Pacific Conference on Finance and Investment: “Reconciling Governance Systems and Deepening the Financial Sector in Market Economies”

Spotted in the Fiji Sun yesterday: Fiji National University is running a conference on finance and investment with the theme of “Reconciling Governance Systems and Deepening the Financial Sector in Market Economies”.

According to the draft programme on the FNU web site, on Day 1 the conference will be opened by Fiji’s Prime Minister Voreqe Bainimarama – to be confirmed –  and Day 2 will be opened by Fiji’s number 2 in command, Attorney General Aiyaz Saiyad Khaiyum whose multi-ministry mandate includes the post of Minister for Trade and Commerce.

A packed Day 1 begins with a plenary session on the mining sector in Australia and China with lessons for Fiji, followed by a session on global auditing standards, three paper sessions running in parallel, on 1) investment and financial development, 2) audit and accounting, as well as 3) culture, gender and health; and two plenary sessions follow on investment in Fiji, and investment trends in a global economy.  The day finishes with two paper sessions running in parallel on miscellaneous issues and a notable session on the role of financial institutions in growth attended by the chief executives of the five major banks operating in Fiji including of ANZ, BSP and Westpac.

An almost equally packed Day 2 begins with plenary sessions on competition policy and the implications of demographic change for growth in the Pacific region; followed by three paper sessions running in parallel, two of which are on unfair trading practice and mediation, and one focuses on price regulations in Fiji.  After lunch two plenary sessions follow on growth opportunities from economic integration between PICs from USP former head of economics Biman Prasad, and monetary policy transmission. Following these sessions are two parallel paper sessions themed mainly on regulation of pricing and on trading fairness issues.

Day 3 contains four plenary sessions on the vulnerability and resilience of small states given by the rather eminent Professor Lino Briguglio who was, among many other things, a lead author for the Intergovernmental Panel on Climate Change Third and Fourth Assessment reports, the potential of ICT, mobile money and on ICT security.   The conference finishes with a panel session on ICT security and a tour of the FNU campus.

Fiji Minister for Primary Industries: Speech to Fifth Regional Meeting of Heads of Agriculture and Forestry

This post is the second of two posts containing the content of keynote speeches to the biennial Heads of Agriculture and Forestry Services meeting held to determine the strategic course of Land Resources Division of SPC.  The first post contains summary content of a speech made by Dr Jimmie Rogers and this second post contains the complete opening speech of Ratu Joketani Cokanasiga, who was Fiji’s Minister for Primary Industries at the time.  His speech lays out the challenges for agriculture in the Pacific region.

5th Regional Meeting of HOAFS

Opening Address, 24 September 2012, 9am

“Your Excellencies;

Heads of Agriculture and Forestry Services from the 22 Pacific Island Countries and territories;

Mr. Michael Hailu – the Chief Executive Officer (CEO) of the Technical Centre for Agricultural and rural Co-operation (CTA);

Dr. Vili Fuavau – FAO Sub-Regional Representative to the Pacific islands;

Dr. Richard Markham, Program Manager for Pacific Crops for the Australian Council for International Agricultural Research;

Distinguished Representatives from Australia, the European Union, Regional and International Organizations and Agencies;

Representatives of the Secretariat of the Pacific Community;

Colleagues and Friends;

Ni sa Bula!

On behalf of the people and Government of Fiji, let me extend to you warm greetings.

I am honoured to be able to welcome you to the 5^th Heads of Agriculture and Forestry Services meeting, hosted by the Secretariat of the Pacific Community’s Land Resources Division.

The agriculture and forestry sectors of the Pacific Islands are facing a number of strategic threats: from rising food insecurity associated with rising imported food prices and shrinking national food production; from climate change, and the threat that rising temperatures and sea levels pose to our forest resource and food production systems; and from urbanization, the challenges that poses to the management of our agriculture and forestry resources, and the health of our populations.

The Pacific’s population is booming, with estimates indicating it now exceeds 10 million and is expected to reach 15 million by 2035. That is equivalent to a growth rate of 188,000 people – equivalent to the population of Samoa – are being added to the total each year. An increasingly, that rising population is found in our towns and cities.

To meet the expected demand for food without significant increases in prices, the Pacific will need to increase the production of food by over 50%.

Yet agricultural productivity in the Pacific is falling, and has been for the last 3 decades as our populations move off the land to urban and per-urban centres, leaving often fallow land behind. And with the added threat of climate change, the ability of our food production systems to meet this level of rising demand is under threat.

Traditionally, communal living and subsistence economy has been the Pacific way. It is that sense of belonging to community that draws people together. Island life for many was abundant whether they were living in remote inland areas or large coastal villages. But fast-forward to the present day and projections of the movement and growth of people in urban areas is at an unprecedented rate in the capitals across the Pacific.

The challenge is how to feed our new, urban populations when the experience of the intensification of agriculture across the Pacific has led to land degradation, deforestation and pollution of scarce water resources. These challenges are further compounded by the impact of sea level rise, and increasing pest and disease incidences, associated with climate change.

Outside the Pacific, the world is facing the same problems, with the Global Population estimated to hit 9 billion in the coming decades, with the FAO estimating that the world needs to produce 70–100 per cent more food by 2050 in order to meet demand, and stem food price rises already at risk due to high energy prices and the use of food for biofuels.

Subsequently, regional co-operation and support is critical to help us face such a complex array of challenges from without and within. The role for regional leadership in facilitating such co-ordination, as well as providing capacity building and supplementation, remains strong.

However, there remain significant challenges to developing national and regional policies that support the wider emergence of more sustainable forms of land use and efficient agricultural production.

The complexity, and often lack, of information flow between scientists, practitioners and policy makers is known to exacerbate the difficulties, despite increased emphasis upon evidence-based policy.

Just as it is imperative to ensure that policy decisions are informed by scientific knowledge and priorities, it is also vital that research should be directed at issues that influence current and future policy frameworks and be relevant to the needs and issues of farmers and agriculturalists in different parts of the world, enabling public science and policy institutions to become proactive rather than reactive.

Therefore, the Pacific needs SPC to continue to not only be at the forefront of cutting edge research into agriculture and forestry issues in the Pacific, but develop systems for translating and the sharing of important research that is and has been done, so that it can better serve policy.

Likewise, there is a need for greater emphasis on the development of evidence-based systems for analyzing the impact of policy and research interventions, to facilitate strategic decision-making, and sharing of important lessons between the members of our region.

In order that we can confidently face the challenges of not only the come years, but decades and indeed the 21^st century, we need to, as a region, find answers to the strategic threats we face, and develop practical solutions.

We need to know what the predicted critical impacts of climate change will be on agricultural yields, cropping practices, crop disease spread, disease resistance, so that we direct resources accordingly.

We need to know how best we can encourage agricultural and forestry intensification and extensification, without negatively impacting on our soil health, land and marine biodiversity and climate change emissions.

We need to know what gains could be achieved by crop genetic improvement to help us cope with both rising demand, and increased environmental stress.

