Ministry

MINISTERIAL STATEMENT

Status Report and Future Plans for the Papua New Guinea Agriculture Sector

 

THEME:“UNLOCKING THE POWER OF AGRICULTURE FOR PAPUA NEW GUINEA”

 

Hon. Benny Allan, MP

Minister for Agriculture and Livestock

 

12th September 2018

1. Introduction

In the 1960’s and the 1970’s, the agriculture sector was contributing between 70-80% of Papua New Guinea’s Gross Domestic Product (GDP). It was the agriculture sector that was the solid backbone of the economy of our country. And it was on the back of the agriculture sector that PNG gained Political Independence in 1975.

However, over the last few decades, the contribution of the sector to the economy has decreased steadily and is now at around 30% of the total national GDP. At the same time, investments and support for mining, oil and gas have increased with these extractive sectors now contributing about 70% of the GDP.

Up until 2009, coffee was the highest cash crop income earner.  Since 2010, oil palm took over to become the highest income earning commodity crop in the agriculture sector followed by coffee, cocoa, coconut, rubber and tea. The contributions to the national economy and development from the agriculture sector now are under serious threat from a high population growth and increasing competition for land by other interests. Village agriculture, which supports over 80% of the population, remains dominated by subsistence food production. In coffee, cocoa, coconut and rubber; over 80% of the production that is exported overseas is produced by the village farmers.

As a nation, with over 85% of our eight million people depending 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 to empower our people so that they participate meaningfully in the development of our Nation. By 2050, the population of PNG is projected to be about 17 million. Indications are that over 70% of our people will still be heavily dependent on agriculture by 2050.

Over the past few decades, the agriculture sector while contributing up to 30% per year to our national GDP, the Government’s budget appropriation to the sector has been less than 2% of the total GDP. Over the last 25 to 30 years, under-investment by Governments has seriously limited the agriculture sector’s capacity to contribute more to people’s prosperity and economic growth of our country.

Having stated that, it is the first time ever the O’Neil-Abel Government has recognized the contribution of the agriculture sector to the economy. The total budget appropriation of over K600 millionin the 2018 national budget to the agriculture sector was the highest ever.

For the first time the Government has allocated funding to the subsectors as follows;

  • Oil Palm Industry Corporation – K15,
  • Livestock – K10 million,
  • Rubber – K3 million,
  • Spice Industry – K2 million,
  • Fresh Produce Development Agency – K15 million,
  • Kokonas Indastri Koporesin – K10 million,
  • Cocoa Board – K15 million and
  • Coffee Industry Corporation – K18 million.

 

Recurrent Budgets:

  • Department of Agriculture and Livestock – K10 million
  • National Agriculture Quarantine & Inspection Authority – K8.2 million

 

  • National Development Bank – K50 million (for lending to agriculture
  • Agriculture Commercialization Equity Fund – K100 million (parked at the Department of National Planning and Monitoring).

 

The Districts received K1 million each which equate to K89 million through their DSIPs for agriculture extension programs.

The overall budget appropriation to the agriculture sector reflects the priority of this Government to truly grow the economy as per the Alotau Accord 2.

I will now briefly highlight the status of the agriculture sector in PNG and outline plans moving forward. This brief covers the Department of Agriculture and Livestock, Coffee Industry Corporation (CIC), Cocoa Board, Kokonas Industry Koperesen, Livestock Development Corporation (LDC), Oil Palm Industry Corporation (OPIC) Fresh Produce Development Agency (FPDA), Rubber, Spice and Rice.

 

2. Department of Agriculture and Livestock

When I took office soon after the 2017 National Elections, I draw up a 100-Day Plan.

One of the priorities was to bring together all major players in the agriculture sector to the recurring issues of my Department and Commodity Boards in partnership with the private sector organized. We conducted a very successful “2017 National Agriculture Inaugural Summit”with the theme; “Unlocking the Power of Agriculture for Papua New Guinea” in Port Moresby from 20thto 22ndNovember, 2017.

The Prime Minister opened the Summit followed by senior Government Ministers, private sector, Heads of Government Departments, donors and selected corporative and community representatives.

The first two days were dedicated to addressing constraints and opportunities confronting the private sector in the agriculture sector in PNG. On the third day, the Government through the invited Departmental Heads were given the opportunity to respond to the issues, constraints, challenges and opportunities highlighted by the private sector.

