The government’s macro-economic policies have had a major influence on the agriculture sector. From independence to 1993, the government followed a ‘hard kina policy’. This period was characterized by prudent fiscal policies, high kina exchange rates, real wage rigidity, and high import dependency. Protective measures were used to establish several agricultural industries during this period, notably sugar and poultry. Import bans were partially imposed on many imported foods in 1983, and more comprehensively in 1986, then replaced by import tariffs after 1993.

For the agriculture sector as a whole, however, macro-economic policies inhibited new investment and the assets of past investments deteriorated. Cash cropping faced pressure from increasing production efficiencies in other countries that grow the same crops as Papua New Guinea and from high cost structures within Papua New Guinea. Since 1989, the Papua New Guinea macro-economic environment has experienced a series of severe shocks, some of them due to natural disasters, some to external factors, and others as a consequence of internal conflict and policy decisions within Papua New Guinea. Serious drought in 1997 also had an impact. There was a sharp decline in food production in the short-term, but it recovered within 6–18 months, while the production of some cash crops (such as coffee) actually increased in the year following the drought. Nevertheless, the drought helped to highlight the importance of agriculture to the well being of Papua New Guinea and the vulnerability of the food production system to climatic extremes, as well as the paucity of implementable policies on food shortages.

Institutionally, much of the policy debate in post-independence Papua New Guinea has reflected nostalgia for the expansive extension services of the colonial era. There has been much criticism of the under-resourced public sector field staff trying to maintain services to communities who were increasingly vocal in their demands for government ‘hand-outs’. From this perspective, most agricultural support service delivery is seen to have collapsed following independence. This in turn has generated pressure for improved delivery systems to reach village farmers. Popular ‘solutions’ include efforts to decentralize government services and to enhance the performance of individual industries through corporatization of marketing and service delivery functions.

Coffee, the dominant cash crop in the Highlands Region, provided the initial impetus for an industry corporation. Rapid expansion of corporate services for the industry occurred to address the threat to the industry’s survival as a result of the arrival of coffee leaf rust in 1986. Donor assistance was provided to research the problem and the Coffee Development Agency (CDA) was established to deliver extension packages in response to the crisis. The Coffee Industry Act of 1991 formalized the amalgamation of separate organizations responsible for marketing, extension and research in the coffee industry as the Coffee Industry Corporation (CIC). The Department of Livestock (DAL) and provincial divisions of primary industry (DPIs) were to withdraw from these fields.

The apparent early success of the coffee industry model led to a policy to assist the key agriculture industries to corporatize in order to establish a new work ethos for enhanced efficiency and service orientation. The creation of organizations, which would be controlled by, accountable to, and financed by the industries, was a major thrust of these policies. The cocoa and coconut industries, which had maintained their separate marketing boards from the colonial era, formed research and extension organizations under joint-venture arrangements. The Cocoa and Coconut Research Institute (CCRI), established in the mid-1980s, formed the Cocoa and Coconut Extension Agency (CCEA) in 1996 to provide extension services in the cocoa and coconut industries. The CCEA started as a small organization, initially with industry funds used only for top management. Front-line extension staff were to be provided by the provinces. Similarly, the Oil Palm Industry Corporation (OPIC) was established to provide extension services to smallholders as one of its main functions. It is partly funded by levies on production, but has also benefited from STABEX funding as well as government grants. The Livestock Development Corporation (LDC) has a mandate to manage Papua New Guinea abattoirs. It was designed to be self-funding through levies, but has become active in developing horticultural crops in Central Province.

The Medium Term Development Strategy (MTDS) provided the framework for agriculture policy making from 1994. The MTDS sought to redefine the role and institutions of government to give better support to the people in their own efforts to secure a better standard of living. The key priorities of the MTDS were health, education, infrastructure and the private sector. Agriculture was encompassed in the private sector, which was to be the ‘engine of growth’ for productive enterprise. Government involvement in this sector was to be restricted to facilitating access to credit, research and extension, training services, and monitoring the commercial activities of government.

DAL formulated its own version of a MTDS for the agriculture sector in 1996 (DAL 1996). The DAL paper presented plans for a ‘new look’ DAL that would serve as a facilitator of growth in the sector. The major strategic initiatives were to be the establishment of the National Agricultural Research Institute (NARI) and the National Agricultural Quarantine Inspection Agency (NAQIA). An Agricultural Credit Guarantee Scheme for smallholders was also to be launched. The strategic objectives were to:

In 1998, DAL approached the Food and Agricultural Organization (FAO) of the United Nations for technical assistance to reform the country's legal and institutional arrangements for management of the agriculture sector. The intention was to re-establish DAL as the central government body responsible for management of the agriculture sector. The FAO consultants noted that DAL remained in a marginalized and moribund state. While it was no longer appropriate for DAL to implement programs, there was a need to build the capacity of a small office to provide the lead role in policy making for the sector. This would require DAL to significantly enhance its capacity in strategic planning, monitoring and evaluation of programs and projects (FAO 2000, 8). Moreover, these functions should be carried out in close collaboration with other national, provincial, and local government agencies, industry corporations, and the private sector.

