Agribusiness

Women in the Markham and Ramu could benefit from the proposed IFC model.

New agriculture corridor promises jobs & growth

PHOTO: IFC

The results of a scoping study of the Markham and Ramu valleys are helping to develop a win–win business model for investors and customary landowners.

By Gabriella Munoz

About 80 per cent of land in the fertile Markham and Ramu valleys in northern Papua New Guinea could be used for agricultural development but so far it remains intact.

Why is this so?

‘It’s clear when you talk to the people that there are challenges, the biggest of which seems to be land ownership. But there are other issues, such as infrastructure and farmers gaining access to inputs,’ Christian Reichel, International Finance Corporation (IFC)’s Operations Officer in Port Moresby tells Business Advantage PNG.

‘When you consider the growth in population in PNG and the demand growth in Asia, it’s clear we need to understand how we can support farmers, manufacturers and exporters to seize these opportunities.’

The IFC partnered with the PNG Government’s Grow PNG program, with further support from the Australian and New Zealand governments, to deliver a study of the agricultural potential of the Markham and Ramu valleys and to create development scenarios for landowners and investors.

As part of the study, the IFC and its partners looked at land ownership, soil types, crop suitability and access to necessary resources, as well as historical, current and planned economic activities.

‘Potential investors have access to relevant information in one stop, so they can decide if it’s worth spending more time in developing business and investment plans,’ says Reichel.

Farm management

One recommendation of the IFC’s study is to create a farm management services company. Its aim would be to offer advice on good agricultural practices, farm management and farm inputs (such as fertilisers, chemicals and equipment, especially tractors).

The service company would help farmers develop the

The Markham/Ramu Valley corridor in brief

Where The valleys are located between Lae, PNG’s second largest city, and the Highlands region. What’s produced now Palm oil, sugar, cocoa, fresh produce and livestock. What can be produced Rice, animal feed, fruits and vegetables. The project The IFC has developed a 20-year project that could boost the growth and economic development of the region. Development could include a variety of produce, including animal protein, animal feed, fruit and vegetable production, while cocoato-chocolate production, a recent growth area in PNG, could be realised quicker.

CREDIT: IFC

technical skills to improve their agricultural practices. The company could also do ‘everything for landowners, in return for a profit share,’ explains Reichel.

He believes that if there are different business models available to landowners, then they will not feel they are losing their land when it is developed.

‘World Bank research shows growth from agriculture can have a more significant impact on the poorest 40 per cent of the population compared to growth in other parts of the economy,’ says IFC Resident Representative for PNG, Markus Scheuermaier. ‘With 80 per cent of the population [in PNG] working in agriculture, it is essential that smallholder farmers are linked to markets and derive income from their crops.’

Turnover

‘Meaningfully divided between crops’ and crops that are regularly turned over would help the landowners decide what to produce. Long-term crops, however, could mean landowners lose ‘some feeling for it’.

The IFC wants to avoid a situation where investments don’t work out and companies leave the country out of frustration. A partnership with professional landowners and investors makes sense and lowers the risk on both sides.

The aim is to showcase one pilot area instead of having hundreds of smallholdings all over the country.

Reichel says the intention is to create a model that can be applied to the whole of PNG. 