With an eye on high-value niche markets, the policymakers of Papua New Guinea are determined to rehabilitate the domestic coffee industry, while also capitalising on growing international demand. In order to realise these goals, numerous issues will need to be addressed. In addition to unstable commodity prices, a combination of short- and long-term factors are threatening to put PNG’s coffee production at risk, particularly the emergence of a pest infestation that has the potential to cost the industry millions in revenue.

Lay Of The Land

In terms of regulation, the industry is led by the governmental Coffee Industry Corporation (CIC). The entity states that PNG exports around 1m bags per annum for a turnover of PGK500m ($158.5m), with around 65% of the cost of exports or free on board prices charged to farmers. The majority of PNG coffee exports are sent to Europe – Germany being the largest consumer – the US, Japan, South Korea and Canada.

Coffee has served as an important source of revenue for the government, with the majority of yields concentrated in the Eastern Highland Province, the Western Highland Province and Simbu. While being PNG’s most important product and a major contributor to foreign exchange receipts, harvests are not what they once were. Today approximately 95% of coffee is produced by smallholder growers who own an estimated average of less than 1500 trees per grower, with some having as little as 20 trees running alongside subsistence crops. This is a major change from when the industry had more than 150 commercial operations, many of which were under the management of large, international brands.

According to the Rural Industries Council, approximately 397,000 households grow coffee, which equates to around 1.6m people who directly benefit from cultivating the crop. Furthermore, the CIC suggests the industry employs as many as 3m people.

The fragmented segment is complex in nature. According to the CIC, there are 35 wet factories that transform coffee cherries to parchment, 60 dry factories that convert the parchment into green bean, 18 licensed exporters of green beans and six manufacturers in the business of roasting. A total of 750,854 bags were produced in 2016, equating to an output of 45,069 tonnes.

As a result of the limited training in commercial growing and trading among smallholder growers, as well as ailing infrastructure, coffee yields are well below market potential. Likewise, instability in international commodity prices has led to sporadic crop development since the vast majority of coffee crops are grown by highly price-sensitive smallholders. Moreover, the coffee berry borer, an insect which first began emerging in PNG in early 2017, threatens to destroy existing crops.

Pest Control

Native to Africa, the coffee berry borer is considered one of the most harmful coffee crop pests in the world. Its presence could be devastating if not addressed effectively, with the Ministry of Agriculture estimating that 80% of PNG’s coffee production could be lost, although discussions with industry experts on the ground suggest that this figure is too high. Since its detection in Banz, Jiwaka Province, the industry has been on high alert.

As of May 2017 authorities were assessing the extent to which the pest had multiplied, with the aim of identifying the exact geographical spread and any possible eradication or containment methods. After several warnings from the CIC about the borer, Tommy Tomscoll, the minister of agriculture and livestock, pledged PGK50m ($15.9m) to help contain the spread. However, by mid-2017 only PGK20m ($6.3m) had been issued to the CIC and the PNG Quarantine Authority. A number of industry players have pressed the government to issue more funds in the second half of 2017 to further assist the containment effort.

There are a mix of containment and eradication methods that can be employed, and some industry experts believe that the removal of plants where the pest is present will not be necessary. Potaisa Hombunaka, project manager for the Productive Partnerships in Agriculture Programme (PPAP), told OBG, “The notion of cutting down tress and burning them is the wrong course of action. The insect only survives on the berry, so there is no need to cut the whole tree down.” Therefore, a less wasteful solution may be for the government to remove berries from the trees in affected areas and compensate the individual farmers for their loss.

While the arrival of the coffee berry borer may lead to a reduction in production numbers in the near term, there is a silver lining. This is not the first time PNG’s agriculture sector has had to deal with a destructive insect. The cocoa pod borer surfaced in 2008 and destroyed a portion of cocoa crop over a number of years. Recently, production has grown with the planting of cocoa pod borer-resistant crops. With that in mind, some industry experts have chosen to highlight the benefits of the arrival of the coffee berry borer, saying it will better prepare stakeholders to deal with similar future risks and develop new pest-resistant trees.


Despite major drawbacks in the market, the implementation of numerous programmes is assisting the long-term development of coffee cultivation, helping the industry reach its full potential. In an effort to protect the valuable crop, several rehabilitation initiatives are well under way, including the PPAP, which is funded by the World Bank, the EU and the International Fund for Agricultural Development to support the planting of new trees and acquire better farming equipment.

Since its inception in 2010, the PPAP has yielded strong results for the industry. Coffee production per farmer has risen significantly, from 382 kg per ha in 2011 to 816 kg per ha by the end of 2014. Similarly, the average net income earned by smallholder growers increased by 64%, from PGK2000 ($634) in 2012 to PGK3280 ($1040) at end-2014.

Originally the project was scheduled to last until June 2016, but due to its early success it has now been extended to June 2019.

By that date the PPAP plans to have 15,000 ha applying improved management practices, with each ha producing 600 kg of coffee. In terms of funding, the PPAP has been broken into three core components: institutional strengthening and industry coordination ($13.7m), productive partnerships ($21.1m) and market access infrastructure ($20.2m).

Moreover, 200 km of rural roads will be rehabilitated and kept up with maintenance agreements, which will greatly aid the development of supply chains when transporting goods from harvest areas to ports or more populated areas of the country.


Public initiatives are also bolstering the segment. The government vision under the CIC is to rapidly increase coffee production by 2018 with a priority of developing the harvesting skills of smallholders who dominate the market.

To achieve this, farmers around the country are currently being trained on how to improve the quality of their coffee and educated on guidelines to meet certification requirements that are being implemented. A major component of the plan is to rehabilitate existing plantations and lessen bottlenecks that stem from outdated infrastructure.

While the 2018 plan does not have a specific production target, industry expectations are set at 1.5m 60-kg bags. According to the CIC, 30% of the estimated 1m bags sold annually are priced at a premium rate, while 70% are sold at a discounted value due to smallholders’ varied farming techniques. Another strategic objective of the CIC is to connect already certified growers to buyers in niche markets in order to increase the amount of bags sold at a premium rate. However, increasing smallholder growers’ level of commercial awareness and certifying more farms will be a major challenge to achieving these goals.