Sweet success of islands’ agricultural economy

Yvette Battenberg

In Focus Fiji

Sugar cane farming, fishing, tourism and gold mining are the mainstays of Fiji’s economy, but the government wants to ensure that growth won’t damage the environment

AN42b Sigatoka_04

© Maksym Kozlenko CC BY-SA 4.0 via Wikimedia Commons

In a recent speech, Prime Minister Josaia Voreqe ‘Frank’ Bainimarama spoke to other Pacific island leaders of the need to use a new development model for the region – one that focuses on sustainability above all else. “We must overhaul our economies in a way that links economic growth and environmental protection,” he said in May, setting out his intention to build “green economies in which the driver of growth is more intelligent, more effective and has the common interests of all citizens in mind”.

Encouragement of private investment into the economy is a particular focus, with the government currently reviewing economic policy to ensure that foreign investors see the country as attractive, with minimal bureaucracy for businesses to negotiate. Fiji currently ranks 81 out of 189 countries in the World Bank’s Ease of Doing Business index.

Speaking at the end of July, Faiyaz Koya, the Minister for Industry, Trade and Tourism, said: “Our vision is to make Fiji the financial hub of the Pacific, but we cannot be a financial hub unless the proper and prudent financial regulatory environment is in place.”

He continued: “Growth in the financial sector is attributed to the confidence of Fijians and foreign investors in the Fijian government and our sound and stable policies, and is an indication of Fijians acquiring sustainable livelihoods. It gives insight that Fiji is on the march.”

Foreign investment has not always gone smoothly, however. A new tourist resort at Momi Bay on the island of Viti Levu was initially funded by New Zealand-based Bridgecorp, which ran into financial difficulties in 2007. The Fiji Momi Bay resort development had to be taken over by the government-run Fiji National Provident Fund in 2010 following the collapse of Bridgecorp in the wake of fraud trials against some of its directors in Auckland.

After stagnating for several years, the project was restarted in the autumn of 2014, with Bainimarama declaring: “We are breathing new life into the partially built complex that had come to resemble a ghost town. And all is now on track for a spectacular opening in two years’ time. The Marriott Resort at Momi Bay is destined to become one of the brightest jewels in the crown of the Fijian tourism industry.”

Gold mining accounts for a sizeable amount of the country’s foreign trade earnings, as the country’s third most valuable export (2012). The country is located on the Pacific ‘Ring of Fire’, known for its significant porphyry copper-gold and epithermal gold deposits.

The Emperor Gold Mine (see box on previous page), managed and owned by Vatukoula Gold Mines, is the country’s primary gold mine and has been extracting gold since 1935.

In 2007 copper-gold deposits were discovered in a joint exploratory venture between Nittetsu Mining, Mitsubishi Materials and Newcrest Mining, 30 km off the coast of Suva. The Namosi Joint Venture, as it is now known, was then one of the world’s largest undeveloped copper-gold deposits. In 2011 the group was licensed to explore further in the seas around Fiji. Other mines include the Tuvatu Gold Mine and the Mount Kasi Gold Mine, which re-opened in 2013 when Newcrest Mining was given a license to carry out US$13 million in exploration works over the following three years. Explorative mining in Fiji has grown significantly in recent years. Foreign investment in the form of exploration and mining is becoming more and more popular, as mineral deposits in the country are believed to be abundant.

Since the colonial years, new companies and investors have expressed interest in exploring and mining. In 2013 several sites were identified as being rich in bauxite deposits. According to the Fiji Islands Bureau of Statistics, the mining and quarrying industry employed 0.66 per cent of the Fijian labour force in June 2006, equivalent to 2,154 workers, a significant increase from 1,899 in December 2005. More recent figures are not yet available, but given the increase in explorative and mining activities on the islands since this time, the number is likely to have increased again.

Fiji does not produce oil or gas, so refined petroleum is one of the top products it imports, contributing 27.42 per cent to total imports in 2012. However, the government, through the Ministry of Lands and Mineral Resources, has granted licenses to three companies for exploration rights in the country’s sovereign waters – Akura Fiji, South Pacific Petroleum and Seo Tuinaivalu. Akura Fiji estimates that there is potential for 12.5 billion cubic feet of gas in the waters around the island.

There are also several quarrying companies in Fiji, the most notable of which are Fiji Industries and Standard Concrete Industries. Quarrying activities mainly focus on the production of materials for construction, including limestone, sand and gravel. In 2008, Standard Concrete Industries, the country’s largest supplier of ready mix concrete, concrete blocks and paving slabs, expanded its operation base with the establishment of a ‘super’ quarry in Nadi.

At a grass-roots level, government Micro and Small Business Grants have been awarded to 2,000 entrepreneurs this year in Suva, Navua, Sigatoka, Savusavu and Taveuni, proving that it is not just the big, prestigious projects that are driving Fiji’s economy forwards.

Fiji’s largest gold mine

The Emperor Gold Mine, located in the northern part of the main island of Suva and owned by Vatukoula Gold Mines, is the largest producing gold mine in Fiji. According to the operator, the mine is currently estimated to contain 4.1 million ounces of mineral resources and 750,000 ounces of mineral reserves. The mine sits at the base of the hills that make up the Tavua volcanic crater.

With more than 75 years of production history, and in excess of seven million ounces of gold produced to date, the mine is of strategic importance to the country’s gold industry.

In 2009 the mine was flooded following a dramatic increase in rainfall during a once-in-a-century extreme weather event.

As part of the clean-up operation, Vatukoula Gold Mines announced plans to refurbish and develop the mine to restore annual production to previous levels and investigate the potential for explorative drilling in the surrounding areas.

The mine currently operates an open pit and underground operations, but it is expected to make the move towards becoming a predominantly underground mine in the future.

The rise and fall of Fiji’s economy

The Fijian economy is largely agricultural, with the main cash crop, and export, being sugar cane. Tourism is the largest foreign-exchange earner and clothing exports have grown rapidly from the late 1980s. Other significant activities are fishing and timber production. In the last two decades, exports of bottled mineral water, primarily to the USA, have also grown.

More than 80 per cent of land is owned by ethnic Fijians, mainly by the local clans, or mataqali, with ownership by outsiders prohibited. Indo-Fijians are able to farm sugar cane under land lease arrangements, but from the late 1990s, as leases came up for renewal, many landlords would only offer short leases at higher rents and many Indo-Fijian farmers have had to return the farms they had worked for many years to the owners.

Like many small island states, Fiji has a high rate of emigration, particularly of its most educated people, who seek better opportunities abroad. Consequently, remittances are second only to tourism for bringing in foreign exchange earnings. A new tax regime, brought in in 2012, aims at creating a more attractive environment for workers, with new personal tax breaks, reduced corporate tax and lowered tariffs on machinery. This was offset by an upper-income tax surcharge and increased airport departure taxes.

Both sugar and tourism are vulnerable to the climate; hurricanes are relatively frequent and droughts can also cause problems. Moreover, tourists can be deterred by political instability. Thus, economic growth has been uneven, with strong growth in years such as 1999, when the harvest was good, and negative growth in years such as 2000, when the government was overthrown.

Following the coup of December 2006, which caused tourist numbers to fall by 70 per cent, and the subsequent global recession, the economy stagnated in 2007-09, recovering in 2010, with steady growth generally of two to four per cent a year from 2010-15.


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