The dominant features of the protective, self-reliance policies of the immediate post-independence period were the ‘hard kina’ and import bans of selected food items. One outcome of the protective policies was the establishment of local poultry and sugar industries. Both industries have relatively efficient producers who keep abreast of international trends and performance standards. Ramu Agri-Industries operates a sugar cane estate, an outgrowers’ scheme, a sugar factory, a sugar refinery, a distillery, four cattle ranches and a meat processing plant. Sugar production ranges from 30,000 to 44,000 tonnes per annum, with about 7000 tonnes exported in good seasons. About 150 outgrowers produce about 20 per cent of the cane for the mill. Establishment of a technologically advanced industry that provides some employment in the sector has come at the cost of high domestic sugar prices for PNG consumers and degradation of the environment that may affect the long-term sustainability of sugar cane growing (Hartemink 2001, 360–362).
Three major producers, with three large, vertically-integrated operations that control feed milling, breeding, growing, processing and distribution, dominate the poultry industry. They are protected by a 70 per cent tariff on imported poultry products. There are also established poultry farmers servicing the live chicken market in most provinces. Although growers regularly complain of low returns, live chicken prices in many centres are two to three times those of the frozen product from supermarkets. While Papua New Guinea is virtually self-sufficient in poultry meat and eggs, the net foreign exchange saving is reduced by heavy reliance on imported feed. Global changes mean both industries are vulnerable to lower-cost external producers as trade barriers are lowered.
Although these small industries benefited from protection, the overall impact of the ‘hard kina’ policies on the agriculture sector was negative. While governments have regularly indicated their appreciation that agriculture directly or indirectly sustains the majority of the country’s population with food and income, the performance of the sector in terms of productivity and employment generation has sometimes been stagnant since independence. Official figures indicate that agriculture grew at only 1.7 per cent per year during the 1980s, while population growth amounted to 2.3 per cent, but these do not cover subsistence production nor domestically-grown market food. With improved prices for export crops, the agricultural sector grew strongly during the 1990s. The 2004 budget papers indicate that the agriculture, forestry and fishing sector grew at 9.1 per cent in 2000, declined by 5.3 per cent in 2001, grew again by 7.3 per cent in 2002 and was projected to grow at an annual average rate of 2.9 per cent over the five years 2003–2007.
Slow growth in employment is a critical problem in Papua New Guinea. From 1980 to 1990, urban unemployment increased from around 9 per cent to 35 per cent, while rural unemployment rose from 21 to 38 per cent. Lack of employment opportunities has been linked to the rapid increase in crime. High crime rates have generated major costs on business and undermined investor confidence, thereby inhibiting employment-generating activity.
Agriculture previously generated a high proportion of Papua New Guinea’s formal employment through a large estate sector. The sector generated 52,000 formal jobs in 1970, but this fell to 45,000 by 1980 due primarily to the decline in the estate sector. Accurate statistics on formal employment by sector are no longer available, but a sector survey in 1998 estimated that the number of formal jobs in agriculture was less than 25,000. Increasingly, non-formal employment in smallholder farming has been seen as a means of keeping the rapidly expanding labour force engaged in gainful activities.
Coffee is the major cash crop industry, generating cash incomes to around two million people, but it has experienced somewhat slower growth over the decade 1991 to 2000. Export volume peaked at 85,000 tonnes in 1989 and again at 83,500 tonnes in 1998. Plantation coffee production has been in decline over recent decades and village-based smallholder producers now account for over 80 per cent of output. High wages and low productivity, together with ambitious localization of ownership/management, deteriorating infrastructure, and the declining security situation, were key factors in the demise of plantations. This in turn has reduced formal employment opportunities. Cocoa production has also stagnated at around 27,000–37,000 tonnes since independence. The industry has been under pressure from a general decline in international cocoa prices, a receding estate sector, natural disasters (particularly the Rabaul volcanic eruption of 1994), and adverse weather conditions. The secessionist rebellion in the cocoa growing province of Bougainville since 1989 resulted in the closure of 15,800 smallholder cocoa blocks and 111 estates (DAL 2001, 22).
After a long period of stagnation, copra production increased for the period 1996–2000 in response to improved prices. Production of other cash crops, such as rubber, tea, pyrethrum and spices, has declined or been stagnant over the past twenty years. The outstanding performer on the export cash-cropping side has been oil palm, where high-yielding genetic material has given Papua New Guinea a comparative advantage over other producers. The industry has expanded to four mills in West New Britain and one each in Oro, New Ireland and Milne Bay provinces. Average palm oil export volumes reached 368,000 tonnes in 2007, compared with an average of 122,400 tonnes per year from 1984 to 1990. The price paid to smallholder growers increased dramatically through the 1990s and again in 2008. The crop is generating considerable wealth in the areas where it is being produced. With a more competitive exchange rate, further investment in industry expansion is occuring given a stable political climate.
