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The high price of sweetness: The twin challenges of efficiency and soil erosion in Fiji's sugar industry

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  • Mahadevan, Renuka

Abstract

The European Union's sugar subsidy since 1975 has kept attempts to reform Fiji's sugar industry at bay, until recently due to the expiry of the subsidy at the end of 2007. This paper looks at the high price at which Fiji's sugar has remained sweet, in particular, with regards to efficient production and soil erosion. When the extent of soil erosion was included in the production function, farms on average produced at about 69% of their potential output and this finding was robust to both parametric and nonparametric approaches. In addition, soil erosion was estimated to result in a 9% loss in cane output which translates to a loss of US$8 million in farm income and US$12 million in sugar sales to the industry. Lastly, empirical evidence supports the recommendation of an integrated package of policies related to land tenure and the adoption of soil conservation practice and management.

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  • Mahadevan, Renuka, 2008. "The high price of sweetness: The twin challenges of efficiency and soil erosion in Fiji's sugar industry," Ecological Economics, Elsevier, vol. 66(2-3), pages 468-477, June.
    • Handle: RePEc:eee:ecolec:v:66:y:2008:i:2-3:p:468-477
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    1. Jara-Rojas, Roberto & Bravo-Ureta, Boris E. & Moreira, Victor H. & Diaz, Jose, 2012. "Natural Resource Conservation and Technical Efficiency from Small-scale Farmers in Central Chile," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126227, International Association of Agricultural Economists.
    2. Renuka Mahadevan & John Asafu‐Adjaye, 2010. "The Implications Of European Union Sugar Price Cuts, Economic Partnership Agreement, And Development Aid For Fiji," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 52-64, January.
    3. Laure Latruffe & Hervé Guyomard & Chantal Le Mouël, 2009. "The role of public subsidies on farms’ managerial efficiency: An application of a five-stage approach to France," Working Papers SMART 09-05, INRAE UMR SMART.
    4. Janesh Sami, 2020. "Time Series Dynamics of Sugar Export Earnings in Fiji with Multiple Endogenous Structural Breaks: Implications for EU Sugar and Industry Reforms," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(1), pages 169-189, March.

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