Sugar Tax

This story from the BBC is an interesting addition to the conversation about whether we should tax unhealthy foods to force people to eat more healthily.  Researchers from the US have proposed a sugar tax to combat that country’s soaring consumption of sugar and sweeteners.  Others dissent.

The story also mentions that “Denmark and Hungary have a tax on saturated fat, while France has approved a tax on soft drinks” which is news to me.  Interesting.

PACER Plus – what now?

This interesting article about PACER Plus from 25th Jan 2012 was written by PhD candidate Wesley Morgan for the Development Policy Blog for the Development Policy Centre based in the Crawford School of Economics at Australia National University.   It underlines the dilemmas and challenges facing participants particularly Australia.  Although the article cites SPC and SPC-commissioned studies on export restrictions, it is posted for readers’ interest and is not the official view of SPC.

Agricultural and Forestry Economics Publications

The Land Management and Resource Policy Support team aims to conduct economic analysis on projects and policy issues relating to LRD core themes of food security, agriculture, forestry and land, and to communicate the findings.

Below is a fairly comprehensive list of economic analysis on LRD themes in the Pacific region, whether published by LRD or other authors.  If any relevant papers or analysis are missing, please contact the Resource Economist on jonathanb [at]

This took me a long time to put together so please use it well!

LRD Economics Publications

Below are listed economics-themed studies and reports relevant to agriculture, forestry and other relevant work, which have been either written, co-authored or commissioned by LRD staff.  These are available in the LRD Economics Publications folder.

Marita Manley, 2007. Do community-based approaches to natural resource management work? Pacific Economic Bulletin.*Marita Manley was then Resource Economist, LRD.
Andrew McGregor, R. Michael Bourke, Marita Manley, Sakiusa Tubuna, Rajhnael Deo, 2009. Pacific island food security: situation, challenges and opportunities.  Pacific Economic Bulletin.*Marita Manley was then Resource Economist, LRD; Rajhnael was then Economic Statistician, LRD.
Tim Martyn, 2010. The economic feasibility of coconut-oil bio-fuels in the Pacific.  Pacific Economic Bulletin.*Tim Martyn was then Resource Economist, LRD.
Marita Manley and Tim Martyn, 2009. The threats and opportunities of higher food prices in the Pacific, Pacific Perspectives 2009: Crises and Opportunities, UNESCAP.*Tim Martyn was then Resource Economist, LRD; Marita Manley was Agricultural and Forestry Policy Adviser, LRD.
Tuifa’asisina Steve Rogers and Tim Martyn, 2009. Background Paper: Food.  Pacific Economic Survey.  FAO. *Tim Martyn was then Resource Economist, LRD.
Andrew McGregor, Pousima Afeaki, Dr. John (Jack) Armstrong, Amanda Hamilton, Dr. Jim Hollyer, Roy Masamdu, Kevin Nalder, 2011.  Pacific Island Taro Market Access Scoping Study. EU-Funded Facilitating Agricultural Commodity Trade Project, Land Resources Division, Secretariat of the Pacific Community.*Commissioned by LRD’s Facilitating Agricultural Commodity Trade Project, Land Resources Division.  Roy Masamdu was currently Biosecurity and Trade Facilitation Officer for LRD.
Rosa Kambuou, Clifton Gwabu and Mary Taylor, 2007. The contribution of crop-plant genetic diversity to economic development and sustainable rural livelihoods in the Pacific region. Pacific Economic Bulletin.*Mary Taylor was then Regional Advisor, LRD-SPC

Other Studies on the Economics of Agriculture and Forestry in Pacific Island Countries

Links to studies and reports relevant to the economics of agriculture, forestry and other relevant work are provided on the following topics.


