Food and Agriculture Organization of the United Nations
and South Pacific Regional Environment Programme
National Environmental Management Strategies (NEMS) were formulated between 1991 and 1994 for SPSIDS, based on each country's own strategies and specific economic, physical, cultural and social situation. These strategies are coordinated by a Task Force, comprising senior government representatives, NGOs and the private sector. It would be expected that NEMS implementation will involve close cooperation between relevant Environment Departments and other line Ministries and representatives of the civil society.
Planning for forests is presently underway, in Fiji, Samoa, the Solomon Islands, Tonga and Vanuatu through National Forestry Action Plans (NFAP). Forests conservation and development will invariably be affected by actions in agriculture, energy, transportation, trade, industrial development, tourism and human settlements. There is need, therefore, to integrate NFAPs into national development plans.
In the area of integrating nutrition policy with agricultural and rural development policy, some progress has been made in the development of National Plans of Action for Nutrition (NPAN) in Fiji, Papua New Guinea, the Solomon Islands, Tonga, Vanuatu, and Samoa. Increasing local food supplies is an important aspect of nutrition policy, but very few of the islands can sustain from their own resources the growing appetite for European-type diets. In countries where economic policies are focusing on deregulation (e.g. Cook Islands) and promotion of exports (e.g. Fiji, Samoa), NPAN would have marginal effects if not integrated within national development plans. Education is a key strategy for combatting malnutrition by convincing people to adopt healthier diets based on local products. Collaboration between various ministries and services - agriculture, education, health, industry, trade, community development - is essential for successful implementation of nutrition policies. Implementing strategies relating to food and nutrition must involve joint actions at governmental and non-governmental level and private sector agencies to promote nutritional well-being and household food security.
Fisheries are critically important to all SPSIDS, and for most of them, and in particular the more vulnerable atoll states, the fisheries sector represents the most important economic component in the national economy (the "engine of growth"). Foreign industrial fisheries provide revenue from licence fees and other economic benefits (e.g. provisioning in national ports), while national industries (fleets and processing facilities) are another source of export income. A healthy fisheries sector holds one of the keys to successful implementation of other aspects of an integrated agriculture and food policy.
Specifically on fisheries, national development strategies and planning of most SPSIDS involve developing and/or strengthening local investment in the fisheries sector. Some states such as Fiji and the Solomon Islands already have important domestic fishing fleets and processing facilities, ranking as major sectors of the economy. Through these facilities, these states are in a position to maximize added value from their fisheries. Other states such as Tonga, Kiribati, Vanuatu, Papua New Guinea and Samoa have ambitious plans for fisheries development, including in some instances, the privatization of some State-owned industries.
As part of the process, most SPSIDS seek to diversify activities in the fisheries sector, encouraging the establishment of new industries (e.g. longline fishing for the airshipment of tuna to Japan and other niche markets in the region) and trying to integrate the fisheries sector more closely into the expanding tourist industry (e.g. environmentally-friendly water sports and sport fishing), and where possible, the promotion of inland fisheries and aquaculture (including mariculture).
1.2. Public Sector Reforms
The public sector is a major component of the economies of many SPSIDS, for example between 60% and 80% of GDP in the Cook Islands, Samoa and Tuvalu. The size and expansion of the public sector in many SPSIDS, perhaps partly due to the required servicing of considerable aid flows, has to an extent "crowded out" the private sector in terms of gaining access to skilled labour (Fleming and Hardaker 1995).
Governments' role should be focused on areas with long-term consequences and a neutral impact: creating conditions conducive to more efficient and environmentally sound production, disseminating market information, up-grading research and extension services, assisting with the creation of market and credit institutions, enhancing efficiencies in product distribution and quarantine and product quality, providing a supportive regulatory framework which ensures a balance between agricultural exports and household food security, especially in the sanitary/phytosanitary area.
SPSIDS have already begun to reduce the role of government and encourage development of the private sector. But more progress can be made towards providing a more competitive environment, reducing distortions and eliminating inefficiencies in their domestic economies. For instance, to the extent that public sector wages tend to set the norm, alternative approaches to public sector wage setting could perhaps be envisaged.