The corporatization experiment has yielded mixed results. The Oil Palm Industry Corporation (OPIC), through the PNG Oil Palm Research Association (OPRA), provides a cost-effective and technically well-managed research program for oil palm. While OPIC also has the best-developed management and operating systems of the industry extension services, it has been criticized on the grounds that it is not accountable to industry, which pays a substantial proportion of costs, and that performance criteria are based on area planted, not production. This problem has been addressed in West New Britain, where OPIC extension operations have achieved financial self-sufficiency. In the Hoskins area, the resultant increase in efficiency has seen the extension worker to farmer ratio increase from 1:80 to 1:200.
In the other tree crop industries, the results are less encouraging. Generous aid funding during the 1980s enabled the CIC to rapidly expand its research facilities and extension organization, with the latter employing some 300 staff. When funding to these institutions was sharply reduced in 1997 following the end of donor support and general government budget constraints, a major cutback was required. Politicization has also hindered the effectiveness of CIC operations, which have come under increased scrutiny as the industry faces declining production and quality issues. When the CCEA was established, the rapid and unsustainable expansion of the CIC extension service was identified as a lesson, so the strategy was to mobilize provincial resources. This arrangement was threatened by uncertain managerial responsibility, the unsatisfactory performance of many provincial DPI staff, and the downsizing of DAL and provincial establishments. In order to provide an effective service, CCEA had to recruit its own provincial managers, therefore reducing the financial viability of the service.
The major policy change affecting agriculture in Papua New Guinea has occurred as a consequence of poor economic management. A range of factors has led to the devaluation of the Papua New Guinea currency since September 1994. By the 2007, the kina had declined to a value of K1 = $US0.34, compared with about K1 = $US1 in the early 1990s and K1 = $US0.72 in mid 1997. (It has since recovered somewhat, fluctuating between $US 0.30 and $US 0.36 between January and September 2008).
While the dramatic change in exchange rates has brought hardship for urban consumers and increased the cost of imported farm inputs, it generally has positive outcomes for the agriculture sector. Shifts in exchange rates have helped increase returns to Papua New Guinea primary producers relative to competing imports and make Papua New Guinea’s agricultural products more competitive in international markets. To the extent that marketing systems are ‘open’ and pass on price changes to producers, the big winners are Papua New Guinea farmers who predominantly use local resources (land and capital) to generate their product. These are predominantly small-scale commercial and semi-commercial farmers who use minimal amounts of imported items. In summary, recent economic changes have provided a window of opportunity for agriculture to build on its enhanced comparative advantage to create efficient, sustainable industries that generate income, provide employment, and ensure food security for the majority of the population.
Domestically marketed food production has been one of the success stories in Papua New Guinea agriculture over the past twenty-five years. The available evidence suggests that Papua New Guinea’s domestically marketed food production has kept pace with population growth and that it has accelerated rapidly since 1998 following the devaluation of the kina and recovery from the 1997 drought and frosts (Bourke 2001, 6–7). This has occurred despite the constraints of poor governance and an unsatisfactory policy framework. Moreover, the level of food imports into Papua New Guinea is not particularly high. Rural people consume an average of 24 kilograms of rice and seven kilograms of flour per year, while imported foodstuffs account for only one sixth of the calories consumed by rural households (Bourke 2001, 7). Nevertheless, there are significant constraints to the continued supply of quality foodstuffs to urban markets at competitive prices.
The capacity of government to respond to these challenges has been seriously eroded during the post-independence period. Under the above devolution policies, the role of DAL has been dramatically reduced over the past twenty years and especially in the last ten. From being the organization responsible for almost all support services and public capital spending for the sector, DAL has lost responsibility for most projects, general extension, research and quarantine, and for most research, development and extension functions for the coffee, copra, cocoa and oil palm industries.
The supposition was that, when new organizations were formed to take on functions formerly performed by DAL, they would take on most of the resources formerly used by DAL for those functions and that DAL would have cost reductions similar to the cost of the new organizations (Woodward 1998). This expectation was not born out in practice. In common with other areas of institutional change in Papua New Guinea, weak public administration meant that the changes were never implemented as intended. With a strong nostalgia for the past, DAL actively lobbied to retain its staff and budget, despite the transfer of functions out of the department. It had its most dramatic ‘success’ under the Skate administration, when, in the 1999 budget, the newly established NARI and NAQIA received a zero allocation of funds, while DAL retained substantial funding. In addition, DAL refused to transfer a number of research positions under its establishment to NARI.