Economics of Agriculture and Food Security
Jetori Mauro, Michael Lyne and Gilbert Nartea, 2010. Constraints to small-grower investment in coffee production in the Eastern Highlands of Papua New Guinea.  Pacific Economic Bulletin
Ron Duncan, 2007. Overview of the Economics Research Workshop on Pacific Agriculture.  Pacific Economic Bulletin
Euan Fleming, 2007. Agricultural productivity change in Pacific island countries, Pacific Economic Bulletin.
Mahendra Reddy, 2007. Enhancing the agricultural sector in Pacific island economies. Pacific Economic Bulletin.
Bob Warner, 2007. Smallholders and rural growth in Solomon Islands.  Pacific Economic Bulletin.
Andrew M. McGregor, 2007. The export of horticultural and high-value agricultural products from the Pacific islands.  Pacific Economic Bulletin.
Shashi Kad and Tony Weir, 2008.  Virgin coconut oil as a tool for sustainable development in outer islands.  Pacific Economic Bulletin.
Heiko Bammann, 2007. Participatory value chain analysis for improved farmer incomes, employment opportunities and food security. Pacific Economic Bulletin.
Louis M. Kurika, John E. Moxon and Meli Lolo, 2007. Agricultural research and development on small islands and atolls: the Papua New Guinea experience. Pacific Economic Bulletin.
Raghunath D. Ghodake, 2007. Overview of papers from the PNG National Agricultural Research Institute. Pacific Economic Bulletin.
Davinder Singh, Raghunath D. Ghodake and Alan R. Quartermain, 2007. Addressing national development in the Pacific through a regional crop improvement program. Pacific Economic Bulletin.
E.M. Aregheore and D.J. Hunter, 2007. The role of local feed resources in the economic empowerment of smallholder livestock farmers in Pacific island countries.  Pacific Economic Bulletin.
John Moxon and Tio Nevenimo, 2007. Utilisation of indigenous nuts, spices and other minor crops in the Pacific region. Pacific Economic Bulletin.
Michael Manning, 2007. Papua New Guinea’s strategic plan for agriculture. Pacific Economic Bulletin.
Padma Lal, 2006. Potential efficiency gains in the Fiji sugar industry: the performance payment system.  Pacific Economic Bulletin.
Ron Duncan, 2007. Enhancing the labour absorption capacity of Pacific agriculture.  Pacific Economic Bulletin.
Renuka Mahadevan, 2009. The withdrawal of EU sugar preferences and the bittersweet reform pill for Fiji.  Pacific Economic Bulletin.
Tuifa’asisina Steve Rogers, 2010. Agriculture Data: Report on a scoping study in six Pacific Island Countries. SPREP.
Richard Beyer, 2010. Agro-Based Processing Opportunities for Tonga, FAO.
Andrew McGregor, 2006.  Pacific 2020: Background Paper: Agriculture. AusAid.
All ACP Commodities Program, 2010.  Agriculture for Growth: learning from experience in the Pacific.  Summary results of five country studies in Fiji, Samoa, Solomon Islands, Tonga and Vanuatu.  FAO.
Andrew McGregor and Pierre Chanel Watas with Livai Tora, 2009.  The Vanuatu Organic Cocoa Growers Association (VOCGA) : A Case Study of Agriculture for Growth in the Pacific. FAO.
Asian Development Bank and International Food Policy Research Institute, 2009.  Building Climate Resilience in the Agriculture Sector in Asia and the Pacific.  Asian Development Bank, Mandaluyong City, Philippines.
R. Michael Bourke and Tracy Harwood (eds), 2009.  Food and Agriculture in Papua New Guinea. Australia National University. – This is a comprehensive book containing a number of quality articles on the agricultural economy in PNG including the following example, although data tends to be out of date, this is an astonishing analysis of both high quality and quantity (142 pages), of sources of cash income from agriculture in PNG. 
Matthew Allen, R. Michael Bourke and Andrew McGregor, Part 5, Cash Income from Agriculture, in R. Michael Bourke and Tracy Harwood (eds), 2009.  Food and Agriculture in Papua New Guinea. Australia National University.
Appendix Tables, in R. Michael Bourke and Tracy Harwood (eds), 2009.  Food and Agriculture in Papua New Guinea. Australia National University.
Ron Duncan, 2010. Setting Agricultural Research Priorities in Fiji.  Working Paper.
Paresh K Narayan and Biman Prasad, 2004.  Economic importance of the sugar industry in Fiji: simulating the impact of a 30 percent decline in sugar production. Working Paper, Department of Economics, University of the South Pacific.
Roderick Duncan, 2008.  Agricultural productivity, the electoral cycle and ENSO effects in Papua New Guinea.  Pacific Economic Bulletin.
Tim Anderson, 2008. Women roadside sellers in Madang.  Pacific Economic Bulletin.
Reuben W. Sengere, Willie Susuke and Bryant Allen, 2008.  The rehabilitation of coffee plantations in Papua New Guinea: the case of Obihaka.  Pacific Economic Bulletin.
Biman C Prasad and Paresh K Narayan, 2005. The plan to increase Fiji’s rice production – is it worthwhile?  Pacific Economic Bulletin.
Biman Chand Prasad and Paresh K Narayan, 2004. The relationship between Fiji Sugar Corporation’s profitability and sugarcane production: an empirical assessment.  Pacific Economic Bulletin.
Martin Gould, Giles Dickenson-Jones and Richard Wood, 2011. The second international food and fuel price shock and Forum island economies. International Finance and Development Division, the Australian Treasury.
Economics of Forestry
Colin Hunt, 2010. Compensating for the costs of reducing deforestation in Papua New Guinea. Pacific Economic Bulletin.
Colin Filer, 2010. The impacts of rural industry on the native forests of Papua New Guinea.  Pacific Economic Bulletin.
Stephen Howes, 2009.  Cheap but not easy: the reduction of greenhouse gas emissions from deforestation and forest degradation in Papua New Guinea.  Pacific Economic Bulletin.
Economics of Land
Pacific Islands Forum Secretariat, 2008.  Land Management and Conflict Minimisation Report and 10 Sub-Reports.
AusAid, 2008.  Making Land Work Report and 16 Case Studies.  
Charles Yala, 2008.  Improving access to finance through land titling: evidence from the Hoskins Smallholder Oil Palm Project.  Pacific Economic Bulletin.
Spike Boydell, Garrick Small & John Sheehan, 2008.  Review of Financial Management of Customary and Other Land in the Pacific.  Land Management and Conflict Minimisation Report.  Pacific Islands Forum Secretariat.
Biman C. Prasad, 2006. Resolving the agricultural land lease impasse in Fiji.  Pacific Economic Bulletin.
R. Michael Bourke, 2005. Agricultural production and customary land in Papua New Guinea; in

Jim Fingleton (ed), 2005. Privatising Land in the Pacific: A defence of customary tenures. Discussion Paper.  The Australia Institute.

Chris Lightfoot, 2005. Does customary land ownership make economic sense?; in

Jim Fingleton (ed), 2005. Privatising Land in the Pacific: A defence of customary tenures. Discussion Paper.  The Australia Institute.