The key outcomes of the Summit have been summarized in a Recommendation, and have also been documented to feed into the “PNG Sector Medium Term Development Plan 2018-2022”,consistent with the Government’s Medium-Term Development Plan III 2018-2022and the Government’s priority under the Alotau Accord 2.

 

2.1 Agriculture Summit II (2018).

The Second Agriculture Summit to be held in Lae at the end of November 2018 after the APEC Leader’s Summit is focused more towards bringing in more participation of the Micro, Small, and Medium Entrepreneurs (MSME), Cooperatives, private and government Sectors. It is expected that strong alliance, partnerships and networking will be established through this national dialogue.

 

2.2 DAL 90-day Plan

In June 2018 when the government appointed the Acting Secretary, the Department of Agriculture and Livestock instituted a Ninety-Day Work Plan that is a practical approach that integrates and expands on DAL responsibilities as the lead agency in the sector. The priority areas in the 90- Day Plan include;

 

2.2.1 Priority 1: Review of the Act and Appointments of Commodity Boards

DAL has completed cabinet submissions for all commodity boards, which include the revocation of interim boards. Full boards will now oversee proper administration, control and management of the affairs of the relevant commodity industries.

All the Commodity Acts will also be reviewed.

 

2.2.2 Priority 2: Agriculture Sector Plan

DAL has formulated a draft framework for the next PNG Agriculture Sector Plan and Strategies entitled “PNG Agriculture Plan 2018-2023”with the theme “Translating PNG’s Agriculture Power for Our People’s Prosperity and Our Nation’s Economic Independence”. The organization has secured support from the Food and Agriculture Organization of the United Nations (FAO) to develop this plan.

World Bank under the Productive Partnership in Agriculture Project has indicated to also start the review of the National Agriculture Plan. DAL is now working with FAO and World Bank on the Technical Assistance Project and Terms of Reference from FAO and World Bank for the support.

This plan shall consider the interests of key stakeholders in the supply chain from mobilisation of customary land to farming to manufacturing of agriculture products and by-products, and finally to consumers. It shall recognize the need and importance for supporting and incentivizing developmental and private sector programs that landowners will buy into so that their customary land can be released for wealth creation and economic growth.

Ultimately, this Plan aims to “modernise the agriculture sector and make it international competitive ensuring that all stakeholders get fair and optimum rewards markets can offer”. It will explore new, innovative and practical solutions for “productive, climate-smart and sustainable food systems”in light of the challenges we face in food security, climate change, changing consumer demands and new technologies.

Other sub-sector plans currently ready for NEC endorsement are the Food Security and E-Agriculture policies.

 

2.2.3 Priority 3: Alignment of the Sector Plan to MTDP III (2018-2023)

Consistent with the MTDP II and MTDP III, and Alotau Acord 2, DAL and the Commodity Boards are focusing on increased production, increased revenue, increased food and income security, and import replacement and downstream processing.

Commodity Boards apart from their regulatory responsibilities are rolling out regional and district by district nursery programs, in strategic locations to increase production and riding on other programs such as World Bank, International Fund for Agriculture Development and European Union and FAO.

 

2.2.4 Priority 4: Is the DAL Corporate Plan and Restructure

The last DAL Corporate Plan dates back to 1999. The restructure came into effect in 2000.

In 2012 DAL started many short-term and partial restructures which were done in isolation and approval by the Department of Personnel Management (DPM). These resulted in DAL recruiting and filing in vacancies with unqualified staff thus affecting the efficiency and smooth operation of DAL.

DAL is a technical department that needs skilled and competent people.

The Corporate Plan will ensure DAL organisational structure meets the sector’s needs and prepare for emerging opportunities arising for technology innovation and agriculture advancement.

To complete this exercise, the DAL needs the support of the departments of Personnel Management and Finance.

 

2.2.5 Priority 5: Major Agriculture Projects and Establishment of the Project and Sate Negotiating Team (SNT).

A Project Planning and Management Committee has been established under the 90-day Plan. The important function of the committee, which consists of a very experienced and senior planner and technical staff, is to appraise and evaluate all Public Investment Project (PIP) submissions by the Department, Commodity Boards, private sector and corporate entities.

The committee’s task is to vet and conduct due diligence on all projects before submitting to the Department of National Planning and Monitoring (DNPM), National Development Bank and other funding institutions and donor agencies.

The department (DAL) has also invited other key state agencies to form aState Negotiating Teamfor the vetting process of all project submissions.

