mataqali land?”

• 2 challenges at the industry level: mahogany and dairy

• 1 challenge at the rural infrastructure level

• 1 challenge at the national political level

I suggest some possible answers- but it is all up to you.

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Challenge 1: Food you eat: crucial for rural development:

Any significant shift away from consumption of our local foods

* reduces domestic employment and incomes

* worsens rural development, increases rural poverty,

* encourages rural:urban drift and associated pressures on urban housing, water, sewerage, education and health services, crime

* reduces national food security especially for the poor

* reduces national nutritional well-being

* increases pressure on balance of payments

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Total Fijian consumption of Root crops and Cereals: worrying trends

Q1 are the Fijians in the poorest 20% in Fiji; Q5 are the Fijians in the richest 20% of Fiji

After the third quintile, the well-off Fijians are consuming less root-cops, while their consumption of imported cereals keeps rising

Until in the highest 20%, Fijians are spending as much on imported cereals as on local root crops

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Noodles- extra-ordinary rise in consumption for Fijians

Unusual rise for Rural Fijians at upper income brackets

Note: Maggie v Chow may be a battle for bigger market share for noodles: but another effect is clearly increased total consumption of noodles altogether, with reduced consumption of other carbohydrate substitutes.

2008 HIES will almost certainly show massive increase in consumption of noodles at all income levels (and further decline in root-crops?).

Noodles per AE pa ($)

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Inc pAE Q uintiles

Rur Fij

Urb Fij

Urb Indo

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All meats and eggs: no doubt about the foods

seen by consumers are “superior”

Pretty steady increase up the quintiles

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But Fresh Fish consumption?

Good news for Rural Fijians

Much lower levels for Urban Fijians

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Increasing consumption of chicken

High increases for all groups at the upper income brackets

Note that chicken has significant import content- feed etc.

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And increasing consumption of imported lamb

Note the large increase for Rural Fijians at the top quintile

Implications for health, of eating these extremely fatty cuts

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Fijian vegetables: bele, rourou, ota, duruka, coconut as % of all vegetables

Expected high percentages for Rural Fijians but dropping sharply at higher income levels for both rural and urban Fijians

And Urban Fijians are eating a much lower proportion of Fijian vegetables

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Similarly, Indian vegetables as % of all vegetables

Interesting high % for poorer Urban Fijian households

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Sugary items: confectionary, ices, ice-cream, sweets, Indian

sweets, soft drinks, other drinks, juices

Rapid rise for Urban Indo-Fijians and Fijians

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Junk Food Expenditure (twisties, bongos, soft drink etc)

per 0 to 14 years old

Extremely rapid increase for upper income Indo-Fijians- serious nutritional problems indicated.

Junk Foods per 0 to 14 years old pa ($)

(all snacks and drinks except tea, coffee, kava)

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Inc pAE Quintiles

Urb Indo

Rur Indo

Urb Fijian

Rur Fijian

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Some counter strategies?

No use “preaching to the poor” to eat healthy local foods, when the rich themselves don’t do it.

I suggest the following:

eg Serious improvements in local food markets in urban areas: look at the sad state of the existing ones

eg need for proper outlets for fresh fish with ice, and cleaning cutting facilities

eg national cooking competitions to find/popularise cooking of snack foods using local foods

eg encouragement of domestic and international food processors to use Fiji’s more nutritious local foods?

eg encouragement of SMEs to sell refrigerated coconuts at popular eating places

eg banning of advertisements targeting children, or high taxation of unhealthy snack foods and sugary confectionaries

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Challenge 2: How encourage Fijians to better use their own mataqali land

Even indigenous Fijians are reluctant to invest in their own mataqali land: they are buying expensive freehold land

I believe that the key problem is the lack of full legal leases on the mataqali land, for long enough period to encourage Fijian families to invest with security, so that they can borrow from banks..

I am NOT saying convert native land into free-hold: keep native land as native land, which cannot be sold off like free-hold land.

Challenge: how create secure long term leases for Fijians on their own mataqali land.

