Soaring food and energy prices during 2008 highlighted the vulnerability of Pacific island countries and Timor-Leste to external economic shocks. Food and fuel prices peaked between May and July 2008, but fell to around half these levels by December 2008. The impact of the subsequent global recession has lowered prices in 2009, but despite the Food and Agriculture’s (FAO ) forecasts of strong production in 2009, prices are rising again. A country can be a substantial importer of food and enjoy a high level of food security provided it has more than sufficient foreign exchange earnings to cover those imports. Both improved agricultural productivity and freer trade in agriculture are necessary to ensure regional food security. The future food security for the region therefore depends on both the capacity to produce food and the capacity to export goods and services to pay for food imports.

In an increasingly liberalised and deregulated global market, agriculture, livestock and fisheries industries need to be internationally competitive. Helping farmers increase both agricultural production and productivity is a long-standing policy objective which is made more pressing in the face of price shocks. Investments in infrastructure, agricultural research, and institutions that provide farmers with access to finance, inputs and information can help improve production and productivity. While 10 of the 14 Forum island countries include energy in their national sustainable development strategies, the sector could be better integrated into national priority areas and budgets. In most countries, governments play a key role in the development of the energy sector, but to best manage energy, considerable resources need to be provided to oversee energy supply development. National energy offices need to be well integrated with other government departments to influence national development priorities, decisions and budget allocations.

Inefficient fuel procurement arrangements, weak regulatory frameworks and the poor state of fuel-related infrastructure (including ports and storage) combine to push the cost of fuel in the region above global prices. While privatisation of energy utilities has proven controversial in many countries, Samoa has successfully introduced the best elements of competition while retaining strong oversight of the sector. Samoa’s approach is now being considered by Forum Economic Ministers for application in the wider region.

Solar energy and biofuels are being used in limited quantities throughout the region. Wider use of renewable energy technologies in Pacific island countries and Timor-Leste requires strong government policy setting and implementation of innovative, low-oversight solutions. Use of renewable energies needs to be linked to national planning efforts and well integrated into national budgeting processes.