The withdrawal of government from activities that can be better provided by the private sector can have a positive impact on the overall efficiency of a country's economy and its international competitiveness. But it is the nature of profit-oriented firms that services (e.g. transport, health) will be provided only where they turn a profit, and that will likely be too expensive for the poorer segments of society anyway. Maintenance of certain publicly-run services will therefore be necessary, especially in more isolated areas.
1.3. Economic Efficiency
Macro-economic policy reforms contribute to improving competitiveness, but they will be relatively ineffective unless they are combined with other reforms that lead to greater productivity of labour (through training and education) and capital (through research) and lower relative prices of non-tradable goods and labour through public sector and labour market reforms. Two vital issues for competitiveness on international markets are wage levels and exchange rates. The availability of local skilled labour has been dealt with earlier.
The level of wages in some SPSIDS has made maintenance of international competitiveness very difficult. Booth (1995) cites studies that indicate that minimum wage legislation in Papua New Guinea had in the past raised labour costs far above those in other comparable economies. Prior to the 1987 reforms, Elek et al (1993) note in their study of Fiji that labour markets were intensely regulated, trade unions were well-organized and powerful, and wage rates were high compared with those in the countries with which Fijian business was attempting to compete. According to that study, wage regulations, rather than improving the living standards of workers, led to slow growth, poor labour absorption into the work force, and declining per caput incomes.
Policies that aim at providing more flexibility in the setting of wage rates and that strengthen the link between wages and labour productivity are especially important in attemps to attract foreign investors and diversify their export sectors (often into labour- intensive industries). There is a need, however, to ensure gender equity in employment opportunities and renumeration in countries where women are currently concentrated in lower levels of employment. A case in point is fish and agricultural processing. In the case of tuna canning, processing costs in the South Pacific are much higher than in certain South-East Asian countries such as Thailand.
Unfortunately, the wage levels needed to be internationally competitive - all else being equal - may not constitute a living wage in a given national context and can lead to social tensions. Enhancing labour productivity can offset the need to lower wages. On the other hand, the level of domestic prices for basic necessities will largely determine the level of a "living wage". In this regard, the distance from suppliers raises prices for imported goods which the exchange rate can do little to remedy; on the contrary, adjusting high exchange rates would make imported goods even more expensive.
The exchange rate and relative inflation rates also have a great influence on the profitability of SPSIDS' enterprises and their ability to compete with foreign businesses. Elek et al (1993) refer to Fiji's post-1987 experience as an illustration of the power of changes in the real exchange rate on influencing competitiveness and export performance. The effectiveness of devaluation of the nominal exchange rate depends on the extent to which the increased prices of exportable and importable goods within the economy feed through into wage demands and general inflation.
1.4. Enhancing Domestic Performance
In a deregulated economy, the task of selecting appropriate production mixes and processes is best left to the private sector, guided by government policy objectives but also by international price relativities. Economic efficiency is necessary, even without reference to international competitiveness; it is the key to sustainable resource use, especially in resource-poor countries. On the other hand, allowing unbridled expression to market forces means governments, in a very real sense, giving up control of such important issues as food security and protection of the environment.
Should international operators determine the price of food to domestic producers and consumers, and indeed the very availability of food if local consumers are unable to compete for it on the global market place? The logic of free trade is that government policies should not favour some production sectors at the expense of others. But in that case, how will governments manage to give the necessary boost to a particular sector in the framework of a diversification policy?
A balanced policy towards development and trade takes due account of natural constraints and weaknesses and of considerations of social equity such as better distributing the benefits of such economic gains as have been registered. Correcting the inadequacies of market mechanisms will always be a necessary and legitimate area for public policy.
In the face of competitive international food prices and high local costs of production, aiming at increased food self-sufficiency may not be the best option in purely economic terms. For social and environmental reasons however, various options are open for stimulating increased and more efficient agricultural production.
Governments of SPSIDS are therefore faced with the problem: how to boost domestic output while protecting the fragile natural resource base and shielding local producers from international competition in ways negotiable under the new world trade regime?
There is an almost limitless range of measures which can be taken, including tariff or quota protection for specific sectors, preferably limited in time; improved publicly- or privately- (including cooperatively-) owned marketing infrastructures: (e.g. storage, slaughter facilities, packaging plants, transport); extension and training services; support for localised small-scale processing, incentives for the adoption of new technologies, and other measures.
