COUNTRY PROJECT Presentations

Integrated Assessment of Trade-Related Policies in the Agriculture Sector and Biological Diversity Mauritius

Geneva, 1-3 July 2008

OBJECTIVE OF THE ASSESSMENT The UNEP Project

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Fisheries,

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undertaken by the Ministry of Agro-Industry and

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implemented by the Agricultural Research and Extension Unit (AREU).

Mauritius is currently studying the impact of the reduction of sugar prices as a result of the changes in the EU trade policy on the agricultural sector in Mauritius.

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Annual sugar quota - 507,000 t under ACP-EU Sugar Protocol

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net foreign exchange earnings - 300 M USD.

FOCUS OF THE ASSESSMENT

• The dismantling of Sugar Protocol •Cut (36%) in sugar prices a period of 4 years • price reduction fully implemented by 2009 •decrease in price from 523.7 Euro/tonne in July to 335.2 Euro in 2009/2010. • Mauritius will be the most affected by this price cut specially that sugar account to 17% of foreign exchange earnings and up to 4.5% of GDP. • Mauritius is expected to lose 895 M Euro during the 9 years of the implementation of the new Sugar Regime.

FOCUS OF THE ASSESSMENT Mauritius has developed a MultiAnnual Adaptation Strategy (MAAS) 2006-2015, which includes 6 main policy options:

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regrouping of small farmers;

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sustaining difficult areas under sugar cane; moving out of sugar cane;

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centralization; right sizing of labor force; Shift to ethanol production.

FOCUS OF THE ASSESSMENT

Core objectives of the plan: (1) (2) (3) (4) (5) Transformation of the sugar industry into a sugar cane cluster. (produce several types of sugar i.e. raw, special, and white sugar; electricity from bagasse and ethanol.

Establishment of a competitive, viable and sustainable sector. Fulfilment of the trade commitments of the country. Reduction of the dependency on the import of fossil fuels generally and on oil in particular. Continuation of the multifunctional role of sugar and in particular the support to national environment and social objectives.

FOCUS OF THE ASSESSMENT

The IA study in Mauritius is reviewing the impacts of some of the policy options of the MAAS.

Study to focus on both the national level.

focus group

A. Small farmers

small farmers and corporate sectors so as to have a real picture of the impact of the EU-sugar reform at 3 main interventions of the MAAS to be considered for each   Regrouping of small farmers Sustaining difficult areas  Moving out of sugar/cane /(diversification or abandon)

B. Corporate sector and large planters

   Centralization Right sizing of labor force Ethanol Production

CONCEPTUAL FRAMEWORK

Main driving force: EU sugar reform 36% within a period of 4 years. How MAAS policy would affect the agricultural sector and the target commodity.

Expected changes in biodiversity as a result of price reduction of sugar. MAAS will also lead to increase efficiency, decrease in cost of production and competitiveness      Describe the likely changes in incentives in the agriculture sector and in land use.

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Change in Land utilisation, Diversification, Agro forestry Infrastructure, Integrated Resort Scheme/ Real State Scheme Abandonment / fragmentation of agricultural areas Intensification (grouping of farmers) Sugar cane for other use Impact on flora & fauna, Soil erosion

CONCEPTUAL FRAMEWORK (cont.)

Impacts on the environment, biodiversity and the ecosystem services associated with biodiversity

Provisionary

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Import Substitution Reduction in import of fuel Increase in water demand Reduction in fertiliser import

Regulating

 Control of erosion & sedimentation   Regulate pest and pathogen Increase in infiltration rate   Habitat for beneficial organism Water purification and waste treatment

Cultural

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Historical and cultural heritage

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Conservation of valued species Recreation and eco tourism value

CONCEPTUAL FRAMEWORK (cont.)

Human Well-being and Poverty Reduction

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Farmer’s income livelihood

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Food security Life style around village and sugar estates

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Unemployment Social problem (e.g. alcoholism) Re-skilling New job opportunities (IRS) Gender issue Trade Agreements and other Influences on Agriculture

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EU Sugar Regime, Reform in Economy, MAAS for sugar sector Price and market of sugar

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Trade Agreements and other Influences on Agriculture -SIE ACT - Non-sugar sector plan - EPA and bilateral / Regional Trade Agreement -Negotiations with WTO to consider sugar as sensitive product or as a tropical product -Trade agreement with Brazil - SADC initiative for seed security

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Local policies - NBSAP, - Democratisation of land - Energy policy, - Integrated Resort Scheme policy - Food Security - Diversification (food and livestock) - Cross Border Initiative - Increasing oil price & biofuel policy

CONCEPTUAL FRAMEWORK (cont.)

