The Fijian government has announced a major restructuring plan for the island nation's 120-year-old sugar industry.

Prime Minister Laisenia Oarase told the Fijian Parliament that if the upgrading of the country's sugar mills did not begin next year then there was not much point in the continuation of the Fijian sugar industry.

Under the restructuring plan, four state-owned sugar mills will be turned into stand-alone companies before the start of the new financial year in April. The mills currently exist on generous government subsidies.

More than 2,000 employees of Fiji Sugar Corp are to be transferred to the four new companies, which are to be owned by cane growers, sugar mill workers and indigenous Fijian landowners. The government will retain a small stake in the companies, reported Associated Press Newswires.

Sugar accounts for 7% of Fiji's gross domestic product, while almost a quarter of the country's 820,000 people depend on the sugar business either directly or indirectly.

Currently, Fiji has guaranteed access to the European sugar market for more than a third of its sugar output at a price that is subsidised by Brussels. Fiji has been warned that it needs to take steps to ensure the future of its sugar industry because the EU subsidy agreement is due to come to an end after 2006.