 

2.2.6 Priority 6: APEC Senior Official Meetings and Senior Officials Meetings; Food Security Week

In March and August 2018, DAL together with the National Fisheries Authority and the agriculture Commodity Boards organized and conducted two very successful APEC SOM3 meetings on Food Security in agriculture and fisheries. Key outcomes for PNG where two proposals by the PNG APEC Policy Partnership in Food Security (PPFS) Secretariat, namely;

  1. Multipurpose Food Security and Climate Change and
  2. Empowering Women in Agriculture and Fisheries.

They have been approved for funding by the APEC Secretariat for 2018 and 2019. I understand that this is the first time in the history of the APEC SOM PPFS committee for one economy (PNG in this case) to get two proposals approved by the APEC Secretariat in Singapore.

In May 2018, DAL also secured funding and support from the Technical Centre for Agricultural and Rural Cooperation (CTA) office in Brussels, Europe, to develop the first Agriculture-Tourism policy for PNG. This policy aims to improve linkages between agriculture and tourism to strengthen the local agri-food sector and promote agri-tourism in PNG. My Department is now finalising the terms of reference for the project, and organising a working group from the Government, private sector and other relevant sectors in the community to develop this very important policy.

 

3. Coffee

Coffee contributes substantially to foreign exchange earnings, employment and national GDP. In the last five years, coffee accounted for 27% of total agricultural export and 6% of GDP, translating to about K450 million annually. Coffee income feeds into transport, construction, manufacturing, retail and wholesale, insurance, banking and other allied industries. It is grown in 18 of PNG’s 22 provinces by more than 450,000 households representing around 3.3 million people. Coffee is the main cash crop of the highlands people of PNG.

Prospects for growth in the global market for coffee are looking bright. According to the International Coffee Organization (ICO), global production of coffee has shown an upward trend over the last 20 years. The major traditional consumer markets for coffee are the EU, US and Japan which account for 53% of the global coffee market. These markets have shown a modest increase in consumption of coffee of 1.5% per annum year on year over the last five years. However, these figures only reflect volume. The consumption habits of consumers in these markets are changing leading to a higher demand for higher-quality, high-value specialty coffees.

Historically PNG has had an excellent reputation for high quality fine flavour arabica coffee but the long-term trend has been one of decline over the last 20 years. In the period from 2012-2016 production declined to an average of 47,532 tonnes per annum, and PNG’s share of the global market has halved to just 0.53%.

Volume is not the only concern for coffee producers; quality is a vital factor that determines market price and price premiums or discounts for low quality. The industry faces problems with falling yields, inconsistent quality and pest and disease problems such as coffee berry borer (CBB), coffee leaf rust, coffee green scale and pink disease. This is a pity because PNG coffee is a great product with much potential for growth. PNG coffee is highly rated among specialty coffee drinkers. Consumer reviews of PNG are highly positive with comments such as “Excellent taste with nutty and spicy undertones”, “This is great coffee and very good value”, and “This coffee is of superb quality with a full aromatic flavour”.

The presence of CBB in the Jiwaka and the Eastern Highlands provinces is much more serious because they are major coffee growing provinces in PNG and are well connected by road and air, and are in close proximity to other major coffee growing provinces like Simbu, Western Highlands, Enga and Southern Highlands.  Together, these six provinces account for about 95% of the total coffee production in PNG. Last year the National Executive Council approved K20 million to combat CBB. In 2018, the Coffee Industry Corporation (CIC) received K5 million to continue with CBB containment and eradication program.

The CIC Industry Strategic Plan for 2013-2018 (CIC-ISP) underlines that investments in coffee will benefit the majority of the population in PNG. The goal of the CIC-ISP is to increase financial returns, productivity, product safety, quality and market access for smallholder coffee farmers and other actors along the value-chain. CIC has set ambitious targets to increase productivity of village farmers and the plantation sector. In the medium term, CIC plans to stabilize production above 1.2 million bags in 2018 and see further 5% increase per year, every year going forward.

 

4. Cocoa

Over the past five years, cocoa production averaged 43,867 tons with 90% of these being produced by village farmers while 10% from the plantation sector. PNG’s cocoa industry has been in decline since the serious outbreak of Cocoa Pod Borer (CPB) from 2008. Cocoa exports fell from 52,579 tonnes in 2008 to 33,090 tonnes in 2015. Production has now increased to over 40,000 tonnes. However, the industry faces problems with low and stagnant yields, and inconsistent quality. Cocoa is grown in 14 of PNG’s 22 provinces with East Sepik, Bougainville, Madang, East New Britain, Morobe, West New Britain and New Ireland being the major producers. Cocoa sustains around 151,000 families equating to about two million people in the country, and contributes an estimated K300 million per annum to the national economy.

