Fiji will revamp its sugar industry

By Robert Keith-Reid
Associated Press

SUVA, Fiji — The 120-year-old Fiji sugar industry, backbone of the Pacific nation's economy, embarked on a new era yesterday after the government announced a major restructuring of the state-controlled industry.

"If the upgrading of the (sugar) mills does not start next year then there is little or no point in continuing with the sugar industry in Fiji," Prime Minister Laisenia Qarase told the parliament.

Qarase has been under heavy pressure to push ahead with the $138 million restructuring plan that was presented to his government by industry leaders 13 months ago.

Qarase told legislators that four state-owned sugar mills — which survive on generous government subsidies — will be turned into stand-alone companies before the new fiscal year beginning April 1.

More than 2,000 Fiji Sugar Corp. employees will be transferred to the four new processing companies, which will be owned by cane growers, sugar mill workers and indigenous Fijian landowners, with the government retaining a small stake.

Sugar accounts for 7 percent of the nation's gross domestic product and 18.5 percent of its foreign currency earnings. Almost a quarter of Fiji's 820,000 people depend directly or indirectly on the sugar business.

The restructuring plan handed to the government said the European Investment Bank, Asian Development Bank and commercial banks would back the reforms if they clearly were a business proposition and not a social rescue plan.

Qarase said the government was "very much aware" that many people would have to leave the industry.

The industry has enjoyed guaranteed access to the European market for more than one-third of its sugar output at a price heavily subsidized by Brussels. The market access agreement will end after 2006.