Reviewed and validated conceptual framework Human Well-being and Poverty Reduction Farmer’s income livelihood Food security Life style around village and sugar estates Unemployment Social problem (e.g alcoholism) Re-skilling New job opportunities (IRS) Gender issue

Biodiversity & Ecosystem Services

Provisionary

: Import Substitution Reduction in import of fuel Increase in water demand Reduction in fertiliser import

Regulating

: Control of erosion & sedimentation

Cultural:

Regulate pest and pathogen Increase in infiltration rate Habitat for beneficial organism Water purification and waste treatment

Historical and cultural heritage

Conservation of valued species

Trade Agreements and other Influences on Agriculture

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EU Sugar Regime, Reform in Economy, MAAS for sugar sector Price and market of sugar

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Trade Agreements and other Influences on Agriculture -SIE ACT - Non-sugar sector plan - EPA and bilateral / Regional Trade Agreement -Negotiations with WTO to consider sugar as sensitive product or as a tropical product -Trade agreement with Brazil - SADC initiative for seed security

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Local policies - NBSAP, - Democratisation of land - Energy policy, - Integrated Resort Scheme policy - Food Security - Diversification (food and livestock) - Cross Border Initiative - Increasing oil price & biofuel policy Agricultural activities and Change in land tenure and use Change in Land utilization

Diversification, IRS, Agro forestry,

Infrastructure, Real State Scheme

Abandonment / fragmentation of agricultural areas

Intensification (grouping of farmers) Sugar cane for other use Impact on flora & fauna Soil erosion Recreation and eco tourism value

METHODOLOGY

The baseline for the analysis of impacts Relevant documents related to trade, biodiversity and sugar related policies before reform have been compiled. Baseline data available as sugarcane has been the backbone of the Economy for over 4 decades. Data collected for the study would be analysed, assessed and compared with the baseline data The main economic, social and environmental indicators used to measure the impacts

Economic Indicators

: Value of land, Yield, Cost of production / inputs required, Revenue to farmers, Change in land Tenure, Irrigation

Social Indicators : Group level

: Management skill of farmers, Status of farmer, Social values, Group behaviour/Involvement, Group level evolution, Entrepreneur skill

METHODOLOGY (cont.)

Household level : Family labour, Social values, rate of alcoholism, Occupation, Change in activities and leisure time of farmers Community /society level : labour

Environment/Biodiversity Indicators:

Biotic factors: Cane variety, Weed flora, Pest and diseases, Fauna, Aquatic fauna in coastal zones Abiotic factors: Soil compaction/ texture, Drains at block level, Topography and soil erosion, Water ways and rivers, Burning / green harvesting, Inputs (Use of fertiliser /chemicals), Pesticide disposal taken care by group

Institutional impacts

Need to review role of FSC Sugar Estates role vis-a-vis farmers as a service provider, Role of Cooperatives, Role of MSIRI, Role of other service providers

METHODOLOGY (cont.)

Policy scenarios Used Small Planters:

Growers with small size holdings will be subjected to:  continue with sugarcane under new conditions management and cultural practices (regrouping);  Move out of sugarcane to diversification crops;    Move out of sugarcane to forestry; Move out of sugarcane to Integrated Resort schemes (IRS/SRS) and infrastructure; Abandoning of land

METHODOLOGY (cont.)

The methodology involves:  Collection of base line data prior to EU reform and MAAS policies     Field survey to collect information on – Farmer Profile, Socio-Economic Information, Field Profile, Cultural Practices, Biodiversity Information, Revenue Focus Group Study involving meeting with each group for additional information and to validate survey findings Expert presentation and brain storming Cost benefit analysis     Root cause analysis Scenario building planning Stakeholder consultation Risk assessment - probability/impact

ASSESSMENT OF IMPACTS

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Environmental dimension of the impact assessment a number of Strategic Plans are available:

– Forestry Action Plan, – National Biodiversity Action Plan 2007-2015 – National Environment Action Plan 2 – Environmental Impact Assessment (EIA) studies for projects on Integrated Resort Schemes, morcellement for residential purposes, – Strategic Environmental Assessment for the Multi-annual Adaptation Strategy for the Mauritian Sugarcane cluster (2006-2015 )

Social and economic dimension of the assessment

– a number of analyses would be carried out (gender assessment, cost benefit analysis). Choice of methods is governed by the cost, timely availability of data and availability of resource persons.

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Collection of baseline data with two main focus (small planters and the corporate sector). Potential scenarios have been developed.

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Collection of field data is under way especially for the small planters regrouping. Some preliminary data is available and preliminary analysis is being undertaken.

ASSESSMENT OF IMPACTS (cont.)

A. Small Farmers Group Focus Policy option 1: Regrouping of Small Farmers Regrouping targets some 27000 small growers occupying around 12,000 ha of land, of which 8000 ha are classified as difficult areas.

The impact on the social, economy and environment aspects in being observed depending on the degree of preparedness of sites.