We need to know how we can develop suitable, middle and small-scale animal production systems capable of providing sufficient economic return without impacting on the environment, in order to meet growing demand for meat and animal products.

We need to know what market and non-market mechanisms will need to be put in place to help link our agricultural production bases to increasingly urban markets, as well as markets overseas.

We need to know what are the effective and efficient policies and other interventions to encourage sustainable land management, to ensure that in rising to meet the challenge of rising population growth, we maintain sustainable land development practices.

We need to know how best to encourage adoption of new technologies and new approaches to agricultural and forestry production, and resource management, by small-holder farmers.

We need to know what role the private sector and farmer associations can play in the supply of critical information to farmers, and how much agricultural extension, farmer mobilization and empowerment, be achieved by the use of new technologies, such as mobile phones and the web.

We need to know how the transition from today’s smallholder based agriculture to sustainable agricultural intensification can occur in ways that maintain cultural and environmental livelihoods for smallholder farmers.

We need to know what steps need to be taken to encourage young people to study agricultural science, to reverse the flow of our young people away from vocations in agriculture and forestry.

We need to know what is causing the change in consumer behavior towards the consumption of foods with poor nutritious value, and what intervention methods can be developed that encourage and provide incentives to all consumers to eat healthier diets in order to combat the rising tide of NCDs.

Given the threat of population pressures combined with climate change, the goal for the agricultural sector is no longer simply to maximize productivity, but to optimize across a far more complex landscape of production, rural development, environmental, and food consumption outcomes. However, there remain significant challenges to developing national and regional policies that support the wide emergence of more sustainable forms of land use and efficient agricultural production.

Greater investment into agricultural research in this region in order to find answers to these questions; investment in developing systems for effectively sharing these lessons; designing programs capable of implementing this new knowledge, are then critical areas where the Secretariat of the Pacific Community can play a leading role, so that the Pacific agriculture and forestry sectors can meet the challenges of the 21^st Century.

We are presented with a unique opportunity, over the next few days, to revisit and review the strategic direction of the Secretariat’s Land Resources Division. Together, we can work to ensure that we have the vision, and regional co-ordination required.

Ladies and gentlemen, I wish you all a fruitful and satisfying next few days. It gives me great pleasure to declare your Heads of Agriculture and Forestry Service Meeting opened.

Vinaka Vakalevu”

Managing Strategic Risks to Agriculture and Forestry in the Pacific: A Summary

At the Fifth Heads of Agriculture and Forestry Services meeting on 24-27 September 2012 two keynote speeches laid out the overall challenges for agriculture in the Pacific region.

• The first is a speech by SPC Director-General Dr Jimmie Rogers, closely based on the LRD Issue Paper entitled “Managing Strategic Risks to Agriculture and Forestry in the Pacific”, which is available here.
• The second is a speech by the Minister for Primary Industries in Fiji, Ratu Joketani Cokanasiga

The following two posts will contain the content of the speeches.  This first post is intended as a shorter, digestible version of the LRD Issue Paper on which Dr Rogers’ speech was based.

Managing Strategic Risks to Agriculture and Forestry in the Pacific

The LRD Issue Paper first lays out the background macroeconomic context of agriculture from a national level, noting the following:

• Low GDP growth over the past 5 years – with the exceptions of PNG, Solomon Islands and Vanuatu
• Low growth in the agriculture sector from the period 2004-2010 – with the exceptions of Solomon Islands and Palau.
• High labour force participation rates in the agriculture sector
• Low percentage contribution of the sector to GDP compared to other sectors
• Low levels of public expenditure on the agriculture sector, relative to both participation rates in agriculture and its contribution to GDP.
• Household Income and Expenditure Surveys, that count value of home produced food consumed as household income, indicate that agriculture for subsistence provides a significant proportion of poor rural households’ income.

High labour force participation rates in the sector and HIES figures on the significance of the sector for household income underline the importance of agriculture from a sustainable livelihoods perspective; whereas low growth and low public expenditure in agriculture indicate that the sector is not delivering sufficient benefits to its participants and that government resources to tackle agricultural issues are scarce.  The importance of the sector combined with the scarcity of resources to tackle the challenges, underlines the need for a strategic, optimum impact approach to tackling the key challenges in the sector.

“It is within this environment of high levels of risk, high levels of participation and income dependency, and low rates of public expenditure, that the Land Resource Division of SPC seeks to support national priorities through the implementation of its capacity building, capacity supplementation and research activities under a new Strategic plan. Going forward, we need to identify those areas which offer the best returns on investment, through an evidence-based approach.”

The Economic Development Challenges to Pacific Agriculture

The LRD Issue Paper lays out the following general economic development challenges to Pacific agriculture:

• Geographical fragmentation of Pacific Island economies from each other
• Geographical remoteness of Pacific Island Countries from other major import markets
• Resultant “permanent wedge” between the cost of production and world market prices for many PICs, making it difficult for them to compete in all but a few niche products (World Bank 2008)
• The resultant need to differentiate Pacific Island products from cheaper Asian alternatives, and to focus on branding to target niche markets
• Preferential market access to Australia under SPARTECA trade agreement has been undermined by non-tariff barriers such as strict quarantine standards, coupled with the low capacity of national biosecurity authorities to overcome the hurdle of these standards
• The need to increase the proportion of GDP from logging by focusing on high value timber and attracting investment required to maximize domestic value-adding before exports, but without exceeding the estimated allowable annual cut

The Food and Nutritional Security Challenges to Pacific Agriculture

The LRD Issue Paper lays out the following food and nutritional security challenges to Pacific agriculture:

• The increased availability of cheap imported food has contributed to a reduced availability and displacement of traditional nutritionally valuable staple foods, and increased availability of foods associated with chronic non-communicable diseases; the resulting need to prioritise opportunities for import substation
• The narrow genetic base of most Pacific Island crops that increases the risk of these crops succumbing to disease and natural disasters; the consequent need to monitor pests and diseases and ensure the research and breeding programmes are in place to manage any outbreaks.
• The need to assist farmers with methods of sustaining production during or otherwise coping with extreme weather events; and balancing the need for resilient varieties of crops with the need to enable farmers to produce varieties that sell well in sophisticated markets such as hotels and supermarkets.
•  The need to produce and disseminate crops that are better adapted to cope with the challenges associated with climate change such as drought, floods, higher rates of salinity and pests and diseases.  The LRD Issue Paper underlines the work of the LRD Genetic Resources team with its Centre for Pacific Crops and Trees, which conserves and makes available for utilization thousands of varieties of Pacific crops.