Globally, PNG accounts for only 1% of the total production.  However, PNG cocoa has earned a world reputation of being one of the finest quality cocoa producers being rated by the International Cocoa Organisation (ICCO) as having a “90% fine or flavour status”. PNG cocoa is a great product that produces excellent fine flavour chocolate and has much potential for growth. The challenge for the Government and the private sector is “how do we translate this high-quality cocoa reputation to more money in the pockets of our cocoa farmers who live in the rural areas”.

Prospects for growth in the global market for cocoa are looking bright. According to ICCO, global consumption of cocoa is increasing by 17% per annum. Much of the increase in volume is being driven by the emerging markets in Brazil, China and India. Between 2010 and 2015 consumption of chocolate in Brazil, China and India increased by 99%, 132% and 245%, respectively.

The ICCO further states that global demand is outstripping supply which will lead to a predicted shortfall in global cocoa supplies of 100,000 tonnes per annum by 2020. According to industry sources in Western Europe, there is already a shortfall in the supply of highest quality “fine”cocoa, leading to higher prices for the best quality product. In 2017, DAL in collaboration with the PNG Cocoa Board secured a grant of over US$620,000 from the World Trade Organisation in Geneva to enhance trade for cocoa farmers in PNG.

The Cocoa Industry Strategic Plan for 2016-2025 (Cocoa-ISP) calls for a rapid ramp up in production and exports to deliver 310,000 tonnes of cocoa exports by 2030. The goal of the Cocoa-ISP is to build a dynamic, competitive and sustainable cocoa industry. In response to the numerous challenges being faced by our rural cocoa farmers and key stakeholders along the whole supply chain from farming to consumers, the PNG Cocoa Board is focusing on three key strategic programs (with funding support from the Government) and they are;

  1. Nursery Program,
  2. Freight Subsidy Program and
  3. Cocoa Quality and Market Promotion Program.

Under the Nursery Program, the Cocoa Board is facilitating the propagation of the recently released ten (10) CPB tolerant cocoa clone planting materials to rehabilitate village cocoa farms. In addition, the Cocoa Board has engaged with 12 District Development Authorities through Memorandum of Agreements (MOA) to promote and support rehabilitation of cocoa frame, as well as increase opportunities for new Small Medium Enterprises (SME’s) in the industry.

 

5. Coconut

The coconut industry is the oldest agricultural industry in PNG and has played a significant economic and development role since the 1940s. However, the industry over decades has declined in its status and is now the fourth major commodity after oil palm, coffee and cocoa in terms of their contributions to the GDP of PNG.

The industry provides employment for 309,417 households (2000 National Population Census), representing 31% of total households in PNG. It is estimated that over two million people are involved either directly or indirectly in coconut cultivation, production and consumption in PNG. The main commercial product from the coconut palm produced by rural farmers is copra.

However, the price of copra is so low compared to other agriculture commodities such as cocoa and coffee. And for those in the remote islands of the major coconut producing provinces in PNG, rising transport costs to markets have further eroded farm-gate prices, and their economic survival is a matter of great concern.

Diversification of coconut products produced by the agriculture producers will not only enhance exports and bring in additional national revenue but it can also address the reduction of importation of coconut products and substitutes from overseas such as Asia. In the last two years, packaged coconut water has become a lucrative industry, competing against carbonated drinks. There are numerous opportunities within the coconut sector in which small-scale producers can value add coconut through product diversification, technology improvements and enhanced market access.

Plans are in place to increase area planted under coconut from 202,400 ha in 2016 to 204,800 ha in 2017 and to 207,200 ha in 2018 generating revenues of K64.7 million, K65.3 million and K71.1 million respectively from export of copra, copra oil and copra meal. Current awareness and training programs to diversify into non-traditional value-added coconut programs over the last few years has attracted a lot of interests among coconut farmers and key stakeholders in the industry and the future of the coconut industry is looking bright and promising.

