3 AGRICULTURE IN THE SOUTH PACIFIC

One of the objectives of the IslandslAustralia Project of the National Centre for Development of Studies (NCDS) is to provide opportunities for representatives from the various South Pacific countries to discuss common problems and seek regional solutions. The Centre recently held a workshop on Agriculture in the South Pacific at the Forestry Training Centre in Gympie, Queensland.

The workshop was attended by private and public-sector participants from Fiji, Kiribati, Papua New Guinea, Solomon Islands, Vanuatu and Western Samoa. Growers, small entrepreneurs, estate managers, agricultural cooperative managers, exporters, extension workers and

marketing board executives met to exchange ideas and experiences and to seek advice from Australian agriculturalists, economists and scientists.

Academics from the University of New England, University of Adelaide and the Australian National University (ANU) joined with staff of the Australian Centre for International Agncultural Research (ACIAR), the Australian International Development Assistance Bureau (AIDAB) and the Queensland Department of Primary Industries. NCDS graduate students from Papua New Guinea, Solomon Islands, and Tonga participated. The following three papers were among those presented at the Gympie workshop.

24 PACIFIC ECONOMIC BULLETIN

The importance of agriculture to development in the South Pacific

ACIAR’s research in the region

Kenneth M. Menz Australian Centre for International Agricultural Research

Most South Pacific economies are heavily dependent upon agriculture (broadly defined to include fishing and forestry). The exceptions are the mineral-rich nations of Nauru and New Caledonia and the counmes that receive large transfers of official aid or private remittances. Dependence upon agriculture ranges from approximately 25 to 50 per cent of GDP for most Pacific countries which receive relatively large amounts of Australian development assistance.

Heavy dependence upon agriculture is typical of countries with a low per capita income. The strong empirical correlation between these two parameters has been one of the cornerstones of the literature on economic development. Economic growth is almost universally associated with an increase in the role of non-agricultural activity relative to that of agriculture. However, experience around the world supported by strong theoretical arguments, has shown that this development process is based upon productivity improvements in agriculture. Counmes that have denigrated the basic role of agriculture have suffered from retarded pr~gress .~ Such productivity improvements help not only farmers, but also consumers. With agriculture being a relatively labour-intensive sector, employment is increased. Poor consumers typically increase their consumption of food

‘D.w. Jorgensen, ‘The role of agriculture in economic development: classical versus neoclassical models of growth’, in C.R. Wharton. Jr (ed), Substantive Agriculture and Economic Development, Chicago, Aldme, 1969.

LJ.W. Mellor, ‘Links between technology, agricultural development, economic growth and trade creation’ in Building on Success, Technical Report No. 7, Canberra. ACIAR, 1987.

’M. Lipton, Why Poor People Stay Poor: a Study of Urban Bim in World Development, London, Maurice Temple, 1977.

as their incomes rise. At some point in the development process, food is no longer the most attractive item of expenditure and a more diversified pattern of consumption expenditure emerges, providing an impetus for a diversification out of agriculture. While this represents an overly simplistic view of the development process, the key point is that a de-emphasis on agriculture (for example, through the promotion of a capital-intensive industrial policy) without prior adequate development of the agricultural sector will probably fail. On the other hand, an agriculture-oriented development strategy, in economies dominated by agriculture (such as the South Pacific), ensures that the consequences of productivity growth carry through to other sectors of the economy.

Productivity improvement in agriculture via research

The key to agricultural development throughout the world has been increased productivity resulting from the application of new technologies - the products of agricultural research. Between 1961 and 1980 output per hectare of major food crops in the developing world rose by 1.9 per cent annually. Agricultural research played a pre-eminent part in the yield increase^.^ Numerous economic studies have estimated that the economic rate of return to agricultural research is large5 and have also shown that the economic benefits resulting from the productivity enhancement have outweighed the economic costs of conducting the research.

4J.R. Anderson, ‘Impact of agricultural research in developing countries’, in Building on Success, Technical Report No. 7, Canberra, ACIAR, 1987.

50ne of the most recent is C. Thirtle and P. Bottomley, ‘Is publicly funded agricultural research excessive?’ Journal of Agricultural Economics, January 1988.

AGRICULTUREIN THE SOUTH PACIFIC

Setting agricultural research priorities Given the importance of agricultural research in the overall development context, and given the limited amount of research resources available in the South Pacific, the direction of agricultural research into areas where it has the highest expected economic payoff is an important issue. Targets for research should be high volumehigh value products, or those where a low investment in research leads to a high productivity gain.