Changes brought about by regrouping

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removal of rocks and rock pile, leveling, removal of boundaries, extensive mechanical land preparation

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planting of new cane Variety 1400/86 in dual row for higher machinery efficiency and for faster cane growth reduction in weed infestation.

Impact of regrouping

Better cane yield, no possibility for interline cropping; no physical field boundaries; replacement of grown, group approach favoured among farmers and increase their willingness to share

ASSESSMENT OF IMPACTS (cont.)

Policy Option 2: Sustaining difficult areas or moving out of sugar cane

Difficult areas under sugar cane have the following characteristics:

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Either the degree of rockiness is fairly high and intensive where even moderate derocking is uneconomical or the slope of the land under cane is steep; Mechanization even partial is difficult; 3.

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Yields are fairly low; Cane cultivation costs are high; The very rocky areas are found in the drier parts of the country; They are most exposed to the adverse impact of drought and cyclones; They are cultivated mostly by small planters and by those leasing land from larger estates; Conversion into residential units and commercial sale is very difficult.

ASSESSMENT OF IMPACTS (cont.)

(a) Incentives expected to small planters through regrouping for the maintenance of 2000 Ha equivalent to the US quota). in these difficult areas (a production potential of at least 12 000t of sugar i.e. Expected Effects - Soil erosion from less stable land-use: sedimentation/eutrophication in downstream reservoirs or lagoons, negative impact on water supplies and also on aquatic biodiversity in downstream rivers, reservoirs and lagoons. The impact significant on the coral reef, where sedimentation would have a particularly severe impact. The future of some 2500 fishermen engaged in coastal fishing could also be seriously affected. The regrouping exercise: better cultural practices and varieties introduced better land preparation and better irrigation facilities

ASSESSMENT OF IMPACTS (cont.)

(b) 3000 ha to be converted to food crop /fruit production, cultivation of high fibre cane or energy crop, reforestation or eco-tourism and Integrated Resort Scheme project The following approach is being adopted: (i) The cultivation of crops including fruit trees that have a positive effect on land conservation; (ii) The cultivation of high fibre cane or energy crops once identified and found to be commercially viable and sustainable; (iii) Reforestation; (iv) The development of eco-tourism and IRS projects.

( c ) The Ex-tea land (2500 ha) unsuitable for sugarcane – is to be converted to other crops species adapted to super humid zone or livestock The agricultural alternatives have not been studied yet in any detail. Options proposed for part of the land in the superhumid zone include: Mixed cropping of vegetables and fruit production. None of them has been validated yet. And on a very small-scale, there is the additional option of Protected culture of selected flowers, ornamentals and vegetables.

ASSESSMENT OF IMPACTS (cont.)

Policy Option 3: Moving out of sugar cane Some of the non-agricultural options include:  urban and property development,   ecotourism and productive forestry Restrictions imposed by planning and environmental considerations.

Forestry may not be economically attractive for farmer. Mauritian economy places a lot of hope on the tourism sector. Ecotourism or IRS projects are to be environment friendly and facilitate job creation.  The possibility of establishing wind farms in part of the areas moving away from cane is being explored. The Bel Ombre, St Félix, StAntoine, Gris Gris and Grand Bassin regions are attractive sites.

ASSESSMENT OF IMPACTS (cont.)

B. Corporate Sector Group Focus Policy option 1: Centralisation

The challenge for the corporate sector is to maintain efforts to improve yields through mechanization/irrigation, to reduce both production and management costs and to invest in by-products The objective of centralisation is to improve the cost competitiveness of the Mauritian sugar milling sector by:  Reducing the number of mills from eleven to four.

  Increasing the milling capacity of two important mills FUEL and Savannah to accommodate additional cane supplies.

The adequate provision of energy in the form of steam and electricity,   A reliable and sustainable supply of canes both from large and small planters, The operation of efficient and flexible state of the art installations to produce different types of sugar and to optimize the use of bagasse, molasses

ASSESSMENT OF IMPACTS (cont.)

Policy option 2: Right Sizing of Labour Force

The Voluntary Retirement Scheme (VRS) aim at reducing the operating cost of production of sugar (with objective to reduce labour cost from 56% in 2001 to 30%).     A package to all employees of the sugar industry, opting for an early retirement: Compensation in terms of cash payment as well as land entitlement, exemption of income tax and land & housing loans at preferential rates. A package of support measures implemented, among which, awareness campaigns, training courses for younger VRS leavers, counseling units, medical cover schemes, and scholarships awarded to children. The provision of reskilling and loan opportunities to facilitate adaptation. The employees will also participate in empowerment and welfare schemes being set up by Government. With the new VRS Schemes under MAAS, it is expected that some 6,000 employees of the sugar cane industry would take advantage of the offer.

ASSESSMENT OF IMPACTS (cont.)

