Agriculture continues to be a thriving industry in Papua New Guinea, but unfortunately the wrong people have been benefitting from its growth. While farmers sell 1 kg of coffee for PGK5 ($2.03), buyers resell it to dry factories for four times the price and even export it for five times the price. The same happens for other traditional crops as well.
This vicious circle has to stop, as it keeps farmers at the low end of the chain, which is high risk and low value. We want to empower farmers by providing a direct export market to them, and this administration has the resources and the willpower to make it happen. Money alone will not complete the job. In 2014, we passed the largest budget to date in support of the sector, and we are also introducing a new National Administration Act before the end of 2014, which is aimed at empowering farmers and reducing the multiple layers of bureaucracy. The new act will bring all sector players under one single piece of legislation and will clearly establish the responsibilities of all the different levels of government, right down to the districts.
Agricultural traders have been operating in this country for decades now and they have held back growth of the crop sector. Investors would not want to put their money in PNG knowing that they have no export access, as many of the commodity boards are controlled by the traders. PNG has no more space for traders in the traditional sense of the term, and licences will not be renewed unless the licence-holder goes into plantations first, for projects covering a minimum area of 10,000 ha. The government is not asking traders to pack their bags and leave, rather, if they want to continue their trade, they have to become growers first. Many traders are in fact already taking up this challenge.
To encourage greater participation of farmers in export activities, we are also introducing special category licences, including 14 for women. This is in addition to lowering the minimum requirement for export licences to 30,000 bags per year for traditional crops. This represents a significant reduction on the 100,000 bags required presently, a number that few people in the country have the capacity to meet. This includes the traders themselves, who end up buying from different sources just to fulfil the quota. It is, in fact, the state that wants to take over regulatory responsibilities and streamline activities in the agriculture sector, as the different levels of bureaucracy have created confusion in the past.
We are also aware that most of the problems in the sector are structural and cannot be improved simply by introducing new legislation or administrative bodies. The lack of infrastructure, for example, remains a chronic problem for PNG, in particular limited access to markets.
Over the last five years the government has been fairly generous in issuing freight subsidies, as well as introducing a number of price-support mechanisms to facilitate market access for crops which originate in remote areas. However, this was a misplaced effort, as growers operating at the periphery of large towns were benefitting from it instead. Under the new arrangement only growers in possession of incorporated licences and women’s licences will be able to access the funds.
On a more general note, the current administration feels that the agriculture sector has reached a turning point whereby we need to act now to keep the industry buoyant, with all the socio-political implications that this implies.
Farmers are net buyers and net sellers in this country and saving often continues to be an abstract concept. To this end, surpluses are difficult to achieve under the current structure, as is the transition from subsistence to commercial farming. The only way forward is to empower farmers, especially as urbanisation continues unabated in PNG. By linking the farmers directly to the market place, we expect productivity to double over the short to medium term.
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