OBG talks to Allan Bird, Agricultural Development Consultant; Ilan Weiss, Chairman and Executive Director, Innovative Agro Industry; and Sir Brown Bai, Chairman, Rural Industries Council.

Interview: Allan Bird

With commodity prices down, is it time for agriculture to play a bigger role in Papua New Guinea?

ALLAN BIRD: The general attitude of subsistence farmers can be constructive when needed but the important part is to understand and identify all the players in the sector. The landscape sector is the visible one because its stakeholders are taxable organisations and therefore show up in statistics. The remainder is made up of approximately 1m households, which are not banked and not included in statistics (outside of infrequent elections). These are the same farmers that are involved in the betel nut trade, on which no one can put a number. There is no available data, and because this section of the economy is not taxable there is a lack of initiative from the government, which sees an easier task in levying large oil companies and agri-business companies. This is the backbone of the sector and it needs more attention, not only because of the country’s dependence on agriculture, but also because of the sector’s vast untapped potential.

This potential is not only to assure food security, improve cash incomes and provide comfortable livelihoods, but also to bring total prosperity and full development to the country. It follows then that the agriculture sector must be targeted for development if the nation is to prosper and become one of the developed nations of the world.

WEISS: Once new techniques and technologies are provided, innovation soon follows suit. The biggest investors in PNG agriculture are the smallholders and not “corporate agriculture”. On the informal side, it is subsistence farmers that are the biggest investors, accounting for over 50% of total investment. The biggest challenge for them is securing access to markets and financing solutions. Modern agriculture is attractive and involves a lot of science and education. It also generates employment, particularly for women. The technology and skills to produce high-yielding crops are available – it is the rest of the process, leading to accessing urban domestic markets and export, that needs attention. Smallholder farmers need to be assisted by regional nucleus estates and agricultural industrial centres which provide inputs and training, and a market for produce that secures high yields.

BAI: Agriculture goes back to ancestral times in PNG. It is the backbone of PNG and has been the dominant survival mode of people here for centuries, but today’s picture is less bright, and commercial farming is having trouble emerging. Our current development pattern shows that subsistence agriculture contributes to the sector in significant ways. The challenge lies in transitioning from subsistence to commercial agriculture in a way that provides sustainable growth. The government estimates that 30% of the land in PNG has high agricultural potential, though barely 4% is being used for commercial production. Development strategies have shown a will from authorities to commit to developing road networks that link rural areas to trade hubs and improve extension services, but sufficient funds have not been allocated for agriculture. The only way to increase export revenue is by implementing development plans.

What are your views on the ban policy that has been applied to some import market goods?

WEISS: All stakeholders share a common interest. The viability of the market spurs initiatives and increases the farmer’s will to get more involved. Yet, despite the lack of standardisation, there are many favourable conditions for further sector development: beautiful produce is available in several of PNG’s regions and growing conditions are exceptional.

Retailers need to invest in upstream agriculture because it serves their interests. Government involvement and more public-private partnerships are essential as private sector involvement makes public investment much more effective. Government policies protecting agriculture, including bans, quotas, tariffs and duties, are common, globally. Farmers worldwide can access concessional loans, commercial financing instruments and additional protections instruments that PNG farmers cannot. Such facilities should be made available to PNG farmers to place them on an equal footing with their competitors.

BAI: I believe that there is a need for consultation, and this has not been the case lately, leading to a series of misunderstandings within the sector. PNG farming needs to be promoted, undoubtedly, but there is no clear policy basis that would justify such a ban. We can understand this approach as a temporary arrangement, but there are no clarifications on the initial reasons for it. It should have been put to good use and helped in the government’s achieving its goals in promoting local farmers, but this did not happen. The ban issue is situated in a string of issues that lead to the same conclusion: the rural industry needs effective and strong leadership to drive its development aspirations.

BIRD: It is difficult to believe the argument that the ban was meant to support the farmers. For the past 15 years, with no success, we have been arguing for the acquisition of funding for the introduction of a cold supply chain from the Highlands. It is crucial to ensure that the supply is there when a window opens, and unfortunately the PNG farmers have not been in a position to do so. First, the supply chain between regions such as the Highlands and Port Moresby does not exist. Second, the transport conditions in the supply chains that do exist are very poor, and the quality of the produce deteriorates throughout the process. Third, the cost of shipping between local ports is simply higher than the one for Singapore.

How can agri-business in PNG be developed?

BAI: Building a supply chain is the biggest concept for the sector today. But there are steps to go through. A farmer out in a rural area is always willing to take part. The challenge is training them and setting up the necessary infrastructure. Our extension services and our research must be geared towards assisting those people. A fine example of this is the current successful transition of the cocoa, copra and oil palm integration from large-scale companies to small holders. When government extension services such as road infrastructure and financing are collapsing, the best alternative is to resort to the private sector. The money and the know-how are there, so the government only has to provide backing and promotion. This is the safest way to put an end to our unhealthy dependency on extractive industries.

BIRD: The critical point is that the customer basis for purchasing agri-products is the most important element in the whole chain. Frustration in the customers leads to a blame game. Consumer confidence and farmer satisfaction is a balance in need of care.

Competition in agriculture is healthy; new actors drive agri-products and stimulate local employment trends. Consumers also benefit by becoming empowered and gaining confidence. Agriculture has been overshadowed by the extractive industries, and this is the moment to capitalise on the growing sense that it belongs to the centre stage and needs to play a bigger role in the PNG economy.

WEISS: The farmers should concentrate on farming, while the logistics, marketing and investment arms should be taken over by agri-business, buyers’ co-ops and community groups, reaching a more efficient segmentation of operations. This, in turn, improves the ability of a farmer to identify a market and enter into it. The farmer then becomes efficient and productive, transforming subsistence farming into cash cropping almost immediately. This phenomenon generates fertile ground for the development of regional economies, culminating in a large-scale national agriculture sector with multiplier effects, such as employment generation, services, banking and more.