While Mark and Chris are up to their necks in salt water and coconuts at the Fiji Meet-up, I wanted to discuss an interesting opportunity in Fijian tourism.
No, I’m not going to babble on about gorgeous scenery and warm water whereby those who start a tourism company will bloat with wealth. I would rather talk about something much sexier…feeding the hundreds of thousands of tourists that wash up on Fiji’s shores annually.
Tourism has been the lifeblood of Fiji for decades, employing many thousands of islanders, all-the-while acting as a backbone for the government budget. I am surprised the national slogan isn’t “Promote tourism or bust” because it is relied upon and needed that badly.
Nonetheless, the country’s balance of trade has been negative for years, largely due to the imports of energy and foodstuffs. Last year alone Fiji imported A$325 million of foodstuffs, a large proportion which was consumed by the over 300 hotels and resorts on the islands. Mind the fact that the economy is a paltry $3.81 billion and we are talking some serious moolah!
Now, the issue is not necessarily one of insufficient supply on the islands. Mark and Chris will gladly tell you how inexpensive good produce is at the markets. So if the Fijian’s aren’t paying $7.00 per kilo for tomatoes in the winter time, then who is?
The crux of the problem is that the majority of farms in Fiji are small holder and with insufficient cooperatives (and lack of access to capital) to gain leverage, they are unable to supply the hospitality industry with either the quantity or service required. This has led to hotels being serviced by large Australian and New Zealand food distributors, leading to high prices ($7 per kilo for tomatoes) at resorts. If you’ve visited the country you know what I am talking about. Food at resorts ain’t cheap and freshness is up for debate.
So what does this all mean?
Well, the further I dig into the hospitality and agricultural industries, the more intrigued I become. There is only a minor presence of commercial agriculture in Fiji, sans sugar cane, and as Chris mentioned in his post “Hope”, land is cheap and labour even cheaper. All of this means that there is an opportunity to service the hospitality industry locally, something I have been speaking with friends about doing. It’s a no-brainer to supply local, reliable organic and fresh produce to this marketplace.
The incentives for projects like this vary widely, but as the Meet Up delegates are learning, tax breaks exist and we can even get our equipment in the country duty free. That’s not to mention the 10% tariff (used to be 20%, darn) on all produce, dairy and meat imports, giving us a natural buffer from foreign competition.
While growing food is all nice and dandy, if the high-end market isn’t around, then a growing operation would be a flop. So naturally my intrigue stems from the growing tourism numbers (see chart above) which will provide a backstop and deepening market for high quality, fresh produce. And according to my studies, using history as my guide, where there are growing numbers of people there is an increasing number of mouths to feed. Thank you Woodstock!
- Scott
“When it is understood that one loses joy and happiness in the attempt to possess them, the essence of natural farming will be realized. The ultimate goal of farming is not the growing of crops, but the cultivation and perfection of human beings.”― Masanobu Fukuoka, The One-Straw Revolution
Agree with your thoughts, but as always I will be a devil’s advocate.
I ask myself if the case for agriculture investment is so compelling why isn’t it attracting investment? Local and foreign businessman continue to invest in Fiji (and perhaps not so much in agriculture). Recently a teak plantation project got off the ground. Why not agriculture? I think of Kyrgyzstan utilising just 10% of hydro potential. It can be developed and electricity exported to neighbouring countries. There is lot of unused land which can be used for agriculture/livestock instead of importing (Kyrgyzstan imports eggs, chicken…). But its not happening. Why? Vege industry not taking off in Fiji – could it be because of:
1. Weather – risk. Hurricanes can wipe out crops whereas there are no (or little) risk in NZ, Australia etc
2. Costing. Prices at markets are relatively cheap but they are priced for subsistence – growers sell to earn a living. ‘Free’ labour is probably used, no taxes, no pension contributions etc. It is conceivable that cost for large scale farms could be higher. I say ‘could’ – only guessing here. Maybe this is wrong.
3. I spoke with a friend many months ago and he paid F$5 for 5-6 small tomatoes. High price because of weather.
4. Maybe it makes economic (and environmental) sense to grow in much larger scale in NZ/Aust and export to Fiji. One research shows lamb exported from NZ to UK is 4 times environmentally friendly compared with UK lamb. http://www.3news.co.nz/Britons-told-to-eat-meat-from-NZ/tabid/1160/articleID/274962/Default.aspx
5. Lot of foodstuffs are imported. I don’t know the breakdown. Many items cannot or are not produced locally (in sufficient volume and with consistent high quality)- beef, lamb, salmon, apples, strawberries etc etc. I wonder how much of imported items can be substituted with local production.
6. “Food at resorts ain’t cheap”. The cost of raw materials is not a significant percentage of the total food cost. 50% drop in the cost of tomatoes etc will probably have negligible impact on the food cost.