Note the inability of the Agriculture sector to get loans from Commercial or Development banks.

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Loans to agriculture ($millions) declining for 16 years: scandalous

Bulk of decline of course due to decline of lending to sugar cane farming

What remains, to Forestry and Logging, and a bit to “Other Agriculture”

Loans to Agriculture ($millions)

FDB, Commercial Banks and Both

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Loans to Agriculture as Percentages of Total Lending

I suggest that loans to agriculture will not grow as long as potential farmers (including

indigenous Fijians) do not have secure long term leases?

Is it any wonder that Rural poverty is so high.

Perc. of Loans to Agriculture

FDB, Commercial Banks and Both

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The incidence of poverty has always been highest in rural areas-

Rural incidence of poverty in 2002-03 40%

Urban incidence of poverty in 2002-03 29%

Percentage of poor in rural areas in 2002-03 70%

Preliminary 2008-09 data suggests that rural poverty may have increased since 2002-03:

But wait for the Fiji Islands Bureau of Statistics to properly process and analyse the data.

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Challenge 3: Industry: how maximise benefits from mahogany?

For your communities that have mahogany resources, the easiest thing is to cut the trees, roughly saw the timber and sell locally or overseas- and you have cash in your hands

Already happening on a large scale, so much so, that very large off-cuts are being sold for firewood: how scandalous: In India or Indonesia, these off-cuts would be considered very valuable and converted into valuable small items.

For every $1 million you get for roughly sawn timber, if processed into value added products- like doors, frames, flooring etc, you would get $3 to $4 millions.

But getting timber processing enterprises is “hard work”.

On your own, extremely difficult; easier with partnerships with quality timber processors and manufacturers

Are your leaders up to getting such partnerships going? Or is it going to be “cut, saw and cash”?

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Challenge 4: How subsidise the dairy farmers? Should you?

I see two challenges here.

First: is it ever likely that Fiji’s dairy industry will be as competitive as that in NZ and Australia? Or

is the dairy industry looking at perpetual protection at consumers’ cost?

The fact that even with high protection, imports are still able to compete with Rewa Dairy products

says something.

Secondly: the Government subsidises Rewa Dairy which then tries to give a higher milk price to

dairy farmers. This is an inefficient way of encouraging higher milk production.

Government subsidies should be given directly to dairy farmers, per litre of milk produced- whatever

is required to sustain an efficient dairy farmer.

Not to Rewa Dairy which makes most of its profits from imported milk powder which it converts

into liquid milk

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Challenge 5: What rural infrastructure to invest in: access roads

You cannot have rural development without rural roads.

In a year or so, or two years or so, or three, some powerful people with military gongs will be cutting

ribbons, heralding the completion of the tar-sealed Kings Road: but how will it change the

lives of those in the interior? the really inside rural farmers in Tailevu, Rewa and Naitasiri,

giving them easier access to urban markets and services?

Or will it simply enable the towns people of Suva, Rakiraki and Ba to zip between the towns in

greater comfort?

What you need is an equal investment in rural roads that open up access to the King’s Road.

How much will Government have spent on tar-sealing King’s Road? $80 millions? How much does

Government currently provide for new rural roads in Tailevu, Rewa and Naitasiri?

What should be your fair share of government funds for improving and building new rural roads?

How much in millions? Can your leaders demand your fair share of new access roads?

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Challenge 6: At national level: how encourage investment and

growth of GDP?

You cannot have new rural roads, or a subsidised dairy industry, or a strengthened mahogany

processing factory, without healthy government revenues:

Government revenue and expenditure = about 25% of Fiji’s GDP.

If Fiji’s GDP grows by $400 millions, then government revenue (and expenditure) grows roughly by

$100 millions

If the Fiji economy contracts by $400 millions, that is $400 million less income for our people, and

$100 million less for Government taxes, and$100 million less of Government expenditure on

education or health.

The trouble is- Fiji’s economy has not been growing as it should have been for the last 22 years.