At ACIAR considerable work has been undertaken analysing these various parameters of economic returns to agricultural research.6 A complete analysis is not yet available, but a striking feature in relation to the South Pacific is evident: there are few countries in the area where crops of sufficiently high value and volume are grown to justify a substantive research effort. ‘Substantive’ could be regarded as one scientist working for 4-5 years with appropriate logistical support. The exceptions would be Papua New Guinea and Fiji where the export tree crops and sugar warrant substantive research efforts. Other countries of the South Pacific will have to be more imaginative in attempting to provide the agricultural technologies that have been the springboard to economic growth throughout the world.

Possible ways to obtain new technologies for countries with low levels of production include:

1. Using overseas development assistance to supplement domestic efforts in agricultural research.

2. Regionalization of agricultural research. The inherent political difficulties arising from perceived differences in research objectives are well known. However, a regional agricultural research institution, with research priorities being set on regional economic criteria, would not seem to be an impossible goal, especially if financed by development assistance.

Another mode of operation would be to ‘borrow’ or adapt research results from elsewhere, for example, other individual

3.

%S. Davis, P.A. Oram and J.G. Ryan, Assessmenf of Agricultural Research Priorities: An International Assessment, ACIAR Monograph No. 4, Canberra, ACIAR, 1987.

25

countries or international agricultural research institutions.

ACIAR is able to help in providing vital agricultural research resources in the South Pacific.

What is ACIAR? ACIAR was established in June 1982 as

an independent statutory authority of the Australian Government. It is responsible to the Minister for Foreign Affairs and Trade, and its activities are part of Australia’s overseas development assistance program.

The functions of the Centre as set out in the Australian Centre for International Agricultural Research Act 1982 are:

(a) to formulate programs and policies with respect to agricultural research for either or both of the following purposes: (i) identifying agricultural problems of developing countries; (ii) finding solutions to agricultural problems of developing countries;

(b) to commission agricultural research by persons or institutions in Australia (whether the research is to be conducted in Australia or overseas) in accordance with such programs and policies; and

(c) to communicate to persons and institutions the results of such agricultural research.

In implementing this mandate, ACIAR has emphasized research partnerships, that is collaborative research with developing countries. This is an attempt to ensure that research projects are not imposed upon the developing partner country, but that Australian expertise is harnessed to work with developing country scientists, on problems agreed to be of high priority. The task for ACIAR becomes one of matching developing country research priorities with the expertise and interest of Australians working in Australian research institutions. The core staff of ACIAR consists of Director, Deputy Director and a group of Research Program Coordinators (usually one per scientific discipline) and appropriate support staff. The budget for 1988-89 is A$15.6 million.

26 PACIFIC ECONOMIC BULLETIN

ACIAR in the South Pacific Expenditure on projects in the South

Pacific has been running at approximately A$1.5-2.0 million per year. A list of all projects undertaken is given in Table 1. It can be seen from that list that a number of projects have a regional orientation. More detail on many of these can be obtained directly from ACIAR? but some features of selected projects are given below.

Giant clam mariculture A survey of reef areas in the South

Pacific confmed the suspected low population levels of giant clams. Artificial breeding and culture of clams have been achieved and the high growth rates confmed. Giant clams are a sought-after indigenous food in the South Pacific and there is a potentially lucrative export market. The next phase of the project will pilot test the technology in various countries throughout the South Pacific as well as attempting to define the socioeconomic conditions where clam farming is most likely to succeed. The potential export market will be more clearly defined.

South Pacific smallholder project A unique and comprehensive set of data

on the agro-economy of smallholder agriculture has been obtained and is available for use by researchers and policy makers throughout the region. The importance of smallholder agriculture in the economies of the South Pacific islands has been demonstrated as well as its potential to provide the basis for broader economic development. A detailed set of policy recommendations derived from the data and analysis is available in various project reports and is being communicated to national government policy makers through direct personal communication and through a series of in-country workshops. Farm management manuals, containing key input- output data on smallholder agriculture, have been prepared on the basis of the survey data. These will help define areas of potential for technological improvement.

Disease-free sweet potatoes Sweet potatoes have been taken from the

South Pacific and disease eliminated by heat treatment in an Australian laboratory. Disease-free planting material is reproduced before returning it to the South Pacific. Trials are underway to determine the yield differences between the disease-free and diseased varieties as well as the number of generations that can be grown before the difference is dissipated. Initial indications are that the yield differences are substantial. A major advantage of this approach is that ‘new varieties’ with their attendant problems of grower and consumer acceptability are not involved.

