Tuesday, January 23 2018
A recent market study of Papua New Guinea’s coffee industry has revealed several major issues that prevent the sector from generating higher volumes and prices of coffee.
Among the issues highlighted are chronic infrastructure problems, law and order breakdown, lack of knowledge and training among coffee farmers, the outbreak of the Coffee Berry Borer and the effects of climate change.
The study was funded by the Pacific Horticultural and Agricultural Market Access (PHAMA) Program, an Australian Government initiative co-funded by the New Zealand Government. Windward Commodities was contracted to carry out the study in November 2017 which involved several consultations with coffee stakeholders in Goroka, Mount Hagen and Port Moresby.
PNG’s coffee sector involves approximately 400,000 households in production, with annual export returns of approximately K350 million (AUD148). 60-70% of this goes back to coffee smallholder households. Other issues affecting the progress of the coffee sector in PNG are the changing population demographics including youth attitudes to farming, competition from more profitable crops such as vegetable farming, and restrictive policies and regulations.
The purpose of the study was to:
In the course of consultations, several processors and exporters expressed concern at the drop in production levels of PNG coffee.
Grant Jephcott of New Guinea Highlands Coffee in Goroka said, “Part of the reasons it’s shrinking is because the law and order doesn’t give anyone strength to hold on to their land. 3% of agricultural leasehold land is all unmanageable and uncontrollable. Half of your expenditure is just defending your territory as opposed to getting on and producing a product.”
He said the roads issue had wreaked havoc on business and getting the coffee into the markets remained a challenge. “If nothing else happens but we are able to improve the quality of the roads, there’ll be a natural increase in coffee productivity and sales within PNG,” Jephcott said.
Terry Shelley of Nowek Ltd said a coffee tree replanting program was necessary for the sustainability of the industry.
“The trees are there but they’re not producing because they’re old. It needs a massive replanting and to do that you need the seedlings. We need a nursery that can produce at least 10 or 20 million seedlings a year to get back. If we plant at least 20 million seedlings a year for the next 10 years, we can pay the youth and turn the urban drift around, and also rural youth unemployment,” he said.
Mark Munnul of Kosem Ltd said coffee was a cash intensive commodity, however, acquiring finances was a challenge for his company.
“Even if you have a good market, you have to have cash to purchase the coffee so that’s been our constraint all along. We can only buy so much, export, get the money and then buy again. There are two (coffee harvesting) seasons in a year so they (farmers) put all their commitment into those seasons because they need cash. So you can’t ask tell them you’ll pay later because that’s all the money the farmer gets. The market is there, they want more but we can only purchase so much and supply,” said Munnul.
Consultations were also held with the Coffee Industry Corporation (CIC) which is mandated to regulate PNG’s coffee exports.
CIC general manager Steven Tumae said they had reviewed some standards and made changes following their observations of certain practices in the industry that were unfavourable to smallholders. He said they were also trying to develop a national brand for PNG coffee.
“We want a name that reflects the diversity of our culture, and the family involvement in coffee farming: wife, husband and children. We want to capture the community coerciveness in this country that has been very solid so far in the absence of a social security system by the government.”
To promote replanting of coffee trees, CIC has made it a licensing requirement for exporters to grow up to 10,000 trees or provide evidence of their support to farmers who are rehabilitating or infilling new growth areas numbering up to 10,000 trees.
“We have also done a review of our regulations policy guidelines and intend to license coffee farmers so it’s more controlled and when we introduce laws or policy guidelines, it must be adhered to so that the issue of inconsistent quality and sustainability are addressed by having people who can manage coffee plots as a business rather than a subsistence crop. These are some of the interventions CIC is already doing and needs partners like PHAMA to assist and take it to the next level,” he said.
PHAMA’s support in funding the market study is aligned with its priorities to assist the PNG coffee industry in better defining market opportunities, promoting market development (including
value-adding initiatives), and assisting the industry to meet market needs such as quality improvements and certification.
The findings from this study will also complement the outcome of PHAMA’s support for improving coffee roasting and preparation capacity which is in alignment with the CIC “Tree to Cup” Policy aimed at increasing production, improving processes in the coffee value chain and includes growing the domestic coffee market.
For further information, contact Sidney Suma at email@example.com or on +675 7640 3290