Tim Curtin and David Lea, 2006.  Land titling and socioeconomic development in the South Pacific.  Pacific Economic Bulletin.
Steven Gosarevski, Helen Hughes and Susan Windybank, 2004.  Is Papua New Guinea viable with customary land ownership?  Pacific Economic Bulletin.
Jim Fingleton, 2004.  Is Papua New Guinea viable without customary groups? Pacific Economic Bulletin.
Tim Anderson, 2006.  On the economic value of customary land in Papua New Guinea. Pacific Economic Bulletin.
David Lea, 2009. New initiatives in the development of customary land: group versus individual interests. Pacific Economic Bulletin.
Charles Yala, 2006.  Rethinking customary land tenure issues in Papua New Guinea.  Pacific Economic Bulletin.
Tim Anderson, 2009.  Land registration, land markets and livelihoods in Papua New Guinea.  Aidwatch.
Prasad, B.C. and Tisdell, C., 1996. Getting Property Rights ‘right’, Land Tenure in Fiji, Pacific Economic Bulletin, Vol.1, pp.31-46.
Miscellaneous: Macroeconomics, Environmental Economics, Data Sources
Pacific Regional Information System (PRISM), Statistics for Development Program, SPC.  Click here for a list of all reports and data sources including HIES, MDG, Health and Census Reports and links to National Statistics Offices
Anything published by the Pacific Economic Bulletin (click for PEB main site).
Fiji Islands Bureau of Statistics and World Bank, 2011. Republic of Fiji Poverty Trends, Profiles and Small Area Estimation (Poverty Maps) in Republic of Fiji (2003-2009).  World Bank.
Sunil Kumar and Shalendra Singh, 2009.  Policy Options for the Small Pacific Island Economies in the event of Global Economic Crisis.  Conference Paper for 2009 Conference on “Turmoil and Turbulence in Small Island Developing States”– at the Sir Arthur Lewis Institute of Social and Economic Studies, University of the West Indies.
Kim Robertson, 2011. HIES 2010 Poverty Analysis.  Millennium Challenge Account (MCA) Vanuatu.
Craig Sugden and Kiyoshi Taniguchi, 2007.  Structural change versus economic inertia. Pacific Economic Bulletin.
Pacific Islands Forum Secretariat, 2011.  Out of Session Paper, Regional Economic Outlook.  
Prasad, B.C., 2003. “Institutional Responses to Environment and Natural Resources Management: A Case of the Sustainable Development Bill for Fiji”, Global Environmental Research.  Vol.7, No.1, pp.123-128.
Prasad, B.C and Tisdell, C., 2006. Institutions, Economic Performance and Sustainable Development: A Case Study of the Fiji Islands, Nova Science Publishers: New York
United Nationals Economic and Social Commission for Asia and the Pacific, 2011.  Chapter 2, Economic and Social Survey of Asia and the Pacific 2011.  UNESCAP.  See pages 70 to 75 for a succinct look at economic challenges for the Pacific region.
AusAid, 2009, Pacific Economic Survey 2009: Engaging with the World.  
Bob Warner and Eric Omuru, 2008. PNG commodity prices—an opportunity not to be missed.  Pacific Economic Bulletin.
Asian Development Bank, 2011.  Asian Development Outlook 2011. Mandaluyong City, Philippines: Asian Development Bank.  “a comprehensive economic analysis of 45 economies in developing Asia and the Pacific.”
Asian Development Bank, 2010.  Asian Development Outlook 2010. Mandaluyong City, Philippines: Asian Development Bank.  
Asian Development Bank, 2009.  Asian Development Outlook 2009. Mandaluyong City, Philippines: Asian Development Bank.
Lars Hein, 2006.  Environmental Economics Tool Kit: Analyzing the Economic Costs of Land Degradation and the Benefits of Sustainable Land Management, United Nations Development Program and Global Environment Facility.
Asian Development Bank, 2011.  Food Security and Climate Change in the Pacific: Rethinking the Options. Mandaluyong City, Philippines: Asian Development Bank.
Asian Development Bank, 2011. The Political Economy of Economic Reform in the Pacific. Mandaluyong City, Philippines: Asian Development Bank.
Asian Development Bank, 2010.  Solomon Islands 2010 Economic Report.  Mandaluyong City, Philippines: Asian Development Bank.
Asian Development Bank, 2009.  Vanuatu Economic Report 2009.  Mandaluyong City, Philippines: Asian Development Bank.
Asian Development Bank, 2006. Juumemmej: Republic of the Marshall Islands Social and Economic Report 2005.  Mandaluyong City, Philippines: Asian Development Bank.
Asian Development Bank, 2006. Tuvalu Economic Report 2006: From Plan to Action.  Mandaluyong City, Philippines: Asian Development Bank.
Ron Duncan and Ila Temu, 1995. Papua New Guinea: longer term developments and recent economic problems.  Asian Pacific Economic Literature, Australian National University.  
Ron Duncan and Satish Chand, 2002.  The Economics of the ‘Arc of Instability.  Asian-Pacific Economic Literature, Vol. 16, pp. 1-9, 2002, Australian National University.
Giles Dickenson-Jones and Albert Wijeweera, 2010. An empirical analysis of price and income elasticities of Papua New Guinea’s exports.  Pacific Economic Bulletin



PACC Economics Workshop and Presentation on Agricultural Data Sources

Last week I participated in and presented at the second of three great workshops about cost benefit analysis (CBA), organised by SPREP‘s Aaron Buncle, for the Pacific Adaptation to Climate Change (PACC) project, which is led by Taito Nakalevu of SPREP.  This workshop was aimed at national level PACC food security project leaders, and the third will be aimed at PACC coastal management project leaders.

The second workshop was attended by people from Palau, Fiji, Solomon Islands, Papua New Guinea, and Tonga, five regional-level economists (unusual to have so many regional economists in one room), PACC project coordinator Taito Nakalevu and UNDP-Samoa Regional Technical Adviser Gabor Vereczi.

Here is a link to a story about a similar previous CBA workshop.

It was gratifying to see the national officials leave with the tools to conduct cost benefit analyses of their own projects and indeed to think more naturally and intuitively about how to increase the economic impacts of their own work.