Biological control of passionfruit scale Until 1984, passionfruit pulp ranked as

the third most important agricultural export, worth around A$2.5 million, for Western Samoa. Passionfruit pulp production is unique in Samoa because the crop is perennial and well adapted for small-scale production on the island’s rocky soils which are not well suited to other cultivated crops. The potential value of the crop for 1988 is expected to be in the order of A$4 million, a large cash crop for a nation of 160,000 people.

In 1984 the industry collapsed as vines were destroyed by white scale insects. An ACIAR sponsored research project identified a predator of the scale insect in the form of the wasp Encarsia. The wasp was released and it has successfully controlled the scale insect.

Concluding comment Agricultural development is likely to

remain a prerequisite for general economic development in the South Pacific region. Agricultural research, leading to new technology, is a key ingredient of agricultural development. Countries of the South Pacific have limited resources for agricultural research. The Australian Centre for International Agricultural Research can help to supplement these resources through collaborative effort with South Pacific institutions.

7J. Persley and P. Ferrar, South Pacific Agriculture: Challenges and Opportunities for ACIAR and Its Research Partners, Technical Report No.5, Canberra, ACIAR, 1987.

AGRICULTURE IN THE SOUTH PACIFIC

Table 1 ACIAR projects in the South Pacific region

27

Project Title numba

Parucipaung countries

8332

8402

8403

841 8

8433

8442

8522

8527

8543

8548

The culrure of the @ant clam (Tr~dncm spp.) for food and restocking of uopical reefs

Studies on cadang-cadang disease of coconuts in the Phhppines and Malaysia

Etiology, distribuuon and conml of virus-like diseases of coconut palm in the South Pacific

E idcmiology and control

nematodes m small ruminants m Pacific islands

oPgasuo.inteslinal

Sweet potatoes: pathogen- tested germplasm for the South Pacific

Coconut improvement

Nutntion and palicy implications of the spread of cash croppmg in Papua New Guinea

The Southeast Asid Pacific forage research and development program

Kesearch on baitfish biology m the Solomon Islands. Maldives and Papua New Gumea for the luna mdustry

The cause and control of kava wilt dseases m the Souih Pacific

Mmonesia

Vanuatu

Fiji. Vanuatu, Solomon Islands, Western Samoa, Tonga

Tonga, Westcrn Samoa, Solomon Islands. Papua New Gum=

Papua New Guinea

Papua Neu Guinea

FIJI

Solomon Islands. Papua New G"Ult%A, Maldives

Tonga, with possible involvUncn1 of Fiji, W stem Samoa and Vanuatu

Crop sciences

Crop sciences

Arumal scimces

Crop sciences

C"P sciences

SOClO economcs

Forages

Crop SC1WICCS

PXDJ~CI Title number

Parucipaung AClAK countries research

program

8558

8567

8607

8613

8627

8700

8734

8737

8801

8802

8803

The development of small holder farming systems m the Kingdom of Tonga

Dcvelopmenr of cultivars and production systems for matunng pigeonpea (Cajanur cajan)

ACIAR agncultural research priority assessment and cwrdinauon

Fuelwood and sandalwood sdviculture m eastern Indonesia

Agnculiural research pnonues m Papua liew GUfflt%A

Banana lmpmvement m Asia and the Paclfic

Design of monitonng systems for smallholder agnculture m Papua New Gulnca

Biological controi tapes

Biological control of Mimosa invira

Biologml control m the South Pacific

Pacfic food handling pTOJeC1

Tonga

Fiji

Papua New Guinea

Fiji, Vanuatu, New Caledrmia, Indonesia

Papua New Guinea

Cook Islands. Tonga, Western Samoa

Papua New G U e a

Most South Pacific countries

Western Samoa

Westem Samoa. Vanuatu, 'Conga, Papua New Gunea

General Pacific

Economics and farm '"g systems

Crop sciences

Economics and

syslems

Forestry

farming

Economics and fanning systems

Crop sciences

Economics and f a m n g systema

Crop science

C'OP

Crop

science

sciences

Poslharfesl lechnology

28 PACIFIC ECONOMIC BULLETIN

What is hindering the development of agriculture in the South Pacific?

The official’s view

Luke V. Ratuvuki Acting Director of Agriculture Extension, Ministry of Primary Industries, Fiji

In the Pacific, the agricultural sector contributes a major part of the gross national product, directly involves the majority of people and, at least in the short term, represents the greatest potential for future economic growth and contribution to the quality of life. Thus, the societies and governments of these island nations have much at stake in the agricultural sector and through various policies, programs and activities are attempting to improve the productivity, contribution and effectiveness of their agricultural sectors.

