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Fiji Kava Value Chain Analysis Report

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Fiji Kava Value Chain Analysis Report FIJI KAVA VALUE CHAIN ANALYSIS FIJI KAVA VALUE CHAIN ANALYSIS Prepared, printed and distributed with assistance from the Australian Government and New Zealand Government through the Pacific Horticultural and Agricultural Market Access (PHAMA) program. The PHAMA program is administered by AECOM-Kalang and aims to improve economic growth and livelihoods in Pacific countries by increasing Pacific horticultural and agricultural exports to international markets. 2 Disclaimer This publication has been funded by the Australian Government through the Department of Foreign Affairs and Trade. The views expressed in this publication are the author’s alone and are not necessarily the views of the Australian Government. Contents Abbreviations List ..........................................................................................................4 Executive Summary ....................................................................................................... 7 1. Introduction ............................................................................................................... 15 1.1 Overview ...................................................................................................................................16 1.2 PHAMA Support for the Kava Sector ........................................................................16 1.3 Study Methodology ............................................................................................................19 2. Background................................................................................................................21 2.1 General.....................................................................................................................................22 2.2 Agricultural Sector Overview ......................................................................................22 2.3 Institutional Framework.................................................................................................. 23 2.4 Policy Framework .............................................................................................................24 3. The Kava Value Chain .............................................................................................27 3.1 Overview .................................................................................................................................28 3.2 Kava Production ................................................................................................................30 3.3 Production Systems .........................................................................................................30 3.4 Value Chain Actors ...........................................................................................................33 3 3.5 Markets and Marketing ................................................................................................... 37 3.6 Legal and Regulatory Framework .............................................................................42 3.7 Gender Equality and Social Inclusion ......................................................................45 3.8 Value Chain Analysis ........................................................................................................47 4. Conclusions and Recommendations ....................................................................51 4.1 General Conclusions ......................................................................................................... 52 4.2 Recommendations ...........................................................................................................53 Annex 1 Kava Production and Price .........................................................................57 Annex 2 International Trade in Kava Products ......................................................63 Annex 3 Contribution of Kava Value Chain Actors ............................................... 71 Annex 4 Gender and Social Inclusion in the Kava Value Chain .........................75 Annex 5 Kava Value Chain Analysis ........................................................................85 Annex 6 Kava Value Chain Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis .........................................................................................................93 Annex 7 Case Studies ..................................................................................................97 Annex 8 Interview Guide ........................................................................................... 117 Abbreviations List Abbreviations Description Abbreviations Description Africa, Caribbean and Pacific Horticultural & ACP Pacific PHAMA Agricultural Market Access Program Agricultural Marketing AMA Authority PIC Pacific Island Countries AUD Australian Dollar PS Permanent Secretary BAF Biosecurity Authority of Fiji SPC Pacific Community Bilateral Quarantine Strengths, Weaknesses, BQA SWOT Agreement Opportunities and Threats Codex Alimentarius TA Coordinating Committee CCNASWP for North America and the TC Tropical Cyclone South-West Pacific TRTC Tutu Rural Training Centre Dalsey, Hillblom and Lynn DHL USA United States of America (courier service) University of the South EU European Union USP IAS Pacific Institute of Applied Food and Agriculture Sciences FAO Organisation UK United Kingdom Fiji Crop and Livestock FCLC United Nations Children’s Council UNICEF 4 Fund Food and Drug FDA WG Williams & Gosling Administration (USA) WHO World Health Organisation FDB Fiji Development Bank WTO World Trade Organisation FJD Fijian Dollar FSC Fiji Sugar Corporation Good Agricultural GAPs Practices GDP Gross Domestic Product Gender Equality and Social GESI Inclusion Integrated Human IHRDP Resource Development Programs International Kava IKEC Executive Committee Market Access Working MAWG Group MoA Ministry of Agriculture (Fiji) NES National Export Strategy NZD New Zealand Dollar 5 Executive Summary Background Kava makes a significant contribution as well as employing large numbers to rural livelihoods in some parts of Fiji, of people in harvesting, processing particularly on the outer islands where and retail operations. Kava is widely there are limited other opportunities, consumed in Fiji but is also exported and is also important in cultural and in significant quantities to countries social dimensions. It is one of the most including Kiribati, United States of important cash crops in some rural areas America (USA) and New Zealand. Industry Metrics Whilst the statistics are incomplete, it is possible to make some broad estimates of the key industry metrics as follows: No. of kava growers 10,400 (1 in 8 rural households) Area of crop 4,000 – 5,000 hectares Area harvested annually 1,000 – 2,000 hectares Yield 2.6 – 2.8 tonnes/ha harvested Kava produced 4,000 – 4,500 tonnes dry weight, farmgate Imports 100 tonnes dry weight 8 Exports 250 tonnes dry weight Shrinkage, wastage and losses 600-650 tonnes dry weight Domestic consumption 3,300 – 3,700 tonnes dry weight Marketing Pathways The domestic marketing pathway The processors pound and package begins with around 10,400 kava kava for retail sale. Some processors growers who sell mostly dried kava for are also exporters who export either cash payment in the village to various in raw or processed forms. Small traders, agents and middlemen. Some amounts of kava are imported, mostly kava growers also sell small amounts from Vanuatu. Some of this imported of kava locally in village or provincial product may also be re-exported. The town markets, and some is used within great majority of the kava is sold in raw the rural communities to meet social or powdered form to retail customers obligations. However, the majority of the through the municipal markets or kava is washed, sun-dried and packed speciality kava shops. in sacks or bales and transported by road and inter-island shipping to the major urban centres where it is sold to processors, wholesalers and retailers. Kava Production Cakaudrove, Kadavu, Lomaiviti and smallholders, farming less than one Bua are the major kava-growing areas hectare of mataqali land. Most kava is of Fiji with some 64% of registered grown using a combination of family growers located in these provinces. On and hired labour. Overall, only 2.1% Kadavu, over 80% of all households of kava growers are women, but the grow kava. In Cakaudrove, Lomaiviti percentage varies from negligible to and Bua the equivalent is in the 35% to up to 3%-4% in some provinces. 42% range. However, these figures greatly The great majority of Fiji’s kava underestimate the role of women in farmers are iTaukei unmechanised the kava value chain. Other Value Chain Actors Intermediaries or middlemen fulfil an There are about 35 kava exporters important role in the kava value chain registered with the Ministry of as they connect farmers to the market. Agriculture (MoA) exporting kava to Middlemen can be market vendors, various destinations, but many of these businesses, exporters or buying agents. are not currently active due to the high Some have established packhouses domestic prices making profitable to undertake primary processing: exporting difficult. There are also two washing, sorting, drying and bagging. kava processing factories. 9 Exporters also engage middlemen and agents to procure kava on their behalf. Markets and Marketing The domestic market dominates Fiji’s Over the last decade Fiji’s exports of kava sector. The domestic market kava averaged
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