Tomato sauce hot potato in Fiji

Press, 25 August 1986, Page 25

Tomato sauce hot potato in Fiji

By PATRICIA HERBERT Tomato sauce is a hot political and economic issue in Fiji.

It is also a useful case study into the rigidly protected workings of the Fijian economy. As one disgruntled expatriate puts it: "You can’t get a decent bottle of tomato sauce in Fiji — you have to buy the local stuff.” All competition has been eliminated so that the Fiji product can establish itself on the market, but retailers report slow sales and considerable consumer resistance.

Word spreads quickly in a small place and it seems everyone has a story to offer on the peculiar properties of “the local stuff.” Some bottles have been so runny they have disgorged their full contents on first use. Others have reportedly “fizzed over” when the top is removed and, more commonly, the sauce has acquired a sulphurous smell after being exposed to the air. The problems are attributed to the additives used as Fiji has no standard governing preservatives, but the Fiji Government must accept some responsibility. As part of its relentless drive to reduce the imbalance in Fiji’s overseas trade, it imported tomato seeds and distributed them to growers, but it chose the wrong seed variety and the tomatoes are small, some say bitter. Then, encouraged by the assistance available under Fiji’s import substitution policy, a manufacturer set up a plant to

make tomato sauce and applied to the Government for protection. He got it in the form of an absolute monopoly. Before he set up his business, Fiji had imported from Watties in New Zealand and from Heinz in Australia, but their products have disappeared from the shelves — sold out in a frenzy of panic buying. Witness the “expat” who saw two cases in a store and bought the lot; a 24 bottle stockpile to get through the next few barbecues.

Even between tomato crops in Fiji, no overseas supplies are allowed in. Instead, says Fiji’s Director of Trade and Industry, Mr Mahendra Singh, tomato paste is watered down to maintain continuity of supply and, he insists, “a reasonably good quality.”

There are no chinks in the protective armour as Mr Umbalal Patel, a supermarket proprietor, can attest. He tried to squeeze round the embargo by applying for permission to import Heinz unsweetened tomato sauce for “the diabetic market” on the grounds that Fiji made only sweetened.

Permission was refused.

Mr Patel is angry at the restrictions especially as, according to his calculations, “the local stuff” is not only inferior to, but more expensive than Watties and Heinz would be, even with a 40 per cent duty. It is the whole licensing regime he objects to. “Personally, I’m not

happy at all because it limits the customer’s choice," he says. “The Government should protect industry through a high rate of tariff, perhaps 50 or 60 per cent, not by banning imports.” Duties are already high — high enough Mr Singh admits to have “attracted comment from a lot of international experts.” They are pitched to the level of competition. For example, Fiji produces almost no lamb so the duty is only 15 per cent, but it makes its own jam so the duty on imported jam is a staggering 87.5 per cent. This has the bad effect domestically of pushing up the cost of living, but carries the advantage of encouraging importers to establish factories and therefore jobs in Fiji. The Canterbury clothing company, Lane Walker Rudkin, was considering this and seems to have got as far as the final stages of planning. Its Fiji agent, Mr Dwakar Prasad of J. R. White and Company, Ltd, was sure that he would be given the licence to import cloth from New Zealand and to have the garments made in Fiji, LWR’s motive being to escape the 77.5 per cent duty charged on sports wear.

He said the matter was already in the hands of lawyers and that he would be in Christchurch on September 8 to sign the documents. It seems now, however, that plans will fall through as the duty has been cut back to 7.5 per cent and a spokesman for LWR says they will prob-

ably continue to supply from New Zealand, as that is their preference and the "economies” have changed. Still, the example demonstrates the value to Fiji of its protective policies — policies Mr Singh defends, saying Fiji is not in a strong position to export so must try to find import substitutes, just as it must broaden its industrial base to reduce its dependence on sugar and tourism.

New Zealand has been assisting in this process — sometimes at potential cost to its own trading interests. The only vegetables Fiji buys in bulk from New Zealand are potatoes, onions and garlic, yet New Zealand is now setting up pilot projects so that Fiji can grow these crops. The idea, Mr Singh says, is not to be self-sufficient because that is not possible — just to be a little less reliant on imports. The need to reduce this reliance is amply demonstrated in Fiji’s trade statistics. Taking the New Zealand figures for 1984: Fiji spent $F78.5 million on New Zealand imports and exported only SFB.7 million to New Zealand; an imbalance reflected also in its dealings with Australia where the results were $F164.8 million and $F33.6 million respectively. The licences and the duty protections are combined with exhortations from the Fijian Prime Minister, Ratu Sir Kamisese Mara, to “buy Fiji.” Just this month, he was peddling the message in the Fiji newspapers, urging restaurateurs to use more local produce in their cooking. For New Zealand exporters, these pressures are compounded by the strengthening of the New Zealand dollar against the Australian. Australia had traditionally dominated the Fiji market, but New Zealand has been steadily gaining ground and now commands what the New Zealand Trade Commissioner in Suva, Mr John Nicholson, describes as “a fairly useful share.”