The Natural Resource Challenges to Pacific Agriculture

The LRD Issue Paper lays out the following natural resource challenges to Pacific agriculture:

• In the Pacific, about 70% of agriculture is rain fed.  Subsequently, predictions of prolonged variations in normal rainfall patterns wrought by climate change could be potentially devastating for agriculture in the region.
• Rising temperatures will change the distribution of pests, invasive species and diseases in the region.
• The increasing frequency and severity risk of natural disasters such as cyclones, as well as new pest and disease incursions directly threaten agricultural productivity.
• The special vulnerability of PICTs to the impacts of climate change and natural disasters, especially due to cyclones
• The particular vulnerability of commercial farming – compared to traditionally resilient subsistence farming – to natural disasters.
• The move to intensive cultivation over the last generation, but the failure of sustainable land management practices such as such as better crop husbandry, use of compost, natural pesticides, crop rotation and soil management practices, to keep pace; and the consequent need to demonstrate to farmers the economic benefits of sustainable land management practices.
• The lack of qualified veterinarians and animal production specialists, given that an estimated 70 per cent of all emerging and remerging disease in humans originates from animals.
• Traditional government agricultural extension services, as currently structured and funded, face challenges in human and financial resources and cannot meet the diverse needs of farmers in training and information required to adopt the new technologies and approaches.
• The need to make use of the benefits of ICT and mobile phone-based applications to help farmers with information on improved crop management, pest and disease management; whilst integrating this new technology with social learning in traditional kinship networks.
• The need to better link farmers to markets and to find ways to develop new, successful models of collaboration between private sector buyers and farmers, taking a value chain approach. The LRD Issue Paper underlines new work to fulfil this need that is driven by or that involves LRD – for example the Improving Key Services to Agriculture project and the Integrated Crop Management project.

 

Developing Strategic Response to Threats to Pacific Agriculture

The LRD Issue Paper underlines the following additional challenges for Pacific agriculture:

• The lack of or inadequate, policies and legislative frameworks governing the management of forests; and where legislation for sustainable forestry does exist, there is a lack of enforcement of the legislation.
• Given that most forest is based on customary land; the need to develop community-based sustainable forest management.  THe LRD Issue Paper underlines the work of Reduced Emission from Deforestation and Forest Degradation (REDD) and REDD+, and SPC’s role in supporting countries to implement national sustainable forest management practices.
• The need to reduce the endemic departure of youth from the agricultural sector in search of formal employment, through offering improved income opportunities to participants; the role of LRD in coordinating regional activities linked to national level implementation of the Youth in Agriculture Strategy.

In terms of developing a strategic response for Pacific agriculture the LRD Issue Paper notes the following:

• The need to develop effective regional and national response strategies, utilizing better evidence-based approaches to policy making. The role of LRD in developing and assisting development of Regional and National Sector policies, to set out a course of action for the next three to ten years and beyond.
• To serve the purpose of improved evidence-based policy, improving timely agriculture data collection, systematization and reporting is a high priority regional need.  LRD will work with stakeholders to shore up existing approaches and develop new approaches to data collection for the agriculture sector.
• The need to carry out more regular policy analysis that provides specific recommendations that feed into specific action plans.

Long-Term Priorities

This section is quoted verbatim as it is a tightly worded statement of LRD priorities.

“To guide the Land Resources Division in its work over the course of the next corporate plan and indeed the next decade, it is important we get your help, and hear your voice, in mapping out the long-term priorities.

These include:

1. To improve sustainable food and nutritional security
2. To improve sustainable land, agriculture and forestry resources development; and
3. To improve sustainable economic development

To improve sustainable food and nutritional security, we will:

Build the capacity of communities to access, produce and utilize crop, tree and livestock diversity including the climate change ready root and tree crop planting material

Build the capacity of communities to access locally produced, nutritious foods

To improve sustainable land, agriculture and forestry resource development, we will:

Build capacity in land, agriculture and forestry policy analysis through the adoption of evidence-based systems of policy development

Build the capacity of communities to sustainably manage their land, agriculture and forestry resources through the adoption of new production, management and information and communication technologies

Build the capacity of our national authorities to monitor and eliminate strategic threats cause by new pest and disease incursions; and

Improve the resilience of our communities to the risks posed by climate change, such as the increased frequency and severity of natural disasters

To improve sustainable economic development, we will:

Build the capacity of our agribusiness and agroforestry enterprises to access existing high-value market opportunities, both at home and abroad;

Build the capacity of our national authorities to open up access to new markets by reducing non-tariff barriers to our fresh food products”

Growth of agriculture in the Pacific for the past 5 years

The table below from the Asian Development Bank’s Asian Development Outlook 2013 shows estimated growth rates of value added in agriculture for the last 5 years.

Expand Fairtrade in Fiji sugar industry

The text is below for an article that I wrote for Islands Business, October 2012 edition, when my study of Fairtrade certification of sugar cane in Vanua Levu was published.  The full study is available here.  I am presenting on this study at the Agricultural Value Chains Course in Nadi on 17th April 2013.

“Fairtrade certification of sugar cane in Vanua Levu, Fiji, is producing significant economic benefits, according to a new study by the Secretariat of the Pacific Community (SPC).

The report estimates, taking into account all costs and benefits, that the economic impact of Fairtrade certification of all farmers serving the Labasa sugar mill in Vanua Levu amounts to F$9,094,473, assuming the benefits and costs are incurred over a 12-year period.

This represents a return of F$6.48 dollars for every dollar spent on gaining certification, including those spent by farmers and donors—the European Union (EU), which is the principal contributor, as well as SPC.

For context, the total revenue for all growers in Fiji was F$85,100,000 in 2011, according to the Fiji Sugar Corporation’s 2011 Annual Report, and the average net benefit from Fairtrade certification in Vanua Levu alone is F$757,872, assuming as the study does, a mid-range estimate of a total of seven years of certification and an additional five years of benefit from expenditure of funds saved during certification.

Executive Manager of LCPA Mukesh Kumar stands by a drain that was funded by Fairtrade Premiums; locals estimate that the drain saves over a thousand tonnes of cane from being flooded annually. Source: SPC

Gang delegate and community leader Rahimant Ali stands next to a hillside water tank due for cleaning and renovation. Source: SPC

However, one important implication of the SPC report is that extending certification to other mills is likely to bring several million dollars worth of additional economic benefit to sugar cane growers in Fiji at relatively low cost.

Moreover, it is in the interest of growers to remain certified and receive the associated benefits for as many years as possible.

Sugar cane in the Labasa mill area was certified Fairtrade in early 2011 and will remain certified until conditions of certification can no longer be met.

The sole buyer of sugar from Fiji, British refiner and wholesaler Tate and Lyle Sugars Limited made a commitment in 2008 to convert all of its retail branded sugar to Fairtrade, and approached the Fiji sugar industry the same year about becoming certified.

In 2010, the decision was taken by stakeholders in the industry to certify one mill as a pilot scheme, and the Labasa mill was chosen.

The Labasa Cane Producers’ Association (LCPA) was established to oversee certification and was created by the Technical Manager of the EU’s Lautoka-based Coordination Unit, Mohammed Habib, who became LCPA’s first Executive Manager. He has recently been succeeded by Mukesh Kumar.

Habib says: “The new SPC report shows that Fairtrade certification could continue to be an important shot in the arm for the Fiji sugar industry and makes me proud of what we have achieved.

“This achievement comes at a very critical juncture in the reform of the Fiji sugar industry and we take the opportunity to thank all stakeholders, donors and sugar cane farmers for their support.”

