Business Advantage Papua New Guinea
Agribusiness
The demands of food security and import replacement are shaping agriculture in PNG.
Agribusiness is a sector where Papua New Guinea has a long history, and significant natural advantages. It has high rainfall and fertile soils, and its people have been farming for centuries.
‘You can try and engage a Papua New Guinean on any subject on any matter and they may be interested or not, just like anyone else,’ says Ilan Weiss, Chairman of Innovative Agro Industry (IAI).
‘But you mention agriculture to a Papua New Guinean and their eyes light up. They automatically engage. The reason is that Papua New Guineans have been doing agriculture for far longer than Europeans. It’s something dear to their hearts. They are very open to innovation and you find good farmers everywhere.’
PNG’S recent foreign exchange shortages have increased the urgency to boost agriculture. There is a growing emphasis on import replacement.
Mainland Holdings is one company taking the lead. Chief Executive David Alcock says the company intends to grow sorghum and soya beans in partnership with local farmers to use as stockfeed.
‘We have an over-reliance on imported grains. Foreign currency has become very difficult to source. One large bank, when I asked them for assistance, said: “We can’t provide any.” I asked them what would they do if they were in my position and they said: “Grow something.” We decided to see the foreign exchange as an opportunity rather than a difficulty.’
Mainland Holdings imports 150,000 tonnes of Australian wheat each year. Of this, 60,000 tonnes is used in stock feed. ‘Sorghum, our replacement for wheat in stock feed, will grow in PNG. That is absolutely proven. Soya beans, a critical protein addition to stock feed, will also grow in PNG.
‘If you can grow those two, you would have an enormous impact on the price of stock feed and the amount of industry you can create. The aim is to farm 1500 hectares a year. With two crops a year, it will give us 15,000 tonnes of sorghum. That is a quarter of our needs to replace all of our wheat in our stock feed.’
IAI, which has been operating in PNG since 2011, is another company looking at import replacement. It has established a dairy production farm at Ilimo in Central Province that is designed to partially replace dairy imports in Port Moresby and elsewhere, increasing local self-sufficiency. The farm has 175 hectares of cultivated land producing stock feed for 500 milking cows and a dairy processing plant, capable of producing 12,000 litres of milk per day. Weiss describes pricing of dairy products in PNG as ‘ridiculous’.
‘This is a grass-to-glass farm. We aim to bring prices down.’
Weiss says when IAI came to PNG, they found that despite PNG’S natural agricultural advantages, good climate for a variety of produce and excellent water resources, the country was largely dependent on imports to feed its people.
‘All those imports are sold in PNG at much higher prices than they are sold in the developed world. But that’s changing. Demand for production from the company’s first project, the 9-Mile farm outside Port Moresby, was so high that we had to stop exports’ and concentrate on the domestic market,’ says Weiss.
Palm oil
Palm oil is perhaps the crop where PNG has the longest history and soundest international record. Ian Orrell, Group Head of Sustainability for New Britain Palm Oil (NBPOL) says the company has 83 per cent of national production.
‘It is the largest employer in the country after the government, with almost 25,500 permanent employees on the payroll. And these are not temporary employees or linked to contractors and subcontractors. These are full-time employees. Only 106 are expatriates, or 0.4 per cent. The rest are PNG nationals.’’
Orrell says the relationship with smallholders is an ‘extremely important’ part of NBPOL’S upstream operations. ‘We support 17,500 smallholder farms, many of which have co-resident families: an estimated total population of about 150,000.
‘Smallholders represent about a third of our crop production.’
Almost all of NBPOL’S production goes to the European Union, except for a small amount that goes to Switzerland. The company has dutyfree access to the European market. Orrell observes that the EU market is ‘extremely sensitive’ to sustainability issues.
‘Overseas buyers of PNG palm oil demand assurances that what they are buying is independently certified, sustainably-produced palm oil. Twenty per cent of global palm oil is certified sustainable (CSPO), and the proportion is rising’.
Orrell says having certified sustainable production helps when accessing business finance. It also allowed the company to diversify geographically.
‘We have a closed supply chain with no chance of contamination. That led to the establishment of a state-of-theart refinery in Liverpool [in England] in 2010.’
PNG has some unique plants with potential. One is the galip nut ( Canarium indicum), which is indigenous to PNG’S islands, including New Ireland, New Britain and Bougainville. It is a protein-rich nut with similar properties to an almond.
‘Now is a great time to build an industry around the galip nut in Papua New Guinea,’ says Helen Wallace, Project Leader at the Transformative Agriculture and Enterprise Development program.
Minimal new nuts are coming on the market, and Wallace believes the galip nut has commercial potential.
‘We have an increasing world population and people are interested in healthy snacks.’
Coffee
Coffee is a crop that has a long history in PNG, but disease and mismanagement are posing challenges to the industry. Steven Tumae, General Manager of Industry and Operations at the Coffee Industry Corporation says the organisation is working on a new 10-year strategy that aims to address six key problem areas: production levels, quality of coffee, product marketing
PAPUA NEW GUINEA HAS EXCELLENT SOILS AND CLIMATE, BUT IT IS ALSO PRONE TO PESTS AND DISEASES.
systems, infrastructure, and the legal and policy environment, Tumae says.
The CIC’S strategy aims to help farmers work together.
‘Farmers lack the business acumen, financial knowhow, and the knowledge of how to make the most profit in the long term from their coffee trees’, he says.
‘There are plenty of small businesses that can be developed if the farmers work together as micro-smes. The shared profit would be substantial. The CIC plans to enable smallholders to become business-orientated farmers with direct access to the market.’
Potential small businesses include nurseries, processing the coffee as green beans, and selling quality coffee beans direct to local cafes and venues.
Another potential industry is agritourism, according to Maria Linibi, President of the Papua New Guinea Women in Agricultural Development Foundation.
‘There is a big gap in the market for the promotion of traditional crops and farming methods to tourists.’