My presentation about “secondary” agricultural data sources that may be needed for a CBA is available for download here: Sourcing Secondary Data for Cost Benefit Analysis  

Sugar, Cabbage and Poverty Alleviation

This is just to explain why I haven’t blogged in a while.

I have been getting busier working on (among other things like a proposal, a workshop and my team’s work plan) two pieces of analysis. 

Fairtrade certification of sugar cane production in Vanua Levu, Fiji

The first is a cost benefit analysis of Fairtrade Certification of sugar cane in Vanua Levu, sold to Tate and Lyle from the Labasa mill.  Fairtrade certification was led by Mohammed Habib and his team at the Labasa Cane Producers’ Association, and SPC’s FACT project gave 10,000 FJD towards certification costs.  The study involved the following:

  • increased income to farming communities due to Fairtrade Premiums coming in at 60 dollars per tonne of sugar sold to Tate and Lyle
  • creation of a Small Producer Organisation called the Labasa Cane Producers’ Association to democratically yet non-politically organise sugar cane producers, a challenge in Fiji but – as the study will mention – well worth it, as this means that the sugar cane Gang Delegates (heads of gangs of 10 farmers) are able to effectively choose where Fairtrade Premium funding is being spent
  • Fairtrade Premiums are spent not as cash handouts to farmers but as subsidies to farm inputs such as fertiliser, weedicide and harvesting equipment, as well as community development projects that tackle health, education and infrastructure
  • creation and implementation of an Environmental Management Plan to phase out the use of deadly weedicides and to improve safe storage and use of existing weedicides

I visited the Labasa Cane Producers’ Association (LCPA) in December and interviewed a wide range of farmers as well as LCPA staff.  I now have most of the data and I am currently working on the analysis.  So far the study is looking to be significantly net positive from the farmers perspective: Fairtrade Certification has been and will be in the future, highly beneficial for Vanua Levu sugar cane farmers and their communities.  

Some of the benefits in the study are difficult to value, so simplifying assumptions have to be made, but even if those benefits are not valued the message will be the same: Fairtrade Certification is a good thing for Fiji sugar, economically, environmentally and from a health perspective.

Details and figures will of course be available in the study which, of course, when published, I will blog about.

Moreover there is a plan to extend Fairtrade Certification to the rest of the Fiji sugar industry – the areas covered by the other 3 mills (Labasa mill is one of four in Fiji),  potentially bringing millions of dollars worth of net benefits into the Fiji sugar cane farming community over the next several years if successful.

Integrated Pest Management

Another study that I am currently undertaking is a cost benefit analysis of the Fiji element of an SPC project that ran from 2006 to 2011, and involved integrated pest management on brassicas in the Sigatoka area of Fiji.  In plain English, brassicas are cabbages, and integrated pest management means reduced, smarter and safer application of pesticide, to use natural predators to help control pests.  Economically this means (possibly) less cost on pesticides, less labour used to apply pesticide, and (possibly) more revenue.  Next week I shall visit (hopefully) 18 participating farmers in Sigatoka to ask them questions about the  changes in time, cost and revenue incurred by using IPM practices compared to business as usual, as well as anything they noticed about its environmental effects. 

It seems the science of the project was well established but the economics has not yet been examined.

This CBA will comprise mainly a financial analysis of IPM from the point of view of the average farmer, but I shall try to capture as far as possible the broader costs and benefits.

Results will be presented at a meeting at the end of February about the extension of IPM as a technique, and a paper (hopefully) published…and blogged about of course….after this.  The meeting is to plan the next stage of this IPM project which has been extended from two countries to five.  All the more important that the economic aspect is considered.

Impact of a second global recession on Pacific Island Countries

When reading the Forum Secretariat’s excellent E-Newsletter entitled “Trends and Developments” I came across a summary of implications of the current global conditions for the Pacific Region, published in the “In Brief: Economic Update Series”.

The link to the summary is here, in Issue 3 of the In Brief: Economic Update Series. However I have briefly summarized below the implications for Pacific Island Countries from a second global recession, an event that is threatened in 2012 by the uncertainty around the future of the Eurozone and other factors.

The first three implications are obvious even to non-economists but not everybody will be aware of the last three. All of the below are relevant directly or indirectly for agricultural and forestry commodity trade, to food security and to the income and expenditure of farming communities across PICs.

  • Lower remittances: A slowdown in income in richer immigrant destinations is likely to lead to a drop in remittance flows into PICs.
  • Lower tourism: Tourism hinges on the income available to spare on leisure in tourist source countries and this in turn depends on the economic fortunes of those countries. 
  • Lower export demand: Affecting PICs with a larger proportion of export revenue to total national income, a global slowdown will hit export demand. However according to the regional in 2012 Australia and New Zealand have a positive outlook that will cushion the blow from decreased demand from other large markets. 
  • Exchange rate appreciations: There are winners and losers from this. Appreciation of Australian and New Zealand currencies relative to PIC currencies means that imported goods from those countries will be more expensive to PICs, hitting any consumer or business that purchases goods from those countries. However island exports will be cheaper from the perspective of Australia and New Zealand, benefitting PIC exporters. Along with lower global export demand overall, the net effect for individual business is unpredictable.
  • Commodity prices: The price of gold tends to increase in hard economic times and is currently on the increase. This is good for PNG, Solomon Islands and Fiji who export gold. The PIFS report cites an International Energy Agency report claim that the price of oil may continue to drop in 2011 but a 2012 market prediction from the same agency states that the price may increase. This is as much an economic driver as a result of economic conditions. However it is clear that as oil importers, PICs would benefit from lower oil prices and suffer from higher oil prices. It is the latter that appear more likely in 2012 especially given the prospect of an oil embargo by the international community on significant crude exporter, Iran. 
  • Trust Funds: Several PICs have large amounts of money stored as public savings abroad; in the 2008 crisis when stock markets fell, some of these funds lost 20-30% of their value. A second recession threatens similar consequences, but these consequences will also differ by country according to investment portfolio.

