FHTA Tourism Talanoa: Faraway Conflicts and Small Island Impacts

FHTA Tourism Talanoa: Faraway Conflicts and Small Island Impacts

FHTA, 11 August 2022 – As ports in Ukraine open cautiously after weeks of anticipation, several ships carrying wheat have finally managed to depart successfully and some have since berthed at their intended destinations.

This was seen as a small but significant victory. A positive sign for a critical part of the global supply chain and the many knots that have plagued its many linked services, with the expectation that this might mean the start of food supplies at least moving into a more stable situation despite the ongoing effects of the Russia – Ukraine conflict.

Until recently, many people in the Pacific (and probably around the globe) had very little understanding and appreciation even, of the fact that Ukraine is a world leader in terms of agricultural exports; producing 18% of the world’s sunflower seed, safflower or cottonseed oil exports; 13% of corn production; 12% of global barley exports; and 8% of wheat and meslin.

So, to have them unable to fulfil their export obligations has been extremely problematic for them and the entire world as increasing delivery gaps and demand force prices upwards.

While Ukraine is a major exporter to Asia, Russia also provides a large percentage of the wheat demands for sub-Saharan Africa.

The implications for these nations when supply is disrupted and cost increases jump exponentially are enormous, and experts have warned that global food price rises and a surge in hunger across the world are now real possibilities shortly.

As noted by the Asian Development Bank, there was minimal impact on trade in the Pacific with a lower dependency on the European/Russian market.

Distance too is a factor between the two regions, as there isn’t a strong tourism linkage and this translates to an average of 36,043 visitors from Europe for the 3 years preceding the pandemic (into Fiji).

Generally, the Russian invasion of Ukraine is seen to have had a limited impact on the Pacific’s external financing in the near term because this usually comes in the form of remittances and grants from development partners.
Indirectly though is where the real shockwaves are being felt in the Pacific.

For Pacific Island Countries (PICs), demand is exacerbated by our smaller populations, distant locations and lower demand drowning out our collective voices as we watch the steady increase in everyday food items.

We have a high dependency on imports – fuel, food and manufactured items because while PICs have many resources and raw materials available, we lack the infrastructure, technology and resources to value add or complete the process most raw materials need to suit demand or for longer shelf life or meet consumer preference.

The much-maligned recent price hikes for fuel in Fiji while not being well received, were forecasted particularly for a predominantly maritime region that relies on large supplies of fuel.

We often forget that our remoteness from each other and the rest of the world compound the impacts of commodity price shocks, primarily for fuel.

And slowly but surely, we are seeing the gradual cost increases in other areas of our everyday lives become impacted by these faraway events that we have no control over – the price of
wheat products like flour, the cost of transport to school and work and the type of food we can afford to eat more often.

The world’s economic outlook appears to remain uncertain when compounding the major events happening in Ukraine and the pandemic-related disruptions in China with extended lockdown mandates adding to our supply chain bottlenecks.

Across the globe, we watch as larger countries try to manage their (much larger) debt levels, interest rate hikes and increasing inflation levels.

The International Monetary Fund (IMF) has emphasised the need for countries to manage inflation, target fiscal assistance to the needy, make sensible use of macroprudential tools and undertake vital reforms for public debt management.

Level advice in times of growing uncertainty with private sector businesses doing their own belt-tightening, much of which was already in place because of prior strategies that were being applied when moving from border shutdown to reopening, especially where their individual financial situations were at below emergency levels.

Tourism arrivals have certainly surprised even our most positive expectations, and as the industry that was being relied on to get the economy kickstarted, we took the responsibility seriously and with the assistance granted from Government, having acknowledged early that the industry needed support to get back up again, we continue to deliver our best.

We’re taking nothing for granted as we continually look for weak spots in our operations and plug those holes with stringent processes and protocols.

But the impacts of that faraway conflict are being felt heavily throughout the tourism supply chains from fuel, to food to any supplies used for travel, accommodation, events, transport, lighting, IT, white goods and furnishings.

Nothing it appears has been spared the effect of a cost increase along these delivery chains.

We will repeat that. Nothing.

With the additional and very early realisation that anything that impacts our key visitor markets is also going to affect the number of people travelling, when they travel and how often they travel.

The high numbers of visitors post-reopening have been a result of pent-up demand and the need for people to get out of their homes and closed-up spaces, towns and cities, and to make use of the often-generous spread of COVID support international governments provided while they waited for vaccination levels to move up.

There is very real concern that as inflation spreads and the travelling populations are forced to tighten their own spending habits, holidays will be impacted or at the very least, put on hold.

Will 2023 bookings continue at the levels they did this year?

Will the supply chain issues be resolved by the end of 2022?

How expensive will air travel and accommodation costs be by 2024 and might fewer people find it as affordable to take annual vacations?

How much will bread cost by next year?

Can I afford to fill my fuel tank up so I can drive my car to work every day?

How much can I increase my wages budget to get the best staff, deliver the best service and still cover my costs?

All extremely pertinent questions coming from issues nearly every private sector business, regardless of which industry they are from, is dealing with now.

The future is what you make it, but it still needs the ability to plan well for it so you know you’re heading in the right direction and to determine where you must plan for buffers or be more creative with diversification and cost mitigative efforts.

For the short term, we are still moving ahead with buffer planning through protection against further variants at least.

There have been wide calls for progress on vaccination rates to protect against future variants so that means going to get your vaccination if you haven’t already and getting your boosters if you have had your two vaccination shots.

What plans have you made in your business or your home to adjust if these price increases continue?

We can already see many things continue to keep changing, regardless of how far away they might begin.

By: Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 11 August 2022)