Retrospective and Perspective of Agricultural Development in PNG

By PETER I. MOOROWER*

Major agricultural policies in PNG in the past 20 years including those entailed in the White Paper: Agriculture 1996 – 2000 (National Food Security Policy;  National Agricultural Development Strategy 2002 – 2012, the PNG style’ Green Revolution etc) have not been met with desired results,  probably due to weak governance (institutional and / or political failures) and externalities.  These calls for serious review and redefinition of existing policies, towards mitigating constraint factors and development potentials of this country.  It may be to this effect that the National Agricultural Development Plan (NADP) is introduced with anticipation for successes.

While the NADP is commendable, it is neither a panacea nor antidote as the plan has yet to translate intended strategies into realized ones.  Few questions needed to be asked from the outset:  Have the stagnant policies been appropriately reviewed and redefined to be implemented as per the plan?  Is the plan derived through a proper (analysis and synthesis) SWOT model platform?  Or, is the plan a product of professionals know best’ approach (blueprint) that is inflexible and prone to suffer defects which what the World Bank (1983) describes as ‘human projects’, or, is the plan a product of the Learning Process approach (bottom-up)?  Has the institutional bottle – necks properly reformed to facilitate the plan?  Or, have risk management strategies considered in the plan as agriculture in PNG is subjected to wide range of risks?  These questions are not intended to undermine the technicalities and professional inputs into the NADP, but they emerged as a result of lack of public knowledge on the White Paper and lack of intended results.  Further more, any development plan needs to be accompanied by an implementing strategy that is realistic and doable with provision of resources and in particular should link with policies and the overall MTDS to see the preferred outcome over sustained period.

However, some of the obvious institutional deficiencies and defects and the general symptoms of agriculture in PNG as a result of weak governance are:

•    The Fruit and Vegetable industry, since its inception in the late 1980’s and despite its continuous funding from within and abroad, is really struggling to make impacts in production and marketing capacities for both domestic and international demands.  The organization appears to be fully resourced but the low output could be due to lack of management dynamics. Recent success story of Israeli-backed and developed fruit and vegetable farm in Port Moresby and delivering international standard produce for the domestic market in Papua New Guinea is a wakeup call for FPDA.

•    Commodity boards of the tree crops tend to have exclusive management power and have been running the industries with self-interests with little regard for the farmers and the industries future and expansion.  For instance, since the coffee industry began, PNG’s coffee export is rather stagnant. Over the past six years, production averaged 1.180 million bags annually.  Though the latest ICO statistics suggest that global supply increased by 4.4 million bags from 146.4 million bags in 1999 to 150.8 million bags in calendar year 2000, PNG’s share of export has not improved much. Do we continue like this for ages, or, when do we increase production and negotiate for increased market quota?  In addition, if there ever exist anything such as growers fund/ stabilization fund etc., why then are the contributors (farmers) denied excess to knowledge or the current status of account not normally made public?  Despite the fluctuation is coffee prices, the disparity between ICO indicator prices and prices received by farmers over the years has been so high. In the pretext and context, the parastatal bodies are experiencing higher overhead costs and treating the farmers as residual recipients of the sales revenue of the commodity. No wonder the PNG government recently has to bail out CIC.

•    The agricultural researches in the country tend to be more subjective rather than being objective to the needs of the farmers.  By what magnitude have the farmers benefited from the generation and diffusion of the agricultural technologies so far?  Most likely insignificant number of farmers, usually around the periphery of the research station may indicate some benefit but what about the farmers far and wide and in places like Karimui, Kaintiba, Kandep etc.? Someone needs to produce a report card on the kina spent so far on agricultural researches to the kina gained for justification.

•    Lending for Smallholder agriculture has very much declined in the last two decades or so, mostly because of risk and risky decisions by the lending institution (the then RDBPNG) and this, the management of the bank can admit.  Smallholder farmers are therefore denied credit because of no savings and acceptable forms of security for loans, punctuated by ethnical (moral hazard), geographical and meteorological problems that affect credit.

Despite the lending ability of National Development Bank (NDB), the previous K100 million approved for implementation of NADP is channeled through this bank to be administered under its existing lending policies. Further development funds are channeled through the same institution annually. Is it viable thus, or can it deliver in the atmosphere saturated with risks?  This bank (NDB) is one institution in the country that changes name many times but has the lending policies actually changes so, or flexible to allow maximum access for the struggling and would be farmers to obtain credit?  Or, has the institution structurally and functionally reformed to meet current development needs?  Where is the bank heading to now?  The bank has now gone away almost completely from the original intention (agricultural and rural loans) to commercial and industrial loans. The main issue now is not about having credit facilities available but it is about how best to make the capital available to farmers, given the circumstances.

•    For sometime new the Livestock Development Corporation (LDC) is rather ailing or struggling despite its vibrant beginning, and hence, the country continues to import lamb, beef and dairy products from abroad.  How long can we continue to import these products?  Do we not have the comparative advantages? How about evaluation or a simple SWOT analysis to start off with to give us some sense and direction? It is really a national shame for an agriculturally potential country like PNG to see its livestock sector not performing too well.

•    The extension services of the DAL are rather non-existent despite officers nationwide are maintained on payroll on a recurrent basis.  How long can the tax payers continue to fund? Is there any hope of resurrecting the DAL extension services – best way and efficient way? Or should the department and the ministry assumed that all is too well?

