Loss of preferential access to the protected EU sugar market: Fiji's response

• Published in: The Australian journal of agricultural and resource economics 2023-07, Vol.67 (3), p.480-499
• Main Author: Anderson, Kym
• Format: Article
• Language: English
• Subjects: Access; agricultural subsidies; consumer taxation; Consumers; Equivalence; Estimates; Government; international competitiveness; nominal rate of assistance; preferential market access; Prospects; Sugar; Sugar industry; Taxation; Time series
• ISSN: 1364-985X; 1467-8489
• DOI: 10.1111/1467-8489.12526

The Fijian government's response since 2010 to the loss of preferential access to the European Union's previously highly protected sugar market has been to increasingly support its cane growers and millers. That support is now much higher than most other countries' assistance to the sugar industry. This study provides detailed estimates of the changing extent of those transfers to producers from both taxpayers and consumers during 2010–22. In doing so, it estimates for the first time an annual time series of nominal rates of assistance to producers and consumer tax equivalent rates (NRAs and CTEs, but they are also converted to producer and consumer support estimates as defined by the OECD). Those NRA and CTE estimates have been approaching 100%. The level of support was equivalent to 10% of Fiji's agricultural value added in 2018–21 and is around 5% of its government's consolidated revenue—at a time when the government has a very high debt‐to‐GDP ratio (90% in 2022). Since the nature of the support is economically inefficient, inequitable, environmentally damaging and fiscally unsustainable given foreseeable market prospects, suggestions are made as to how that support might be repurposed to provide better economic, social and environmental outcomes for Fiji.