With respect to tariffs, use of sliding scale tariffs would make it possible to maintain stable domestic prices while fixed tariffs may introduce greater price instability (a fixed 20% tariff on an essential foodstuff would amplify the domestic price rise when the world market price rose sharply, while a sliding scale could provide for lower tariffs in times of high world prices and vice- versa).
In some countries, land taxes based on estimated productive potential taking account of soil fertility, access to markets and ecological vulnerability have proved effective in forcing owners to farm more productively. It has been estimated that in Tonga, a tax of T$ 50 per hectare (1991 value) would stimulate output without provoking ecological damage. Getting prices right without over- or under-shooting the mark can be a difficult exercise. (Cameron, 1991). Strategies could include an attempt to reduce recourse to imported inputs (e.g. developing feeds from locally-available crop residues and processing wastes, rotations with legumes to increase soil fertility, integrated pest management), local energy production by use of solar, wind, and biomass, increased self- sufficiency in basic foodstuffs, pooling of genetic material, and regional training of staff at all levels.
Modernized sugar mills in particular, could become self-efficient in energy terms, and can even produce extra power to feed to the national electric grid (in Reunion, sugar industries generate 80% of the island power requirements). Considering the contribution to trade deficits of SPSIDS' dependence on imported hydrocarbons, the production of liquid fuels from sugar (i.e. alcohol) is an interesting option to consider. Some islands do, however, have hydrocarbon reserves and everywhere, the costs and benefits of developing alternative energy sources should be carefully considered, taking account of economic and environmental considerations.
Finally, in view of the volatile nature of international food markets, food security stocks are necessary as a means of stabilising supplies and prices within margins acceptable to both producers and consumers. Such stocks would be especially effective if they were decentralised at community level. Constituting and maintaining such security stocks implies costs which not all governments (or communities) can afford.
Most SPSIDS currently lack the financial resources and suitably qualified manpower needed for building a framework for integrated sustainable resource management and applying the related policies. Such factors undermine the capacity of national administrations to manage and conserve natural resources and to provide continuity in national policy and planning.
Investment in education and research to enhance technical and managerial skills and performance for civil servants, but also for farmers and technicians, in the area of natural resource management and conservation constitutes an essential complement to a nation's resource endowments. But skilled labour in the region is highly mobile, leading to serious "leakages". In the fisheries sector, it is estimated that to achieve a full complement of skilled workers, an excess margin of 30-40% is therefore necessary.
Strengthening technical collaboration with international, regional and national organizations is a transitional option for overcoming skills shortages, particularly where specialist inputs limited in time are needed. Promoting community support for sustainable approaches to management and conservation of resources is a way of tapping traditional knowledge and skills.
In the primary sector, urgent attention is required to gender balance issues. The world over (and the South Pacific is no exception), women spend more time on farm production processing and marketing activities than men. Yet women's education attainment is generally poorer and agricultural extension services are generally directed towards men. This constitutes a serious waste of human resources. While Melanesian women bear the major responsibility for food production, and provide a significant amount of labour in commercial agriculture, they are generally by-passed by agricultural education and extension. In Polynesian and Micronesian countries where women's role is less significant, they are nonetheless key contributers in both production and marketing of agricultural commodities. Their need for increased access to productive resources, improved productivity and added value is increasingly obvious as male-female and rural-urban disparities manifest in concert with the development of other sectors. An important first step would be to increase the visibility of women farmers contributions and constraints to agricultural production through time use studies and the disaggregation of traditional data bases by sex. Other specific actions, related to women's participation in agriculture, adapted from the Pacific Platform for Action prepared by representatives of SPSIDS for the Fourth World Conference on Women (Beijing 1995), are in Appendix 3 (Pacific Platform for Action Rethinking Sustainable Development for Pacific Women Towards the Year 2000).
Policy is generally silent on equity. In a climate of reform, opportunities around economic imperatives arise for the integration of social issues. Uncontrolled growth tends to widen gaps between landowners and landless rural people, rural and urban, male and female. Policies should be explicit on measures to ameliorate potentials for negative human impacts.
As a first step, countries of the region may wish to consider the usefulness of creating a regional economic union. Since such groupings are now being established in most regions of the world, SPSIDS will likely be considered as a group whether this is formalised or not. In the context of regional collaboration, a regional finance institution aimed in particular at stimulating private sector investments would be a useful corollary.