Financial assistance with certification costs came from the European Union, which funded the cost of setting up LCPA and the inspection costs of the Fairtrade Labelling Organisation. Additionally, SPC’s EU-funded Facilitating Agricultural Commodity Trade (FACT) project assisted with the cost of an environmental audit, a pre-requisite for certification.

Dr Lex Thomson, head of FACT, says: “FACT is delighted to have worked with the EU Coordination Unit on Fairtrade certification of sugar in Labasa. FACT assistance with the environmental audit has led to improvements such as the phasing out of highly toxic and hazardous herbicides, as well as cane farmer extension activities.

“We hope the economic, social and environmental benefits of Fairtrade certification demonstrated in this study can now be extended to Viti Levu sugar cane.”

SPC plans to assist in extending Fairtrade certification to growers supplying Fiji’s other three sugar mills, located on the main island of Viti Levu, through the Improvement of Key Agriculture Services for the Sugar Sector Project, due to begin in the next few months.

The project also aims to supplementthe farmers’ income by providing extension and advisory services to increase cane productivity and support the growing of other crops.

Fairtrade certification enables farmers to gain wide-ranging benefits, principally accruing from Fairtrade Premium funds. These are paid by Tate and Lyle Sugars directly to LCPA, at a rate of US$60 or F$106 per tonne of sugar produced, in addition to the standard amount paid to Fiji Sugar Corporation (FSC).

As a condition of certification, the growers must establish a democratic growers’ association (LCPA in this case) in order to decide how to spend the premium funds. This association requires farmers’ time and attendance.

The benefits already realised from premium funds include subsidies for farm productivity and essential farm inputs such as fertiliser and weedicide, assistance with the cost of replanting cane and community development projects.

In 2012, funds will go towards replanting more productive varieties of cane, an investment that will pay off for recipient farmers in the next five years.

The new SPC report includes five short case studies from 43 community development projects carried out in 2011 with Premium Funds, including a F$2,100 drainage ditch that saved Wainikoro farmers an estimated annual 1,500 tonnes of cane that would otherwise be lost to flooding; and a F$4,966 water tank which provides reliable, clean water to the Vatuncina community of 1,000 people, a fifth of whom previously had no clean water supply.

Other LCPA-funded projects include the construction of three kindergartens, acquisition of school equipment, cemetery repair and maintenance, a road upgrade and additional water and drainage projects.

One condition of Fairtrade certification is that LCPA must implement an environmental plan to eliminate the use of banned chemicals and introduce safer chemical storage through training and assistance. This provides health and safety benefits beyond the economic benefits listed.

The report entitled ‘Fairtrade certification of sugar cane in Vanua Levu, Fiji: An economic assessment’, was written by Jonathan Bower, Resource Economist for the Land Resources Division of SPC.”

Agricultural Highlights from Asian Development Bank: Pacific Economic Monitor March 2013

The Asian Development Bank’s March 2013 edition of the Pacific Economic Monitor covers the growth outlook for Pacific island economies as well as topical policy issues.  Here are the agricultural parts and other interesting information presented for context.

Overview

“Economic growth in the Pacific moderated to 7.3% in 2012, from a post-crisis high of 8.3% recorded in the previous year. This regional trend was driven primarily by the performance of the region’s larger, natural resource–extracting, economies. Growth slowed slightly, but remained high in Papua New Guinea (PNG) and Timor-Leste. Economic growth in the Pacific islands also moderated to 2.5% in 2012, from 2.8% a year ago. Growth in Solomon Islands moderated from double-digit rates as log revenues leveled off. Economic stimulus from infrastructure projects was lower in Kiribati, the Federated States of Micronesia, Samoa, and Tonga.”

“Inflation moderated to 5.3% in 2012 from 8.5% in 2011 as international food and fuel prices stabilized, albeit at high levels.”

 

 

“The value of Pacific exports to New Zealand increased by 2.5% in 2012 compared with 2011, supported by greater exports from Nauru (phosphate) and PNG (coffee and food products). Fiji’s exports of agricultural products to New Zealand fell by 11% during the same period, partly reflecting lower sugar production”.

Fiji

“Latest official estimates, as contained in the 2013 Budget, are that GDP growth picked up to 2.5% in 2012. The Reserve Bank of Fiji reports that new lending for consumption and investment increased by 25.4% and 28.1%, respectively, last year. There has been a steady buildup in private sector credit, with lending up by 4.7% through December 2012.”

“Performance of some sectors of the economy worsened relative to 2011. Sugar production fell 7.1%, reflecting weak global demand and the impact of floods early in the year. Gold production also fell by 8%, but bauxite production remained buoyant. Tourist arrivals declined by 2.1% in 2012. December arrivals were driven down due to flight cancellations caused by Cyclone Evan. The cyclone caused an estimated $42 million (about 1% of GDP) in damage, just under half of which was to the non-sugar agriculture sector. Given these developments in key sectors, 2012 growth estimates are likely to be adjusted downward.

“Floods in early 2012 contributed to higher inflation in the first few months of the year. For the year as a whole, inflation was 4.3%— less than half of the rate in 2011.”

“Despite significant investments in recent years, the outlook for Fiji’s sugar industry remains uncertain. In 2012, 20% of mature sugarcane sustained damage due to natural disasters, which will impact on sugar output this year. The recent government announcement that it will purchase mechanized equipment to raise production efficiency may not be sufficient to overcome the industry’s challenges in its efforts to competing internationally. There is a need to embark on deeper structural adjustment. Ongoing negotiations around the contract price of sugar are likely to result in a lower price owing to the global supply glut.”

“Fiji’s growth performance over the medium term faces a number of challenges. While new investments and signs of greater interest from investors are encouraging, actual realization of foreign investment will be impacted by the country’s political situation. The country’s vulnerability to natural disasters and limited fiscal space (due to current debt level) are factors also constraining growth prospects.”

“Recent enhancements in Fiji’s social welfare system will improve targeting and coverage of the vulnerable, enabling it to benefit nearly 13,000 poor households. This will expand coverage from the current 3% to 10% of the population. This level of commitment to protecting the vulnerable puts Fiji at the forefront of development of social safety nets in the Pacific.”

 

Federated States of Micronesia

“Inflation rose in FY2012 on the back of higher global prices for food and fuel, and credit expansion. Costs of food and fuel, which together make up about half of the average consumption basket in the Federated States of Micronesia (FSM), were elevated during the early part of the fiscal year.”

Palau

“Growth remained relatively robust, albeit with some moderation, in FY2012 (ended 30 September) due to the continued strong performance of the tourism sector. Visitor arrivals again grew at a double digit rate, the third consecutive year of high growth, on the back of increasing number of tourists from Japan, Taipei,China, and Republic of Korea.”

“The moderation in arrivals and GDP growth is expected to continue through FY2013. Growth in FY2014 is dependent on the government’s forward investment plans. Easing global supply conditions for food and fuel are projected to result in declining inflation over the next two years.”

