Since 1997, the agricultural leases on Native land, issued under the 1976 Agricultural and Landlord Tenants Act (ALTA), began to expire. The sugar industry is the main commodity export earner for Fiji, directly contributing about 22% of the national GDP and supporting over 25% of the country's active labor force. Fiji exports 80% of its sugar production, earning on average of $250-300 million in foreign exchange annually. Several options have been suggested, including: non-renewal of leases, with the land reverting to Fijian owners; renewal of ALTA but with land rents pegged to the gross value of production instead of the unimproved capital value; sharecropping and contract wage arrangements; and abolishment of lease arrangement under ALTA with leases to be issued under an institutional arrangement guided by the Native Lands Trust Act (NLTA). The land tenure system adopted will have a significant impact not only on the efficiency of the sugar cane sector but also on Fiji's ability to meet its international obligations of sugar exports. This paper explores the land tenure dilemma facing Fiji today. It assesses the economic implications of the various forms of land lease system proposed. This analysis is carried out in terms of efficiency, equity, and risk sharing in the current preferential market access environment and under possible future world market conditions. Suggestions are made on institutional arrangements that could enhance efficiency in resource use and encourage sharing of production risks that arise due to variability in factor prices and climatic conditions as well as sugar prices.


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