Editor,

I write in regards to your article titled 'Tonga's Agriculture Ministry becomes a squash grower' dated 12 September 2007. I work for one of the New Zealand 'Planning' Entities and have followed Tonga's political economy closely for sometime now. I believe this is a risky move by Government that must be addressed with great caution.

There is ample literature on 'Policy Interventionist' under micro-economic policies and it all depends which school of thought you stand from, certainly not the intention of my letter to argue for a particular school of thought but my message is one of caution for Government.

First, it does make good sense that in the current investment environment of Small Pacific nations, Government usually initiates investment in particular New sectors of where the costs of establishment is outrageously high (due to the smallness of the domestic economy among other factors) and where no private investment wants to risk exploring new industries. This is certainly not new in the case of Tonga as that is how utilities such as Electricity, Water, maritme transportation, health and education, among other service sectors came about in Tonga since World War II. Fact of the matter is, no private entity in Tonga or overseas wants to risk multi-million dollars investments in a very small domestic market. So, it does make sense for interventionist policy though there is a thin line between providing 'essential public service' and interfereing with the open market forces.

The squash industry has been established for quite some time now and is certainly not a new industry. However, I do share the view that squash quota may not meet the requirement but one may ask the question, Why are long time growers withdrawing from the industry? Perhaps it is a sign that the squash industry is no longer competitive internationally and efficiency is the key. Therefore, rather than exploring new prospects for agricultural export diversification (I think that is what the Ministry of Agriculture should be doing), they are becoming one of the market entities themselves. Quite alarming when the same entity holds a lot of laws to regulate its own operation. You can't be a player on the rugby field and act as referee at the same time.

Information is limited but one would assume that since it is a public agency the general public therefore may assume that it is a 'public' project and Ministry of Agriculture could have handled this better by undergoing extensive dialogue with the Agricultural farmers in Tonga and also interested parties outside Government. Transparency of information and open dialogue only creates public support and cohension of which ownership will be accepted by the public. At this point, it is good if the project goes through fruitfully, but what happens if it ends up in losses? Will it be blamed on price fluctuations or market preference (again)?

Bottom line, the Government is in the process of privatisation and commercialisation of its public entities for some time now. The role of the Government should be clear, which stands as a regulator and ensure that the general public (the whole of the Tongan socieity) welfare is protected, NOT one interest group which require quotas to be met. The withdrawal of growers may be a sign that the current policy on squash may not be working as it should be or the efficiency of this industry is diminishing due to various factors (internal and external alike) of which the market is not willing to pay for, a price that the poor grower is therefore less willing to sweat for.

Export diversification should be emphasised and should first look at the nearest major makets - ANZ (transportation costs are lower, shorter transportation time for perishable goods etc), Not Japan and US which are thousand of miles away. Government should look at why Tonga's export volume is insignificant to ANZ? Yet, you import a lot from ANZ. Look at the ANZ regulations and talk to the ANZs on how to access these two major markets. Government should be active on this front and leave the market to freely determine its own forces.

Good Luck.

Brian Sutton