 

6. Livestock

The Livestock Development Corporation (LDC) was established in 1983 to take over the responsibility and operation of various ranches, abattoirs and other activities operated by DAL. In 2004, an Asian Development Bank (ADB) report on the PNG agriculture sector revealed that local livestock farmers were keen to expand their herds, for live cattle trade in particular, and expressed disappointment that LDC had no capacity to sell them breeding stock. The Government stopped funding support to LDC in 2014 and remains so today.

Presently, the livestock sub-sector contributes about 15% of the total domestic food production, and about 12% of the agricultural gross domestic product. This status has remained unchanged for over three decades. There is no significant export of livestock products and commercial production, except for pigs and poultry, has declined since the 1970’s.

Meat consumption in PNG on the other hand, has increased steadily over the last two decades, and is predicted to increase at a conservative rate of 5% per annum.  Increased demand for meat is currently met by meat imports costing around K140 million per year. The poultry industry in PNG generates over K800 million annually and more than 80% of this is produced by out-grower farmers living in villages in rural areas.  In addition, the poultry industry in PNG formally employs around 3,000 people, 90% of whom are women.

There is great potential for livestock farmers and farming groups to raise their productivity and output to match future demand for meat. For example, PNG has huge areas of grasslands for pastures, as well as providing opportunity for crop and livestock integrated farming. According to our land use data, PNG has over 400,000 ha of grassland suitable for grazing over 300,000 herd of cattle and producing nearly over 60,000 tonnes of beef per year.  By improving pastures and increasing stocking rates, local farmers can significantly increase local beef production from current 2500 metric tonnes to 8000 metric tonnes.

LDC plans to focus on reviving the cattle industry in the short to medium term as poultry and piggery already have established private sector investments. DAL has secured funding and technical support from the International Atomic Agency (IAEA) in Vienna, Europe, to use nuclear and other technologies including artificial insemination (AI) and innovative pasture improvement techniques to improve nutrition. This project is expected to run from 2018 to 2020.

 

7. Oil Palm

In 2008, the oil palm export revenues exceeded the K1 billion mark, and this trend has remained since. Future trends for the industry in PNG look very promising and even bigger and better outcomes are being forecasted.

Currently, the Oil Palm Industry Corporation’s (OPIC) participation along the value chain commences when it engages with landowners, both customary and state lease holders to allocate land for oil palm development. At the Fresh Fruit Bunch (FFB) processing, waste management, product storage, transportation and marketing stages; OPIC’s role is minimal and limited to information dissemination and some advisory duties.

However, due to the nature of its duties and responsibilities, OPIC needs to be well informed about what happens beyond the sale of FFB to the mills, type of customer it is serving and the overall industry characteristics. Understanding these key issues are fundamental towards an improved service delivery to the smallholder or village farmers who are their primary clients.

According to Tim Anderson in 2006, “there are limited economic possibilities for small farmers; imposed by their weak market position in a long export industry value chain, and by their weak market relationship with a large price-fixing mill. There is really no way for small and village oil palm growers to escape this subordinate relationship”.

These are real challenges that small or village farmers face, and therefore, OPIC needs to re-organize its service delivery mechanism to address these underlying difficulties.

We have assessed the current state of development and note that small growers face immense hurdles with productivity, production and capacity. OPIC must enhance its engagement with the stakeholders in the lucrative part of the value chain in the short to medium term. It should also assist in preparing the groundwork for small farmers to eventually graduate into the lucrative part of the value chain. This approach is consistent with the intention of OPIC as expressed in their draft strategic plan.

 

8. Fresh Produce and Horticulture

The Fresh Food Development Authority (FPDA) is the Government agency responsible for managing the fresh food and horticultural industry in PNG. The industry has new challenges in recent times given the increased consumer demand from the rapidly growing rural and urban populations, increased business activities due to the resource boom and competition from imports. Over the last few years, FPDA has been working closely with the PNG fresh food and horticultural farmers; many of whom are now gradually shifting from subsistence farming to commercial farming where they are now able to grow and sell produces in distant domestic markets.

FPDA now has contracted about 14,000 farmers from 32 districts in nine provinces. Collectively, these farmers have supplied over 12,000 tonnes of fresh produce in major PNG markets generating some K19 million for themselves and their families. Key challenges faced by the local farmers include poor road and transport conditions, high freight costs, absence of coordinated cool chain systems (post-harvest handling), poor flow of appropriate information leading to inconsistency in supply resulting in quality and supply issues to markets.