Several relevant regional organizations exist. One such is the Pacific Economic Cooperation Council (PECC). The PECC encourages a process of "open regionalism" amongst its members through the work of its various task forces. These cover many areas of current or future concern to SPSIDS, including food and agriculture, trade policy, fisheries, minerals and human resource development. Greater involvement on the part of the SPSIDS could contribute to the general "upskilling" through information exchanges with, and exposure to, ideas of business people, government officials and academics from throughout the region. However, it must be recognized that, with the exception of fisheries, to date the PECC has concentrated on issues of interest to the larger countries.
The Asia Pacific Economic Cooperation (APEC) recognizes the growing interdependence among the economies of the region, and seeks to intensify development cooperation and trade and investment liberalization. Its activities are aimed at enhancing accelerated, balanced and equitable economic growth in the Asia Pacific region, as well as globally. The SPSIDS (only Papua New Guinea is currently a member) may feel that membership of APEC could contribute to enhancing their development strategies. It could also contribute to ensuring their interests are not overlooked as the APEC process evolves further, perhaps to include trade liberalization negotiations and freer trade among its members. APEC's working groups and cooperative programmes include such relevant areas as human resource development, cooperation in science and technology, promotion of small-scale enterprises and improvement of economic infrastructure.
The necessary precautions and guarantees would have to be built in to any agreement to participate in such regional groupings in order to avoid such small states' interests being swamped amidst those of the larger members.
To benefit from export opportunities and from changes in world markets and trade, SPSIDS could seek to broaden their trade and investment links especially with the dynamic economies of the Asia-Pacific region. This can be achieved through trade and investment missions and through more active and focused participation in regional forums such as those discussed below.
Within the private sector, firms can form alliances with foreign companies. The specific advantage of this is that foreign firms can provide marketing support and access to markets, and training for new managerial and technical skills. But while SPSIDS clearly need such trade and investment links, the rest of the world is in no way dependent on links with SPSIDS. Investors will only be interested if they find the policy and economic environment conducive to optimizing returns on investments as discussed above. That being said, it is important to draw maximum benefit and resource rents for the country from negotiations with foreign companies for use of such resources as offshore fisheries and forest products, something which has not always been done with complete success in the past.
Regional fisheries cooperation in the South Pacific is well established and has achieved a high degree of success. States recognize that individually they are weak because of their small size, and alone they can be easily manipulated in fisheries matters. Indeed, it was this recognition that primarily led to the establishment, in 1989, of the South Pacific Forum Fisheries Agency (FFA) which is mandated to assist its member states coordinate fisheries policies and activities.
With respect to regional fisheries cooperation, in SPSIDS the most notable successes have been in managing national fisheries on a collective basis. Regionally for conservation and management purposes, FFA's member states have adopted Minimum Terms and Conditions (MTCs) of access governing the operation of tuna fishing fleets (covering important fisheries conservation and management information such as uniform vessel identification, trans-shipment of catches, catch and effort logsheets, observers, appointments of in-country agents, foreign fishing vessels in transit and flag state or fishermen's associations responsibilities), and a regional register of foreign fishing vessels.
In support of management and conservation efforts for inshore and offshore fisheries, the South Pacific Commission provides a range of technical assistance, most notably through resource assessments and information concerning the status of stocks. In addition to the MTCs and the regional register, several regional fishery initiatives have been agreed upon.
Under the auspices of the FFA, its members collaborate closely on a range of other fisheries conservation and management matters including, inter alia, information exchange, harmonization of national legislation, formal definition of maritime zones, port state enforcement and monitoring of vessels, and observer programmes. SPSIDS have also established fisheries collaboration, particularly with respect to tuna, with the US Western Pacific Regional Fishery Management Council, and given the complementarity of interests of these states and the US territories in the South Pacific, there is room for this cooperation to be strengthened.With respect to regional collaboration in fisheries matters of a commercial nature, such collaboration among SPSIDS has advanced at a slower pace than for other types of regional cooperation. This is primarily because national priorities and opportunities for commercial development do not coincide for all states, nor do the interests of national, foreign and joint-venture investors. Indeed, there are instances where the foreign partners in national tuna industries have refused to cooperate with industries in other South Pacific states on the grounds that such cooperation would be inconsistent with market competition.