•    Despite more than 80% of the 7.5 million population of PNG living in the villages and working on agriculture, let alone the adequate arable land and suitable climatic condition, the Agricultural sector accounts for approximately 25% of the GDP of PNG.  Further, FAO report stated that 29% of the population is still food insecure and nutritional status of women marginally lower than that of men.  This implies, under and / or inefficient utilization of human and land resources, coupled with constraint factors.  What a ‘national shame’ for such a land-abundant country with best climate and surplus labour to be food deficient and with low agricultural GDP.

•    Climate change and its impacts on agriculture is the current potential threat and challenge. The incidences and level of pest and diseases build, crop loss has been increasing and will continue to cause a dent in the government budget. Apart from researchers coming up with cultural, biological and chemical remedies for pest and diseases, screening out and breeding drought resistant crops, etc., has the government prepared catastrophical events like another el Nino or  Tsunami, outbreak of fungal diseases such as cocoa block pod,  coffee leaf rust. The government only provides Disaster Relief only as a short term humanitarian assistance for those affected but how about the crops and livestock lost (business lost), will they ever be recovered? How about the possibilities of specific agricultural insurance policy covers, as contingency for climate change impacts?

Lack of governments support and protection of the small farmers tend to vitiate agricultural programs and policy efforts.  Characteristically, agriculture is a very fragile industry and despite the farmers entrepreneurial behaviour, with highly degree of competition and innovation, government intervention is needed in almost every aspects as is the case in almost every developing country. Here are some suggestions the Department of Agriculture and Livestock and the Government might want to consider:

1.    Under the umbrella of the Rural Industry Council (RIC) and by way of
legislation:

a (i)    Under marketing policy, establish a ‘National Commodity Council’ by amalgamating the different tree crops commodity boards (coffee, cocoa, coconut and oil palm) with reduced structure and genuine autonomy from the government.  This will greatly reduce high overhead costs, maximize farmers benefit, reduce individual board’s independency and supremacy and more importantly production and marketing will be nationally coordinated.

(ii)    Remove the existence of artificial barrier to entry into marketing (that reduces competition) by reviewing and relaxing the conditions and criteria in obtaining Processing and Exporting Licenses.  This will allow for competition, maximum participation and benefits of farmers, either individually or cooperatively.  The current conditions favour the few established and well-off ones and are conducive to bribery and corruption, while the majority of farmers are marginalized.

b.    Under research policy, establish a ‘National Research Council’ by amalgamating public and quasi-public agricultural institutions such as NARI, CRI, CCRI, OPRA and others.  This will ensure collaborative and objective researches, avoid duplication, reduce high overhead and unnecessary costs, and will be nationally coordinated.

2.    Enact law on ‘Agricultural Loss Compensation’ (similar to that of Japan) and establish an Agricultural, Insurance Scheme under this law.  Agricultural insurance as a risk management strategy may prompt agricultural lending and may increase loan recovery rates for agricultural lending institutions; will address welfare concerns by stabilizing and/or increase agricultural GDP.  Such scheme will complement credit policy.  Further, green revolution program in some developing countries failed where there is no agricultural or crop insurance.  To effect such scheme, a MOA between NDB, Commercial Banks and insurer may deem desirable.  These linkages will ensure that no farmer who is not a borrower will participate as is the case in India because insurance provides defense against moral hazard and adverse selection.

3.    In light of the NADP and the overall MTDS, and in consultation with Lands Department, embank again on the controversial land reform (distributive) policy to make available the rigid (97%) of the customary land for agricultural development.  Proper and adequate awareness of the concept through mass media will clear the misconception people may have on the prospect.

4    Under price policy to ensure remunerative prices to growers to encourage higher investment and production, how about establishing a specific ‘Agricultural Price Commission’ apart from the general ICCC now in existence?  Such body while recommending prices will take into account all important factors, viz cost of production: changes in input prices;  input / output price parity;  trends in marked price;  intercrop price parity, demand and supply situation;  international market price situation;  terms of trade etc.  Uncontrolled Prices of agricultural products and commodities tend to be inflating the economy unnecessarily.

5.    Under mechanization policy, how about the possibility and feasibility of using the existing Yonki Dam in EHP to irrigate ‘PNG Food Bowl the Markham Valley (which has bi-modal rainfall pattern) for production of cereal and grain crops?  This can significantly reduce the high food import bill.  If the above policies do not exist, it is time now to review and redefine existing policies and/ or develop specific and explicit policies to propel NADP + MTDS.

Finally, the many problems and struggles of PNG is quite similar to that of India, but India manages them well with its long-run and aggressive 5 Years Plans (MTDS) particularly on the agricultural sector that had led to phenomenal growth and success (which India is now rated as the third largest economy in the world).  PNG should start drawing from India’s experience in order to fine tune and/ or re-structure on the NADP and the MTDS in order to be successful.


*The writer was a lecturer with the Business Studies Department at Unitech. He holds a Masters degree in Agricultural Development Economics from the University of Reading, UK. Currently, he is undertaking his PhD studies in Economics at the University of Bath, UK. The writer’s research interest is in the area of Price Dynamics and Marketing Efficiencies of Agricultural markets.