The environment The Pacific island countries have a land

area of only 513,603 sq. km, most of which is in Papua New Guinea. However, because of the archipelagic nature of the majority of the countries, the 200-mile exclusive economic zones (EEZs) total 12,700,000 sq. km and thus comprise major natural resources. In the eastern region, the islands of Kiribati, the Cook Islands, Tonga and eastern Fiji offer a limited range of landforms and soil types and, in most cases, the proportion of an island that is suitable for intensive cultivation without major improvements is relatively small. In the western countries of the region, Papua New Guinea, the Solomon Islands and the main islands of Fiji, the soil and landform types are more conducive to agriculture but are nonetheless still severely limited.

The resources of any area are not static, however, not only because of changes caused by natural or human processes but also because the changing perceptions of any resource depend on the potential user’s needs, knowledge, beliefs, values and technical capacity. In Pacific countries, all five are changing rapidly and far-reaching modifications in rural production systems require re-evaluation of the environment.

Because of their insularity, small scale, fragmentation, isolation, and small populations they are confronted with the problems associated with being remote. The more they incorporate themselves into the world economy, the more does remoteness become a problem as they incur high unit costs in export and import trades. In terms of modern commercial agriculture they have been able to establish only a few large consolidated holdings, but have been largely limited to relatively small-scale farms frequently engaged in both subsistence farming and cash cropping.

Most of the islands are vulnerable to cyclones of high intensity rainfall during which run-off and erosion can be disastrous to houses, crops, water and other essentials to normal living. This is a problem of increasing concern that requires considerable expertise and also financial resources. At other times, long dry spells can have a major effect on production.

The fragmentation of many islands also creates high cost per head in the provision of administrative and other services. This is aggravated by their heavy dependence on foreign aid which stimulates the growth of bureaucracy for its distribution. Further- more, there are obvious limits on the provision of higher order services. Because of the small size and often relatively small populations, the desired ‘critical mass’ of agricultural staff, particularly professional researchers, is very difficult to attain.’ This can be a very serious impediment to the steady development of improved agricultural production systems.

‘See article by Kenneth M. M e n , ‘The importance of agriculture to development in the South Pacific: ACIAR’s research in the region’ in this issue for a discussion of the critical mass in agricultural research.

AGRICULTURE IN THE SOUTH PACIFIC

Guidelines for future progress may be devised considering different methods of increasing productivity or diversification of present land use. Given the inability to establish large consolidated holdings, there may be a need to consider some types of land reform that may be most applicable to island conditions.

With the possibility of future increases in the price of oil, natural sources of energy should be investigated. Similarly, there are at present no integrated systems of urban- rural and producer-market linkages. Humanity is resourceful and there are definitely cost-effective ways of approaching the problem. Decentralization of growth points may be considered in this context. One step further may be to consider certain options that take advantage of the islands’ isolation and insularity. One proposal that is quite fashionable amongst certain academics is to invite the establishment of military installations, and to suggest that nuclear powers dump their radioactive waste in some of the uninhabited islands. Although personally I do not support such a view it still remains an option.

Perhaps for some island nations, because they seek overseas markets and their population aspires to Western goals and goods, the only option is a kind of permanent dependence on outside assistance. Only time will tell how permanent this association will be. It would be foolish to expect developed societies to continue giving aid to societies that failed to develop.

Major constraints The complexity of hindrances to

development in agriculture in the Pacific can be specified as follows: - Lack of resource-base analysis. This

includes financial assistance, trained manpower, working facilities, equipment and support services. It is recognized that for the agricultural sector to become more productive there must be an effective system to generate agricultural knowledge, practices and technology, test and adapt them for appropriateness, package and disseminate them to farmers and secure their utilization by producers.

29

Less than effective communication between and among research and extension services, extension and producers, extension and information services. Inadequate or limited use is being made of accepted educational methods such as research field days, trials in farmers’ fields, extension field days, on-farm tests and demonstrations, mini-fairs and exhibits on a regional basis. Too few agricultural scientists, professionals and technicians spread too thinly over large and inaccessible geographical areas. There is less than effective management at certain levels of government systems, in particular the administration and technical units. Lack of clear, realistic, consistent marketing policies and structure. The islands would like to market their exports and obtain their imports under the most favourable terms possible. They need to be looking at the most cost-effective means of transportation. They might also look at diversification of markets or diversification of products to be marketed. Furthermore, the necessity to export must be considered in the light of international competition, not only in prices but for product quality, quantity and consistency of supply. This is further aggravated by lack of processing facilities and/or disadvantages of small- scale processingJpreserving. Lack of well-planned, organized and implemented manpower development programs with defined roles, assessed needs, established policies and procedures, short, intermediate and long- term in-service training - formal, informal, in-country and out-country. There is less than effective in-service training characterized by too few staff, limited resources, lack of continuity, and integration with program up-dating and build-up. Lack of well-conceptualized and well- defined programs, projects, plan of work and evaluation procedures to guide effective implementation and monitoring. In addition the frequent changes in policies affect implementation.

