Agriculture & Livestock

The driving force behind commercial agriculture in Papua New Guinea has always been the export crops. This trend will no doubt continue to dominate the development of the sector in the future.

At present, more than 90 per cent of the value of agriculture export comes from four crops - coffee, cocoa, oil palm and kernels, and coconuts (copra). Other export commodities include tea, cardamom, rubber, chillies and pyrethrum.

There is considerable potential for the expansion and development of many more crops for export, including the export of fresh fruit and vegetables and processed products.

The Government is keen to see innovation in agricultural and livestock projects. It is committed to improving the country's infrastructure. Major reforms in fiscal and trade policies are expected to induce an upsurge in investor interest in the agricultural sector.

Papua New Guinea has extremely fertile soil and a climate which is ideal for agricultural ventures, particularly in the Highlands, coastal and island regions.

Rural dwellers already form the largest component in agricultural activity with subsistence farming. Food for consumption is only part of the total production in subsistence production. Rather more, it produces all the needs of the household such as housing materials, ceremonial goods, fuel, containers and animal feed.

Investors will find rural communities ready and willing to grow crops for supply to markets or processing factories. Assistance in technology and management procedures for commercial enterprises would however be necessary.

At present, most of Papua New Guinea's small scale agricultural production is consumed by the domestic market. The main goods produced include a wide variety of fruit and vegetables, meats and smallgoods, eggs, tobacco, grains and sugar. The value of fruits and vegetable sales is about K100 million a year. Other marketed products total about the same amount.

The continued development of small scale commercial agriculture is crucial to any expansion of employment. Twenty per cent of the wage-earning households are in the non-village rural sector.

Quality control procedures for exports are being addressed through the country's National Institute of Standards and Industrial Technology (NISIT). New ventures can rely upon the assistance of the Institute for research and development and technology transfer information and assistance.

Export Commodities

Coffee
Arabica coffee is Papua New Guinea's most important crop, both in terms of foreign exchange and its contribution to income and employment. Pioneered by estates, coffee is now primarily a smallholder crop (nearly 70% of production comes from more than 250,000 villages households), and is concentrated in the Highlands region, where coffee is the predominant source of cash income. Nearly half of all the village households grow coffee. Among smallholders there is a greater potential for increasing yields and raising farm incomes. There is considerable scope for expansion.

Cocoa
After coffee, cocoa is Papua New Guinea's second most important agricultural export crop. Existing plantings are highly concentrated geographically in the islands region. But many other areas in the country are highly suitable for cocoa production. Smallholder production has been increasing by about 5 per cent a year over the last 10 years, and the 70,000 producers now account for 70% of total output. Estate production has fallen steadily since 1975, mainly because of disease, but this trend has now been reversed and estates are rapidly replanting with high yielding and more disease resistant hybrids.

The introduction of high-yielding hybrids has greatly improved the projects in Papua New Guinea, and the country remains a competitive producer, even at low prices. Early results from their use are showing yields up to 2 tonnes per hectare while research continues to develop new varieties with even greater yield potential.

The prospects for cocoa look good. In the longer term, the potential for further expansion is excellent, particularly through a further increase in smallholder productivity and a major expansion in upstream processing.

Coconut
The coconut tree has a long history in Papua New Guinea and was an important source of food and other products long before other tree crops were introduced into the country. In recent years, estate production has declined, but coconut continues to be a staple crop for over 100,000 smallholders, who now produce about 60% of national output. About 20% of production is consumed domestically. The traditional tall coconut continues to be an important source of food and cash income for smallholders, particularly in the coastal provinces. Returns are low, but so are production costs, and the coconut is so entrenched in the coastal farming system that it will still be produced regardless of copra prices.

The production of coconuts, in pure stands, as cash crops, is experiencing a period of adjustment. More than two thirds of coconuts are now interplanted with cocoa, and this system offers the best prospects for future growth. Coconuts (whether hybrids or tall) provide the necessary shade for cocoa needs, share costs of cultivation, and provide useful supplemented income. Thus, by inter-cropping the cost of production of both crops are reduced, and a good return can be earned.

Oil Palm
Although it was introduced only 20 years ago, oil palm is now the third most important agricultural export and is growing rapidly. It is expected that in the not too distant future, oil palm will rival coffee in importance. There are now several major nucleus estate/smallholder (NES) schemes in production in Papua New Guinea. Production is almost equally divided between estates and smallholders. The potential for further development is impressive.

Papua New Guinea is estimated to have a strong competitive advantage over most major producers. Estate yields are among the highest in the world, and as a late starter, Papua New Guinea has the advantage of modern mills and marketing facilities and high-quality planting materials. While smallholder yields are lower than estates, oil palm offers a much higher income and a higher return to labor than any other major crop. Apart from the benefit enjoyed by the producers themselves, the NES have a market developmental impact in the regions in which they are located, partially because of the services and utilities that have been associated with them.

Rubber
In terms of soil and climate rubber has as good a potential as oil palm in Papua New Guinea. A large expansion program could be very attractive, particularly in helping to diversify production and offering an important source of income and employment to areas not suitable for other major export crops. Papua New Guinea has recently witnessed a renewed level of investment activity in rubber projects and the trend is expected to continue in the medium term.

There are some rubber projects currently in Papua New Guinea which operate efficiently and profitably. Some are seeking joint venture partners to realise their expansion plans. Interested investors should make further enquiries with the Government to obtain more details.

Other Export Crops
Compared with the four major export commodities and rubber, the potential for other agricultural developments is equally as exciting. The major prospects lie in the expansion of production of tea, cardamom, chillies and pyrethrum, among others, as well as the great number of varieties of tropical fruits and vegetables to cater for the rapidly growing Asian market.

Potential investment opportunities in the agriculture sector can be obtained through the Agricultural Sector Manual and the project profiles being promoted by the Investment Promotion Authority.