Rice: a new sta­ple for PNG?

Business Advantage Papua New Guinea - - Agribusiness -

The suc­cess­ful test­ing of hy­brid rice va­ri­eties will make it pos­si­ble to grow rice in large vol­umes in PNG.

For years, lo­cal pro­duc­ers be­lieved soil con­di­tions in PNG were not con­ducive to large-scale rice pro­duc­tion. How­ever, test­ing by the Philip­pines’ SL Agritech Corp. in Gabadi, out­side Port Moresby, has proved hy­brid va­ri­eties can be suc­cess­fully grown.

In 2012, rice im­ports of about 200,000 tonnes cost the coun­try US$208 mil­lion, ac­cord­ing to the World Bank, sup­ple­ment­ing an es­ti­mated 15,000 tonnes grown lo­cally.

Pre­dict­ing a world rice short­age, and a tripling of im­ports by 2050, the PNG Gov­ern­ment has an­nounced new na­tional rice pol­icy, fo­cus­ing on lo­cal rice farm­ing, re­duc­ing im­ports and en­hanc­ing food se­cu­rity. The aim is to be self-suf­fi­cient in rice by 2030.

In­cen­tives are avail­able to in­vestors com­mit­ting over K200 mil­lion to de­velop large, com­mer­cial-scale, mech­a­nised ir­ri­gated rice farms. An im­port quota sys­tem of 170,000 tonnes is in place for 2015/2016 and the Gov­ern­ment will in­tro­duce an ex­port quota sys­tem.

With pop­u­la­tion growth at about 2.1%, in­creased rice con­sump­tion rep­re­sents a sig­nif­i­cant op­por­tu­nity in PNG.

The coun­try’s dom­i­nant rice player, Trukai In­dus­tries, is de­vel­op­ing a 6000 hectare rice plan­ta­tion in Cen­tral Province.

Trukai’s Chief Ex­ec­u­tive Of­fi­cer Greg Wor­thing­ton-eyre says that, by 2018, 1500 hectares will be pro­duc­ing rice, with the long-term aim of pro­duc­ing 18,000 tonnes per year.

‘Trukai has a com­mand­ing mar­ket share and, although the mar­ket has been grow­ing at about 5% to 5.5% per an­num over the last few years, we are see­ing cur­rent growth at about 3.8% and we see that con­tract­ing to closer to 3%,’ Wor­thing­ton-eyre tells Busi­ness Ad­van­tage PNG.

‘In PNG, rice be­comes more a part of the daily meal, as peo­ple can af­ford it. Hence the mar­ket is grow­ing ahead of pop­u­la­tion.’

In an in­ter­view with Busi­ness Ad­van­tage PNG, Tate ex­pressed con­cern about the PNG forestry in­dus­try’s out­look, par­tic­u­larly in the con­text of the slow­down in the Chi­nese econ­omy. China re­mains the in­dus­try’s big­gest ex­port des­ti­na­tion.

‘Fur­ther bad news from China could see a very rapid weak­en­ing of ex­port tim­ber prices,’ says Tate. He adds that Chi­nese buy­ers are also be­com­ing very prod­uct se­lec­tive. ‘So in­stead of you (be­ing able to) sell ev­ery­thing to China they are be­com­ing much more qual­ity se­lec­tive about what they will buy,’ he says.

‘This, in turn, is in­creas­ing the amount of stock be­ing re­jected, which is cre­at­ing sig­nif­i­cant cost pres­sures for any pro­duc­ers un­able to sell what they have. For a coun­try that re­lies so heav­ily on tim­ber ex­ports, the cur­rent con­di­tions do not au­gur well.’

While Tate ex­presses con­cerns about ex­ter­nal threats to the sec­tor, fig­ures from the Bank of PNG sug­gest a more nu­anced pic­ture. In the nine months to Septem­ber 2015, the kina value of ex­port sales was down 5% on the pre­vi­ous cor­re­spond­ing pe­riod. How­ever, the 2015 ex­port val­ues were still some of the strong­est of the past five years. James Lau, Man­ag­ing Di­rec­tor of Malaysia’s Rim­bunan Hi­jau Group, the largest sin­gle player in PNG’S forestry sec­tor, re­cently told Busi­ness Ad­van­tage PNG that the forestry sec­tor faced sig­nif­i­cant dif­fi­cul­ties in 2015.

‘Round log ex­port prices de­clined be­cause of over­sup­ply and poor mar­ket con­di­tions, es­pe­cially in China— PNG’S main mar­ket,’ Lau says.

‘De­spite these dif­fi­cul­ties, we have main­tained op­er­a­tions and em­ployee num­bers in this sec­tor, but we fore­see tough con­di­tions to con­tinue at least into the sec­ond half of 2016. Tim­ber pro­cess­ing has con­tin­ued nor­mally and we hope to ex­pand this sec­tor in the fu­ture.’

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