AGRIBUSINESS
Becoming the food basket of Asia
Rice production has increased as local retailers sought to replace imports with local produce. Credit: Trukai
Agriculture in Papua New Guinea started thousands of years ago in the Kuk Early Agricultural Site in the Western Highlands – and that knowhow may be about to transform the country. By David James ention agriculture to a Papua New Guinean and their eyes light up,’ says Ilan Weiss, Chairman of Innovative Agro Industry. There is a high level of expertise and enthusiasm is the area. That enthusiasm goes to the top. Prime Minister James Marape has announced that he wants PNG to be known as the ‘food basket’ of Asia. ‘We have very rich organic food in PNG and I want to supply the Asian market with that organic food into the future. Investors who are out there, with money to invest, will attract the right government incentive if you come to us and want to partner in this space.’ About a quarter of the country’s GDP is derived from agriculture, only behind resources, and more than 80 per cent
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of PNG’s population is estimated to be engaged in semi-subsistence food production. According to the World Bank, agriculture is the second largest contributor to PNG’s export earnings after minerals. Palm oil, which accounts for 51 per cent of total agriculture exports, is the largest contributor, followed by coffee (27 per cent), cocoa (15 per cent), and copra and copra oil (7 per cent). In 2019, cocoa and copra export volumes fell, while coffee and palm oil volumes were stable, according to Bank of PNG figures. In 2020, PNG will hopefully be the beneficiary of improved international prices for palm oil, coffee and copra. PNG’s climate and high seasonal rainfall, good-quality soil and lowintensity farming methods, make for a favourable environment for agricultural activities. The PNG Government estimates that about 24 per cent (23,080 square kilometres) of the country is suitable for intensive agricultural production. It means PNG has a considerable comparative advantage, but investors BUSINESS ADVANTAGE PAPUA NEW GUINEA 49
have to be skilful. Weiss says one challenge that the agricultural industries face is not having enough ‘credible’ information. ‘If you look at every agriculture sector in PNG, whether for export or domestic consumption, the information is not out there.’ Investors have to acquire their own information, which implies allowing for longer lead times for feasibility studies and higher allocation of resources and capital. ‘My best advice is have a good relationship with the retailers around the country to get the information that you require if you are looking at domestic consumption,’ explains Weiss. In recent years, food retailers in PNG have looked to source more local produce, as part of an ongoing process of import substitution. ‘We keep growing our local product lines and cutting back on the imports. We’re encouraging farmers to grow more and more,’ Mahesh Patel, Chief Executive of CPL Group (which owns the Stop N Shop supermarket chain), tells Business Advantage PNG.
Connections Greg Worthington-Eyre, Chief Executive of Trukai Industries, a rice grower, believes it is important to have geographical proximity to markets. ‘In this country, anything [has to be transported] on the water.’ He suggests producers need to control costs or ‘lose significant value’ during transportation. Developing good relationships with landowners is also essential for investors in PNG agriculture, says WorthingtonEyre. ‘When you have villages that have been owned under customary title and then all of a sudden something happens with that land, they all come out looking for a slice of the cherry.’
Partnership Partnering with landowners can be an effective way to develop agricultural
