Prime Minister James Marape is intent on putting agriculture, forestry and fisheries at the forefront of the government’s development agenda, with an eye to boost downstream processing of farmed resources. As attempts to galvanise the sector spur the development of Papua New Guinea’s key crops and catches, reforms are under way to ensure the country maximises the potential of its rich soil and biodiversity. The government is also taking steps to increase PNG’s self-sufficiency in food production. “Food imports alone cost us PGK2bn ($606.6m) in capital flight. Agriculture is where the future lies for us,” Prime Minister Marape told local media in June 2019.

Furthermore, PNG must promote agricultural development and encourage the population to participate in reaching this goal. “Rural development driven by the agriculture, livestock, marine and tourism sectors will promote sustained growth, embracing the majority of people and consequently opening up rural areas to effective development,” the late Bai Brown, former chairman of the Rural Industries Council, told OBG.

Structure & Oversight

Following his election in May 2019, Prime Minister Marape appointed three vice-ministers to support John Simon, minister for agriculture and livestock, in formulating policy. An unprecedented move, this decision indicates the government’s commitment to strengthening the sector in the face of recent challenges. The main task for the Department of Agriculture and Livestock (DAL) will be to revamp the struggling Kumul Agriculture Limited (KAL), a stateowned enterprise formed by the National Executive Council in September 2018 to oversee government interests in the agriculture sector and partner with agri-business firms to develop new sustainable projects.

However, KAL quickly became mired in controversy, with both its chairman and director taking out an advertisement in a local newspaper to announce they had been removed from their posts after a failed attempt to secure control of tranches of EU funding. Whether through a revitalised KAL or other means, policymakers will need to focus on formulating strategies to settle disputes over land tenure, providing a secure foundation for foreign investment and ensuring that international assistance programmes operate efficiently.


Only around 2% of the land suitable for agriculture in PNG is under commercial cultivation, but the DAL aims to raise this to 10% – equivalent to 14,625 sq km. The lack of clarity over landownership is a major impediment to the government’s objectives and doing business in PNG in general. After the country became independent in 1975, 97% of land was under customary tenure, meaning that ownership rights belonged to the local community, while the state owned the remaining 3%. The Land Act 1996’s provisions allow the state to lease customary land from its owners and then lease it back to commercial entities for a period of up to 99 years under special agriculture and business leases (SABLs). These schemes are credited with transferring ownership of around 10% of PNG’s land area between 2003 and 2010.

Efforts at reform are ongoing, and the National Land Summit was held in Port Moresby in May 2019 to debate issues surrounding landownership. “SABLs were discussed at the National Land Summit,” Adrien Mourgues, deputy head of cooperation at the EU Delegation to PNG, told OBG. “They are expected to be abolished. Communities are encouraged to incorporate their land through incorporated land groups (ILGs), but there have been some problems with these as well. A number of communities in the Gazelle Peninsula have been encouraged to register their land and make it available for palm oil plantations, but this was done without considering other groups who had acquired the land many years ago and have already established cocoa plantations,” he said. In an attempt to solve these issues, the new administration is formulating the National Agricultural Sector Plan 2019-29, which will complement food security pilot programmes.

Sector Performance 

According to PwC’s “PNG 2019 Budget Commentary”, the agriculture sector was the largest contributor to the 0.3% real GDP growth in 2018, at 0.5 percentage points. Economic expansion was impacted by the 7.5-magnitude earthquake that struck in February 2018, but it is forecast by PwC to rebound to 4% in 2019, with agriculture’s contribution to real GDP growth expected to remain the same.

Overall sector revenue decreased by 13.2% in 2018 compared to 28.8% in 2017. However, the most recent figures from the country’s central bank, Bank of PNG (BPNG), indicate that the sector is slowly making a recovery. Employment in agriculture, forestry and fisheries fell by 3.6% in 2018, but it increased by 0.7% between January and March 2019. Ilan Weiss, CEO of Innovative Agro Industry, a local project development company, told OBG that it may be some time before there is any significant expansion. “It could be four or five years until the sector sees real growth,” he said.

According to Weiss, PNG holds enormous potential for crops such as vanilla, cocoa and coffee, which are starting to regain momentum after completing their initial life cycles. Replantation and rehabilitation programmes are in the pipeline, but – as with many sectors in PNG – agriculture projects depend on supporting infrastructure. Despite the promise of electrification and more reliable internet connection, the country still lags behind in terms of data costs and electricity supply, particularly in rural areas. Additionally, access to finance is still an issue for small and medium-sized enterprises (SMEs) and a major barrier to sector development, according to Allan Tobalbal Oliver, senior agricultural specialist at the World Bank. “We estimate that only 5% of agricultural profits deposited in banks are loaned out again as they are so risk averse. There is huge potential to increase private support for the sector,” he told OBG.

Furthermore, it is important for the country to establish appropriate tax incentives and credit schemes. “So far these have only been made available in a limited form, but they could also be used to support the expansion of the agriculture sector,” Greg Worthington-Eyre, CEO of Trukai Industries, told OBG. “In 2018 the government suspended the tax credit scheme in place, which did not generate a lot of confidence. The opportunity to access such schemes should be widened,” he said.