30 PACIFIC ECONOMIC BULLETIN

The social and traditional commitments of the islander’s insular life-style further consolidating resistance to change. In Fiji the traditional administration approaches are again being revived after twenty years of independence in the hope of strengthening and consolidating the production systems at village level. On the other hand, the research systems are not using approaches built on developing appropriate technologies based on traditional systems, and the full utilization of local resources. Smallholder bias and intensification of production bringing out new problems that may require technical, administrative and financial solutions.

Lack of well-defined credit institutions and unavailability or insufficient supply of farm inputs in rural farms. In the island nations traditional landownership and tenure systems have, at times, led to either exploitation of resources or their neglect rather than sustainable development and usage. Given the abovementioned situations one

should probably ask: ‘What is the role of the government and private sectors? How will the regional support schemes achieve their objectives and goals in various island nations?’

AGRICULTUREIN THE SOUTH PACIFIC 31

What is hindering the development of agriculture in the South Pacific? The producer’s view *

Charles Eaton General Manager, Southern Development Company Limited, Fiji

The determinants for successful commercial agricultural development in the South Pacific islands are very wide and complex and vary from one environment to another, from village to village, island to island, and country to country. The potential for and the constraints on each agricultural venture, producing either for local consumption or export, must be considered separately. What may be good for one operation and society may not be applicable to others. Scientifically oriented agropowers, such as the United States, Canada, Europe, the Soviet Union, Australia and New Zealand, apply basically similar agronomic principles and practices often irrespective of the environment or particular crop. The overriding concerns of these modem farmers or agrobusinesses are similar: budgetary constraints, climatic variables, supply and demand, and the availability of machinery and spare parts. In short, their concern is economic return per hectare, often regardless of the long-term social and ecological implications.

By contrast, smallholder subsistence agriculture in the South Pacific consists of a great range of often radically different agronomic designs and crop combinations, often incomprehensible to the modem agronomist, economist or rural development planner. Traditional South Pacific agriculture is a combination of many diverse factors based on land tenure systems which are often archaic and restrictive, ethnic and

*The comments and suggestions for improving and consolidating the agriculture sector’s productivity and credibility as expressed in this paper are founded on twenty-eight years experience of rural development in Fiji, s i x of which were with statutory government bodies and the balance with the Southern Development Company Limited (SDC), an organization that directs 450 farmers in western Viti Levu in the cultivation and production of Virginia tobacco. The company has recently diversified into alternative crops such as papaya for export, tomatoes for canning, and maize for the local stockfeed market.

religious considerations, hierarchical and extended family obligations, limited market potentials, and a very heavy dependence on traditional subsistence cropping to satisfy a wide range of household and cultural needs.

These factors must be considered when discussing and recommending paths for subsistence agriculturalists to enter the modern cash crop economy and for the progress of the plantation system in a changing political climate where more emphasis and parastatal assistance is focused on the smallholder farmer.

Quarantine Strong quarantine capability is essential

for any country, both for the exclusion of harmful pests and parasites and for export market requirements. Fiji enjoys relatively uncomplicated quarantine restrictions and has easy access to the Japanese, New Zealand and Australian fresh fruit commodity markets. The isolation of the island group has been an advantage in so far as the country is free of major plant and animal pests and diseases.

However, the quarantine advantages now enjoyed could easily change if smct and appropriate quarantine measures are not enforced and maintained. As quoted in the Fiji Agricultural Sector Study:

The discovery of a single fruit fly in a NMA (National Marketing Authority) consignment of mangoes in 1983 led to an extensive investigation by the Japanese Department of Agriculture that almost resulted in the banning of Fiji imports.’ SDC’s prime target crop, Virginia

tobacco, is soleiy used locally, so quarantine

‘A. McGregor and J. Macartney, Fiji Agricultural Sector Study, Vol. 1, Suva, Asian Development BankFiji Ministry of F’rimaty Industries, 1985, p.38.

32 PACIFIC ECONOMIC BULLETIN

is not an issue. However, the company’s recent venture into the export papaya market makes the strict regulation of quarantine safeguards vital. Some of the advantages Fiji has in entering the Japanese tropical fruit market are shown in Table 1.