7. Fiji does have non-sugar agriculture industry. Fiji exports fair bit of root crops (cassava, dalo), ginger, coconut products etc. Pickled ginger sold in Sweden comes from Fiji!
I hope my questions/issues are baseless and agriculture is a commercially feasible option in Fiji.
Other interesting agriculture products: Cocoa, vanilla, spices etc. Cocoa from Fiji, Samoa etc is of high quality. Samoa has a ‘thriving?’ cocoa industry. Cocoa industry died in Fiji, attempt was made to revive it few years ago. Vanilla and some spices are being exported (don’t know about volumes).
Neesh,
Having just returned from Fiji I wanted to make a few comments to your observations, which are excellent BTW.
1. Weather risk – Cyclones (hurricanes in the N. hemisphere) are not a huge threat in Fiji. They do occur, but most of the time they blow around the islands due to the prevailing jet stream, ocean currents and the geography of the place. Regardless, winds and heavy rains are an issue and one needs to take this risk into consideration, of course.
2. Costing – Labor is cheap, plain and simple. The min. wage is just over FJD $2.50, which is like US $1.35′ish. Benefit pay is very, very limited as well, so your cost to run a labor operation is not going to be prohibitive on a commercial level, and they NEED the jobs desperately.
3. Tomatoes, broccoli, apples, etc.. ALL expensive because of import. We can’t kiss all the girls, so if we do set up something it will likely address leafy stuff and herbs, also things like tomatoes and strawberries.
4. I don’t doubt that NZ lamb is more environmentally friendly than UK lamb. I would question why importing anything from overseas that can be done in Fiji is more sensible. Lamb can be raised (it is), as well as cows, pigs and goats. Their diets are arguably the purest in the world. They are eating broad leaf jungle plants, grasses and drinking Fiji water that Westerners pay $5 litre for in Trader Joes and Safeway!
5. Beef and lamb should be able to be done in Fiji, it’s just the skill that is lacking and the capital. Salmon will always be imported, but why anyone would want salmon when you can get some of the best tuna, Spanish mackerel, mahi mahi, wahoo, crabs, shrimp and lobster is beyond me. Apples will always need to come from overseas. Strawberries CAN be done, I saw it myself in a few gardens.
6. Resorts will rape and pillage, that’s their MO. I had dinner with a Meet Up attendee in Nadi the day after our conference. Dinner for 3 adults, with minimal alcohol (2 beers and 1 glass of wine) came to FJD $425! That’s nuts by any standard, especially since one guy only had an appetizer and dessert!
7. Yes, you are correct. My argument for Fiji agriculture would be centered around “branding”. Fiji Water is successful because they sold the Fiji “brand”. Sure, the water is pure, but come on, shipping water from Fiji to ANYWHERE is ludicrous. Purification is so good these days that buying bottled is just dumb.
Fiji, like New Zealand, Uruguay and other small countries with a “clean” image need to capitalize on that! You aren’t going to compete with larger nations on price, so you need to focus on the quality, the value-added products and the artisan nature of the products themselves. Your comments on cocoa and vanilla, also ginger are very appropriate, and directly applicable to what I just said.
Chris and I are looking at buying a 30-acre cocoa and vanilla plantation as a matter of fact. Anyone interested in learning more about this is free to email me.
Just my 2 cents. I’m anxious to hear what others have to say.
Mark
Dear Mark-
Have been reading Chris and Mark’s writings awhile,
what is the value and the asking price of the 30-acre cocoa and vanilla plantation
Hi Jill
Chris here. The 30-acre block is theoretically not for sale. It forms part of a larger block which we are working on with a superb developer in order to achieve our vision of a community of like minded individuals living in a sustainable environment. At this point it requires certain infrastructure in way of roads, water source and many other things. All of these will cost us money to bring online and it would be premature of me to say what the ultimate value of the entire block will be. Same goes for individual lots, however we intend to keep lot prices under $100k.
Neesh,
Thanks for your comments.
A couple of reasons produce isn’t being supplied locally in sufficient quantities is courtesy of insufficient access to capital and local entrepreneurs unable to supply the quantity and variety the hospitality industry demands. Cooperatives were being talked about in the past to increase the attractiveness of buying locally, but I am unsure if any have gotten off of the ground.
Covering another point you mention, I see commercial growing facilities, such as greenhouses using hydroponics technology, as a way to supply produce and herbs locally. This can be capital intensive and is likely in need of imported talent to initially manage such a facility.
Food prices are sky high at the resorts in large part due to expensive imports. Most produce and herbs are mainly composed of water. Therefore, transporting these goods from overseas is uneconomical and hurts margins at the resorts; it also impacts freshness. So what do the resorts do to counter expensive food imports? Hike up prices of a meal of course.
So, if this problem can be averted by providing hotels a means in which to buy locally, I would be awestruck if they would be against it. Of course I have simplified the supply chain an process of getting a project like this in motion, but you get the point.