By retaining large numbers of staff without useful functions, DAL has become an aimless organization with low staff morale. Motivated, skilled staff have sought opportunities elsewhere, leaving the ‘time servers’ to fill the numbers. The result has been a decline in analytical capacity and the politicization of policy making. Recent analysis of DAL highlighted the functions of economic research and analysis, strategic planning, market research, and policy advice and coordination as key areas that are not currently being performed (Woodward 1998). Related functions are monitoring and evaluation (M&E), which should generate key data on actual performance across the sector, and training, where DAL no longer has an implementation function, but for which there is also a policy vacuum.
Functionally, food and food security has been left as the main policy function of DAL. Increasingly, its policy papers have become statements based on narrow arguments that seek increased allocations of funds to politically popular causes, especially rice growing. They lack a sound analysis of the situation and put forward unrealistic hopes.
In the colonial era, expatriate-dominated bodies, such as the Farmers’ and Settlers’ Association in the highlands and the Planters’ Association in the lowlands, had considerable influence in policy making. The decline of the plantation sector in the post-independence era brought a corresponding reduction in the effectiveness of these bodies. At the same time, grower bodies representing smallholders began to play a more important role as ‘watchdogs’ for the rural sector and lobbied governments on agricultural issues affecting farmers generally. The former Planters’ Association, which changed its name to the Papua New Guinea Growers’ Association in 1990, has become an effective lobby group for smallholder farmers in the copra and cocoa industries. Similarly, the Smallholder Coffee Growers Association had emerged as an important player by 1998, representing about 14,000 members across fourteen coffee-growing provinces.
The Papua New Guinea Growers’ Association was a prime mover to bring all the farmers and industries bodies of Papua New Guinea together under the Rural Industries Council (RIC) to raise the profile of agriculture in Papua New Guinea and give a stronger voice for policies to support the sector. The RIC has established a representative office in Port Moresby in association with the Institute of National Affairs. Its aim is to establish a powerful advisory body for the agriculture sector with strong private sector involvement.
An important, but neglected, area of policy concerns the role of women in agriculture. The central role of women in agriculture has largely been ignored by farmer bodies and the government institutions servicing the agriculture sector. These institutions interact predominantly with men and, at the operational level, decisions about cash-cropping and the sale of these products are dominated my men. Moreover, there is a strong gender bias against women in the education system and men account for 82 per cent of all formal employment. This pattern in turn reinforces the male bias in access to agricultural services and credit. While DAL established a Women-in-Agriculture Development Programs in 2001, effective strategies to achieve its objectives have not been forthcoming.
The disadvantaged position of women is identified as a key constraint on the further development of the agricultural sector in Papua New Guinea. Not only do women play a significant role in the production of food and other agricultural products, but they are generally the more innovative and reliable operators in the downstream processing and marketing activities of those products. There are many positive cases where women have established successful savings and loans programs or taken the lead in marketing agricultural produce. In the formal sector, most employers find women to be more reliable in handling money and other assets, or in routine tasks requiring high productivity (such as food processing) and give preference to employing women in these areas.
A feature of the Papua New Guinea community response to breakdown of public sector service delivery has been the proliferation of non-government organizations (NGOs) and community-based organizations (CBOs) that seek to help groups meet their development aspirations. These groups comprise the voluntary sector that seeks to initiate local development initiatives. Women’s groups have been among the more effective in this movement. Overall, however, NGOs and CBOs demonstrate weaknesses in assessing genuine community needs and identifying, designing, implementing and monitoring projects that actually deliver benefits to the community on a sustainable basis.
In the field of agricultural research, NARI’s mandate is to clearly define priority problems deserving research, plan viable research approaches and conduct them in a disciplined manner, and then to ensure that useful results are extended to stakeholders via appropriate channels. It is seeking to tackle the latter task through an outreach and liaison (O and L) program based on different approaches and strategies to those of the past. This seeks to make more efficient use of available resources through strategies that maximize development impact and sustainability.
The challenge has been to focus scarce resources on those target groups that have the potential to respond to opportunities and initiatives. As with other institutions, there is a reluctance to provide a policy framework that supports a performance outcome. Nevertheless, NARI’s O and L program has identified four primary target groups: commercial smallholder food producers, at-risk subsistence farmers, alternative cash crop producers, and peri-urban gardeners. These groups provide balance across NARI’s areas of responsibility and offer prospects for highly visible and short-term results. NARI’s strategy is to build partnerships with a range of extension agencies or facilitators for the effective two-way exchange of information and technology between itself and target groups.