FAO identifies way to boost Cook Islands agriculture

Saturday June 14, 2014 Written by Published in Uncategorised
How much food is imported each year, as compared to the resident population.14091301 How much food is imported each year, as compared to the resident population.14091301

“Linking farmers to markets: Realising opportunities for locally produced food on domestic and tourist markets in Cook Islands” is the title of a new report has been released by the FAO sub-regional office for the Pacific Islands through the Cook Islands Chamber of Commerce.

The report makes 16 wide- ranging recommendations on how best to implement the findings of the report.

The executive summary of the report says:

Over the past 20 years, the agriculture sector in the Cook Islands has undergone a significant transformation. The value of imported food consumption per capita has more than doubled, and foreign exchange generated from food and beverage exports has plummeted to just over NZ$3 million.

As Cook Islanders of working age have increasingly moved from the outer islands to Rarotonga and from Rarotonga to New Zealand, participation in the agricultural activities has fallen dramatically. Growth in the tourist and the service sectors of the economy has effectively raised wages higher than the agriculture sector can profitably pay, resulting in the migration of labour to other sectors.

In addition, increased investment in these industries has resulted in rising land values and the conversion of agricultural land into land for the tourism and residential property developments.

While a small but vibrant agribusiness sector remains, competition from more efficient producers in Asia and the Pacific Rim have priced primary sector products from the Cook Islands out of export markets, and many domestic markets.

Unlocking the potential of the agriculture sector in the Cook Islands will require significant reorientation towards production of fruit and horticultural products for domestic markets, including tourism.

Critical to servicing this market, however, is the adoption of farming systems capable of producing a consistent, high quality supply. The high cost of finance in the Cook Islands, and the threat of uninsured losses due to natural disasters, is a major impediment to the level of investment required to effect this reorientation.

Improved market information and information on market demand is also required to assist the agriculture sector to better co-ordinate production to meet domestic demand specifications.

Tariff, tax and regulatory policies governing the importation and sale of agricultural products and inputs which promote the consumption of nutritious locally produced food throughout the year, as well as provide access to lower cost farm inputs, will offer additional security to agriculture sector investments.

Finally improved public-private sector dialogue and collaboration between the agriculture sector, tourism and key partner Ministries, will help to improve co-ordination of food policy interventions.

At the request of the Government of Cook Islands the Food and Agriculture Organisation (FAO) was asked to help identify the specific policy, regulatory and programmatic interventions that would help the agriculture sector realise opportunities for locally produced food on domestic and tourist markets, in order to reduce food import dependence.

This report presents those recommendations, and the evidence which supports them.

Objective 1: Facilitating increased investment in the adoption of more efficient farming systems

The competitiveness of the agriculture sector is undermined by the relative scarcity of agricultural land and high cost of agricultural labour located in proximity to the major domestic markets.

Consequently, a major focus of the Government of Cook islands import substitution policy should be facilitating the adoption of new technologies which reduce dependence on these two inputs. In addition the lack of off-season production is a significant barrier to local proudcers capturing a greater proportion of local demand.

To realize import substitution opportunities through increased agricultural productivity and extended growing seasons will require a transformation to knowledge intensive, land and labour-saving approaches to farming.

This will require capital investments in the adoption of new farm technologies. The Government of Cook Islands need to implement programmes and policy reforms to create a more enabling environment for investment in commercial agricultural production and processing.

To encourage investment in the adoption of  new technologies which increase off-season supply, as well as processing technologies which would help to provide a market for second grade fruit and vegetable products during periods of oversupply, there is an urgent need for the introduction of:

  • a  low interest loan facility for agribusiness development;
  • tax breaks for primary producers and the ability to quickly write off the value of capital investment for agricultural equipment (100% depreciation);
  • disaster risk insurance for agribusiness infrastructure and equipment.

Recommendation 1: The Business Trade and Investment Board (BTIB), Ministry of Agriculture (MOA) and the Ministry of Finance and Economic Management (MFEM), together with the Bank of Cook Islands (BCI) and partner International Organisations (IOs), should develop a proposal  for dedicated low interest loan product for agribusiness development.

Recommendation 2: The BTIB, together with the MOA and MFEM and partner IOs, should develop a proposal for the reform of the Cook Islands tax code to render all investment in capital equipment for agriculture 100 per cent depreciable over three years for tax purposes.

Recommendation 3: MFEM in cooperation with MOA and BCI should develop a proposal for establishing a private sector ‘disaster risk’ agriculture insurance facility to reduce the risk of capital investment in agriculture.

Financing agriculture is more effective, and hence less risky, when it is part of a broader package that combines both financial and non-financial services to the farmers with the objective of building business management skills, improving yields and quality (through access to better inputs and extension) and ensuring access to markets for selling farm produce.