Applying some perspective on relative significance of these factors, the ADB’s latest edition of the Pacific Economic Monitor states that:

“the Eurozone crisis is expected to have only limited impacts on the Pacific because the region‘s growth prospects are more closely tied to the economies of Australia and New Zealand, which remain relatively buoyant due to strong demand from Asian markets for their commodity exports. Main impacts will be indirect, through trade and investment linkages between the EU and the Pacific‘s economic partners, declining values of Pacific trust funds, and declines in tourism, particularly from US and Japan, if these economies weaken.”

In the same document,

“an analysis of sovereign investment funds in the Pacific shows that the current period of volatility to date has resulted in small valuation losses (relative to 2008-09), but, looking forward, considerable downside risks remain.”

Real GDP Growth and Inflation

Below are the estimated real GDP growth and inflation prospects for PICs in 2012, from the Asian Development Bank Pacific Economic Monitor.


Trade and Nutritional Outcomes in the Pacific

On duty travel in Samoa in the last couple of weeks I was given a set of papers about trade and nutrition in the Pacific, by a most helpful lady named Christine Quested in the Ministry of Health in Samoa, who co-wrote them. Most of the papers, having analysed the trade and nutrition situation in the Pacific, finish by recommending aligning trade policy with health and by advocating for putting health on the trade policy agenda in the Pacific. This links then to the points I made in a previous post on what then a good nutrition tariff might look like.

In this post I want to cover the following:

• Evidence that trade liberalization probably impacts on diet

• Other links between trade and nutrition in the Pacific region

• Policy implications for food-related trade policy

In a 2011 paper looking at trade and nutrition in Fiji and Samoa, Thow et al outline a fairly compelling pattern in the domestic availability of food. To simplify, the pattern can broadly be described as trade liberalization leading to increased availability – and by implication, consumption – of unhealthy, imported food.

They recognize that their methodology cannot assign causality from trade liberalization to trade increase to diet, and I would posit that the process of economic development itself, including rising incomes, urbanization, marketisation of the economy and so forth, would be a driver behind increased trade and changed diet independently of trade barriers.

However, a look at the graphs below reveals a repeating pattern that suggests that liberalization does contribute to increased imports and thus increased consumption of imported food. The first appears to show a direct link between policies such as export promotion (through production for export crowding out production of traditional crops for domestic production) and import substitution, and calories per capita of imported cereals and local starchy roots.  The second and third show that reduction of tariffs and liberalization in Fiji and Samoa were followed by big increases in imports of fats and oils.  The fourth graph shows that consumption of confectionary and pastry in Fiji and Samoa rose sharply following liberalization.


In a separate 2010 book chapter, Thow et al. posit that there have historically been six pathways through which trade has influenced diet, which I summarise below. I think only a few of them continue to be driven by trade POLICY, but they are worth noting.

1. The continuing transition to a cash economy, driven by trade – after all, the domestic economy was originally subsistence and barter-driven and cash would only originally have been necessary for the purchase of imported goods. The rise of the cash economy would have implications for nutrition through the ability to buy a wider variety of foods; however those foods would have been of a poor nutritional quality. Thow et al point to a number of very interesting historical examples – for instance during the Japanese occupation in the Marshall Islands, increasing exports of copra enabled the consumption of store-bought foods to increase dramatically, but this was accompanied by the presence of beri-beri (thiamine deficiency). In the subsequent American occupation, the low consumption of purchased food reflected the more limited opportunity to purchase imports. The same pattern occurred in Tahiti in the 1960s with the expansion of copra fuelling sudden increased consumption of imported foods.

2. Urbanisation – the growth of trade historically required administrative centres. Urban residents tend to consume a less traditional diet, both due to greater access to imports and –according to two studies cited by Thow et al (2010), through a ‘demonstration effect’ of the diets of expatriates.

3. Promotion of the production of exports and import-substitution, trade-related policies which change diet through:

• the greater availability of cash for food imports;

• encroachment on the land and labour needed for domestic production of traditional foods – and thus lowering of production of domestic foods;

• support for import-substituting meat, and lack of government support for traditional domestic food production

4. Low price and availability of food imports.  Currency devaluations in Papua New Guinea led to significant increases in consumption of local food, of course through making imported food more expensive relative to local staples. This and other examples cited demonstrate that demand for imported food is sensitive to price.

5. Financial integration and investment – many countries in the Pacific region have since the mid-1980s, made efforts to simplify their licensing and other investment-related procedures as well as to attract investment through tax reform. This has helped lead to an increased presence of international corporations selling marketable imported food – for instance, fast food outlets – and highly effective marketing of “commerciogenic” imported foods.

6. Donors, aid and trade – the high level of aid has enabled Pacific Island countries to plug the considerable gap between their export revenues and import spending, and has thus cushioned the incentive to consume domestic food instead of imported food. Another point is that donor aid objectives have not always been supported by their actions on trade. To quote directly from Thow et al’s book chapter: “the political and commercial considerations arising from the dependence of Pacific Island countries on aid may also limit their ability and desire to restrict food imports on health grounds (Foliaki and Pearce 2003). For example, New Zealand is a major donor to the Pacific region, as well as a major source of food imports; during the aftermath of Fiji’s ban on mutton flap imports, New Zealand threatened to take action through the WTO despite health being one of their aid and development priorities (Kelsey 2004).” Moreover food aid to Micronesia by the United States in the 1960s and 1970s was imported and helped lead to dependence of FSM populations on rice as a staple food.

