Palm oil leads agri­cul­tural ex­pan­sion

With about 85% of the pop­u­la­tion living at sub­sis­tence level in ru­ral and re­gional Pa­pua New Guinea, agri­cul­ture is a main­stay of the econ­omy.

Business Advantage Papua New Guinea - - Agribusiness -

Agri­cul­tural prod­ucts ac­count for about 18% of Pa­pua New Guinea’s ex­ports and 25% of its GDP, ap­prox­i­mately US$3.80 bil­lion. The main ex­port crops are palm oil, cof­fee, co­coa, co­pra, rub­ber and tea. PNG also has a live­stock sec­tor, mainly fo­cused on poul­try prod­ucts.

Ma­jor palm oil in­vest­ment

In early 2015, the world’s big­gest palm oil pro­ducer, Malaysia’s Sime Darby, bought a ma­jor­ity stake in PNG’S ma­jor palm oil op­er­a­tion and sec­ond-largest em­ployer, New Bri­tain Palm Oil Limited, from Kulim Malaysia in a deal worth K5.09 bil­lion (US$ 1.74 bil­lion)

Sime Darby has of­fered a shareholding of up to 30% for the PNG gov­ern­ment to buy into NBPOL, whose palm oil prod­ucts are cer­ti­fied against the Round­table on Sus­tain­able Palm Oil stan­dard.

Sime Darby is ex­pected to ex­pand the com­pany’s op­er­a­tions, and has pro­posed a public–pri­vate part­ner­ship with the pro­vin­cial gov­ern­ment to pro­vide elec­tric­ity from its waste ma­te­ri­als.

NBPOL’S Gen­eral Manager in West New Bri­tain, Harry Brock, says that by us­ing meth­ane and palm ker­nel, the com­pany could pro­vide the prov­ince with re­new­able en­ergy. Talks are un­der­way with the pro­vin­cial gov­ern­ment and state util­ity PNG Power to in­vest in this en­ergy source.

New plan­ta­tions

An­other big palm oil plan­ta­tion in­vestor is R H Group, whose Chief Ex­ec­u­tive, James Lau says the com­pany’s Sig­ite Mukus project in East New Bri­tain prov­ince will be fully de­vel­oped by 2017 with 31,000 hectares un­der plan­ta­tion.

‘Con­struc­tion of the first crude palm oil mill has com­menced and is ex­pected to be com­pleted in first half of 2016,’ he tells Busi­ness Ad­van­tage PNG.

‘This mill will process 60 tonnes of palm oil per hour. A sec­ond mill, ca­pa­ble of pro­cess­ing 120 tonnes per hour, will be con­structed dur­ing phase 2 of the project. In­vest­ment for both mills to­tals K240 mil­lion [US$92 mil­lion].

‘Once fully op­er­a­tional, the project will em­ploy 3,500 peo­ple on an on­go­ing ba­sis, and in­ject K33 mil­lion [US$12.6 mil­lion] per year into the econ­omy of East New Bri­tain.’

Ris­ing to the chal­lenges

Cof­fee prices jumped by 57% from De­cem­ber 2013 to June 2014, while co­pra rose by 10% in the first half of 2014 and co­coa by 12%.

On the sur­face, this sounds like good news for PNG’S farm­ers. How­ever, the Asian Devel­op­ment Bank re­ports pro­duc­tion re­sponse to th­ese higher prices has been con­strained by the un­ex­pect­edly sharp ap­pre­ci­a­tion of the PNG kina in July 2014, as well as by struc­tural con­straints like weak trans­port and lo­gis­tics net­works, a co­coa pod borer in­fes­ta­tion, and age­ing cof­fee and tea plan­ta­tions.

Co­coa pro­duc­ers are bounc­ing back from the dev­as­tat­ing ef­fects of the co­coa pod borer, which hit pro­duc­tion in the mid-2000s.

Trader and ex­porter, Ag­mark, sup­ported by World Bank ex­per­tise and fund­ing, set up the Co­coa Board’s Pro­duc­tive Part­ners in Agri­cul­ture Projects (PPAP). Us­ing new and hardier seedlings, which have the po­ten­tial to more than dou­ble the co­coa yield for farm­ers and to with­stand the borer and other dis­eases, PPAP is show­ing pos­i­tive re­sults.

A new train­ing fa­cil­ity has also been built at Tokiala, out­side Kokopo in East New Bri­tain, where farm­ers are taught man­age­ment of co­coa plan­ta­tions.

Ag­mark Man­ag­ing Direc­tor John Nightin­gale says more than 234,000 co­coa seedlings have now been planted on 1,172 small­holder farms, and the plan is to plant an­other 234,000 co­coa seedlings, and de­velop the con­cept of ro­ta­tional re­plant­ing of the co­coa crop through­out its farmer net­works.

He says an in­ten­sive man­age­ment strat­egy called ‘Ev­ery Pod, Ev­ery Tree, Ev­ery Week’, could see yields rise from 0.4 tonnes per hectare to 2.5 tonnes.

Rice in­dus­try for PNG?

A su­per-hy­brid rice pi­lot project funded by Na­tional Devel­op­ment Bank in Cen­tral Prov­ince is pro­gress­ing well, ac­cord­ing to the bank’s Man­ag­ing Direc­tor, Moses Liu.

The bank has in­vested K2.6 mil­lion (US$1 mil­lion) in Gabadi Agri­cul­ture Ltd, which has teamed up with Philip­pines-based SL Agritech Cor­po­ra­tion, to de­velop 10 hectares of rice-grow­ing land with­out us­ing chem­i­cals or fer­tilis­ers. Yields are ex­pected to reach at least seven met­ric tons per hectare.

PNG Cof­fee Ltd also wants to pi­o­neer com­mer­cial pro­duc­tion of hy­brid rice from the Philip­pines.

Spices, in­clud­ing vanilla, car­damom and gin­ger, are also grown on a small scale in PNG and around 8,000 house­holds are also in­volved in grow­ing rub­ber trees.

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