The push began with New Zealand’s export incentives scheme which encouraged New Zealand manufacturers to be more outward looking and has flowered under the new South Pacific foreign policy emphasis, so that while Fiji’s imports increased only 9.9 per cent from 1980 to 1984, New Zealand’s exports rose 15.6 per cent to almost 20 per cent of the total. The trade is mostly in foodstuffs and building materials. To promote New Zealand foods, Mr Nicholson organised a “Taste of New Zealand” campaign in association with Morris Hedstrom, the retail giant in the region, and the Suva Travelodge. »■ Morris Hedstrom’s assistant general manager, merchandise, in Fiji, Mr Pat

Clark, says the promotion went well and that he was delighted with the support given it by New Zealand suppliers, but that it is too early to tell whether sales will be boosted as a result Still, he reckons it made a bigger impact across a wider sector of the population than most promotions and says he would like to make it an annual event

Its strength was that it was backed by a New Zealand film festival and coincided with a Herbs concert, both of which served to enhance an awareness of New Zealand, he says. Of the lines stocked by Morris Hedstrom, about 40 per cent are Fijian made, 25 per cent Australian, 25 per cent New Zealand and 10 per cent “other.” New Zealand’s strongest competitor is Australia, Mr Clark says, because while 50 per cent of our trade is exclusive, the other 50 per cent is contestable.

New Zealand, he says, picked up a lot of business with the 1984 devaluation, but that advantage is now all but eroded. The damage from this has yet to fully register because Mbrris Hedstrom is "too big an operator to jump from one bed to another” and generally tends to stay with one source of supply for a while as it buys on a “52week year” basis.

With Mr Patel, however, the cost of the strong New Zealand dollar against the weakening Australian one is likely to be counted sooner. He imports on his own account and makes his decisions according to the exchange rate when he does his costings. But there is a lead time between when he makes his orders and when he pays for the deliveries and he is now favouring Australia because he thinks the Aussie dollar will either remain where it is or fall.

Because the New Zealand dollar is less predictable, it carries a greater risk. Mr Patel remembers being stung last year when it rose unexpectedly and he lost "quite a sum — it ran into thousands.”

As a New Zealander, the manager of the Suva Travelodge, Mr Peter Rigby, would prefer to buy New Zealand and was happy to participate in the “Taste of New Zealand” exercise, featuring a different New Zealand dish each day, washed down with a complimentary glass of New Zealand wine, in Pennies — the hotel’s luncheon restaurant.

As a businessman, however, he will buy from Australia if.it is cheaper and that is the trend.

In the Fiji building industry, New Zealand is wellestablished. Fletcher Construction has been there 17 years under Reddy Fletcher, a 50-50 partnership with Reddy Construction of Fiji. The company now has $35 million in work, including the ambitious 300-room Sheraton

development at Nadi. The manager, Mr Mike Taylor, says they buy from New Zealand if possible, but not if it means paying a higher price and that they have lately been turning to Australia because of the dollar fluctuations.

Still, scope in the contracting area for New Zealand companies remains considerable as evident in the tenders for the new timber mill at Drasa, Lautoka.

This is being developed by Forestry Development Services, Ltd; a joint venture between the Fiji Pine Commission and British Petroleum (South West Pacific). The plant is intended to process logs for the Fiji pine plantation so the job is a big one and has attracted international interest. For all that. New Zealand firms have scooped many of the contracts so far let. According to the project manager, Mr George Crawford, they have been successful because they have been bidding competitively and because New Zealand’s proximity gives them a transport advantage. The civil contract to build the mill’s foundations was awarded to McConnell-Dowell in a joint venture with Grayburn, a local company. McConnell-Dowell is also competing for the mechanical erection contract, this time in association with IMEL, another Fiji company, and against Reddy Fletcher and others.

Timbertec in New Zealand won the contract to build all the pre-engineered buildings made from laminated beams and Windsor Engineering, the job of building the dry kilns.