Sector Brief

Papua New Guinea Agriculture Sector Overview and Future Plans

Background

Agriculture has been the economic backbone of Papua New Guinea (PNG) for over 70 years.  However, since the last few decades, the importance of agriculture is now being dwarfed by the growing contribution of export earnings from minerals, oil and gas.  In fact its contributions to the national economy and development are under serious threat from a high population growth, increasing competition for land by other interests, technical issues and serious deficiencies in the government system. The sector’s contribution to the country’s Gross Domestic Product (GDP) was about 19% in 2010 and currently stands at around 30%.

The Government’s intention is that one day in the near future, agriculture and the many different agri-industries in the country will be world class, highly competitive and leading the charge in transforming our economy and making our people prosperous.  The contribution of agriculture to food security, through domestic cultivation for home consumption is estimated at K5.0 billion annually, while its contribution to export trade economy was estimated at K2.9 billion in 2011 (BPNG 2011).  In fact, the motivation behind PNG Vision 2050 is the challenge of how we as a Nation leverage and manage revenues from mining, oil and gas to build world class and vibrant agriculture, forestry, fisheries and tourism sectors.

As a Nation with some 82% of our 7.5 million people dependent on agriculture daily for food and income, the agriculture sector is very well placed to support the Government’s desire to grow the economy, share the wealth equally and empower our people so that they can participate meaningfully in the development of our Nation.  By 2050, the population of PNG is projected to be about 17 million with over 60% still heavily dependent on agriculture.

 

PNG Agriculture Policy Priorities

The “O’Neill-Abel Government’s Alotau Accord II of 2017” has placed agriculture as the number one priority to increase economic growth and development. This policy shift follows the drastic drop in metal, oil and gas prices in the world market in recent years, leading to significant budget deficits and resulting in serious cash flow problems experienced by the Government.

At the National level, the three key performance indicators that will ensure the agriculture sector significantly increases economic growth are:

  1. increased export and domestic production and/or revenues,
  2. increased number and volume of new investments; and
  3. increased the number of indigenous men and women in small, medium and corporate businesses in the agriculture and agriculture-related sectors.

The Department of Agriculture and Livestock (DAL) has an important role to play in developing and implementing key policies, and monitoring of policy outcomes. However the Department currently lacks the powers necessary to contribute effectively towards improving the performance of the commodity boards and ensuring service delivery in the provinces. The DAL should be given statutory powers required to enable it to undertake those tasks, and to initiate appropriate actions to rectify any chronic lapses in performance of commodity boards and provincial agencies responsible for delivery of services to farmers.

Another important issue for the agricultural sector is how to enhance the resilience of farmers faced with inevitable fluctuations in commodity prices; compounded by climate change effects on production. Village farmers in PNG have tended to protect themselves from the uncertainties of world markets by limiting their commercial exposure.  In other words, they maintain the capacity to return to subsistence farming and other informal activities when there is a slump in world commodity prices.

 

PNG Agriculture Future Plans

The Government’s plans are to build a modern and internationally competitive agriculture sector over the next few decades. Since 2012, the DAL has taken a new approach with the support of the Government to respond to targets and deliverables set out in the Medium Term Development Plan. For the Government to achieve these targets and successfully deliver on the very ambitious milestones for the agriculture sector in the PNG Vision 2050, both State land and Customary land must be mobilised for economic development.

Currently, only around 2% of the land suitable for agriculture in PNG is under commercial agriculture, largely under coconut, coffee, cocoa, rubber and oil palm. Our plans in this regard are to increase land under commercial agriculture to about 10% of the land suitable for agriculture in PNG or 14,625 km2 (PNG Department of Treasury). Under current market conditions, this would easily increase agriculture’s contribution from around K2 billion to over K15 billion annually. This is a very conservative projection when one takes into account the changes to export licensing arrangements we are now implementing and the introduction of a legal framework to guide the implementation of the Government’s key priorities in agriculture.

The DAL has formulated a draft framework for the next PNG Agriculture Sector Plan entitled “PNG Agriculture Plan 2018-2037” with the theme “Translating PNG’s Agriculture Power to Our People’s Prosperity and Our Nation’s Economic Independence”. This Plan is a holistic approach for the PNG agriculture sector development that considers the inter-connectivity of the various stakeholders in the supply chain/value chain and their linkages with other related supply chains and value chains.

It recognizes the need for implementing developmental programs that landowners will buy into so that their customary land can be released for economic growth and nation building. It also emphasizes the development of support services and infrastructure such as irrigation, farm to market roads, river and other water transport modes and related infrastructure, improved technology, information and extension, and improved access to credit and enhanced human resource development. It will explore new approaches in a new age of resource and climate constrained agriculture, rather than simply more of the same.

It seeks to do this by providing a sectoral policy framework in harmony with favorable macro-economic policy as well as through increased public and private sector investments in agriculture, infrastructure and support services, institutional governance, and land utilization reform programs. The DAL has begun consultation with key stakeholders on the proposed draft PNG Agriculture Plan 2018-2037.