Papua New Guinea

“In 2012 PNG was one of the fastest growing economies in Asia and the Pacific with near double-digit growth. The non-mineral sector performed most strongly, led by construction, transport, finance, and retail trade, as domestic demand created by the building of a liquefied natural gas (LNG) project reached its peak. Mining output recovered from technical disruptions and unfavorable weather experienced in 2011. Government expenditure was higher than expected. Falling oil output due to declining reserves dragged down overall growth. Growth in agriculture, forestry, and fisheries output slowed as a result of poorer growing conditions and moderating export prices, which led to lower coffee, copra, and cocoa output.”

“Economic growth is projected to ease to 5.5% in 2013, as the scaling down of LNG project construction reduces construction and transport activity, with spillovers to other sectors such as retail and wholesale trade. Moderating prices of key agricultural exports and a strong kina are expected to depress rural incomes and consumption.”

Samoa:

“Economic growth moderated to 1.2% in FY2012 (ended 30 June) from 2.0% in the previous year. Samoa experienced lower growth over the past year as reconstruction and rehabilitation following the 2009 tsunami wound down.”

“In the first quarter of FY2013, GDP growth picked up, reaching 2.1% (y-o-y) supported by the manufacturing sector. However, at the end of the second quarter, Cyclone Evan hit, causing damage estimated at more than $210 million (equivalent to around 30% of GDP). Agriculture and tourism were the hardest hit, incurring losses estimated at $28 million each. Transport, power, and water and sanitation infrastructure also suffered significant damage, as did school buildings and housing. Restoration of production capacity and reconstruction of essential infrastructure are expected to take about 2–3 years”

“Inflation rose to 6.2% in FY2012, largely driven by higher food prices. Over the first half of FY2013, inflation has been on a declining trend, with deflation recorded in every month from September to December 2012”

“Growth is now projected at 0.9% for FY2013. This reflects declining output from agriculture, tourism, and other productive sectors due to infrastructure damage caused by Cyclone Evan. Economic recovery efforts, once fully in place, are expected to have a positive impact on GDP in FY2014, with projected growth of 2%.”

“Inflation can be expected to rise over the second half of FY2013 with higher domestic food prices arising from supply disruptions. Full year inflation is now projected at 4.5%, and is seen to slow to 4.0% in FY2014 in line with declining international food and fuel prices, and restoration of the distribution network.”

Solomon Islands:

“Growth slowed to 5.5% in 2012, from 10.6% in the previous year, due to declines in agriculture and steady forestry output. Log production remained at 2011’s record levels due to strong external demand and higher investment in the sector. Production of cocoa and copra slumped due to sluggish demand overseas.”

“Falling international prices of logs (by 7.7% in 2012) and agricultural commodities reduced export revenues and generated a trade deficit in the second quarter of 2012—the first after 4 consecutive quarters of trade surpluses.”

“Growth is expected to slow further, to 4%, in 2013. Although agricultural production and gold output are projected to increase, log production is seen to decline.”

“Due to a lag observed in the effect of changes in international prices on the Solomon Islands economy, international food price rises from mid-2012 are expected to impact inflation in early 2013, but to dissipate by midyear. Over full-year 2013, average inflation is expected to ease to 4.5% as economic growth slows.”

“Logging accounts for 15% of government revenue, 60% of exports, and 32% of foreign exchange earnings. It is the largest source of formal sector employment (second only to the government), accounting for about 5,000 jobs. Forests have been extensively exploited—logging rates have been estimated to have reached several times the sustainable rate in recent years. One study warns that natural forest resources may be exhausted before 2020. A decline in logging would adversely impact government finances and necessitate new sources of government revenues (e.g., a new taxation regime for the mining sector) to maintain government expenditures.”

Tonga

“Growth slowed considerably in FY2012 (ended 30 June), falling to 0.8% from 2.9% in the previous year. Weak remittances and declining private sector borrowing, along with the completion of large development partner-financed public investment projects, weighed down growth.”

“Inflation fell to 4.6% in FY2012, down from 6.1% in FY2011. Winding down of infrastructure projects and weak domestic activity relieved pressures on domestic prices, despite slight rises in international food and fuel prices during the fiscal year.”

Tuvalu

“After contracting in 2009–2011, the economy expanded by 1.2% in 2012 due to continued growth in development spending and retail trade. Inflation also accelerated in 2012, driven by higher transport prices as well as higher food prices early in the year.”

Vanuatu

“The economy is estimated to have grown by 2.0% in 2012 on the back of recovery in the tourism sector. Following 2 years of decline, tourist arrivals increased by about 15% in 2012, largely due to higher arrivals from major markets (Australia and New Zealand). The hosting of the African Caribbean Pacific/European Union Conference also increased visitor arrivals and provided a small boost to construction activity.”

“The agriculture sector, which accounts for 23% of the economy, contracted (through the first 3 quarters of 2012) due to declines in the production of kava, beef, and coconut oil. Although copra production increased by a third in 2012, it only accounts for about 5% of the agriculture sector.”

“Coming from a 0.9% increase in the consumer prices in 2011, inflation is estimated to have increased to 1.4% in 2012— driven by higher food prices early in the year. Consumer prices trended lower during the second and third quarters of the year driven by food and utility price falls.”

“Growth is expected to pick up to 3.2% in 2013 and 3.4% in 2014, as delayed construction projects begin to be implemented and agricultural production recovers. Tourist arrivals are also expected to grow in 2013, partly due to diversion of visitors from Fiji due to Cyclone Evan.

“Economic growth has slowed significantly in recent years. The economy grew by 6.5% in 2008 compared with an average of 2.1% in 2009–2011. The completion of large development partner-funded projects and declining property investment fueled this decline. Expanding the economic and export bases, and development of better infrastructure to facilitate easier movement of goods and persons, should help support economic growth and job generation moving forward.”

Pacific Island Highlights from World Bank’s East Asia and Pacific Economic Update 2012

The World Bank recently published its second half-yearly economic update for the East Asia and Pacific Economic Update 2012.  Agricultural and forestry-relevant highlights from the Pacific region are below, with parts most relevant to Land Resources Division such as agriculture, forestry and food security, highlighted.

Fiji

“As a consequence of the Global economic Crisis in 2008, Fiji’s economy contracted by 1.3 percent in 2009, and was followed by marginal growth in 2010. The economy picked up in 2011, with growth reaching 1.9 percent. Growth was largely driven by a recovery in tourism and related sectors, as well as in agriculture, which recovered well from the 2010 cyclones. Growth is expected to continue in 2012, led by continued strength in tourism and a pick-up in the industrial sector. However, the Fijian economy remains vulnerable and policy space to respond to future external shocks, such as a global economic downturn or a commodity price shock, is limited.”

“Inflation moderated in 2012 to 3.7 percent in September as the effects of one-off factors—such as the 2011 increase in vaT rate—abated. Food prices have also declined steadily, despite the swings in commodity prices. The large number of items under price control could explain this decline. Inflation is projected to moderate further, to 3.5 percent by year-end.”

