Interview: Brown Bai
What criteria need to be taken into account to create a more profitable and sustainable palm oil industry in Papua New Guinea?
BROWN BAI: Players in the palm oil sector have a lot of international exposure. They are all certified by the Roundtable on Sustainable Palm Oil, and sustainability principals are independently audited every year. In addition, the environmental laws are very stringent in PNG and we have to adhere to them very closely. This gives us a competitive advantage and allows us to fetch premium prices on the global market as international laws apply to every producer of palm oil in PNG, including small owners. There are two types of smallholder oil palm growers – Land Settlement Schemes and Village Oil Palm (VOP) growers. However, the understanding of international law and sustainability practices by the VOP growers is very low, meaning that companies need to do more to educate them. This represents one of the biggest challenges going forward in PNG. Our market reputation is very important, so it is crucial to align laws with the practices of smallholder growers in a way that creates the best product for export.
The government also has to make sure that all corporations comply with the domestic laws of the country. We have to assess how best to capitalise on our agricultural products by being ahead of the curve instead of chasing market demand. There are a lot of considerations, such as how to reduce the cost of production and make our products more competitive, but this is easier said than done. We must also continue to produce goods for domestic consumption, keeping production in line with international standards and taking into account global issues like food security and climate change. Lastly, we need to take a fresh look at agricultural land cultivation in PNG. Comparatively, we have not allocated enough new land for agriculture to foster growth. It also means that farmers are cultivating the same blocks of land with the same crops continuously, which is not a sustainable use of soil. In general, the agriculture sector needs to step back and look at the big picture and how to develop the sector in the 21st century, pairing targeted strategic sustainable practices with policy to make our exports much more profitable.
How can more agro-processing and value addition be integrated into the sector?
BAI: Generally speaking, the private sector is the engine of growth for agriculture in PNG. In a perfect model, the government sets the directives and the private sector invests, implements and turns the plans into reality. What we need now in PNG is more consultation between the government and the private sector on major policy initiatives. Ideally, we will go beyond consultation to a model of cooperation.
With palm oil we use the nucleus farming model, where the central processing and buying is provided by the operating company, and support is transferred to smallholder growers through the company. This concept works so effectively that palm oil has become the leading agriculture export for the country. The nucleus farming model is a successful concept that is also being used to promote the growth of other commodities like coffee, cocoa, rice, poultry and cattle.
This concept, which links smallholder farmers and milling companies’ operations very effectively, is proving to be one of the key factors in opening up many undeveloped rural areas where thousands of Papua New Guineans live and where public services provided by the government are limited.
The government recognises the value and significant role of this developmental concept by encouraging it through the arrangement of public-private partnerships. The engagement of farmers in this farming model provides increased income opportunities for them. Moreover, it enables the growth of other support services which ultimately provide an investment environment in which the private sector can flourish.