Through the FFA, some member states have investigated the establishment of a regionally owned tuna processing facility and have sought closer cooperation in marketing. However, commercial considerations generally mitigate against closer commercial cooperation, though it is recognized by the smaller South Pacific states that dialogue on commercial cooperation should be maintained.
(i) Negotiating power. Membership of WTO is a means whereby SPSIDS can seek to protect their interests in future trade negotiations: the Uruguay Round agricultural trade reforms may be regarded as the first step in an on-going process of agricultural policy reform. The Agreement will be reviewed before the end of 1999, and future negotiations will be initiated before the transition period ends. These will no doubt have a further impact on the economic interests of SPSIDS, so it is better for them to be present than absent from the negotiating table.
On the other side of the argument, as already mentioned, it can be questioned whether states of such a small economic and trade weighting will be able to have any real influence on negotiations, including within the Cairns Group (see below).
(ii) Cairns Group. The islands' negotiating capacity could be enhanced through membership and active participation in the work of the so-called group of "fair" agricultural exporters, the Cairns Group (Fiji is already a member, alongside countries such as Australia, New Zealand and Argentina).
Trade negotiations are conducted on a "give-and-take" basis: what have SPSIDS to give (or threaten to withhold) in order to obtain concessions from other negotiating states? to what degree are larger members of such groupings likely to base their negotiating stance on the interests of the smallest members? However, the smallness of the islands and of the volume of produce they have on offer means they will never be seen as a threat, which should facilitate negotiation of special status deals.
(iii) Agricultural policy reforms. Through participation in multilateral negotiations, SPSIDS can have a legitimate claim to trade concessions in other areas in return for supporting specific agricultural reforms.
Constraints resulting from membership would however include: limitations on policy choices of member states in order to conform to GATT rules; loss of freedom to adopt agricultural policies which go against principles of market forces and non-intervention; and loss of freedom to adopt, and modify, tariffs and quotas, and other safeguard measures.
(iv) Links with other sectors. New items on the WTO's agenda, which will become increasingly important to SPSIDS, include links between trade and the environment, and labour issues. Currently, policies to protect the environment are allowed under the Agreement, provided they do not introduce distortions to trade and introducing them will, in any case, depend on the ability of SPSIDS to mobilise associated costs (though the planned negotiations on this point may lead to greater environmental sensitivity in trade policy).
(v) Other benefits. The strengthened dispute settlement procedures of the WTO will provide small trading countries like SPSIDS with the ability to protect their trading interests against unfair trade practices of stronger trading nations. Other benefits from WTO membership include greater access to trade and policy information, a higher level of technical assistance from the WTO and access to various types of compensation as developing countries. (vi) Food security considerations. In February 1996, the South-East Asian NGO Conference on Trade and Food Security adopted The Balay Declaration which includes, inter alia, the following propositions which may be worth consideration by governments in the context of possible WTO membership: i) the right to pursue policies aimed at national and regional food self-sufficiency should be acknowledged in international trade rules and in regional trade approaches; ii) developing countries should be granted easier access to waivers on the implementation of liberalization measures in sensitive sectors vital to food security. In fairness to the WTO, mention must be made of the Decision in the Final Act to assist poorer countries of the region and elsewhere in the event of their food security being adversely affected by the application of the Uruguay Round agreements. (vii) Joint Delegation. Active membership also involves costs in terms of maintaining a delegation in Geneva, and also, to have any chance of being effective, substantial knowledge and negotiating skills which the countries of the sub-region appear not to be able to spare from domestic duties. Common representation in Geneva could alleviate such difficulties. A Review of Policy Alternatives to Developing Countries and compliance with GATT is presented in Appendix 4 Review of Policy Alternatives to Developing Countries.
- Establishing international, regional and national cooperation in the conservation, management and development of national and regional resources. FAO and other organizations could provide technical support for initiatives of this nature, including the strengthening the scope and number of Technical Cooperation among Developing Countries (TCDC) exchanges with other regions.
- Establishing a regional promotion and export marketing agency with, in the first instance, a generic mandate (each country to market its products individually if it thought that necessary) but working towards joint marketing.
- Establishing procedures for centralising and sharing information on markets, technical matters and so on (mandate to be defined limitatively in the first instance to avoid overload and disappointment). Connection through e-mail and the Internet, with a central processing unit, would greatly assist with information exchange. Indeed, regional closed "conferences" could be set up on e-mail.