Table 1 Areas from which Japan prohibits fruit and vegetable imports

Commodity Some prohibited areas Pest or that are potential disease competitors with Fiji

Pawpaw, guava, Australia, PNG, Burma, Mango fly mature banana, Thailand, Malaysia, (Dum dursadis) avocado, Philippines. India, Sri eggplant, M a , Pakistan, mango Micronesia

All fresh fruit Brazil, Australia, Meditemnean and vegetables Africa, West Indies fmit fly (excluding pine- (Caratitis apples, coconuts capitala) and immature beans)

Papaya, egg plant, water Malaysia, Indonesia, cucwbifs) melon, pumpkin Pi+ppines, and other cucur- Micronesia, PNG bitacecus plants

China, Taiwan, Thailand, Melon fly (Dacw

Underground Malaysia, Singapore, Burrowing plants (includ- h e r t o Rim. Brazil, nematode mg gmger and Hawaii Radopmolur dalo) SimilW)

Source: Derived from Native Land Development Corporation, Export Market for Pawpaw andMangoes to Japan, with Reference to Canada, Ausfralia and New Zealand (Report prepared by I. Mathews), Suva, May 1983.

The introduction of any pests or diseases into a relatively free area, as Fiji is, could be catastrophic for any export crops, therefore a high degree of quarantine vigilance is vital for any producer nation.

Marketing (or commodity) boards While successful agricultural develop-

ment needs substantial government backing and support, it is the private sector, individual and corporate, that will sow the seed and reap the immediate benefits. Commodity boards to facilitate investment, promotion and development of target products should be initiated by the private sector. It has been shown that progressive institutional structures can be a key factor in the success of the private sector. The successful Papaya Administration Committee (PAC) in Hawaii demonstrates what can be achieved by constructive

planning and realistic market strategies in addition to the coordination of the Hawaiian papaya industry agronomic and technical needs.

The committee, organized and managed by the industry itself, has developed a multi- million dollar export business with an annual production of over 25,000 kg of export papaya fruit. The Hawaiian papaya industry views on the PAC are:

Despite any failures or shortcomings of the PAC, the industry consensus is that it has been an effective organization. Persons interviewed have said that the PAC is primarily responsible for ‘holding the industry together through the EDB crisis’ and that without it, the industry could not survive in its present form.2 It was generally recognized in a study of

the Hawaiian papaya industry that PAC corrected disorganized marketing brought about by the cyclical nature of papaya production and the lack of papaya market planning industry-wide.3 Papua New Guinea has had success in commodity board structures, particularly in the revitalization of the private plantation sector and in the marketing of both coffee and cocoa.

Government should encourage and foster the private sector’s participation in commodity development by way of an appropriate authority to promote an identified export product, for example papaya, ginger, and root crops. While initial government funding may be necessary, the ultimate aim of the boards should be to be managed and funded by the industry itself. These committees can address themselves to the strategies necessary for the success of the small semi-subsistence Pacific islander agriculturalist who is entering a complex export-oriented market. The body can also design a package of practices and services to assist those small farmers who may not have the financial resources, technical knowledge or educational background to ‘put it together’. An authority can also ensure

*Loudat et d., ‘A method of assessing new crop potential in Hawaii: a case study of the Hawaiian papaya industry’, Research Extension Series Q/9 (October), Honolulu, University of Hawaii, 1987, p.12.

3 ~ u d a t , op. cit., p.11.

AGRICULTURE IN THE SOUTH PACIFIC 33

consistent product quality and a reliable and regular supply.

Table 2 Production, marketing and consumption (PMC) system

Component Classification

Land suitability Land tenure Climatic factors Pest considerations and control Seed availability Fertilizer needs Material requirements (tools, equipnent. etc.) Heavy machinery inputs Farm and plant energy requirements Government backups, mral services Agronomic research. agricultural information Labour requirements and availability Farmer market understanding Field extension services

Sources and dependability of material supply Farm and product financing Government product regulations Quarantine requirements, on/off shore Quality standards T r a n s p a and communication Storage and distribution Processing outlets Processing potential Processing infrasuucture Processing re uirement Market identijication, information Research and development

Market penetration Market size Product versatility Consumer awareness and preferences

Production

Marketing

Consumption

Source: Adapted from SaLAT, Feasibility OjIntroducing New Crops: Production - Marketing - Consumption (PMC) System, Washington D.C., National Science Foundation.

