Ilan Weiss, Chairman, Innovative Agro Industry: Interview

Interview: Ilan Weiss

What issues need to be addressed to enable growth in the domestic agriculture sector?

LLAN WEISS: For thousands of years the people of Papua New Guinea have been living off the land, so in a country like this, it is easier to tap into natural agricultural skills. In contrast to the great potential present in PNG for developing agriculture, there are also many challenges that exist. First and foremost is logistics. Other challenges include financing, lack of a commercial skillset, land mobilisation and policy. With logistics, for example, it is a matter of bringing the quality produce from the highlands to Port Moresby. Getting the produce here at a reasonable cost and preserving shelf life is very difficult. Utilising aviation only services a portion of the supply chain; another problem is that farmers in remote areas do not deliver consistent yields. Farmers in developed countries can often take things for granted. Proper infrastructure is something that, unfortunately, we do not have the luxury of utilising here. Access to energy and communication – which are staples in developing agriculture – do not yet exist here. Underdeveloped law and order is also an issue that disrupts the supply chain. Therefore, to be successful in PNG, one needs to ensure service and control of the full supply and value chain. There are no service providers or opportunities to outsource, so for this reason that we have developed fully integrated agricultural projects. You can sometimes be blind-sided by unexpected occurrences, but over time many of these instances are getting more manageable.

To what extent does growth in the sector depend on infrastructure spending and development?

WEISS: It is highly dependent, but there are solutions. Investment in farms located closer to the markets helps ease reliance on external factors, such as infrastructure spending. Our farm in Port Moresby is testament to that fact, as we grow import replacements at Nine Mile Farm so proximity to Port Moresby is key, given the demand for these products. The climate here is not as ideal as in the highlands, but through technology we are able to create the right conditions and essentially bridge gaps in the industry. It also works the other way: instead of farming livestock in industrial areas then transporting them out to rural areas, establish farms for livestock close to the customers. The same goes for stock feed; 70-80% of the cost for livestock is feed. Importing from Australia, processing in Lae, then distributing around the country is commercially inviable. A solution to this problem is our operation in the highlands, engaging local outgrowers to grow maize. In this way, we were able to reduce feed cost from $1100 per tonne to around $600 by sourcing locally and blending. The agricultural business model is not equipped to build infrastructure – electricity, roads, wharfs and the like. While infrastructure is essential for modern agriculture, the name of the game in PNG is finding smart solutions to best utilise what is available.

What criteria must be met in the short term to make agro-processing and value addition possible in PNG?

WEISS: Agriculture today is based on volume, which PNG has not achieved yet, and in this environment downstream processing might not be the most profitable. As a farmer, buyers of bulk straight from the farm are often the most profitable for you. Adding value, depending on the product, does not necessarily increase the margin if the right environment is not present. Simple value addition, like making salad instead of selling raw heads of lettuce, can increase profits, but large-scale processing is not always the answer. Our dairy farm, for example, is from grass to glass. Here, a larger amount of processing is necessary, which enables us to produce milk, yogurt, dairy snacks, ice cream and so on. Technology assists here as well. Luckily, Papua New Guineans are very open to innovation and new techniques, which is a very positive thing for the industry. This makes future value addition easier as farmers move from subsistence to commercial farming.