These challenges are further exasperated by inadequate policy and regulatory framework, and unnecessary bureaucratic red tape.  Consequently, PNGs local fresh produce commodities are less competitive against the imports. This has resulted in many local vegetable producers missing out on domestic markets created by urbanization, mining, petroleum and other large economic projects. For example, the total estimate for fresh produce demand in Port Moresby is about 167,000 tonnes per year. It is estimated that peri-urban and rural farmers in local markets and street vending meet some 60% of this demand.

Current records show that there is about a 40% wastage when local farmers sell their produce through the formal system of retailers, wholesalers, caterers and formal markets because of perceptions of quality issues.  According to data from the Customs Office, about 85% of fresh produce needs of resource projects are imported resulting in an opportunity cost of PGK500,000 per week for PNG translating to an import bill of K26 million annually.

In 2013, the domestic fresh food market in PNG was valued at K2.5 billion and this is expected to increase in future as our population increases. Recent studies have shown that while PNG’s food imports have declined from 9,200 tonnes to around 6,000 tonnes, we still import over 8,000 tonnes of food from overseas.

The recent ban on imports of some of the fresh food has shown that PNG local farmers are able to supply much of the domestic fresh food requirements. For example, currently around 4,900 tonnes of the estimated 6,600 tonnes of fresh food banned through the import restrictions is supplied by the local PNG farmers.

PNG village farmers face many challenges in the fresh produce industry and need more support from the government and other stakeholders. Some key constraints include access to credit, marketing, infrastructure, extension, training, pest and disease, delivery of agricultural services and others.

In 2015, DAL and FPDA in partnership with the Department of National Planning and Monitoring, the Department of Treasury and other Government agencies initiated discussions with the International Fund for Agriculture Development (IFAD) on the “Maket belong Villis Fama Project”. This Project aims to deliver three key objectives, and they are:

  1. Building and strengthening of ‘business partnerships’between farmers and their private sector partners;
  2. Building and strengthening of ‘networking’between markets, farmers and their private sector partners along the supply chain; and
  3. Strengthening of ‘Government institutions, systems and building of their capacity’in facilitating local and international trade of PNG’s fresh produce and horticultural products.

In December 2017, the IFAD Board in Rome approved the PNG “Maket bilong Villis Fama Project”for funding worth US$25 million.  This Agreement, between the Government and IFAD was signed by the Treasurer in August 2018 which will be repaid over a period of 25 years including a grace period of five years, with interest at a fixed rate of 1.25 per cent plus a service charge of 0.75 percent per annum. Co-financing of up to US$25 million will be from the PNG Government mainly through in-kind contributions, and from other development partners.

The project will be implemented over a six-year period in six provinces. Activities related to the fresh produce value chain will be implemented in four provinces in the highlands region, namely, Western Highlands, Jiwaka, Simbu and Eastern Highlands and Morobe in the Mamose region. Galip nut related activities will be implemented in East New Britain.

 

9. National Agriculture Quarantine Inspection Authority

The National Agriculture Quarantine and Inspection Authority (NAQIA) was established by an Act of Parliament in 1997 to ensure the domestic industry has reasonable access to international genetic material to enhance local primary production competitiveness, and which does not expose PNG to unacceptable risks. NAQIA is also required to ensure imported foods meet minimum health and safety standards through export certification and quality assurance systems based on Codex (FAO/WHO) phytosanitary, veterinary and public health requirements and protocols.

A key function of NAQIA is to advise Government on policy, legislative, regulatory and procedural changes required to achieve adequate quarantine inspection, certification and permitting for health and safety standards of imported and exported products and biosecurity standards relating to animal, fish, plant food and timber products.

In recent times, the Government of PNG has challenged NAQIA to not only focus on bio-security but also place increasing emphasis on trade facilitation. Under the Alotau Accord 2, the Government has tasked the agriculture sector to grow and drive the economy.  In response to these domestic challenges and international opportunities for PNG, the NAQIA in the last two years has focused on solutions and strategies for modernisation of biosecurity services to enhance quarantine and facilitate trade in agriculture.

The first step NAQIA undertook was to complete consultations with key stakeholders on the new Bio-Security Bill for PNG and has submitted a draft to the NEC for approval. The next key strategy is to upgrade and modernise NAQIA’s outdated ICT infrastructure and systems. The third key strategy is Modernisation Program which will include establishing a modern and secure database, undertake software development and training and buildings of staff capacity.