Assisting banks to look at farmers within their value chains and combining the resulting information into financial packages should also help in reducing risks and costs.  Consequently it is critical that the Cook Islands develop:

  • information tools to assist financial institutions and agriculture sector stakeholders to identify the gross margins that can be expected from these new approaches to fruit and vegetable production;
  • a public-private sector program for the identification of ‘best bet’ agribusinesses for the receipt of low-interest loans; and
  • a technical assistance package aimed at the adoption of off-season production technologies and use of hydroponic and semi-hydroponic technologies, covered agriculture and mechanised farming systems, as well as mentoring assistance on business planning and management.

Recommendation 4: In order to facilitate economic and financial feasibility assessments for business planning and to strengthen the business case for loan applications the MOA should, in partnership with IOs, prepare a farm manual containing gross margin analysis for all key crops and farm budget information.

Recommendation 5: The BTIB and MOA working in partnership with the Tourism Industry Council, Chamber of Commerce and the Titikaveka Growers Association (TGA), with support by partner technical agencies, should put together a portfolio of bankable agribusiness projects.

Recommendation 6: The MOA, together with assistance from partner IOs, should develop a proposal for the development of a technical assistance package designed to assist with the selection and dissemination of off-season varieties of vegetable and fruit products in demand on the domestic market; the transfer of knowledge on off-season production technologies, including hydroponics, semi-hydroponics and covered agriculture.

Objective 2:     Improved marketing and market information capacity

The paucity of market information and market intelligence on future domestic demand undermines the monitoring and evaluation of farm production trends, farm production planning and effective coordination of supply of farm produce to the domestic market.

Domestic market price and volume data can be used to monitor food production trends and the implementation of sector plans; as well as provide vital information on the contribution of the agriculture sector to the national economy.

The Cook Islands Statistics Office (CISO) is currently reviewing its long term strategy for statistics collection for each sector, which provides a unique opportunity for the MOA to work with CISO to ensure the inclusion of a provision for a weekly or monthly Market Survey in the National Stragey for the  Development of Statistics (NSDS).

Recommendation 7: The MOA should work with the CISO to institutionalise the production of a weekly or monthly domestic market survey (volume, prices and demand) and publishing of this information in a regular report,  as part of the NSDS.

Inability to consistently produce and deliver the required quantity and quality of fresh fruits and vegetables required by retail, hospitality and tourist markets is a critical challenge for the agriculture sector in the Cook Islands.

However, tourist and retail outlets have cited a willingness to share information on their present and future demand for these products (quality and quantity) in a systematic way, as long as they can interact with one or a small number of institutional intermediaries.

There is a need for facilitated support to establish strategic alliances that better ensure good coordination between supply and demand.

Recommendation 8: The BTIB and the CITC should work together with the CITIC and the MOA and the TGA to develop a pilot scheme for collecting forecasts of future demand (quality and quantity) for select fruit and vegetables products from participating hotels and retail outlets, and co-ordination of supply.

Providing promotional benefits to tourism and retail outlets for their use of local food products, is essential for driving increased demand for local produce and encouraging their participation in schemes designed to promote greater co-operation between growers and local buyers.

Fresh and locally sourced food is a central component of the tourist experience, and therefore customer feedback; however there are currently few hospitality businesses in Cook Islands focusing on improving the “cuisine experiences” of their guests by incorporating locally produced food into their menus.

Cook Islands tourism outlets should be offered additional marketing benefits for menus and ‘cuisine experiences’ involving local food.

Recommendation 9: The CITC, CITIC, the BTIB and MOA should build a promotional campaign around the use of local fresh produce in the food and beverage experience in Cook Islands by inviting tourism operators and chefs who are particularly innovative in their use of local food to identify some initiatives to help differentiate the Cook Islands tourism brand as a destination offering a superior ‘cuisine experience’ to other Pacific Islands

3. Improved co-ordination of policy and regulatory reform

In order to help achieve the implementation of policy and regulatory reforms required to achieve improved food security, the Cook Islands needs to establish a high level, multi-sector statutory body to offer the full range of public and private sector stakeholders in food production and consumption, a formal policy role. This should result in better policy and development outcomes.

This body, identified here as the Food Policy Council, should be established in order to address the emerging NCD crisis in the Cook Islands by introducing practical measures to encourage increased consumption of locally produced, nutritious food in order to reduce obesity rates.

This statutory body should be given the responsibility for designing and implementing the policy, regulatory and programmatic reforms presented here, among other identified priorities.

Recommendation 10: The MOA should join with the Ministry of Health, MFEM, BTIB and Office of the Prime Minister to facilitate the establishment of Food Policy Council to design and implement whole of government policy measures to address the strategic issues common to food production and consumption trends in the Cook Islands; and to enhance co-operation between the public and private sectors.

Increasing the consumption of fresh local fruits and vegetables among Cook Islanders, and reducing their consumption of imported processed foods high in salt, fat and sugar has been recognized by government as an important strategy in the prevention and control of Non-Communicable Diseases (NCDs)

The Cook Islanders has already shown its willingness to use price disincentives to deal with obesity and NCDs by implementing a tax on the sugar content of soft drinks; in addition to alcohol and tobacco.

