Papua New Guinea: Unlocking agriculture’s potential

In addition to the environmental benefits, a focus on sustainable agriculture in Papua New Guinea (PNG) is expected to generate healthier sales of the country’s biggest products − palm oil and coffee. However, a number of hurdles will need to be overcome to achieve this goal. Heavy rainfall in the first six months of 2012 has significantly impacted palm oil production, while a labour shortage is expected to affect export revenues of the coffee production segment.

In August, the Roundtable on Sustainable Palm Oil (RPSO), an international not-for-profit association that has united palm oil stakeholders in a bid to implement global standards for sustainable palm oil, confirmed that a Milne Bay Estates production facility in Hagita, Milne Bay Province, was aiming to attain certification by December 2012. Its parent company, New Britain Palm Oil (NBPO), achieved certification in May for its mill in Poliamba, New Ireland region, and has pledged to have each of its palm oil mills 100% RSPO-certified by the end of 2012.

The successes in achieving sustainability certification represent a significant turnaround for the industry. The World Bank suspended International Finance Corporation funding for crude palm oil projects worldwide in 2009, citing environmental concerns.

Meanwhile, in 2010 US-based agribusiness firm Cargill was forced to pull out of the country under a cloud of accusations that its plantations had damaged rainforests and impacted social stability. By avoiding planting on peatland, PNG can achieve an RSPO accreditation that gives it access to lucrative food processing markets in the EU and North America, giving it a competitive advantage.

On August 22, NBPO announced that its revenues for the first half of 2012 had fallen to $366m, a 9.3% decline, largely due to very high rainfall across all of the firm’s operating sites. NBPO also suffered lower prices for its palm kernel oil, which averaged $1476 per tonne in the first six months of 2012, compared to $2096 in the same period in 2011.

While the country’s other main cash crop − coffee − can sustain higher-than-average rainfall, the industry faces a quite different challenge. In March, the Coffee Industry Corporation (CIC) revealed that export revenues hit a historic high of PGK927m ($435.55m) in 2011, with a record production output of 1.5m bags.

The CIC said the increase was due to high world market prices and support from the government, donors, partners/NGOs and the World Bank’s Productive Partnership in Agriculture Project, which aims to target improved smallholder productivity and ease access to lucrative Western markets through organic or fair trade certification.

However, observers have predicted that labour shortages will see a dramatic decrease in output this year. In a statement on August 20, Australian specialty coffee firm Campos said that only 600,000 bags would likely be available for export this year, down from 1.5m bags in 2011. The company blamed voting incentives for this year’s election, which prevented farm workers from working at coffee estates.

“Politicians often pay handsomely for electorate support. Farm workers who would usually work on the estates are lured away from work and processing coffee,” said Campos.

However, the coffee firm said that this improves the prospects for a better harvest in 2013. “Farmers on estates have planned ahead for this year’s shortage. They trim and prune their trees severely in anticipation. This leads to a low harvest for the year, but also brings on a much more prolific harvest in the years to follow.”

Moving forward, it is expected that the ethics of sustainability instilled in the sector bode well for the long-term viability of agriculture, something that has been recognised by the government in recent weeks.

According to Paulias Matane, a senior statesman and former governor-general, “I strongly believe that our focus on developing our natural renewable resources, such as agriculture, forestry and fisheries, will be the core and most effective strategy to successfully work towards the Vision 2050 master plan. These resources have the greatest potential and value to provide diverse opportunities to the vast majority of our population.”

Vele Pat Ila’ava, the acting secretary at the Department of Agriculture (DAL), agrees, stating that that agriculture was a key player in the nation’s PNG Vision 2050. However, the biggest challenge for the DAL and the sector, he said, was how to best leverage and manage the country’s “huge” energy and mining revenues in order to “build a vibrant and sustainable economy for the future”.

With the government and private sector improving coordination on sustainable agriculture, it can be expected that this year’s bad weather and political changes are a blip on an upward trajectory for the sector.

Share

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Asia

Plant-based meat: a Covid-19 boom industry?

With the global plant-based meat industry experiencing continued growth despite the disruption of the Covid-19 pandemic, several emerging regions are expected to see a boom in the segment that...

In Agriculture

Can PNG realise its ambitious agricultural goals?

Papua New Guinea’s efforts to strengthen agriculture’s position as a major economic driver have been given a boost following the much-anticipated launch of a series of new projects.

Latest

Asia: Economic Year in Review 2020

– Thailand and Malaysia led the region in terms of government stimulus

– Key digital solutions were developed in food delivery, education, health care and finance

– Despite falling...