 

10. Rubber – Department of Agriculture and Livestock

DAL is currently responsible for all aspects of the rubber industry in PNG. An estimated 7,405 people are involved directly in growing and producing rubber in PNG. Majority of these are village growers accounting for 59% while settlers account for 31% and estate employees accounting for only 10% of the total number. However, in terms of area, the estate represents about 50% of the 16,670 hectares under rubber in PNG. The remaining 50% is divided up equally between the village farmers (25%) and settlements (25%) sectors.

The decline in production by the North Fly Rubber Ltd (NFRL) factory was driven by falling rubber prices after 1996 which saw price reductions of up to 50%. The NFRL depends entirely on the village growers to supply the cup-lump and therefore the decline in production by the factory was closely linked to the capacity of the growers. As would be expected, increase in prices has positively influenced rubber production by the village growers. This observation is interesting in that it shows that village growers are very sensitive to rubber price fluctuations. An important lesson for future rubber projects targeting village growers from this example is the need to develop appropriate and relevant price strategies.

PNG produces good quality dry rubber which is blended with the lower grades from other countries for international marketing purposes. The long-term objective of the rubber industry in PNG should therefore be to maintain consistent supply of high quality PNGCR 10 rubber. Efforts to improve the quality and increase production of the PNGCR 10 rubber should be central to any rubber development plan.

Plans are to increase area under rubber from around 25,000 ha in 2016 to 35,000 ha in 2017 and then to 45,000 ha in 2018 and thereby increasing revenue generated from K40 million in 2016 to K80 million in 2018. Currently there are about 40,000 families and 13,000 SME’s directly engaged in the rubber industry. Plans are to increase citizen participation to 46,000 families and 15,000 SME’s by 2018.

 

11. Spice – Department of Agriculture and Livestock

DAL is currently responsible for all aspects of the spice industry in PNG. The National Parliament in 1989 enacted the Spice Industry Act. Following this, the Spice Industry Board was established in 1991 and charged with the responsibility to coordinate and grow the spice industry in the country focusing on all spice crops such as vanilla, cardamom, chilies, pepper, turmeric, ginger and cinnamon, among others. However the national Government stopped funding the Spice Board in 1995 and transferred the responsibility to the provinces and the districts. Since then, government funding to the Spice Board has not been consistent and mostly has been inadequate. In fact, the Spice Board has not received any funds from the National Government Budget from 2012 to 2017.

Central, Gulf, Oro, Eastern Highlands, Simbu, Morobe, East Sepik, Sandaun, East New Britain, West New Britain and Manus provinces have spice programmes and projects. Based on the figures for 2002, the area and production of spices are relatively extensive for vanilla and cardamom. There are over 100,000 rural households growing spices. According to a study by the Commonwealth Secretariat in 1996, PNG had the potential to develop a viable spice export industry to the tune of US$60 million (K180 million) annually. However, currently the industry is estimated to generate over K23 million in foreign exchange.

Currently, there are over 200 traders of various spices most of which are vanilla exporters. Markets for PNG spices have been identified in Europe, the Middle East, Asia and the United States. However, attracting new investors who have sufficient capital and capacity, and ensuring that there is an effective marketing network that must be overcome as a matter of high and urgent priority for the spice industry in PNG.

In 2018 and onwards, the Spice Board plans to improve management and coordination, establish a quality control and certification system, undertake an audit of all existing registered operators, support downstream processing and market development in the spice industry. The program is expected to benefit over 200,000 spice growing households in the country, and generate over K100 million in foreign exchange for the national economy. The Spice Board has requested K35 million in the 2018 budget for these interventions.

 

12. Rice – Department of Agriculture and Livestock

The “PNG Rice Policy 2015 – 2030”is aimed firstly at promoting the cultivation of domestic rice to feed our people; secondly, by ensuring monetary savings for the government by reducing foreign rice import bill; and thirdly, by supporting initiatives in the future to export locally grown rice that will earn foreign exchange for PNG.

After 100 years of experimenting rice farming in PNG, there is now compelling evidence confirming that PNG is able to grow rice commercially to meet its domestic market requirements, as well as export rice.  Currently, PNG imports about 400,000 tons of rice, valued at some K600 million annually. This translates to around 85% of our domestic rice demand.

In response, the Government decided to increase domestic rice production by promoting and supporting large scale, highly mechanized irrigated commercial farming.