However, in order to arrest the dramatic increase in obesity, consumers should also face disincentives for the consumption of food and beverage products which have a negative impact on obesity. These are identified as food and beverage products for which one serve contain rates of salt (sodium) and trans fat which are significantly higher than the daily recommended intake.

Revenue raised from this ‘health excise’ should be directed to improving the affordability of fruits and vegetables. The introduction of a trial free school lunch programme which provides each school student with a daily serve of fruit (fruit plate), in order to establish healthy consumption habits among the nation’s youth, is one example of a practical and affordable program which should be the flagship policy of the Food Policy Council.

In order to facilitate the introduction of this excise, the Food Policy Council should work with partner International Organisations to develop an implementation plan for this policy which would include:

  • identifying food products of which a single serve exceed the daily minimum requirements for sodium, trans fat and sugar;
  • analysing the impact of a 20% excise on these products on their consumption, and an accurate estimation of the revenue such as excise would raise for investment in encouraging the consumption of health alternatives;
  • developing cost effective proposals for improving access of at risk groups to affordable fruit and vegetable products. 

Recommendation 11: The Food Policy Council should lead the consultation for and implementation of a ‘health excise’ on food products with a negative impact on NCDs, and the identification of priority programmes for facilitating improved access to healthier substitute products (such as through the proposed free school fruit-lunch programme).

Despite having a very liberal trade regime the government has maintained tariff protection for selected fruit and vegetables produced locally. An import tariff is levied on imports of fruits (of up to 75%) and vegetables (of up to 25%) during the period September 1 through to November 30 in order to help improve the competitiveness of local production versus imports during this off-season ‘shoulder’ period.

However, several of the products included in the protected group can be grown with appropriate farming methods over a more extended period of the year (e.g. December to February).

The provision of temporary price protection would provide an additional incentive for investment in the adoption of off-season production technologies.

Therefore it would be advisable for the Food Policy Council to review the impact of an extension of tariff protection for select fruit and vegetable products to the off-season months (Dec-Feb) on the competitiveness of local production vs imports; and in light of this analysis, consider whether this reform should be part of the package of incentives to be offered to encourage investment in off-season production.

Recommendation 12: The Food Policy Council should review the import tariff regime currently in place for fruit and vegetable produce with a view to better aligning it to support improved competitiveness of local off-season production.

The agriculture sector is identified as the single largest consumer of water, with estimated daily use of 4600m3. Ensuring a regular supply of low cost water is essential to improving the reliability and quality of agricultural produce in the Cook Islands.

The introduction of water efficient irrigation systems will be essential if the agriculture sector is to supply the domestic and tourist markets during the season of highest demand: the drier ‘winter’ months during the middle of the year.

However, the government is poised to implement a major upgrade of the Rarotonga water supply infrastructure coupled with a user-pay system which may significantly increase the cost of water consumption to the agriculture sector.

Any significant increase in the price of water paid by farmers would negatively impact their competitiveness, and reduce incentives for capital investment in water-intensive technologies (such as irrigation and hydroponic systems) central to the future of agribusiness in the Cook Islands.

As a result it is critical that the sector develop a clear strategy for agriculture water use and supply which would ensure that farmers continue to access competitively priced water inputs within the proposed system.

Recommendation 13: the Food Policy Council should develop a strategy for the supply of competitively priced water to the agriculture sector through the proposed Te Mato Vai project. Given the proposed timeframe for the beginning of this project, this recommendation should be implemented as a priority.

In order to reduce the cost of farm inputs, and the impact of emissions on public health and branding of the Cook Islands as a clean and green destination, the Government of Cook Islands should introduce legislation to regulate, and eventually eliminate, burning-off of green waste on Rarotonga.

The municipal council should be the initial target of regulation. The Titikaveka Growers Association (TGA) currently produces compost fertiliser at a significantly cheaper price than imports. However, the effectiveness of this farm inputs suffers from a deficit of green waste.

Given the council is responsible for maintaining public sites and removing green waste, and the TGA have provided a designated dump site for green waste, the council should be required to deliver green waste to this site (rather than landfill). 

Recommendation 14: the Food Policy Council should recommend the introduction of a ban on burning of green waste and requiring the delivery to the TGA compost site.

In order to provide a strategic and legislative framework for the new policy and programmatic framework of MOA, the Ministry needs to work with other stakeholders on the Food Policy Council to develop and adopt a long-term policy, and plan for the sector.

This plan should inform a review of the Ministry of Agriculture Act (1978) in order to ensure compliance of this legislative framework with this new Agriculture sector plan.

Recommendation 15: the Food Policy Council, with the assistance from partner IOs, should develop a new long-term strategic plan and policy for the Cook Islands MoA.

Recommendation 16: The Food Policy Council, with the assistance from partner IOs, should undertake a review and reform of the Ministry of Agriculture Act (1978), subsequent to the development of the Agriculture Sector Policy and Strategic Plan.

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