Possible implications for policy from Thow et al (2010) – book chapter, Thow et al (2011) and Thow et al (2010) food policy paper are:

• Modify trade liberalization so that it allows for national control over trade policy measures, and allows for the promotion of domestic production in Pacific Island countries.

• Structure a country’s tariff schedule based on healthfulness of foods (see my post on the economics of nutrition for more on this). Do this in a way that is compatible with World Trade Organisation agreements – for instance quantitative bans are not permitted but increases in tariffs within certain bounds are, and trade-offs can be made by increasing tariffs on certain unhealthy foods and decreasing tariffs on other, healthy foods.

• Investment in rural infrastructure development and increased government support for domestic production, and better balance between export promotion through subsidies and so forth, and support for domestic production;

• I would add to this that it is important, when setting tariffs, for instance on the import of vegetables that may also be produced in the relevant Pacific Island country, to consider and if necessary, to mitigate the economic impact on domestic farmers who may produce the same good.

• Enforcement of food standards and labeling to enable consumers to make more educated choices.

• Some way to curtail marketing of imported foods of poor nutritional quality.

• Effective advocacy with more than one influential champion, active involvement of policy implementers and taking advantage of windows of opportunity, are critical to getting food-related trade policies on the agenda. Policy uptake was in three case studies of specific food bans in Samoa, Fiji and Tonga, aided by “the use of existing legislation, consideration of other government commitments (e.g. WTO) and establishing a clear justification for food targeted.”

• Barriers to policy success are likely to be the selection of an inappropriate legislative tool, the lack of a clear enforcement mechanism and low engagement from sectors other than health.


Thow, AM & Snowdon, W. 2010. ‘The Effect of Trade and Trade Policy on Diet and Health in the Pacific Islands’, in Blouin, C. Drager, N. Dube, L. Hawkes, C. Henson, S (eds.) Trade, Food, Diet and Health: Perspectives and Policy Options. 2009, Wiley-Blackwell Publishers, London.

Thow, Anne Marie , Heywood, Peter , Schultz, Jimaima , Quested, Christine , Jan, Stephen and Colagiuri, Stephen(2011) ‘Trade and the Nutrition Transition: Strengthening Policy for Health in the Pacific’, Ecology of Food and Nutrition, 50: 1, 18 — 42

Thow, Anne Marie, Swinburn, Boyd, Colagiuri, Stephen,  Diligolevu, Mere,  Quested, Christine, Vivili, Paula Leeder, Stephen, 2010. ‘Trade and food policy: Case studies from three Pacific Island countries’, Food Policy 35 (2010) 556–564

Pacific Island Highlights from World Bank’s East Asia and Pacific Economic Update 2011

The World Bank recently published its second half-yearly economic update for the East Asia and Pacific Economic Update 2011  .  Agricultural and forestry-relevant highlights from the Pacific region are below.


  • “Current projections are for Fiji’s economy to grow by 2.0 to 2.5 percent in 2011 compared to 0.3 percent in 2010. The relatively ambitious growth target hinges on the continued strength of the tourism sector, as well as stronger performance of the manufacturing and forestry industries.”

  • “The sugar industry may experience limited improvements in 2011, both in terms of production and mill efficiency. Production of sugar cane is expected to rise as a result of the recovery from the 2010 cyclone, while mill efficiency may rise with attention being given to maintenance and upgrading as reflected in the FJD20 million set aside for this purpose in the budget.”

  • “On the external front, export earnings recovered in 2010. Decline in sugar receipts were offset by rises in gold, timber, and fishing receipts…Net income and transfers both worsened in 2010, due to a rise in profit repatriation, fall in remittances and no EU sugar transfers being received due to reforms in EU’s preferential pricing scheme. Overall, the current account deficit widened from 7.6 percent of GDP in 2009, to 11.2 percent of GDP in 2010.”

  • “National poverty headcount ratio declined from 39.8 percent in 2002/03 to 35.2 percent in 2008/09. While there has been considerable improvement in urban areas over the six years (a decline from 35 percent to 26 percent), rural areas showed no decline in poverty, with a poverty headcount remaining at 44 percent. The trend was consistent with the sectoral pattern of economic growth: most of the decline in poverty was driven by the growth of non-agricultural sectors in urban areas.”

  • “The dominant item in the 2011 capital budget is a 110 million Fiji dollar (FJD) allocation equivalent to around 20 percent of capital expenditure for the restructuring of the Fiji Sugar Corporation (FSC), recently taken over by the government.”

Papua New Guinea

  • “Three factors underlie the strength of PNG’s economy: foreign-investment funded construction projects; record prices for PNG’s exports, and strong government spending financed by higher-than-expected revenues…Up to Q3 2011, prices of PNG’s cash crop exports (particularly coffee, copra and palm oil) returned to or exceeded the highs of mid-2008.”

  • “The sectors of the economy most directly impacted by these factors—particularly construction, road, air and sea transport, storage and communications— are expected to expand by as much as 20 percent in 2011. This strength is spilling into other sectors in the economy (e.g., retail trade), thus creating a broader dynamic. Even agriculture and fishery production are expected to grow by over 4 percent in 2011 as producers respond to higher cash crop prices.”

  • “Core inflation measures have also continued to rise, reaching between 7 and 8 percent for the year to the second quarter and remained near that level through the third quarter…The resurgence in global food prices early in the year directly explains about one-third of this acceleration in prices. In contrast, food prices contributed to 60 percent of PNG’s overall inflation between March 2008 and June 2009.”