Compare Fiji with Mauritius: a small island like us, dependent on tourism and sugar, and half the

population are kaidia.

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Fiji’s growth rates: erratic and often negative

Need I tell you which colour is Fiji (RED)? With so many negative growth rates: is it

surprising that we don’t have a healthy economy: many times, our GDP has gone

down instead of going up: eg -6.6% from 2006 to 2007

Mauritius (BLACK) has not had a single negative growth rate Even 2009 following global

recession, expected to be 2.8%.

GDP Growth rates (Mauritius and Fiji)

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Long term result for Fiji’s GDP, compared to Mauritius (100= 1980)

Fiji is the red line, Mauritius is the black line.

Fiji Average growth rate 1980 to 2007: 1.7% per annum

Mauritius average growth rate 1980 to 2007: 5.1% per annum (3 times higher)

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Why is Fiji’s GDP so low?

Brown line: if we had moderate growth rate of 2.8% from 1986 (= average from 1970 to 1986), growth reducing slightly due to the global recession

Black line: our actual and likely performance. The black dots follow 1987, 2000 and 2006.

The area between the two lines is the total income we will have “lost”: > $10 billions

Fiji's Gross Domestic Product ($m) 1995 prices)

Without Coups and Actuals

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A caution on the “healthy” foreign reserves that we boast about.

Yes, foreign reserves are high at the moment: many Reserve Bank statements.

But the high reserves are not due to improving exports (we know the sugar industry is collapsing, the tourism industry is not particulary buoyant, garments is collapsing, fish, gold and timber are improving, but overall exports revenues are falling.

What has kept our reserves up is that imports have also been falling because of the lack of investment, and the serious constraints on our people’s incomes and expenditure.

So the current “healthy” foreign reserves are nothing to boast about.

The only good sign is a growing economy with positive growth rates.

But following - 6.6% in 2007, a tiny recovery in 2008, current projections are of another negative growth rate for 2009 (possibly -1% or even bigger drop).

Our people cannot eat “healthy foreign reserves”.

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Fundamentally: very little investment is taking place, because

We have an illegal government and an illegal judiciary: Contracts are broken arbitrarily, with people being fired or hired without following due processes; even Jo and the PSC do not know how an unqualified foreign cititizen is given the powerful position of PS Finance, and Chiarman of our crucial Fiji National Provident Fund, where is making decisions involving hundreds of millions of our savings;

while A Military Government refuses to release the Auditor General’s Reports to the tax-payers themselves

When public emergency decrees and complete media censorship stop citizens from lawfully asking relevant questions about their pension fund, or government policies, or government over-expenditure;

When we are ostracised by our major international partners: Aust/NZ/EU/US/Forum Secretariat

It is inevitable that investors (both local and foreign) will be reluctant to invest (unless government gives them massive subsidies and tax concessions which cost us dearly).

If the national political situation does not drastically improve, the Fiji economy will stagger along as we have done for the last three years.

And no amount of talking about “integrated rural development” etc. will improve the lives of rural people including those in Tailevu, Rewa and Naitasiri.

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Can you rise to the national political challenge?

Can you at this planning meeting, pass a resolution, requesting:

The Military Government to convene a genuine Political Dialogue with all political and social leaders, including those of the indigenous Fijian people

Agree on a path forward, which can include electoral reform, incorporating the Charter process into the Constitution, a co-operative review of the GCC, establishing codes of conduct for political leaders (including criminalising racism), institutionalising FICAC etc etc etc

Following which we can have an early return to parliamentary democracy- say by the end of 2010 or by 2011.

Which would restore the EU’s $300 millions for the sugar industry, and restore healthy aid programs from Australia and NZ, end the increasing constraints on Fiji’s peace-keepers for UN.

Which will enable our economy and our peoples’ incomes to grow, restoring Fiji as the healthy “hub of the Pacific” which it was before 2006.

Only then can you have meaningful “development partners’ consultations and planning”- as you are doing today.

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Thank you.

Questions and comments