A new agriculture strategy in Papua New Guinea aims to broaden the country’s primary production base and cut import costs to maintain sustainability in the sector.
Last year PNG’s agriculture sector accounted for 17% of GDP, as well as 16% of the country’s exports, according to data from the Bank of PNG, the central bank, despite the negative effects of low commodity prices, as well as crop diseases and unfavourable weather conditions.
Although its contribution to the economy has been eclipsed by extraction industries, the agriculture sector – which encompasses forestry and fisheries – remains a major economic driver, accounting for approximately one-fifth of the country’s GDP over the past six years.
Import substitution push
To further strengthen domestic agriculture, government authorities are rolling out a new five-year programme.
In September Loi Bakani, governor of the Bank of PNG, gave a presentation entitled, “Economic Outlook for PNG – 2016 & Beyond”, which outlines the government’s plans to boost the sector by reducing dependence on agricultural imports, diversifying and improving infrastructure and increasing transmission of inputs to farms.
Each year agricultural imports cost approximately PGK1.2bn ($378.6m), according to the Bank of PNG. Import costs could escalate further if the kina continues to depreciate, having lost more than one-third of its value in the past four years, as most imports are paid for in foreign currency.
However, if both importers and consumers switch to buying domestic goods, local agricultural production would benefit from increased support and demand for foreign exchange would fall.
“Import substitution will improve the livelihoods of the mass population and help relieve PNG of its current foreign exchange pressure,” Bakani said.
Bakani further urged exporters to take advantage of the kina’s depreciation to raise production and overseas sales to help bring in much needed foreign currency, particularly with PNG’s current low agricultural export base of PGK2.2bn ($694m) – which uses only 3% of available land – demonstrating significant growth potential.
Moreover, PNG’s recently released PGK12.9bn ($4bn) budget – despite having a projected deficit of PGK1.8bn ($568m) – will continue to fund agriculture as one of the country’s priority areas, according to press reports from early November.
Targeted investment
At present, high production costs, inadequate infrastructure, customary land ownership constraints and lack of private investment have limited local production despite PNG’s plentiful supply of produce.
Increased investment in supportive infrastructure would help the country to take full advantage of its agricultural assets, according to a recent report by the Consultative and Implementation and Monitoring Council, a Port Moresby-based think tank.
According to the report, agricultural supply chains need to be strengthened to further develop the sector, particularly through improving road conditions and investing in cool storage facilities for fresh produce and processing plants to provide value-added gains.
Sector stakeholders are also calling for investment in research and development (R&D), along with closer cooperation with the farming community.
Some 80% of PNG’s population rely on subsistence farming for their livelihoods, with most continuing to use traditional production methods, according to PNG’s National Agricultural Research Institute (NARI).
One measure proposed by NARI to improve sustainability involves channelling 10% of the sector’s total contribution to GDP into R&D to promote advanced technology and techniques, a move that could support increased yields and higher rural incomes.
Climate for change
New initiatives also to aim to better protect the sector against extreme weather patterns, such as El Niño, which affected agricultural production earlier this year.
In July a UN report found that frost and drought conditions associated with El Niño had left 2.2m people in PNG’s Highlands region with poor or depleted crops. Of these, more than 150,000 were assessed as having faced severe food shortages.
To address such issues, agencies like NARI are conducting research into developing plant strains that are more resistant to drought and high salt content in the soil, with the aim of reducing crop losses due to climactic events.
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