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Written by Wendell Archibald
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Page 2 of 2
The FFI Concession
In 1970 the NLTB created a forestry concession agreement covering harvesting of indigeneous forests on Native Land located on the Island of Vanua Levu.
The parties to the agreement were Fiji Forest Industries Limited, the Native Land Trust Board and The Conservator of Forests.
The Conservator of Forests was a necessary party to the agreement because the Forests Act gave to him the ultimate power to control the harvesting of all millable timber on all land.
The right granted to Fiji Forests Industries Limited (FFI) was the exclusive right for a period of 30 years to extract timber from all Native Land located on Vanua Levu.
The agreement was novel and on that count should be considered an achievement.
Prior to its existence it was thought to be necessary for a prospective timber miller to first obtain consent of the ownership group and the NLTB to the proposed logging. As well it was thought to be necessary to obtain the consent of the Conservator of Forests and to supply a logging plan to the Conservator of Forests for the area which was proposed to be logged.
FFI was a local registered company which had taken on board an Australian investor called Westfi Limited. Westfi was supposed to supply technical input.
Shortly after the agreement was signed it became apparent that Westfi intended to export unsawn logs to itself in Australia. The Conservator of Forests prevented it saying that there was no point in the agreement unless some value was added locally by processing the timber prior to export.
A plyboard mill was then built at Malau in Labasa together with a saw mill with the assistance of funding from a government agency that eventually came to be Fiji Development Bank.
 In 30 years FFI failed to make a profit and remains unprofitable today. 
In 30 years FFI failed to make a profit and remains unprofitable today.
On one if not two occasions during that period the company had to seek the approval of the High Court when it entered into a composition with its creditors. Some of the creditors claim that despite agreeing to 17c in the dollar they were never paid.
The company blamed the price it had to pay the native owners for its logs as the reason for its failure to make a profit.
When asked by FDB for his opinion as to the reason FFI continued to return losses, a Suva public accountant, who has since migrated to NZ, expressed the view that the cause was “transfer pricing” That is product was being sold overseas at less than cost and the profit on overseas sales was not being returned to FFI.
Oddly, a competitor to FFI was able to set up in Labasa in 1993 and by 1997 was returning a profit on its plyboard and sawmilling operations. It claimed the secret of its success lay in better utilisation of logs. Whereas FFI used 35% of the logs it extracted from native land, the competing company was able to achieve a 65% utilisation rate and needed far less in the way of log volume to sustain a profitable operation.
Meanwhile the native owners of the Vanua Levu Forests continued to live in abject poverty except for those in the Bua village of Nadivakarua who, after asking the “new company” to log their area had their logging royalties paid to them and as part of the deal had a whole new village constructed for them.
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