Currently, there are no large scale mechanised rice farming projects in PNG. Given the lack of interest by local and foreign investors to commit to large scale, highly mechanized, commercial farming in PNG over the last 47 years, the Government further decided that any investor willing to do so would be accorded pioneer status and granted appropriate and relevant incentives, and concessions to establish and develop during its infancy stage of up to 10 years.

These incentives and concessions are aimed at assisting new investors as new players entering into the high risk, low value end of the rice business in PNG to help them build brand names, customer base, and meaningful relationships based on non-price factors such as product quality, service, patented features, environmental and civic involvement.

A Joint Declaration on Agriculture Cooperation was signed between PNG and the Republic of the Philippines during Prime Minister Peter O’Neill’s visit to the Philippines on May 16 2018. Under this declaration, a demonstration rice farm was established on a 25 hectares land at the Pacific Adventist University outside Port Moresby. This farm will be on display for the APEC Leaders to visit during the November APEC Leader’s Summit. Under this arrangement the Embassy of Republic of Philippines in PNG will arrange with Investors from Philippines to come and partner with our landowners through Joint Venture arrangement to grow and market rice. Rice import can be replaced and we can export to the Republic of the Philippines, as they have already indicated that they will import surplus rice from PNG.

The Chinese have already signed agreements with the Government to grow rice in Eastern Highlands and Western Highlands provinces through the China-Papua New Guinea Integrated Agriculture Industrial Park. The project and financing agreements for these will be signed by the two leaders during the November Leaders’ Summit.

Israeli company Innovative Agro Industries (IAI) is organizing rice and grain cultivation in the Sepik Plains.

On the local scene PNG’s long-term traditional partner, Trukai Industry Limited is in a big way partnering with land owners in the Markham valley and very shortly they will move into other high-altitude areas in Baiyer, Jimi and Ruti Valleys in Western Highlands. Only three weeks ago, Trukai launched their Hamamas brand rice in Port Moresby. This new brand of rice is locally grown from the Markham and will be appearing in the shelves of major supermarkets soon.

The Government also has plans to revive the Bereina rice project in the Central Province and extend into other provinces.

The Productive Partnership in Agriculture Project is coordinated by DAL and implemented by CIC and Cocoa Board of PNG. The total value of the project is US$91 million, funded by the World Bank and International Fund for Agriculture Development. It commenced in 2010 and will end by mid 2019.

The objective is to improve the livelihood of the smallholder cocoa and coffee producers in Momase, New Guinea islands and the Highland provinces.

 

13. Conclusions

As responsible elected leaders of our people, we must take heed of two key lessons from our journey as a “Politically Independent Nation”over the last 43 years.

The first is that we must seek God’s wisdom and guidance more strongly than ever before because the challenges confronting our young nation are even much greater and more complex than those that confronted us over the last 43 years. Secondly, our people are the most valuable and important resource and we should never take them for granted.

I therefore commend the O’Neill-Abel Government for putting the Agriculture Sector as the Number One (1) priority to grow and drive our economy during these challenging times.

As you can see, the agriculture sector over the last five years has organised itself and embarked on a reform agenda that places it in a strong position to take on the challenges to grow and drive our economy. The sector is greatly honored and we stand ready and willing to serve and deliver.

As the employer of some 85% or over six million people, making agriculture the number economic sector to grow and drive our economy is indeed giving a golden opportunity to our people to own the economy and be “Masters of their own Destiny”.

Agriculture was key in delivering “Political Independence”for PNG in 1975, and I have no doubt that, given this opportunity, agriculture will deliver “Economic Independence, Prosperity and true Freedom”for our people and our beautiful and blessed country.

Allow me to conclude in the words of President John F. Kennedy which I believe is sound advice to us elected leaders of Papua New Guinea today, and I quote:

“With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God’s work must truly be our own”unquote.

With these few words, I commend to our people of Papua New Guinea the “Status Report and Future Plans for the Papua New Guinea Agriculture Sector”.

God bless you all and God bless Papua New Guinea.

 

………………………

 

Hon. Benny Allan is the current Minister for Agriculture and Livestock, since August 2017 following the 2017 National General Elections. Hon. Allan is also the MP for the Unggai-Bena Electorate in the Eastern Highlands Province, serving his fourth consecutive term. He was Minister for Lands and Physical Planning in the last government (2012-2017) and Minister for Environment and Conservation between 2007-2011.

The Minister’s office is located within the Central Government Office at Waigani where the Department of Agriculture and Livestock (DAL) is housed.