US$40m for commercialization and diversification

Posted on:Dec 26, 2021News

The long-awaited US$40 million (approximately K120 million) loan agreement will be signed soon between the PNG Treasury Department and World Bank, says Minister for Agriculture and Livestock Hon John Simon.

The loan facility is for a five-year PNG Agriculture Commercialization and Diversification (PACD) project, approved by World Bank, to support the growth and diversification of PNG’s agricultural sector, particularly in rural areas. The project will support micro, small and medium enterprises to commercialize and expand further into emerging agricultural opportunities, including coconut products, small livestock and spices in addition to coffee and cocoa.

Minister Simon said, “the overall objective of this project is to facilitate the development of competitive and diversified value chains in targeted provinces of PNG”.

Hon Simon said he is pleased that the funding will be available for coffee, coconut, spice and small livestock farmers in East and West New Britain, New Ireland, Morobe, Madang, Eastern Highlands, Simbu, Jiwaka, Western Highlands, Southern Highlands, Hela and Enga provinces.

He said the monies were a part of a strategy which came to light after issues were raised on the K340 million EU funding focused only on East and West Sepik provinces, adding that avenues were identified to cater for farmers in other provinces as well.


The US$40 million will be invested to support agriculture-based farmers under the Productive Partnership in Agriculture Project (PPAP).

Cabinet approved the project on January 15 2020 and loan negotiations led by the Treasury Department were concluded in February 2020 followed by World Bank approval the following month.

According to World Bank, the US$40 million is a component of the approved US$100 million aimed at addressing some of the country’s most pressing human capital needs. Projects under this facility will deliver critical improvements in some of PNG’s most urgent priorities; health services – particularly in rural areas – as well as agriculture, nutrition and youth employment.

In April this year, Prime Minister Hon James Marape described the approval of these monies as a milestone for the country especially in terms of addressing Papua New Guinea’s most critical development challenges.

The new agriculture project will help consolidate the work of PPAP and address critical barriers to the growth of PNG’s under-performing agricultural sector.


There are three components to this project Including;

  1. Institutional Capacity Building

“This component will ensure improvement in the performance of sector institutions while enhancing industry coordination in cocoa, coffee, spices, coconuts and livestock. Activities under this component will include capacity building at DAL as well as the Commodity Agencies, provinces and districts to ensure effective coordination for service delivery.


  1. Market Access

“Market Access is a vital component that will enable easier access to trading and access to markets, goods and services adding also that approximately 50 Kilometers of feeder roads are envisaged to be rehabilitated under this component; Some roads have already being identified and scoped under PPAP and may go under rehabilitation as soon as the PACD becomes effective.


  1. Productive Partnership

Under this partnership the Minister revealed that there will be two sub- components including similar activities to PPA focusing on productivity, quality and formation of producer organizations and Aggregation, value – addition and marketing (matching grants for Producers’ Organization and MSMEs’.


The project is estimated to benefit 15 000 households or more than 70 000 farmers.

Minister Simon said funding would be allocated for a structured extension support to PPAP farmers and monitor their progress, adding that this will ensure continuous support for self-sustainability.

Meantime, the Minister has also called on DAL staff to comply with their roles as public servants; noting the first component of the project, the Minister added that capacity building is important in service delivery.

He also added that under this component, DAL and his office will build the capacity of the National DAL regional offices. [Released: July 14 2020]