Proposed Sugar Industry Restructuring and Land Conflict in Fiji

View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by The Australian National University PROPOSED SUGAR INDUSTRY RESTRUCTURING AND LAND CONFLICT IN FIJI Old wine in a new bottle? Proposed sugar industry restructuring and land conflict in Fiji Padma Lal with Mahendra Reddy The proposed restructure of Fiji’s sugar industry has the Padma Lal is a reader in potential to change fundamentally the incentives facing Environmental Management and stakeholders and their interaction. How well the stated Development, Asia Pacific School objective of ‘unity in purpose’ is achieved will depend on of Economics and Government, The Australian National University. whether the causes of the current land conflict are addressed and whether the established decision-making Mahendra Reddy is a senior process can help build trust, transparency and lecturer at the Centre for accountability. Ultimately, the success of the proposed Development Studies, School of industry restructure may depend on the commitment of Social and Economic Development, University of the South Pacific. Fijian landowners and the Fijian administration to review the way returns are shared among stakeholders. The Fijian sugar industry is facing major among the stakeholders. Each stakeholder challenges, including declining productivity, group—the mill workers’ unions, transport deteriorating transport and processing workers’ union, sugarcane growers’ unions infrastructure, declining sugarcane quality, and associations and the landowners—is and declining sugar recovery rate (Sugar ‘scrambling to secure “their fair share” of a Commission of Fiji 1997). The roots of many crumbling and shrinking pie’ (Sugar Industry of these problems can be found in past and Proposal 1999). The current structure includes current industry structure (Box 1). a payment system which has little or no These elements include an institutional commercial basis and which does not provide arrangement based on a prescriptive Master incentives to reward those who work towards Award and land leasing system which improving productivity and quality. encouraged an adversarial relationship According to the industry’s own assessment, 79 Pacific Economic Bulletin Volume 18 Number 1 May 2003 © Asia Pacific Press PACIFIC ECONOMIC BULLETIN it is too bureaucratic and legalistic (see back at least to the early days of European Moynagh 1981; Lal 1992, 1997). settlement in the 1800s. The origins of the To address this apparent lack of unity of present conflict, however, can be found in purpose among key stakeholders, the sugar the indigenous land ownership and industry has developed a proposal to provide management system introduced in Fiji key interest groups with a more effective stake during the colonial era, in subsequent in the operation of the industry. Essentially, legislation, and in misperceptions and the new structure is expected to provide misinformation about leases, lease rents and incentives for stakeholders, in particular the the profitability of sugarcane farming. landowners, the growers and the millers, to The present land ownership and cooperate in developing the industry rather management system is a creation of the British than compete over shrinking resources. colonial government under Sir Arthur Gordon (1875–80). To prevent alienation of Origins of current land conflicts Fijian land, the government legislated that custom-held land could not be bought or sold, Conflict over land is nothing new to Fiji. even among Fijians themselves (France 1969). Tensions and disagreements over land go Although land was owned by individuals, Box 1 Key elements of Fiji’s sugar industry structure • A single processing firm, the Fiji Sugar Corporation, operates four mills on the two main islands, Vanua Levu and Viti Levu. • Rain-fed sugar sugarcane is grown mainly on small farms. • Land is leased on terms and conditions stipulated in the Agricultural Landlord and Tenant’s Act (ALTA). • Most sugarcane is grown on land leased from indigenous Fijians who own 92 per cent of land that is inalienable. • Leases are negotiated with the Native Land Trust Board acting as custodians on behalf of the traditional owners. • Leases are issued by the Native Land Trust Board, often without landowner consent. • The sugarcane payment system is based on sugarcane yield, not on the quality of sugarcane supplied to the mills. • A prescriptive Master Award under the Sugar Industry Act 1984 which stipulates key industry activities including — planting and cultivation of sugarcane by registered growers — harvesting and delivery mode of sugarcane to the Fiji Sugar Corporation — sale and purchase of sugarcane under quota to the Fiji Sugar Corporation — establishment and incorporation of the sugarcane harvesting process — the manufacture, storage, marketing, delivery and sale of sugar and by-products — the sharing of the sugar price between the processor and growers and the manner and timing of sugarcane payments — the manner in which industry-related disputes can be settled by the Sugar Industry Tribunal. 