How sustainable is the growth of assistance to Fijian sugar producers?

Abstract

Following the loss of preferential access to the European Union’s previously highly protected sugar market, Fiji’s Government has been increasingly supporting its producers since 2010. That support is now much higher than most other countries’ assistance to the sugar sector. This study summarizes estimates of the changing extent of those transfers to producers from taxpayers and consumers. It does so by expressing them as nominal rates of assistance to producers and consumer tax equivalent rates (NRAs and CTEs). Those NRA and CTE estimates may well now exceed 100%. The level of support is around 5% of the government’s consolidated revenue. The nature of the support is not only economically inefficient and inequitable but also environmentally damaging and fiscally unsustainable given foreseeable market prospects. This suggests the need for that support to be re-purposed to provide better economic, social and environmental outcomes. Several suggestions as to how to do that conclude the paper.