New Projects 

In the meantime, support continues to flow from multilateral partners. In June 2019 PNG signed a deal with the EU as part of the 11th European Development Fund Support to Rural Entrepreneurship, Investment and Trade Project. Richard Maru, then-minister for national planning and monitoring, countersigned a €85m deal to provide funding in support of rural entrepreneurship, investment and trade with a focus on developing cocoa, vanilla and fish proteins value chains in the Momase Region. Mourgues told OBG that the funding will assist in the effective development of agricultural value chains such as infrastructure, capital access and financial inclusion, extension services, access to renewable energy and information systems.

Access to hydropower and solar energy is an essential part of the agreement. An adequate supply of power is not only important for farming, but also for charging phones and devices in order to receive information on markets, harvest times and agricultural techniques. The EU project also aims to improve the harvest process for vanilla, eliminating damaging practices such as smoke drying and allowing PNG farmers to capitalise on the global vanilla shortage that has pushed prices to more than PGK700 ($212) per kg. Meanwhile, the World Bank is overseeing the transition from the $55m Productive Partnerships in Agriculture Project (PPAP) – which ran from 2011 to 2019, and helped optimise outcomes for smallholder growers of coffee and cocoa – to the $40m PNG Agriculture Commercialisation and Diversification Project (PACD), which will run from 2019/20 to 2024/25. The PPAP covered 104,000 farmers across 12 provinces, with 47 partnerships in coffee and 39 in cocoa. The programme encouraged smallholders to work together in order to expand and negotiate with buyers, allowing industry boards to focus on marketing and quality incentives. “The new scheme aims to take farmers to the next level of commercialisation, consolidating their transition into micro-enterprises and SMEs, while bringing in coconut, spices and livestock components to complement the existing focus on coffee and cocoa,” Oliver told OBG.

Palm Oil 

In 2018 PNG exported 614,300 tonnes of palm oil, down 1.2% from 2017, as producers adjusted output levels after a 13.4% fall in average export prices to PGK1867 ($566) per tonne. BPNG attributed this to higher output from Malaysia and lower demand caused by EU policies to prevent deforestation. This resulted in a decline in export revenue, from PGK1.3bn ($394.3m) in 2017 to PGK1.2bn ($364m) in 2018.

New Britain Palm Oil Limited (NBPOL), the country’s largest employer and exporter of the commodity, and Hargy Oil Palms, another large domestic producer, have both undertaken efforts to ensure their oil meets globally recognised sustainable certification standards. Ian Orrell, head of sustainability and quality management at NBPOL, told OBG that 50% of the company’s plantations are now Rainforest Alliance certified, with all of its sites set to meet the standard by mid-2020.

NBPOL and Hargy Oil Palms have both made strong commitments to no deforestation, peat or exploitation (NDPE) standards. This creates challenges to further expansion in PNG, as much of the country’s landscape has high forest cover and is not suitable for oil palm plantations. In light of this, NBPOL is focusing its expansion plans on grassland areas in the Markham Valley. In August 2018 the company acquired 100% of Markham Farming Company Limited (MFCL) for $52.6m, which includes more than 5000 ha of plantable area, and two copra (dried coconut flesh) mills. “The purchase of MFCL allows us to acquire secure state-leased land such as a processing mill and also acts as a stepping stone to further expansion and investment in the valley,” Orrell told OBG. “A challenge in this region is likely to be competition for land from other private sector investors. For example, PNG Biomass is looking to use eucalyptus for power generation, Trukai Industries has interests in rice production and SP Brewery is developing cassava to produce starch for the brewery in Lae.”


The production of cocoa contributes around PGK300m ($91m) per year to PNG’s economy, according to the DAL. BPNG reported that average prices reached PGK7402 ($2250) per tonne in 2018, up 16.9% on 2017. A combined rise in export prices and volume pushed overall revenue up 22%, from PGK202m ($61.3m) in 2017 to PGK246.5m ($74.8m) in 2018. In the same period, cocoa exports grew by 4.4% to 33,300 tonnes, with BPNG attributing the rise to intervention programmes implemented by the Cocoa Board of PNG (CB PNG) to revamp the sector after yields were decimated by an outbreak of cocoa pod borer (CPB) in 2008. The programmes included the introduction of CPB-tolerant strains in village farms, subsidies for freight transport and a marketing strategy to promote local cocoa.

CB PNG recorded total production of 44,000 tonnes at the end of 2018, up from 40,000 in 2017. Tony Vigil, acting CEO of the board, told local media in January 2019 that the rehabilitation initiatives had the industry on track to reach 100,000 tonnes of annual production by 2025. In addition to the intervention programmes, the board launched a scheme in partnership with MiBank and PNG Agriculture Company to extend loans to farmers in three provinces, as part of a project to plant 2m cocoa seedlings and employ 10,557 cocoa farmers.


