Graham King, General Manager, Hargy Oil Palms: Interview

Interview: Graham King

In what ways can Papua New Guinea move closer to food security and self-sufficiency?

GRAHAM KING: Around 83% of the energy and 76% of the protein consumed in PNG is produced domestically. There is considerable growth potential for the domestic food sector, yet factors remain that constrain it – namely, poor road infrastructure, an unreliable power supply and limitations in the shipping industry. For example, the Highlands Highway connects Lae to Mount Hagen, which is very fertile and houses a significant share of the population. However, both the highway and provincial feeder roads are in poor condition, preventing products from being easily and cheaply transported.

Discussions have been held on rebuilding the Highlands Highway, and several plans have been set in motion. However, in its current state this will take a long time, and the feeder roads that PNG’s farmers depend on have barely been considered in the redevelopment plans. Moreover, there is no maintenance scheduled for key provincial roads that serve agricultural areas.

Meanwhile, most households do not have power and cannot store fresh vegetables or meat, so they consume produce from local markets or their own gardens. Furthermore, security concerns in the markets of major towns prevent many consumers from attending, and rice purchased from grocery stores has become one of PNG’s staple food products.

How can domestic food products become more competitive to reduce spending on imports?

KING: The very high costs of power, wages, shipping and security often make imports more competitive than domestic goods. For example, domestic poultry and pork rely on imported grain. Poultry production by PNG’s smallholders is a major industry, and fresh chickens are sold nationwide. However, attempts to grow sorghum and corn to replace grain imports have had only limited success. There has also been no increase in beef production for many years, and due to shipping costs, it is cheaper to import beef from Australia or New Zealand. Any new cattle project will have to be large scale and will require a large capital investment. Moreover, while domestic dairy is in its infancy, it is disappointing that a 25% tariff was introduced on imported milk products in the 2018 budget, as consumers outside of Port Moresby must now pay more for dairy. In addition, a great deal has been written about domestic rice production over the last 50 years. While many schemes and incentives have been put in place to encourage rice farming, it remains cheaper and easier to import rice, and there are no realistic projects yet under way to develop domestic rice production.

What is the export potential of PNG foodstuffs?

KING: The export potential of PNG’s food products varies considerably. For instance, exporting fresh food is almost impossible, owing to cost, quality and quarantine restrictions such as those in Australia and New Zealand. Thus, the country’s typical exports profile comprises products like palm oil, coffee, cocoa, copra and vanilla.

Palm oil is the only commodity whose export volume has increased in the last 20 years, though there are constraints on its further growth, including a shortage of available land, infrastructural limitations and difficulty in achieving sustainability. A national policy for palm oil that establishes sustainability requirements for all producers is urgently needed if PNG intends to maintain its reputation and access to foreign markets. The cost of production here is double that of Indonesia. PNG cannot compete in Asia and must export to Europe, which will pay premiums for sustainable palm oil.

Coffee requires a major replanting programme, and it is unclear how this could be financed. Moreover, 90% of PNG’s coffee beans come from remotely located smallholders, and major investments are needed to rehabilitate and maintain the roads that service those areas. Exporters also require licence security to encourage them to improve services for smallholder growers.