“The [Reserve Bank of Fiji] policy rate was reduced to 0.5 percent earlier in 2012 and has remained at that level. Other policy measures, such as increasing bank lending requirements to agriculture and renewable energy sectors, were also employed to encourage credit growth. The accommodative monetary policy has resulted in ample liquidity (F$577 million at the end of September 2012) and a pick-up in credit growth, with private sector credit rising by 6.3 percent in June, after a growth of 3.5 percent in the previous quarter.”

“Net capital expenditure, including capital transfers (estimated 8.1 percent of GdP), fell compared to 2011 because of a smaller allocation for the restructuring of Fiji Sugar Corporation (FSC). The recently announced 2013 budget projects a widening of the deficit (2.8 percent of GdP) which is largely explained by a 30 percent increase in infrastructure spending.”

“Fiji is vulnerable to international commodity price shocks, which may result in a slowdown to mining-related earnings and investments, or a rise in cost of food and fuel imports. although reserve levels remain adequate, fiscal and monetary policy space to respond to exogenous events is limited. rising government debt would tend to constrain the government’s ability to provide fiscal stimulus and the space for further monetary easing is constrained given the low existing policy rate.”

Kiribati

“The economy of Kiribati grew by around 2 percent in 2011, following several years of weak and volatile growth. Growth of 2.5 percent is expected for 2012, driven by a vibrant retail sector and an influx of aid spending associated with major infrastructure projects. Over the medium-term, growth will depend heavily on the implementation of planned donor projects and the commencement and expansion of a new fish processing operation in Betio.”

“Inflation remains subdued, with consumer prices expected to increase by 2.5 percent during 2012. While world prices for most import products are continuing to decline, constraints on shipping capacity may lead to some price pressure in the context of donor project-driven demand. Inflation is expected to remain at similar levels in 2013.”

 

Papua New Guinea

“Papua New Guinea’s (PNG) economy continued to expand strongly through the first half of 2012, albeit less quickly than in 2010 and 2011. over 2012, the economy appears to be on track to grow by around 8 percent, compared with growth of near 9 percent in 2011. Domestic demand remained the key driver, with pre-election spending of government funds augmenting the effects of ongoing construction of the PNG-LNG (liquified natural gas) project and spin- off investments.”

“The appreciation of the kina (PGK) in 2011 and early 2012 and weakening international commodity prices into the second half of 2012 both reduced rural incomes and government receipts, while also slowing the growth in urban consumer prices.”

“External conditions have become less favorable for commodity exporters. Copra, cocoa, and coffee farmers all saw their incomes compressed by the falls in international prices through the first half of 2012, amplifying the appreciation of the PGK in 2011. Domestic factors, such as the shut- down of processing mills and supply chain issues, further reduced production.”

“In 2013 and 2014 aggregate gross domestic product (GDP) growth is expected to slow, as construction of the PNG-LNG project and spin-off private sector investments conclude, partially offset by the commissioning of the ramu nickel/Cobalt mine. In 2014 and 2015 aggregate and non-mineral GDP are expected to diverge significantly. Production from PNG-LNG will raise the level of aggregate GDP by around 20 to 25 percent; however, growth of the non-mineral economy will slow further on the decline in construction and transport activity and loss of an important impulse for domestic demand. The stabilization in international commodity prices may abate the decline in cash crop production.”

“The revenue and spending pressures surrounding the 2013 budget are likely to intensify mid-decade. Revenue growth is expected to slow further, while it may be difficult to reverse many of the new spending commitments in the 2013 budget.  The pressure to respond to PNG’s significant human development needs will continue to grow. The 2009-2010 PNG Household Income and Expenditure survey data, released by the government in August, found large ongoing challenges, including high rates of malnutrition among children, limited physical assets for most households, and significant exposure to violent disputes, while also finding areas of change, such as improving literacy among younger Papua New Guineans, and the importance of mobile phones and income transfers for many households.”

Samoa

“The economy of Samoa grew by around 1.5 percent in FY2012, with growth of 1.9 percent expected in FY2013. Subdued growth reflects the winding down of stimulus from reconstruction spending following the 2009 tsunami. Continued remittance growth (10 percent year-on-year increase for the first eight months of FY2012) has partially offset the impact of declining agriculture and fisheries exports, and falling tourism receipts. Over the medium-term, growth is expected to return to around 2.5 percent, but this is subject to substantial downside risks, given the possibility of weakening global demand impacting the Samoan economy through declines in exports, tourism receipts, and remittances.”

“Inflation has fallen over the recent months with ongoing declines in global food and fuel prices and recent recovery of local fruit and vegetable production after weather-related disruption early in the year. It is expected to average 6 percent for 2013.”

Solomon Islands

“The Solomon Islands economic growth slowed through the middle quarters of 2012. This was largely because of weaker prices of exports and stabilizing output from earlier drivers of growth, such as logging and the opening of the Gold ridge mine. Meanwhile, fiscal policy took a more expansionary stance, raising concerns around the sustainability and the quality of spending. Inflationary pressures slowed, and external balances remained relatively strong.”

“The Solomon Islands economy is on course to expand by around 5 to 5½ percent in 2012, following growth near 10½ percent in 2011. Mining is estimated to again contribute around 2 percentage points to 2012 growth. The slowdown in aggregate growth is due to lower production across a range of major commodities.”

“As global prices weaken and the incremental appreciation of the Solomon Islands dollar (SBD) relative to the U.S. dollar (in which most exports are denominated), producers are reducing output. The central bank’s index of production of major commodities declined for three consecutive quarters leading to the second quarter, before rebounding in the third quarter, but was still 7.6 percent lower than a year earlier.

“Farmers have been responding to lower prices. Copra production was one-quarter lower in the first half of 2012 than in the corresponding period in 2011, as domestic prices fell from a record high of over SBD 6 per kilogram in March 2011 to SBD 2.35 per kilogram in June 2012. Cocoa production, the other key source of rural cash incomes, followed a similar pattern, with output in second quarter 2012 one-quarter lower than a year earlier as prices weakened. In contrast, palm oil production rose slightly, while prices were only a little weaker (palm oil in Solomon Islands is mostly produced on larger plantations). Lower copra and cocoa prices and production are reducing revenue received by farmers, who are largely in rural areas where there are few alternative sources of cash income: for example, farmers received SBD 20 million from copra in second quarter 2012, 60 percent less than in the corresponding period in 2011, according to Central Bank estimates.”

“Other key drivers of Solomon Islands production and revenue growth stabilized through mid-2012. Log production was affected by rains in second quarter, but overall exports were comparable to the first half of 2011, at almost 1 million cubic meters (well above most estimates of sustainable logging rates). Receipts, however, weakened over the four quarters to mid-2012 because of lower international prices, attributed by the central bank to weaker demand from China.”

“Resurgent international prices for wheat, corn, and some other foods have not affected Solomon Islands. Indeed, inflation has slowed on improved local growing conditions and stable import prices for rice (the main imported food, which is especially important for poorer urban households lacking access to gardens), wheat, and fuel (which affects all prices through high transport and electricity generation costs). The food component of the CPI peaked in April 2012 and, combined with the fall in local fuel prices, overall CPI inflation has slowed to 4.4 percent.”