  • Growth moderated towards the end of 2010, as visitor arrivals and infrastructure spending declined, and copra prices fell. Throughout 2011, Vanuatu has benefited from resurgent copra prices, but continues to face risks from a slower-than-expected recovery in tourism arrivals, reductions in government recurrent expenditure, lower donor-financed infrastructure spending.”
  • “With sound macroeconomic fundamentals, Vanuatu remains relatively well-placed to deal with future shocks. Inflation is expected to remain moderate, reaching 4 percent in 2011, driven by increased food prices, and expansions of private sector credit to both businesses and households in the context of accommodative monetary conditions.”


  • “Samoa was hit hard by the combined impacts of a food and fuel crisis, the global economic crisis and a major tsunami in 2009…Inflationary pressures are projected to decline, given an expected easing of oil prices and expansion in agricultural production for domestic consumption.”


  • “The economy contracted by 0.5 percent in FY2010 (ended June 2010) and is estimated to have achieved only modest growth of 1.3 percent in FY2011 as remittances and tourism earnings fell, weather events  disrupted alreadydeclining agricultural exports, and private sector credit contracted as banks tightened lending conditions in response to a sharp increase in non-performing loans.”


  • “Kiribati has been running consecutive budget deficits, averaging 12 percent of GDP for the past decade. These deficits have been financed through RERF draw-downs and concessional loans. The 2011 budget projected a deficit of 14 percent of GDP, up from 12.5 percent in 2010. Emerging revenue shortfalls, arising from lower than- expected income from fishing license fees, and additional expenditure on pensions and copra subsidies in the context of upcoming elections may see the deficit further increase.”

Solomon Islands

  • “In the second half of 2011, Solomon Islands enjoyed a markedly more secure macroeconomic footing relative to most of the preceding decade. A surge in logging, support from the government’s development partners, and gains in macroeconomic management lifted growth rates, and built foreign exchange and government cash reserves. Nevertheless, recent growth has been concentrated in natural resource exploitation, raising concerns about its sustainability.”

  • “The Solomon Islands economy is likely to grow by around 9 percent in 2011 based on data through to August, several percentage points  stronger than earlier expected. This strength follows an estimated 7 percent expansion in 2010, following a 4¾ percent contraction induced by the global economic downturn in 2009. Logging activity is expected to contribute 2¼ percentage points of this year’s growth—the Solomon Islands Government now expects log exports of 1.75 million m3 in 2011, compared with 1.43 million m3 in 2010. The start of production at the Goldridge gold mine is estimated to contribute another 2 percentage points. Fishing, cocoa and copra production have also all performed strongly this year, buoyed by good production conditions and high international prices. But it is greater government spending (including through donor-funded projects) that explains most of the expansion in the Solomon Islands’ non-forestry, non-mining economy in 2011.”

  • “The government’s revenues have exceed expectations in 2011, attributed to improvements in tax administration and the unexpected strength of logging activities and prices, while Solomon Islands Governmnet-funded development spending in particular was below budget.”

  • “The rise in many global grains prices around the turn of 2011 has had little impact on the Solomon Islands, even among urban consumers who are the most dependent on imported food items. Rice is the principle imported staple, and movements in its retail price have been kept in check by the entry of new wholesalers sourcing rice from a wider range of producers, followed by renewed consolidation in the market.”


  • “Reduced seafarer remittances and higher food and fuel prices drove the economy to contract during 2009 and 2010, with the impact moderated by increases in donor expenditure. Improved remittance income is likely to spur growth of around 1 percent in 2011.”



What are economists for in the Pacific region?

I want to discuss in this post the role of economists in SPC’s work. Perhaps this may have relevance for those working for Pacific Island governments as well. Please be warned: these are the disjoined ramblings of a young applied economist (me) trying to learn by doing and I would welcome any feedback from those who have been in this for longer than I have. I hope to touch on the following areas in this post:

  • What is economics for?
  • How should we do it in the real world to make an impact?
  • Examples of CBAs that I am doing or are on my long list

I would really welcome feedback on these questions, either as a comment or in my email inbox.

Economics for poverty alleviation and promotion of economic wellbeing

Some have been tempted to dismiss economic development in the Pacific region as an unimportant policy priority in the midst of a culture in which so many transactions are non-market, and in which the most common Non-Communicable Diseases such as heart disease and diabetes stem from abundance rather than scarcity. But poverty is a stark reality in the Pacific in which up to 40% of the population cannot meet their basic needs: an ADB report I read once put the proportion of people in Pacific Island Countries below a basic needs poverty line at between 16% (Vanuatu) and 39.6% (PNG, with three other countries at over 30%) with data missing for a few other countries or territories. Moreover, in relation to the relevance of economics, it is a reality that the Pacific region is becoming more market-oriented, and I don’t believe there is a good reason to neglect that element of human interaction just because non-market transactions through family, community and church are also highly significant here.

Economics can do much to advance poverty alleviation and economically smart policy implementation for greater economic benefit for lesser cost (and policy-making, but that’s not SPC’s job) in the Pacific region as long as we have a strategic approach and the discipline is well used.

Easier said than done

However this role of poverty alleviation and advancement of economic welfare through economic analysis is much much easier said than actually achieved, and the route to impact is often diffuse and does not give immediate satisfaction. It’s really hard and it takes a long term view. In a situation of data scarcity, with project leaders who don’t have the time or spare capacity or perhaps budget, if that is required, to go out and search for the data needed for economic analysis, it is easy to ignore the economics and focus on the ‘doing’ – getting those training workshops done or budget released for this or that building project or seeds disseminated or documents prepared.

But I think a good way forward for economists may be to find to somehow find those pieces of analysis whose results will be strategically positioned to make an impact in the future, and to integrate the use of economics more readily into the way we do business as a matter of course, so that opportunities for strategically placed analysis make themselves apparent. It is also important that there is a demand from key stakeholders for a certain piece of analysis otherwise it will not be listened to.  I understand that both the demand and the supply for cost-benefit analyses have been growing in the past ten years in the Pacific region. 

