FBC News 
The World Bank says the current trajectory of Fiji’s sugar sector is unsustainable.
The World Bank’s Fiji Public Expenditure Report 2023 says the sector faces a number of inter-connected challenges which have diverse roots.
This includes technical, institutional, geographic, agro-climatic, policy-induced as well as externally driven.
The report recommends that there is an urgent need to develop and implement a reform program that fixes the deep structural problems in the sugar economy and lays the foundation for more solid and sustainable growth while addressing external pressures and climate resilience concerns.
It goes on to add that the declining demand and rising international competition are compounding the challenges that need to be urgently addressed by Fiji’s sugar sector.
With health being prioritized more, long-term demand for sugar is declining.
The latest OECD-FAO sugar price projections to 2031 suggest that in each of the next nine years, the raw sugar price is expected to be below the 2019-22 average of US$371 per ton, which is on average, about 10% lower.
It is also highlighted that cost of sugar cane production are falling in exporting countries that compete with Fiji.
In Australia, the average cash cost of producing a ton of cane has fallen to F$45 by 2021, which is half of the F$85/ton paid in 2020-21 to growers in Fiji.
Also, within the EU – the main market for Fiji – there is increasing supply/competition from local producers.
It is estimated that the fiscal cost of all public expenditure on the sugar sector averaged $79 million per year during 2017-21.
The World Bank says to reform the industry, government should look at replacing the current arrangement for setting the wholesale price of sugar with an excise tax on all sugar-rich processed foods and beverages, both domestic and imported.
It says subsidies should be removed on fertilizer and weedicides for cane growers and need to replace the numerous forms of assistance to cane growers with more-generic assistance to rural households and regions.
The report adds that there should be an increase in expenditure on rural transport infrastructure to reduce transport/logistics costs with benefits to be shared between all farmers and removing the FSC monopoly to incentivize it to boost productivity, and compensating existing sugar cane growers with a time-limited series of government payments based on their past production levels, which could be generous initially but be gradually phased out by 2026.
