Agribusi­ness

Business Advantage Papua New Guinea - - Contents - By Kevin Mcquil­lan and Sarah Byrne

The prospects for cof­fee pro­duc­tion look strong in Pa­pua New Guinea, ac­cord­ing to Jo­eri Kal­wij, Man­ager of Monpi Cof­fee Ex­ports, one of PNG’S ma­jor cof­fee ex­porters. In par­tic­u­lar, the 2016 re­sult of one mil­lion ex­ported bags was im­pres­sive. He says that the in­dus­try is likely to av­er­age 800,000 bags a year. If the in­dus­try can achieve that ‘we’ll be do­ing well,’ he says.

PNG is among the world’s top 20 cof­fee pro­duc­ers, and boasts the ideal en­vi­ron­ment: ex­cel­lent soil, rain­fall and the right cli­mate.

But there could be greater up­side. Kal­wij be­lieves that if train­ing is im­proved, the trees are up­graded, mills im­proved and the bot­tle­necks at ports—which are due to lengthy and com­plex ex­port bu­reau­cracy—are re­moved, then the in­dus­try could be do­ing much bet­ter.

‘Peo­ple will stand in line to buy a cup of PNG cof­fee—if it’s mar­keted as PNG cof­fee. PNG can cater for all ends of the spec­trum: high-end spe­cialty and a solid qual­ity bulk vol­ume.

‘We will never be a Brazil or a Viet­nam. But do we need to be? We can cre­ate spe­cialty cof­fees. We can cre­ate qual­ity by be­ing more hands-on with the farm­ers.’ In­vest­ing Ma­jor trade and de­vel­op­ment or­gan­i­sa­tion Fair­trade Aus­tralia and New Zealand works with over 6000 cof­fee farm­ers in Pa­pua New Guinea, in­clud­ing the 2600-mem­ber High­lands Or­ganic Agri­cul­tural Co­op­er­a­tive (HOAC).

The Co­op­er­a­tive is in­vest­ing into im­prov­ing lo­cal in­fras­truc­ture and buck­ing lo­cal trends, with pro­duc­tion in­creas­ing by 350 per cent over the last 10 years.

Fair­trade Aus­tralia and New Zealand CEO, Molly Har­riss Ol­son, tells Busi­ness Ad­van­tage PNG that some of the coun­try’s ru­ral in­fras­truc­ture, such as roads and bridges, has de­te­ri­o­rated, lim­it­ing ‘ac­cess to many of the ideal cof­fee grow­ing re­gions.’

De­lays in trans­port also af­fect the qual­ity of cof­fee, which re­duces the price that can be charged, she says. Mo­bil­is­ing farm­ers The Cof­fee In­dus­try Cor­po­ra­tion has im­ple­mented a strat­egy of mo­bil­is­ing farm­ers into groups in an at­tempt to ad­dress farm­ers’ con­cerns about low prices.

Tom Kukhang, the Cof­fee In­dus­try Cor­po­ra­tion’s Chief Sci­en­tist, says if farm­ers work to­gether, the con­sis­tency of the crop will im­prove. It is a strat­egy that pro­vides the grow­ers with larger crop vol­umes, put­ting them in a stronger po­si­tion to ne­go­ti­ate the sale price with the ex­porter.

‘When they go as in­di­vid­u­als to the road­side or mar­ket to

WE WILL NEVER BE A BRAZIL OR A VIET­NAM. BUT DO WE NEED TO BE?

sell their cof­fee, they have no power,’ says Kukhang.

Even­tu­ally, he says, the grower co-ops will al­low the farm­ers to deal directly with small roast­ers through­out the world, re­mov­ing the ‘mid­dle man’. Ex­port bu­reau­cracy Kal­wij praises the US$50 mil­lion World Bank–funded Pro­duc­tive Part­ner­ships in Agri­cul­ture pro­ject (PPAP), which trains farm­ers and aims to re­ha­bil­i­tate age­ing trees. But he says some of that money could be di­rected to­wards im­prov­ing the ex­port process.

‘We need to do away with the prob­lems in get­ting ex­port doc­u­ments ready. If we could achieve this, the ex­porters would buy more and we could ex­port more.’

Kal­wij like­wise points to the need for bet­ter train­ing. ‘It’s a neg­a­tive vi­cious cir­cle with re­gards to qual­ity.’ He notes that qual­ity stan­dards are of­ten not ob­served. Some cof­fee may be under-grade, or may be from past crops. ‘We are de­valu­ing our cof­fee,’ he says.

‘A bucket of ran­dom cher­ries at a ran­dom wet mill will be any colour, from green to dark red and ev­ery­thing in be­tween. Why don’t mills re­ject un­ripe beans? Why don’t we train cof­fee grow­ers bet­ter?’

Kal­wij says in­fras­truc­ture also needs to be im­proved. ‘The de­cline in in­fras­truc­ture and ser­vices can be seen when a road is washed away, or a bridge has col­lapsed in the more re­mote ar­eas.

‘It doesn’t get fixed in the same sea­son. That means that a lot of farm­ers who grow cof­fee have a harder time bring­ing their cof­fee to mar­ket.’ Fu­ture de­mand Fair­trade’s Har­riss Ol­son be­lieves de­mand for cof­fee is grow­ing across the globe. ‘It’s pro­jected that by 2020, Aus­tralians will be drink­ing 4.5 bil­lion cups of cof­fee each year.

‘This growth in de­mand, cou­pled with PNG’S close prox­im­ity to Aus­tralia, pro­vides a tremen­dous op­por­tu­nity for PNG cof­fee grow­ers,’ she says.

Kal­wij says PNG cur­rently pro­vides about one per cent of the global cof­fee out­put and is un­likely to reach dou­ble dig­its. But he be­lieves there is no need to com­pete with the big­ger na­tions. Rather, the ap­proach should be to aim at a dis­tinc­tive niche.

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