“The outlook is for a further moderation in the rate of growth of the Solomon Islands economy. a modest further increase in production from the Gold ridge mine is expected in 2013, but this is likely to be offset by some unwinding from recent, unsustainable logging rates associated with weaker global timber prices and improvements in revenue collection. Demand in the non-resource economy has benefited from both donor flows and government spending; both are likely to follow cash crop receipts to be weaker in coming years than in the recent past. This weaker outlook emphasizes the importance of returning fiscal policy to a sustainable footing after the slippages in 2012, with growing demands for better service delivery met through increasing the effectiveness of spending, rather than the amount.”

Tonga

“Tonga’s economy grew by only 1.3 percent in FY2012, down from 4.7 percent in FY2011.”

“Inflation peaked at 8.5 percent in FY2011, and has since been on a downwards path. Inflation declined to 4.6 percent in FY2012 due to moderating global food and fuel prices and exchange rate appreciation. Moderate inflation of 4.5 percent is expected in FY2013.”

Tuvalu

“After two years of contraction, Tuvalu’s economy grew by 1.1 percent in 2011. Growth of 1.2 percent is expected in 2012.  Growth of 1.2 percent is expected in 2012. Increased competition in the retail sector has driven recovery, while remittances from seafarers (Tuvalu’s primary source of private- sector employment) continue to lag in the context of uncertain international economic conditions. Inflation is expected to remain moderate (2 to 3 percent) in 2012, although up from 0.5 percent in 2011. Increased retail competition and currency appreciation have helped to keep prices down in light of movements to global commodity prices.”

“The current account deficit reached 8 percent of GDP in 2011, with a trade deficit of 58 percent of GdP financed largely by donor grants and income from foreign assets and fishing revenues.”

“Downside risks are significant given Tuvalu’s exposure to external economic shocks and natural disasters (vulnerabilities include further declines in demand for seafarer labor and further declines in trust fund asset values). The only policy instrument for dealing with external shocks is fiscal policy, given Tuvalu’s use of the Australian dollar, heavy reliance on imported goods, and minimal financial diversification.”

SPC to run Agricultural Value Chain Course in Nadi, Fiji – 17-19 April 2013

From 17^th to 19^th April the Land Resources Division of Secretariat of the Pacific Community is to run a course on agricultural value chains, aimed at a range of Pacific Island stakeholders in government and the private sector.  The course will be introduced by Land Resources Division’s Director, Inoke Ratukalou and will feature the expertise of some of the region’s top specialists in work to enhance value along the agricultural supply chain.

The course objective is to provide staff with technical expertise and skills in agricultural value chain analysis and development. The outcome is that participants and their organizations will deepen their understanding and improve their performance in moving value chains forward in the project and program context.

The course will enhance the participants’ expertise and skills in value chain analysis and development approaches in:

• Value chain concepts, principles and applications
• Analysis and assessment of value chains, including value chain mapping, economic analysis, value-added calculation, and governance mapping
• Promoting linkages and facilitating value chain upgrade including through public private partnership (PPP)
• Monitoring and evaluating value chain development and sustainability

COURSE OUTLINE

The course will follow a structured process designed to provide background concepts and methodological tools, discussion, workshops on case studies, and special focus topics.

The course will be organized as a three-day face to face program designed to provide actual experience of value chain analysis and assessment. In addition it will also focus on tackling issues and challenges of value chain development based on “real-life” context. The training will also provide workshops, interactive classroom discussions and presentations to build understanding of the value chain approach and the issues and challenges of value chain development.

Training materials developed for the course will cover a full array of conceptual, analytical and practical topics, which are instrumental to analyzing and developing a value chain, including the following:

a. Rationale for Value Chain Approach

b. Prioritizing Value Chains for Analysis

c. Mapping the Value Chain

d. Calculating costs and margins along the value chain

e. Technology, Knowledge, and Upgrading

f. Calculating Income of Actors along the Value Chain

g. Employment in the Value Chain

h. Governance in the Value Chain

i. Linkages in the Value Chain

j. Facilitating value chain upgrade including through public private partnership (PPP)

k. Monitoring and evaluating value chain development and sustainability

 

AGRICULTURAL VALUE CHAIN PORTAL OBJECTIVES

Assignment objective

Develop a web-based platform where actors and other stakeholders in Pacific agricultural value chains can learn, interact and explore opportunities for improving the functioning of their value chains.

Information

A significant part of the assignment will be to gather together all the existing information on Pacific agricultural value chains, and work with it to ensure it is accessible to the relevant stakeholder groups. This will include categorising it, cross-referencing and linking, adding descriptions or summaries where appropriate, and synthesising or rewriting as necessary to make it accessible to the different stakeholder groups. Information on value chains outside the pacific region will also be included where it is judged to be potentially useful.

The website will also promote value chain analysis as a useful tool for at least some of the stakeholder groups. There are many value chain toolkits currently available, though none specifically tailored for the Pacific region. The website will include links to those that are available, with summaries of their application and relevance for the Pacific region.

The website will also include (or link to) information on interventions that are known to improve value chain functioning, for example market information systems (general information, and actual market information where available), forming farmer associations, and accessing credit.

Interaction

The website will provide an interactive platform for stakeholder groups to discuss and learn from each other, as individuals or as groups. For example, depending on user needs, there could be a discussion forum for a specific value chain (export papaya from Fiji, for example), or for a specific group of stakeholders (all exporters, for example). The website will therefore link up actors across value chains, and contribute to improving openness and transparency, and building trust.

Building awareness of the website, and buy-in from stakeholders, will be an important part of the process. A consultative e-group of representatives of the different stakeholder groups will be established at an early stage, and input will be invited throughout the process of developing the website. This will ensure that the website meets the needs of the user groups. Awareness and buy-in will be consolidated at a workshop, to be held in April 2013, which will bring together many of the key regional stakeholders and will also provide an opportunity to widely publicise the web platform in the regional media. The workshop will launch the website, and explore ways to expand and develop it to build its usefulness.

An Introduction to Cost Benefit Analysis

Here I make available materials intended to give an introduction to cost benefit analysis.

Recently I ran two Cost Benefit Analysis (CBA) workshops – one three day workshop primarily for SPC and Fiji’s Ministry of Primary Industries (co-delivered with economist Marita Manley of GIZ and with a session and other help from economist Paula Holland of SOPAC-SPC), and one shorter workshop run in two morning sessions over 2 days for the EU-Increasing Agricultural Commodity Trade project.  I must also give credit to Aaron Buncle from SPREP for allowing me to adapt his materials for my workshops and advising me from his experiences running his own set of CBA workshops for the Pacific Adaptation to Climate Change project.

The ultimate goal of the workshops – and indeed the goal of CBA – was to be an aid to decision making on resource allocation, or in other words to help all present to decide how to spend their resources in the most beneficial way from an economic and a human welfare perspective.

