Fiji: Tackling the land tenure issue

Because of its ties to ethnicity, culture and a growing import food bill, land tenure is one of Fiji’s most pressing problems. The country’s military-backed government will soon attempt to reform the country’s land tenure system, which has largely remained untouched since the mid-1970s, shortly after independence from Great Britain.

By law and through very complicated traditional arrangements, indigenous Fijians own roughly 87 percent of the land on Fiji’s 300 islands. The government owns six percent and the remaining portions can be bought and sold by people of any ethnicity. This has left the Indo-Fijians, who make up around 40 percent of the population and are descendants of the country’s indentured servants brought over by the British to work in sugar and copra plantations, largely landless.

Fiji’s post-independence government thought it had brought stability to the land tenure issue in 1976 when it created a system for 30-year leases and a secure rental structure. However, Fijian landowners long complained their rents were meager, especially when the government negotiated those rates. When the majority of leases came due between 1997 and 2001, landowners only renewed about one quarter of the contracts. Half of the land was rented to other tenants and the remaining 30 percent was never re-allocated.

This forced farmers of both ethnicities streaming into the cities looking for work. The lost leases also helped bring the downfall of Fiji’s sugar industry, which once amounted to 12 percent of the country’s GDP and employed nearly one-third of the population. Today, it has fallen to around three percent of GDP. At the same time, Fiji’s food import bill has increased dramatically. Fiji’s government has attempted to become more self sufficient by funding projectsto grow crops for domestic use.

Crosbie Walsh says the government needs to tread lightly and summon as many stakeholders as possible before passing any reform, especially if it is thinking about allowing international investment in land-based businesses.

“The need to make better commercial use of native land is irrefutable,” he writes in Fiji: The Way It Was, Is and Can Be:

But (and it is a big But) with these important provisos: The native landowners and their land must be protected from fiscal and environmental abuse; the grassroots (mataqali) owners must benefit substantially from the arrangements and be included in the land management; current farmers on leasehold land should have opportunities to participate, as must local investors.

And the foreign owners must be minority owners; their venture must bring obvious benefit to Fiji; they must employ and train local people as much as possible; their venture should have provisions for the sale of shares leading to ultimate local majority ownership — and they must pay taxes. A large bond to ensure these conditions are not breached is a must.

Even after acknowledging the urgent need for action on land and a number of other important issues, I think most proposed legislation benefits from prior wide public consultations. It will be interesting to see how the new rules “shape up.”

The blogger Corruption Fighter, writing in Fiji Democracy Now, says the government’s plan will most likely fail because leaders don’t understand the real problems tied to the land tenure issue and Fiji’s sugar industry.

What Frank [Bainimarama, Fiji’s self-imposed leader] doesn’t understand is that ALTA [1976 law setting 30-year leases and rents] rent setting arrangements provide little incentive for landowners. Unless rents are indexed regularly, they drop in real value….

Under ALTA, indexation is made according to a formula that requires the unimproved capital value of the land to be recalculated. It’s slow and has generous appeal provisions which have allowed many tenants to escape with very low rents, at least until the NLTB did its job and reviewed them.

In 2001 Padma Lal of the Australian National University and Mahendra Reddy of the USP estimated the average rent for a hectare of land was $66.63. This was a small component of the average cost of production cost which they estimated to be $2188 per hectare. Since then, production costs have risen steeply, especially the cost of fuel and fertiliser after the devaluation last year. But have rents increased to keep pace with the costs of everything else? No, because under ALTA this cannot happen.

What the sugar industry needs to survive is large farms, with farmers who can afford to use machinery and the optimal amount of fertiliser. Such farmers with higher productivity would be able to afford to pay significantly more in rent for the the land they use.

The blog Fiji Today posted rumors of some of the proposed changes the government would like to make. They title the piece:

We hope the land rumors are wrong as it would be a recipe for disaster.

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