Perhaps the choice of strategically positioned CBAs for which there is a clear demand, could be achieved by sufficiently regular consultation between the economists and the program/project managers plus some process or criterion of prioritisation. Prioritising is important because it’s no use trying to do cost benefit analyses (CBAs) for EVERY project – with some CBAs you are simply going to have no impact, and with others, the cost of doing a CBA itself will be too high, so you have to pick the most important ones. And in terms of criteria of prioritisation of effort, the following factors should be considered:

  • larger sums of money
  • more people
  • more people living below a basic needs poverty line
  • similarity to other future projects which the analysis can inform
  • feasibility of analysis and availability or ease of collection of data
  • demand from key stakeholders

I list some examples below of work that I have found that needs to be done (although I don’t have the capacity to do it all!) relating to Land Resources Division, at least some of which I think could be useful.

How does economics tie in with the project cycle?

The scarcity of economists in the region made itself particularly apparent to me when I was asking myself questions about the exact nature of my own role back in early 2011, and was referred by another SPC economist to the UK Treasury’s Green Book which is essentially a handbook to the use of economics in government policy in the UK. The book makes clear that the use of a staple tool of economics, cost-benefit analysis, is at the heart of the monitoring and governance of much of what the UK civil service does.  Indeed, the Treasury states that “all spending proposals should be accompanied by a proportionate and well structured business case”.  You may be thinking that the UK is not a good comparison at all to the Pacific region – and be assured that I am not comparing it directly; moreover the Green Book may seem a terribly dull document.  But here in Suva I read it from cover to cover and found it a very useful starting point for thought. I say starting point because in the Pacific one can never just lift a policy ‘off the shelf’ and apply it, it must be adapted to context.  So I adapted the following diagram from the book which shows how economics work can mesh into the program or project cycle.

The project cycle is often not as linear as this but this is a reasonable representation.  It can apply to policy implementation anywhere in any country.  The economics points on the right are not all 100% necessary – indeed in the Pacific and with relatively small projects in terms of budget size it is either impractical or too costly to conduct all the steps for every project, particularly smaller ones.  This is why it is important to select those pieces of analysis that are likely to have the greatest impact; indeed as Resource Economist in LRD I have found that selection of the right pieces of analysis is a skill in itself and requires broad consultation and judgment.

Here are some examples either of my work or the long list of work that I have in my back pocket to do when I get round to it:

Projects I shall be working on in the next few months

This is not an exhaustive list:

• A cost-benefit analysis of Fair Trade certification of sugar in Labasa, Fiji Islands, that could shed light on the decision to extend fair trade certification to the rest of Fiji sugar.

• A cost-benefit analysis, from the farmers perspective and the perspective of a cocoa supplier, of Fair Trade certification of cocoa beans in Solomon Islands

• A cost-benefit analysis of the work of the EU-Facilitating Agricultural Commodity Trade to assist a cocoa supplier in the Solomon Islands

• A cost-benefit analysis of three different production methods of virgin coconut oil and possibly socioeconomic analysis (analysis of the distribution of the benefits) of each.

• Tonga Household Income and Expenditure Survey Data – poverty analysis, food consumption trends, nutrition analysis

• Fact-finding missions to fill in agricultural and forestry-relevant development indicators with relevant data, to Tonga, Samoa and Solomon Islands.  An LRD colleague is covering 3 other countries.

Projects that I discovered through interviews with the LRD Coordinators back in June that may be in the pipeline in future:

• Paper highlighting the economic and possibly the nutritional importance of increasing domestic consumption of domestically produced food as a % of total food consumption, and taking into account what drives consumer behaviour (probably convenience) when substituting for imports

• Study on agrobiodiversity and economic risk – how much agrobiodiversity is needed before economic risk/risk to sustainable livelihoods is decreased to an acceptable level?

• Cost analysis of imported foods versus locally produced foods

• The benefits vs costs of Integrated Pest Management vs no IPM

• Post-project impact assessment of ACIAR Taro beetle project which finished 2 years ago.

• ACIAR – Developing cleaner export pathways project: relatively simple assessment of costs and benefits of different production methods in the taro supply chain, for example: Use of crates vs bags between the farm and the pack house; Use of hot water treatment vs paying for fumigation

• CBA of an animal disease prevention strategy: would the expected benefits in terms of insurance against a pandemic, justify the costs?

• An investigation of the impact on farmers profit over time of sustainable land use practices. Would either require a large dataset or a case study of 8 farms – 4 sustainable, 4 business-as-usual – describing their costs and profits over a period of time e.g. 5-10 years. Same could be repeated in 3 or 4 countries – Polynesia, Micronesia, Melanesia.

I have put it all out there – I hope this has enlightened about how I see the role of economics in the Pacific region – I would welcome any feedback!

1000 hits – thanks!

A big thank you to LRD Economics readers for your interest and support: this blog now has over 1000 hits since its launch in June and that number is steadily growing.

I’ve been on leave for just over a week but more posts to come soon.  Today on my first day back I’m attending a very interesting workshop from the Pacific Climate Change Science Program, learning about what tools and publications are available on climate change in the Pacific and meeting a number of interesting climate change-engaged people from the Fiji government, University of the South Pacific, SOPAC-SPC, AusAid and ADB.  The second part of the workshop is training the participants to use climate change prediction software for Fiji, which will be publicly available from December for all Pacific Island Countries.  My own reasons for being here are to network and get up to speed on climate change science, tools and publications in the Pacific as I am putting together an LRD proposal that links climate change to both land administration and sustainable land management in the Pacific region.   I hope to finish this soon.

But I digress…this is just to say: thank you for your interest in the blog and please keep on visiting for updates.