The immediate aim of the workshops was to support participants to start on the process of creating and implementing their own CBA workplans including their own Excel analysis.  We began by introducing the concepts behind Cost Benefit Analysis, through a series of presentations, and then taking them through two Excel examples with fictional data.

Here, with permission from other contributors, I release the material we used for the workshops, which are downloadable below.  If you would like to get an idea of CBA, then do take some time to run through the presentations to get some idea of what it’s all about.  Important documents to use as tools to take CBA forward are the CBA Workplan and the Excel Template.

The presentations may be tricky to follow as they are designed to be explained verbally in a workshop format, rather than to stand alone.  So for questions on any of this material, please feel free to email me on jonathanb at spc.int

Introduction to CBA

Paula Holland’s presentation giving an overview of CBA, its purpose and role is available here.

Paula Holland’s accompanying paper entitled “Simple Introduction to Cost-Benefit Analysis” is available here.

Cost Benefit Analysis Workplan

This document is a road map to doing Cost Benefit Analysis at the start of a project, including key questions to ask to define the objectives of a project.

Measuring Costs and Benefits

The Measuring Costs and Benefits presentation describes different types of costs and benefits, with an illustrative example.

Discounting

The presentation on discounting describes how we account for the fact that costs and benefits happen at different points in time – and that benefits accruing now are more valuable to us at the present than the same benefits accruing in future.  Marita Manley delivered this presentation in my first workshop.

Here is an online tutorial on discounting from a non-SPC source.

Sensitivity Analysis

Pre-project CBA requires that we predict the future.  But the future is inherently uncertain.  This presentation describes how we account for uncertainty about the future and for things that “go wrong”.  Marita Manley delivered this presentation in my first workshop.

Data Collection: Secondary Data Sources and CBA

Secondary data are data that have been collected from somebody who is not the user.  Often secondary data are publically available such as censuses, household surveys and consumer price indices.  Such data are often essential to supplement primary data (data collected from a project specially in order to do a CBA).  This presentation describes and gives links to secondary data sources in Fiji, PNG, Solomon Islands and Palau.

Example 1

This is a simple example that can be worked through of a drain that prevents flooding.  The data should be treated as fictional although a similar project did take place in Wainikoro, Vanua Levu.  The Excel spreadsheet template (click here) can be filled in on the basis of the information in the powerpoint presentation (click here).

Example 2

The second example is of field trials of soil health preservation treatments – e.g. NPK fertilizer and mucuna planting.  The data are fictional but a similar set of trials will take place under an ACIAR project in Taveuni. The spreadsheet can be filled in on the basis of the information in the powerpoint presentation.

For more in-depth material, here are a couple of references for further reading:

Boardman, E.A., Greenberg, D.H., Vining, A.R. and Weimer, D.L. 2006 Cost-Benefit Analysis: Concepts and Practice, 3rd edition.

 

Weimer (ed)., 2008.  Cost-Benefit Analysis and Public Policy.  Journal of Policy Analysis and Management Classics Series.

Australian Government 2010, Best Practice Regulation Handbook, Canberra.

Commonwealth of Australia (Department of Finance and Administration) 2006, Handbook of Cost-Benefit Analysis, January.

Boardman, E.A., Greenberg, D.H., Vining, A.R. and Weimer, D.L., 2006, Cost-Benefit Analysis Concepts and Practice, 3rd edition, Pearson Prentice Hall.

Powerpoint presentation – Introduction to Cost-Benefit Analysis: CBA Unit of Australian Government

OECD, Pearce, D., Atkinson, G. and Mourato, S., 2006, Cost-Benefit Analysis and the Environment: Recent Developments, OECD Publishing.

 

A fairly formal online exposition of CBA from Alexis Tsoukias

Cost benefit analysis, a tool to plan and evaluate agricultural projects

This story is from LRD-SPC web site on a workshop I just organised and co-delivered with Marita Manley of GIZ.

Every time we go to the supermarket to buy a few groceries we look for answers to several questions about a product before committing to a purchase. How much does the item cost? What is the volume? How quick is it to prepare? What is its nutritional value? Where is it made? What are the ingredients? Unknowingly, we are conducting a cost-benefit analysis of the product, examining its dollar value stacked up against the inputs that went into producing the product, and making an informed decision about whether to buy it or not.

This is similar to the way we might appraise an agricultural project. However in this case we can carry out an economic assessment and the net value of a project.

A workshop taking place this week at the Secretariat of the Pacific Community (SPC) Suva office is examining just this practice: the use of cost-benefit analysis as a tool and an economic framework to appraise agricultural projects. More than 15 staff of the Fiji Ministry of Primary Industries requested SPC Suva to conduct training in this key decision-making tool. Colleagues from Land Resources Division are also attending the workshop. The workshop is facilitated by the SPC Land Resources Division in collaboration with GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) and SPC’s Applied Geoscience and Technology (SOPAC) Division and funded by the Fiji Ministry of Primary Industry.

Workshop trainer and SPC-SOPAC Economic Analysis Adviser Dr Paula Holland commented in her opening remarks that cost benefit analysis is a tool designed to answer the question, “is this project worth doing?” She said that it is a tool that aids decision-makers to maximise the economic impact of their work and that it is used to analyse the merits of a project from the perspective of society, rather than the individual.

Cost benefit analysis is not all about numbers. It takes into account socio-economic as well as environmental costs. It is a crucial additional tool for governments, regional organisations and donor agencies, and can be used at the project design stage, when prioritising the allocation of resources among projects, and for monitoring and evaluation.

In the Pacific the agriculture and forestry sector contributes a significant proportion of the Gross Domestic Product and export earnings, and provide subsistence production, cash income, customary gifts and livelihoods for rural communities. Resources including people, time, money and skills are scarce thus the need to weigh the benefits and costs of different policy and project options available to avoid wasted public and donor funds.

From an economic perspective, the agriculture and forestry sector faces many challenges. One such challenge is stagnant or declining growth. In addition, a significant number of Pacific Islanders face food security issues, and land degradation and soil erosion are impacting sustained yields, revenues and livelihoods. Increased imports and consumption of imported food and agricultural products leads to higher trade deficits and poor nutrition.

However, our land resources are not being used to their fullest potential. Farmers often do not have access to credit to buy inputs. Climate change could bring significant costs. Given all of these factors, there has never been a greater need to pick projects that make good use of available resources to bring about sustainable development. Cost benefit analysis can help decision-makers make rational choices about distribution of resources; however it is not widely carried out in the Pacific. The workshop will empower agricultural workers to conduct their own cost benefit analyses.

Workshop presenters include Jonathan Bower, United Kingdom Overseas Development Institute Resource Economist working with SPC’s Land Resources Division, and Marita Manley, GIZ Climate Change Adviser and Resource Economist. The workshop started on Monday 23th and will end on Wednesday 25th April. For more information, please contact Jonathan Bower ( jonathanb [at] spc.int ), or Emil Adams ( emila [at] spc.int )