80 Pacific Economic Bulletin Volume 18 Number 1 May 2003 © Asia Pacific Press PROPOSED SUGAR INDUSTRY RESTRUCTURING AND LAND CONFLICT IN FIJI families, clans or other higher levels of in 1940 the government created the monopoly communal aggregation, ownership was Native Land Trust Board (NLTB) under the highly flexible and dynamic and land often Native Land Trust Act (NLTA). The Act gave changed hands (Ward 1995). In an effort to the NLTB sole control over custom-held land, simplify the colony’s management, the and this facilitated dealings between the then colonial government created over time a highly major agriculturists—the Colonial Sugar rigid ownership system that entrenched non- Refinery (CSR) and Indian Fijian growers— alienation and vested ownership primarily and the indigenous owners. However, the in the mataqali.1 Even today, this system sits NLTB is not obliged to consult with uneasily with the Fijians and is partly landowners about renewal or issuance of responsible for the discontent among Fijian leases, a practice which continues to landowners about the use and management contribute to the conflict over land. of their land (Rakai et al. 1995; Ravuvu 1983; The NLTB issues and renews leases, Nayacakalou 1971). collects rents, takes 25 per cent of the rent Following European settlement, income for administration and pays heads demands for productive land for expansion of the land-owning units 22.5 per cent of of various primary industries required the the gross rent collected (Kamikamica and settlers to deal with individual landowners Davey 1988).2 The rest is divided among the in areas remote from the main areas of members of the land-owning units, who may settlement. A land tenure system was created number from a few hundred to more than whereby land could be leased for a 25-year 1,000. The returns to individual landowners period. However, European farmers had thus vary considerably. three main complaints: the 25-year leases The powers of the NLTB were retained were too short to justify major investments; under the Agricultural Landlord and Tenant the 1880 Ordinance did not allow Act (ALTA) introduced in 1976 to rationalise landowners to pay compensation to the the leasing of Crown, Native and Freehold tenant when the land reverted to them; and land for agricultural purposes. Two main the leasing process was daunting, involving features of ALTA have been central to the personal approaches to the mataqali heads, conflict: the stipulated rental amount and the applications to district heads and councils, length of lease. The rental amount was fixed and payment of ‘bribes’ (France 1969). In under ALTA at 6 per cent of the unimproved 1916, a Native Land Ordinance was passed capital value (UCV), with a mandatory which required all land to be leased by the reassessment of the UCV every five years by a government for a period of 25 years with the committee of valuers appointed by the possibility of an extension for another 10 government. Second, all leases granted under years. Under this Ordinance, Fijian ALTA since 1 September 1977 were to be for a landowners were required to pay minimum of 30 years. The holders of leases compensation to the lessee for improvements granted before this date (the great majority of in the case of non-renewal of the lease—a which were for a term of ten years under condition which Fijian landowners were ALTA’s predecessor the Agricultural unhappy about. Landlord and Tenant Ordinance) were To bring a semblance of stability to the entitled to a single extension of 20 years under leasing of land and to minimise the ALTA. As a result a majority of the leases began transaction costs of dealing with individual to expire from 1997, with landowners mataqalis, as well as simplifying the process, generally unwilling to renew them. 81 Pacific Economic Bulletin Volume 18 Number 1 May 2003 © Asia Pacific Press PACIFIC ECONOMIC BULLETIN Non-renewal of leases Reasons for non renewal The reasons for non-renewal given by the Despite extensive dialogue between the then landowners are several. Some are valid while major political parties representing the two others are based on misinformation or ethnic communities, the Soqosoqo no Vakavulewa incomplete data. Four reasons commonly ni Taukei (SVT) for the Fijians and the National cited include Federation Party (NFP) representing the • landowners’ desire to recover some of IndoFijians, not much progress was made. An their land for use by the mataqali members ALTA Task Force was established, involving • a desire on the part of the landowners to key representatives from the SVT and NFP, the participate in commercial agriculture NLTB and the Sugar Cane Growers Council, • inequitable sharing of the ‘subsidy’ with the primary objective of resolving the land received by Fiji under the various issue. The deadlock over ALTA could not be preferential market access arrangements overcome, partly because of the extent of the • past rents were too low and the necessity disagreement between the two groups resulting to charge a ‘market rent’ (higher rent) for from misunderstandings and incomplete their land.

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