In August 2001, DAL launched its agriculture development strategy, Horizon 2002–2012 (DAL 2001). Developed in isolation from other key agencies in the sector, the analysis of the sector given in the strategy paper was supply-driven and it demonstrated little appreciation of factors influencing demand. Horizon 2002–2012 put forward a number of interventions, many of them contradictory, designed to reverse the decentralization and corporatization policies of the post-independence period.

While reiterating the principles of the MTDS and stating support for an efficient private sector as the key force in revitalizing agriculture, it sought to centralize control of the sector through legislative reforms, expanded government spending, and a National Agriculture Development Plan. A ‘paradigm shift in land tenure policies’ was envisaged, using a cooperative model to mobilize land for big investment projects, but restricting ownership to the members of the clan. On the other hand, the government was ‘advised’ to secure access to land for private investors. Marketing was to be privatized in the coconut industry, but DAL’s marketing role was to be strengthened in the rubber industry. DAL was also to take the lead in forming farmers into marketing cooperatives, apparently drawing on experience from Asian countries. An annual budget of between K102 and K108 million was envisaged for the first five years of the planning period.

Not surprisingly, the launch of the Horizon 2002–2012 strategy paper to industry representatives at a workshop in Lae in late 2001 received a negative response. Those bodies that were invited to the workshop by DAL saw the strategy largely as an attempt by a weak and ineffective department to regain control over all aspects of agriculture policy and production in Papua New Guinea, including the export tree crop sector.

With the structural changes in the agriculture sector, DAL’s policy-making role has been increasingly restricted to food security issues. At the same time, political imperatives have increasingly dominated technical and economic reality.

In 1989, a White Paper on Agriculture recognized that food supplies and the overall levels of nutrition were generally adequate throughout the country and looked to improvements in market access as a means of improving the quantity and quality of domestically produced foods for urban markets (Papua New Guinea 1989). A paper by a DAL agricultural economist in 1992 argued that because rice production in Papua New Guinea was a high risk and high cost activity, the cheapest way for Papua New Guinea to obtain rice was to devote resources to export production (Gibson 1992). The following year, the Papua New Guinea Rice Study showed that the cost of producing rice in Papua New Guinea was more than twice the cost of imported rice (Sloane, Cook and King 1993). It concluded that commercial production of rice was not viable in Papua New Guinea and recommended that rice cultivation be limited to small-scale production for subsistence consumption. Both these conclusions were unpopular in the increasingly politicized culture of DAL, where staff with analytical expertise in the agriculture sector had their contracts terminated and national officers were discouraged from undertaking rigorous assessments of policy issues.

Agriculture policy-making changed significantly as a result of the dramatic impact of the 1997 drought and frosts on food supplies (see chapter 17). There was a total or partial collapse of food supplies in many areas and it was estimated that around 260,000 people were in a life-threatening situation with little or no food other than that collected from the bush. Another 980,000 were estimated to have small and inadequate amounts of food available from gardens, sago palm, coconuts or fish. In response, rice imports increased from a forecasted 170,000 tonnes to 236,000 tonnes in 1997–98 (Bourke 2001). However, following the resumption of normal subsistence food production, food imports declined rapidly to levels well below those pertaining before the drought. As a consequence of the drought experience, food security gained prominence in policy-making circles. The PNG Food and Nutrition 2000 Conference was one of the outcomes of this awareness. The conference proceedings brought together 115 papers on various aspects of food production and food security in the country (Bourke et al. 2001). The recommendations from the conference were used as basis for a new policy submission to the National Executive Council (NEC) in late 2001.

Increasingly, official documents have claimed that Papua New Guinea is a food deficit country with poor food security. For instance, the 2000–2010 Food Security Policy concluded that: ‘the long-term sustainability of the national food security in PNG is precarious, based on the present trend of over dependence of imported food’ (DAL 2000). This argument, based on rhetoric rather than fact, has served as a vehicle for DAL’s efforts to regain an implementation role in the sector. For example, in its draft 1993 agriculture strategy, DAL gave priority to establishing the optimum scale and technology for growing rice in Papua New Guinea. This would focus on mechanized rice production in the Bereina area and small-scale upland varieties in the Maprik District of East Sepik Province. A 1998 submission to the NEC proposed investing K36 million over ten years for an intensive program to increase rice production (DAL 1998). It put forward a 39-member DAL-led implementation team, new housing and vehicles for the team, training of the extension team, technicians and farmers, subsidized seed production and distribution, DAL-operated machinery pools, 1000 ha irrigation development and a further 4000 ha of mechanized rice cultivation. The NEC approved the establishment of the Rice and Grain Authority and the allocation of K4 million to the rice programs in 1999. The 2000–2010 Food Security Policy proposed that Papua New Guinea put some 100,000 ha of rain-fed lowland rice into production in order to produce some 150,000–170,000 tons of milled rice per year (DAL 2000). Apparently the figure is derived from the rice import figure, but no analysis is provided as to how this target might be achieved.