According to BPNG, coffee exports reached 52,100 tonnes in 2018, up from 47,800 tonnes in 2017, reflecting higher yields from biennial coffee trees. The increase in export volume more than offset a slight decline in price, raising 2018 export receipts to PGK487.9m ($148m), compared to PGK450.1m ($136.5m) in 2017. Potaisa Hombunaka, project manager at the Coffee Industry Corporation (CIC), told OBG that PNG has been struggling to raise coffee exports since 2000. While total output in 2018 grew by 9.4% to 882,421 bags, this was significantly lower than the target of 2m bags by 2020. However, exports of higher-grade coffee rose by 20% between 2017 and 2018, the majority of which were dispatched to the US.

PNG farmers are in a strong position to benefit from the 6% growth in the global demand for specialty coffee, as 11 out of 20 farmer groups supported by the PPAP produce premium beans. “Differentiation is essential as farmers are price-takers who sell wholesale. Even producers whose coffee scores above 80% in taste tests receive the same price for their crop,” Hombunaka told OBG. Recent legal changes qualify crops over 30 kg as commercially viable for export, offering scope for farmers to market speciality coffee overseas. The CIC is in the process of drawing up a 10-year industry plan, focusing on efforts to connect exporters with aggregated blocks of farmers that can respond quickly when global prices are high. Support has also come from abroad. The Australian government launched the Grow PNG strategy in May 2019, which aims to strengthen cooperation between smallholders and agri-business, particularly coffee growers in Goroka.


Exports of copra grew by 21.5% in 2018, from 50,600 tonnes to 61,500. However, prices fell by 25.3% from PGK2222 ($674) to PGK1774 ($538) per tonne as an initiative to support copra farmers in India boosted global supply. As a result, export receipts eased from PGK120.1m ($36.4m) to PGK109.1m ($33.1m). A decline in global prices also dented copra oil exports, which dropped from 16,200 tonnes to 13,700 tonnes, causing a 43.6% decrease in export earnings, from PGK59.3m ($18m) to PGK41.3m ($12.5m).

As with coffee, high-value coconut products, such as virgin coconut oil, body oils and soaps, are emerging as viable export products for PNG, with the potential to increase production up to 20-fold, according to the World Bank. Orrell told OBG that increasing in-country copra processing is a viable option if seaborne transport networks can be put in place. “We need to reconnect coconut-growing areas in coastal PNG that have become isolated and disconnected from markets with the decline of the copra industry,” he said.


PNG is home to the third-largest tropical rainforest in the world, and 77.8% of the country’s 46.9m-ha territory is covered by forests, providing employment for around 12,000 people. In terms of log exports, 2018 was a promising year. According to SGS PNG, an inspection and certification company, export volumes and free-on-board values were at their highest since 2010, at 4.04m cu metres and $393.2m, respectively. Around one-third of logs exported were produced under SABLs. BPNG figures recorded an average export price of PGK311 ($94.33) per cu metre, up 1.3% compared to 2017, when exports were worth an average of PGK307 ($93.11). The price rise can be attributed to reduced output from Malaysia and continued global demand. China is the leading destination for PNG’s log exports, accounting for 89.7% of the 2018 total.


The National Fisheries Authority (NFA) regulates the fisheries segment, an industry that involves more than two-thirds of the population in some capacity. In October 2018 the APEC Business Advisory Council identified fisheries as a segment with the potential to generate $1bn in revenue, and forecast that the industry could employ an additional 250,000 people in PNG, if the country can develop the policies and infrastructure needed to support expansion.

According to BPNG, the value of exported marine products was PGK561.3m ($170.3m) in 2018, down 56.8% from PGK1.3bn ($394.3m) in 2017. This decline was attributed to a fall in both export volumes and prices. In March 2019 the NFA reported that the segment generated PGK500m ($151.7m) in revenue in 2018, sourced primarily from fishing licences. The authority forecast that revenue would reach PGK600m ($182m) in 2019, growing at 5% per year to reach PGK700m ($212.3m) by 2024. Under a series of public investment programmes, the NFA invested a total of PGK27m ($8.2m) in various projects in 2018, primarily involving the development of town markets, while returning around PGK400m ($121.3m) to the government in the form of dividends. Furthermore, in February 2019 the PNG Fishing Industry Association was awarded the Marine Stewardship Council certification for sustainable tuna fishing.


The focus of the current administration on agriculture and fisheries augurs well for the future. The World Bank’s PACD programme and the €184m deal with the EU should provide strong foundations for the sector’s development, helping to encourage best practices among smallholders, mitigate natural disaster risks and climate change, and formalise SMEs.

However, development support alone will not be sufficient for PNG to achieve its goals for the sector, particularly as it seeks to increase self-sufficiency in food production and agricultural processing. Efforts should be channelled towards structural reforms aimed at improving the ability of state institutions to work with the private sector, starting with a review of KAL’s role in supporting public-private partnerships. Solving issues of landownership will improve investor confidence and encourage domestic and international players to support PNG’s potential for agricultural development.