A commodity board can be the catalyst for all the components necessary for an industry to develop and for expansion by initiating agronomic feasibility studies, promoting market identification research and product development, issuing licences to farmers, packers/exporters and manufacturers, maintaining quality controls, allocating production and export quotas and maintaining close links with those government departments responsible for national agricultural development and its associated infrastructure. Similar proposals have been recommended for Fiji’s ginger

industry and the Fiji timber ind~s t ry .~ An extensive component matrix which a commodity board can coordinate is a modified version of the Production, Marketing and Consumption (PMC) system as outlined in Table 2.

Finance, availability and cost structure Once a commodity cost structure for

profit has been established, it is then appropriate to consider sources of finance for a specific project. Investment finance is a key determinant for the future of large- scale agricultural development in the South Pacific. Potential investors consider the political and economic environment rather than incentives, which alone cannot make up for a restrictive land tenure system, poor services and infrastructures and a lack of commodity policies. A flexible and open trade regime attracts investment in economically sound projects, away from those that offer artificially high financial profits behind protective walls.5

Capital and short-term loans for crop material inputs can be obtained from a number of sources:

Commercial banks. Bank finance is usually available at high interest rates and with onerous security requirements. Such finance is out of the reach of the majority of semi-subsistence farmers on customary, communally owned land.

Parastatal institutions. In Fiji, the Fiji Development Bank lends farmers and plantation developers capital with lower rates of interest and nominal security. The danger of parastatal lending bodies is the advancing of soft loans and loans influenced by political pressures that fall into arrears or have to be written off.

Overseas aid. There are a number of aid-funded agricultural projects for South

A. McGregor, The Fiji Fresh Ginger Industry: a Case Study in Non-traditional Export Development, Honolulu, East West Center, 1988; Fiji Institute of Agricultural Science (HAS), Planning Fiji’s Agricultural Future: the Challenge of Development Plan (1986-90), Proceedings of 9th Annual Congress, Lautoka, 22 March 1986; and P. Drysdale, ‘Timber marketing infrastructure development in Fiji’, in Proceedings of Timber Marketing Conference, Ministry of Forests, Suva, October 1985.

’Asian Development Bank, Asian Development Bank in Agribusiness, Manila, April 1988, p.13.

34 PACIFIC ECONOMIC BULLETIN

Pacific countries financed partly by donor nations. In Fiji two aid-funded projects, Yalavou and Ulusaivou, were funded by aid with marginal success, the social and political considerations superseding economic viability. In principle, the technical and managerial inputs of aid schemes can have long-term benefits. However, free aid grants to farmers can create a ‘gravy train’ complex that can retard farmers’ self motivation and curtail self-reliance.

Private, corporate and individual investment. Apart from the agronomic and economic factors, private corporate and individual investment in iong-term agriculture is influenced to a large degree by land tenure security and political stability. Political events in some Pacific countries over the past two years have created concern on the part of investors who had wished to invest but who now face the risk of political and social instability. This applies to both local and overseas capital.

Directed smallholder finance. Parastatal or private directing bodies, where farmers can obtain cash advance and credits foj the material inputs necessary for the Crops’ success, are an important source of agricultural finance. In the case of SDC, the company finances the farmers’ complete material requirements for the particular crop, either tobacco, maize or papaya (as does the Fiji Sugar Corporation). The company selects, orders, purchases, and delivers to its contracted farmers all crop inputs such as fertilizer, chemicals, essential equipment and the ‘tools of trade’ necessary to produce the specific crop. The company normally purchases in bulk and therefore at cheaper rates, and also selects from a wide range. This saves the small farmer money, time and effort in the procurement of such inputs. The managerial body of a directed smallholder operation can lease expensive farm machinery to farmers who cannot afford to purchase such machinery themselves. Contracting services using suitable tractors and ancillary attachments can correctly plough, harrow, ridge and cultivate fields. The financial advantages to the small farmers are enormous. For instance, in the Sabeto tobacco growing area, only five of the 131 farmers (4 per

cent) own tractors, but all have the use of these when required. The directing body also operates expensive irrigation units that water farmers’ crops at opportune times without the farmers’ direct involvement.

All these inputs are financed for the farmer at no interest and are repaid once the crop is harvested and purchased (see SDC Farm Advance Policies).

Cost structures can only be evaluated with the actual costs versus returns in the particular islandllocation and this must vary greatly from country to country. For instance papaya air freight cost between Taveuni and Nadi (a distance of 378 kilometres) is F$0.72/kg or 0.188 ctskm, while the Nadi-Sydney cost is F$0.5&g for 3059 kilometres, or 0.018 cts/km. The outer islands of most island countries must contend with the combined diseconomies of long distances and scattered locations; cost structures, therefore, can only be assessed in relation to economies of scale and distance.

