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.

KEYWORDS:

• Agricultural subsidies
• consumer taxation
• international competitiveness
• preferential market access

JEL CODES:

• F14
• F54
• H21
• O13
• Q18

Acknowledgements

The author is grateful for data assistance from Fiji government officials and for helpful comments on an earlier draft by participants in a 2022 World Bank mission to Fiji. This policy paper draws on a longer study by Anderson (2022). The views expressed are the author’s alone and not necessarily those of the Government of Fiji or the World Bank.

Disclosure statement

No potential conflict of interest was reported by the author(s).