PNG aims to become major rice exporter

Minister sets out plan to create sustainable agriculture economy

Editor's note: In an interview, Tommy Tomscoll, agriculture minister of Papua New Guinea, talked about the challenges and opportunities the agricultural industry faces.

Papua New Guinea's economy has received international attention because of its mining and oil and gas opportunities, but the backbone of the economy has always been agriculture, which accounts for 24 to 32.3 percent of the GDP. Where does the success of the agriculture sector lie?

Between the 1960s and the 1980s, the economy of PNG was driven by agriculture. That's what created growth, and what brought this nation together. Agriculture at the time was structured around plantations, so as we moved into the 1980s, the cost of production related to plantations was quite high.

This caused a number of businesses and companies involved in the sector to close down. At the same time, oil and gas was discovered, as well as new mines. That hit the agriculture sector hard, because the development potential was moved to the oil and gas sector, especially in relation to our skilled and educated workforce.

The unskilled labor stayed in agriculture, but since the focus had switched to oil, gas and mining, the trickle-down effect has not been felt throughout the whole demography - only a select few. Some 87 percent of people continue to live a rural-based lifestyle, and as such, do not feel the impact of the high-growth sectors.

What would be your solution to revitalizing the industry?

I would like to find a balance between sector liberalization and protectionism. As well as looking after our growers, we must recognize the investor who has the capital and knowledge base. Every commodity is different; I look at each one on a case-by-case basis, so there is no blanket answer for the agriculture sector in general.

Coffee was our principal earner until 2004. From then on, we saw an increase in revenues from the oil palm sector, and coffee slipped into second place.

There are factors outside of coffee production that contributed to its decline, including transportation and distribution challenges. These can be solved through a collective effort from the producers and the government.

The O'Neill government is very focused and concentrating on improving infrastructure that will help this industry, including the construction of highways and communications. Once we have sorted all those things out, it will drive up production because the farmers will have direct and easy access to both the markets and information and data.

The prime minister's vision helps me direct the policies of the sector after he has laid down the foundations. In terms of coffee, we had some of the biggest plantations in the world, until the demise of the regime, and of course the market also became volatile.

When it collapsed, the sector was replaced by smallholdings - family units, that have built up the coffee industry in this country and what we call smallholder growth.

The challenges these smallholders face are the same that the old companies used to face, the only difference being that since these are small, family units, they are able to produce at a cost-efficient level, and break even.

We want to revitalize the coffee industry by first of all rationalizing the industry. Going into the future, our industries will be smallholder based, but we must increase and expand the number of smallholders, to bring unskilled labor back into the sector to become productive members of society.

For 30 years, there was a ban on the licensing of new entries [to the market], which meant no new export licenses were issued to foreign investors.

The idea was to give preference to Papua New Guineans so they that could become the primary exporters in the sector. However, being an exporter means meeting certain criteria, so it hasn't been that easy for Papua New Guineans.

In the meantime, there are still a handful of foreign companies that were here before the ban was put in place, so, we actually haven't seen that many Papuans become exporters even though the regime was set up for them.

I have removed the ban on issuing of foreign licenses, so foreign companies can come, and placed a condition, even on the companies that are already here, and that is this: that you can only be issued with an export license if you bring 10,000 hectares of coffee trees into the industry. That also applies to the companies already in operation.

With regards to palm oil, I want it to become a competitive industry. I want the small producers to become sellers of oil and not just the fruit for the raw materials.

This is why I am setting up four different plants in order to process the fruit into oil, each producing 20 metric tons per hour. If they are not bought domestically, then they will be exported, insuring not only the quality of the product, but also, that farmers sell a value-added products instead of the raw materials. This will allow them to become a higher-value producer contributing to the economy.

With the PNG relationship increasing with China, and the prime minister relying on this relationship for growth, where is the biggest opportunity for Chinese involvement in agriculture?

The easiest way for the Chinese to get involved is through direct foreign investment. The high growth area in agriculture at the moment is palm oil, followed by coffee and cocoa. What we are looking at is to find new growths and new crops and that comes to vegetables because at the moment we are importers.

We want to replace our imports with local produce and be able to export. So we are encouraging Chinese and foreign investors to come into our vegetable and spice industries.

Papua New Guinea sits on the fringes of Asia. We are a country that is well positioned as the markets have shifted from Europe and the Americas to Asia. So if you are looking to relocate your business and recapitalize, Papua New Guinea is the place. China has a market but they need land - fertile land with good water and good soil.

With industrialization and climate change, China is losing fertile farmland. China has capital, technology and scientific-based knowledge, but Papua New Guinea has water and land, and the best way to do agriculture in Papua New Guinea is large-scale, mechanized.

This is the way the world is approaching agriculture since small scale has no longer become feasible. And we have done that; the government has now approved rice farming, which will be the first large-scale mechanized farming in PNG.

In 10 years, Papua New Guinea will be a major rice exporter in a prime location to feed the Asian markets.

Throughout your career, you have been committed to ensuring a better life for Papuans through working the land, as part of a very goal-driven cabinet. As the minister of the sector that employs the largest number of Papua New Guineans, what would you like to leave as your legacy?

First and foremost, I want to ensure that agriculture becomes sustainable and is a leader among all the other sectors.

As long as the economy has a population of 60 percent or higher that depends on agriculture, that economy is an agriculture economy, by definition.

Second, as long as 20 percent or higher of the GDP is a contribution from the agricultural sector, that economy is an agricultural economy. So if you look at PNG, it is an agricultural economy. About 87 percent of our people live off agriculture, and as a sector, we contribute between 24 to 27 percent to the GDP.

I would like to see growth in the GDP. I want to see more of the population go back to farming and become engaged and productive workers, because agriculture is a business and income generator and a way of life for these people.

I want to see the poverty scale reduced, and if I can see a new trend that poverty starts reducing I would be very happy. I want my contribution to be measured by looking at the current scale of poverty and seeing how it reduces.

InFocus provided this story.

(China Daily 06/29/2015 page18)