Appropriate regulation The creation and implementation of strict

presentation and quality controls regulated by the particular industry are of vital importance if agricultural products are to be exported. The preference is for industry- imposed ‘self-regulation’ although government regulations are usually necessary to establish initial order in a particular business.

A ‘don’t care’ attitude by farmers, packers and exporters with respect to quality, size and maturity standards will quickly spell the demise of any export venture, particularly in markets demanding higher and higher standards.

In the early 1960s there was the first (and presumably last) shipment of bananas from Fiji to Japan. Of the 10,OOO cases loaded, eight boxes were damaged on the deck; many fruit from the broken boxes were quite inedible because of over-maturity at harvesting. On arrival in Japan, one-third of the shipment was marketable, one-third was given to institutions as unsaleable, and the balance discarded as inedible. The variety and quality of the fruit was quite acceptable, but maturity controls were not enforced, thus killing a potentially profitable market.

AGRICULTURE IN THE SOUTH PACIFIC 35

The ultimate decline of the banana trade to New Zealand was caused by a combination of hurricanes and poor quality standards.

This undisciplined attitude to production and marketing persists in 1988. In the case of export papaya, irregular sizes, over or under maturity and diseased fruit are all problems in regular shipments to Australia.

Market access and size The internal markets of most countries

are determined by local supply and demand and, apart from climatic abnormalities, markets generally regulate themselves. Overproduction can occur, sometimes because of poor planning and farmer risk- taking: for example in the drumhead cabbage glut of 1981 sugar-bags of cabbages were selling for 50 cents a bag.

In so far as overseas markets are concerned, both plantation and smallholder crops in the South Pacific have many disadvantages, particularly where direct transportation is nonexistent. Comparative constraints of the South Pacific producers versus their African, Asian and South American counterparts include long distances from sizeable markets (USA, Europe), higher labour costs, economies of scale, segmented infrastructures, and few commodity marketing structures. The situation may be easier for ‘ d ~ y ’ high value crops such as tea, coffee and cocoa, all of which can be stored without difficulty. However, perishable ‘soft’ items (for example, papaya, root crops, ginger and fresh vegetables) require fast, direct and relatively cheap access to their destination markets, normally Australia, New Zealand and Canada.

While the market scope and size of any product is determined by shelf price, acceptability and demand, the commodity supplier must have reliable and regular transportation services and maintain delivery and quality standards. As experience shows, even if abundant and cheap transport becomes readily available, Fiji could still only supply a modest proportion of these markets because of very limited volume production in almost all commodities. As an example, current areas under papaya total around 70 hectares; however, markets have been identified that

would require 1200 ha under papaya production.

If South Pacific counmes are to export quality agricultural products to import destinations in the South Pacific, specialized ‘niche’ crops, with the right economic and agronomic ingredients, have to be selected through forecasts of market potential. A close study of both the very successful New Zealand kiwi fruit and the Ecuadorian banana industries would assist in formulating product development policies. A ‘strategic action package’ could then be drawn to strengthen the PMC mamx based on the following key market factors:

Product development Package standards Distribution Communications and transport Selling tactics Forecasts, sales and promotion Media exposure Promotion Profit - the ultimate aim The priorities of these factors for this

market mix would vary from situation to situation but a realistic and objective development plan is essential for success. Once the strategy plan is in motion, strong and ongoing extension services are essential for the guarantee of supply and quality standards .

Summary While it is important that initiatives for

agricultural development should come from the people themselves, it is equally important that island governments realize that it is vital to expand traditional agriculture into a cash crop system if national economic growth is to be encouraged and sustained. It is doubtful if aid donor counmes will continue to provide financial assistance at existing levels into the next decade. Without a solid and healthy agricultural base few counmes can be economically self-reliant.

6McGregor and Macartney, op. cit., pp.4-9.

36

The major objectives for the agricultural sector in the Fiji Government’s Ninth Development Plan were :

improve the overall level of food self- sufficiency; concentrate resources and efforts in selected commodities for which there is an export or domestic market; make agriculture a more efficient means of employment and income generator in the rural areas; extend the benefits of new technologies and research to farmers and effectively promote greater farm management efficiency; continue to provide the necessary infrastructure and support services

PACIFIC ECONOMIC BULLETIN

including physical infrastructure (such as roads), extension and research services, provision of various incentives, storage improvements, marketing and distributive credit; adopt appropriate trade policies to protect local producers. Most island countries of the South

Pacific have the human and physical resources, by utilizing either the large-scale plantation and/or the smallholder farmer systems, to produce quality crops for both domestic and export markets. The problem is to seek what is right, find the right component mix, and then do it right.

7 ~ ~ . op. cit., p.4.