- Give objective and detailed consideration to the option of establishing a regional economic union adapted to the characteristics of the SPSIDS of the region.
- Consider the benefits to be gained from joining the Pacific Economic Cooperation Council and the Asia Pacific Economic Cooperation, and possible costs involved.
- Review the options for increased regional cooperation in fisheries products marketing and processing.
- Carefully assess, possibly on a joint regional basis, the advantages and disadvantages of joining the World Trade Organization; in case of membership, establish a joint delegation in Geneva with suitably qualified and devoted South Pacific staff, complemented as necessary by non-local specialists.
- Develop methods and skills to promote an integrated approach to natural resource management, with possibly a coordinating agency for inter-ministerial collaboration.
- Integrate major national sectoral plans such as National Forestry Action Plan and National Plan of Action for Nutrition into overall national development plans.
- Review public sector wage setting mechanisms in order to avoid disrupting private sector wage mechanisms and to ensure efficiency and competitiveness.
- Carry out a thorough review and assessment of public sector services, determine which can be turned over to the private sector; allow private sector competition alongside public sector services when these are maintained.
- Within the cultural context of respective SPSIDS, analyze and prioritize comparative and competitive advantages for micro- enterprise development, particularly those which may provide rural employment.
- Review policies for agriculture in the light of the respective economic costs of domestic and imported produce, social and environmental aims, and the constraints imposed by international trade regulations.
- Undertake a study of available biomass which can be used for energy production and examine the technical, economic and environmental aspects with a view to reducing imported energy imports.
- Examine the possibility of reducing imported inputs for agriculture by the use of locally-available by-products for use as animal feed, introduction of legumes into crop rotation as a source of nitrogen, use of by-products as packing materials for fruit and vegetables on the domestic market and so on.
- Evaluate the volume and type of produce required to constitute national and community-based food security stocks aimed at maintaining prices within a range acceptable to producers and consumers; evaluate the cost of constituting and maintaining such stocks; make contingency plans and basic rules for recourse to such stocks.
- Allocate a larger share of national budgets to investments in education and training, including on-the-job training and improved agricultural extension services in order to raise technical and managerial skills in agriculture, fisheries, forestry and applied environmental sciences.
- Scrutinise extension and training services for gender bias and ensure that women benefit equitably from training appropriate to their role and tasks.
The above document provides an analysis of the main policy issues before governments, including some policy options, at national and regional level, which governments may care to consider.
The two related documents - respectively on sustainable management of natural resources and on sustainable primary production - provide additional, more detailed information, and set out some of the technical options available.
Anon., 1996, "So Our Rice Bins May Always Be Full, The Balay Declaration of the Southeast Asian NGO Conference on Trade and Food Security", Balqy Kalinaw International Center, University of the Philippines, Quezon City, 13-16 Feb. 1996
Booth, A., 1995, "Development Challenges in a Poor Pacific Economy: The Case of Papua New Guinea", Pacific Affairs
Cameron, J., 1991, "Practical Economies of Food and Nutrition Policy in Small, Open Economies: A Case Study of Four Pacific Societies", FAO's Nutrition Consultants' Reports Series No. 87
Decloître, 1995, "In the Red", "Pacific Islands Monthly", June 46-47
Elek, A. et al, 1993, "Liberalisation and Diversification in a Small Island Economy: Fiji since the 1987 Coups", World Development
FAO, 1994, Final Report of the International Conference on Nutrition Follow-up Meeting for South Pacific Countries, Nadi, Fiji, October 1994
Fleming and Hardaker, 1995, "Pacific 2010: Strategies for Polynesian Agricultural Development", National Centre for Development Studies
Grynberg, R., 1994, "The Closure of the Uruguay Round and its Impact Upon Forum Island Countries", University of the South Pacific
PECC, 1995, "Pacific Economic Development Report 1995: Advancing Regional Integration", Pacific Economic Cooperation Council, Singapore
UNDP, 1994, "Pacific Human Development Report"
UNFPA, 1995, "Population IEC in the Pacific Island Countries: Trends and Challenges", Discussion Paper No. 6
Continues: Policies for Sustaining Food and Agriculture in the South Pacific - Appendices