Policy option 3: Energy Production

Electricity production from bagasse. Bagasse is also a renewable and environment-friendly source of energy, which provides the dual benefits of reducing the country’s dependence on imported fuels and saving foreign exchange. Thus electricity production from bagasse would be increased by 300 million kWh and 30 million liters of ethanol would be produced from molasses. The ethanol would be used to blend with gasoline. Until now, the production of ethanol was constrained by problems associated with the disposal of vinasse. This issue has been resolved and vinasse and the treated vinasse will be used as a fertiliser after the addition of urea and phosphoric acid. The investments estimated for the ethanol plants incorporate vinasse treatment facilities.

ASSESSMENT OF IMPACTS (cont.)

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First National Review Meeting (04 June 2008) The objectives of the workshop were to apprise the relevant stakeholders of the status of the country project and to validate the Integrated Assessment methodologies and relevant indicators.

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Proposals

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A better idea of the economic benefits for regrouping, yield data would have to be collected for at least 5 – 7 years covering one whole crop cycle.

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The ratio of qualitative indicators with respect to qualitative indicators need to be balanced in order to have measurable and quantifiable information for analysis.

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The impact on biodiversity is not clearly quantify due to limited information of biodiversity associated (sugar cane exploited as mono-cropping system since colonial time).

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Some concerns were also raised with respect to:-

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translation of indicators to assess impact

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the value of indicators and comparison with baseline data in order to draw valid conclusion with reference to environment, social and economic consideration

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The difficulty to evaluate social and biodiversity indicators as compared to economic indicators

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Valuation tools for assessment impact on ecosystem services

ASSESSMENT OF IMPACTS (cont.)

The workshop identified and prioritised on possible scenarios for diversification: The following economic indicators were recommended for the study of scenarios under diversification:  Revenue to the farmer for the 2 most likely crops that is and onion and compared to revenue from sugar cane potato     Areas that have shifted from sugar cane to these crops Labor input for diversification as compared to sugar cane that sugar cane is less labor intensive given Government expenditure in the different options (information of interest to policy makers) e.g. provision of credit, income support.

Tax revenue for government.

Following the workshop, the conceptual framework was amended

POLICY RECOMMENDATIONS

No policy recommendation has been formulated yet (though we already have started discussion)

NEXT STEPS

Updated Time Line for the Study

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Jul 2008: Sep 2008 :

Completion of Data collection exercise and finalization of the assessment of the integrated methodologies and biodiversity indicators

Aug 2008

: Workshop to develop integrated national response Drafting of integrated national policy action plan

Oct 2008:

Feedback from stakeholders on national action plan Workshop on Sustainable trade in agriculture Workshop on Integrated Assessment and CBD implementation for NGOs Preparation of country report 

Nov/Dec 2008:

Finalization of country report Preparation of implementation phase (2nd project phase), including preparation for the extension of MOUs

January 2009-December 2009:

- Implementation of national action plans - Submission of final report of the project to UNEP

ACHIEVEMENTS

Main Achievements of the Project

 Setting up of a dedicated Core team to implement the project   Relevant stakeholders involved in Project are committed specially at the level of the technical Committee and has contributed extensively in the development of the focus of the study, and indicators for the IA.

The Launching workshop organized on 23 April 2007 was conducted by the Honourable Minister of Agro Industry and Fisheries, hence showing the commitment of the Government of Mauritius. The launching ceremony was also covered by the national television and the press.

  The active participation of stakeholders during the different workshops has help the core team for the proper execution of the project specially for awareness of other ongoing projects and programmes by other institutions, for the sourcing of baseline data and other relevant information (report, scientific publication, etc), critically reviewing the status of the project, for establishing linkages with other organisations and the development of the conceptual framework Set up of website – http://www.areu.mu/biodiv for the dissemination of information to the public and relevant stakeholder

CHALLENGES

Main challenges (up to date)

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Some stakeholders are not ready to participate in the IA and for some it is difficult to sustain their interest hence the project team is not informed of other relevant past and ongoing projects and studies related to the current study. Capture of some Indicators/Socio-economic data may not be easy as farmers are dependent on other sources of revenue than sugarcane. Data access and availability is in some cases as some stakeholders are unwilling to share information and relevant analysis. Data collection is also highly time consuming and resource intensive Difficulty to assess some of the qualitative indicators specially the social and biodiversity indicators as compared to economic indicators Valuation tools for assessment impact on ecosystem services Dynamic changes in International trade policy may lead to confounding effect in the study specially to establish a clear cause-effect relationship.

The time limitation for the study (2 years) and the complexity to assess potential impact on biodiversity of the different policies under study.

The impact on biodiversity is not clearly quantify due to limited information of biodiversity associated with sugar cane (exploited as mono-cropping system since colonial time)