Papua New Guinea: From adversity to diversity

Scott Bennett remembers working in the Papua New Guinea (PNG) coffee industry in its heyday, when his Australian coffee importing business Bennetts was a major buyer of the neighbouring country’s number-one cash crop. His grandfather started the Melbourne-based business 100 years ago, and Bennett joined in 1980, spending several years of that decade working in PNG. Because of the International Coffee Organization’s (ICO) original quota and duties system, Australia bought most of its coffee from the 463,000-square-kilometre island because it was an Australian territory at the time. “The ICO import restrictions incentivised the Australian roasting industry to use PNG coffee because otherwise you paid duty on everything that you brought in, and there was also an incentive from a logistics standpoint,” Bennett tells Global Coffee Report. “So historically about 50 per cent of the coffee coming into Australia was from PNG, and so that meant everyone used it.” But after PNG gained independence in 1975 and the ICO dropped its quota system in the 1980s, the global market became more accessible to Australian coffee importers and the PNG coffee industry started to struggle. In the past decade in particular, PNG coffee production has dropped 22 per cent from about one million 60-kilogram bags in 2009 to 800,000 bags today, according to the ICO. With exception to two strong years during the decade, annual production has averaged fewer than 800,000 bags. Considering coffee is PNG’s second leading agricultural commodity – it dropped behind palm oil in 2009 – exports have followed a very similar trend, falling nearly 23 per cent during the same period. Today, PNG’s coffee industry contributes only about 0.5 per cent to global production. Although those two significant events decades ago may have contributed to the beginning of coffee’s decline in PNG, Bennett and others in the local industry point to a number of other challenges that have had greater impacts. Near the top of the list is an ageing tree population. “The age of the trees is probably the most critical issue,” says Bennett. “A lot of the trees in the ground are the same trees from when I was there in the ‘80s. No-one’s really replanting and no-one’s instructing them how to replant.” World Bank research confirms that many of PNG’s coffee trees are now more than 40 years old, producing yields far below those of their prime about 30 years ago. In an ongoing support program funded largely by World Bank and the United Nations International Fund for Agricultural Development, more than seven million coffee trees have been replanted or rehabilitated since the program commenced in April 2010. Many coffee  farmers involved in the first round of the program have already seen improved yields, according to World Bank. With more than 45 projects implemented across 10 of the country’s coffee growing regions, more than 36,000 coffee farmers have benefitted, says Potaisa Hombunaka, Program Manager for the Productive Partners in Agriculture Project (PPAP). He notes, however, that it’s only a small percentage of the more than 400,000 coffee-farming households in PNG. Also coming out of the program were winning coffees at PNG’s third annual National Coffee Cupping Competition last year, hosted by the local coffee board, Coffee Industry Corporation (CIC), in partnership with Australian government-funded Pacific Horticultural and Agricultural Market Access Program (PHAMA). Seven entries scored above 85 points, and many of the top entries participated in the PPAP. Although the PPAP and other initiatives happening on the island are working to improve quality, historically PNG has had a reputation for high-quality washed Arabica. Similar to neighbouring coffee producer Indonesia, PNG is a diverse country with all the characteristics of high-quality coffee production. “The soils are incredible, and the rainfall, weather, and climate are perfect. They have a great range of altitudes and unbelievable terroir and capacity,” Bennett details. “They have all the ingredients there to produce fantastic coffee.” But for a variety of reasons, PNG is unable to produce high volumes of high-quality coffee consistently. “That’s always been a problem in PNG, largely because more than 85 per cent of its coffee is produced by smallholders,” says Charles Dambui, CEO of CIC. Not unlike other coffee-producing countries with high numbers of independent farmers working small plots, buyers struggle to get the same quality each batch. Aside from the few past and current projects, there is minimal large-scale coordination or organisation across the local industry, further contributing to inconsistent volumes and qualities. According to World Bank, extension services have also seen significant declines during the past decade, leading to a loss of valuable agricultural knowledge throughout the country. “The loss of coffee management experience has been detrimental to the local industry,” Bennett says. “A lot of people who have been there 30 to 40 years are leaving, and not a lot of that knowledge is being passed on.” PPAP’s Hombunaka also points to the greater industry trend of younger generations leaving coffee farming for more appealing or profitable work in other industries or in the cities. Any knowledge that is there generally isn’t shared beyond the smallholders in specific regions across PNG’s 600 islands, due to long-standing  complications among the more than 10,000 ethnic clans speaking 800 different languages. “The tribal complexity that overlays the entire country is unbelievable,” Bennett says. “So getting any knowledge base out to different communities on a mass basis is really difficult. An indigenous farmer might have the best knowledge, but [other tribes] may not listen because of tribal conflict.” The tribal complexity has also created issues with land ownership. Coffee plots have been left uncultivated as land has changed hands or people fight over ownership. CIC’s Dambui says 85 per cent of PNG land is owned by different tribes through community arrangements. These unmanaged or abandoned plots, thus, contribute to PNG’s inconsistent volumes and qualities. Smallholders didn’t always make up such a large share of the country’s total production. In some of the land ownership conflict and as people have left the industry, “many of our big plantations have fallen back into the hands of smallholders”, Dambui tells GCR, noting that smallholders’ level of input and commitment to coffee production pales in comparison to that of the previous plantation owners. These large well-managed estates, which were capable of producing high volumes of high-quality coffee consistently, are now overgrown or have been converted to other crops. Aside from a lack of knowledge and resources, smallholder farmers also lack incentive to stick with coffee considering their dependence on subsistence farming and coffee’s low return on investment currently. “The vast majority of farming time is spent making food to eat, so coffee takes a second position to that,” Bennett explains. “And today with the global coffee price crisis, there is even less incentive to plant coffee. If coffee trees are not paying their way, then in goes sweet potato, which has higher yields and is a staple food.” This has been exacerbated as the country’s population has expanded rapidly in recent decades. According to World Bank, the number of people jumped from 3.3 million in 1980 to 8.3 million in 2017. Dambui also emphasises the role low global coffee prices are playing on the local industry, with its vast number of “price responsive” farmers who fluctuate in and out of the coffee industry often and without hesitation. He calls on the government to step in with better financial support. “I think the government should focus on establishing a financing scheme for farmers to have easier access with less stringent guidelines,” he says. “Many of our farmers want to go into large-scale production and want to have more technologically advanced processing facilities, but they can’t afford those things with limited funding.” PHAMA-commissioned research conducted during the past year also has recommendations for how the government can help coffee’s future in PNG. The resulting report released this year, “Papua New Guinea Coffee Market Study”, points to current extensive government regulation and requirements that actually complicate an already difficult operating environment. “The nation’s coffee industry will be more productive with less government intervention and more support with: 1) expanded agricultural extension services and best practices training, 2) scientific research on agronomic and economic issues leading to new national programs and policies, and 3) support for private industry that facilitates doing business domestically and abroad,” the report reads. The research identified three areas to focus efforts in hopes of turning the industry around: supporting women in coffee; facilitating business growth, domestic consumption, and international trade; and promoting quality from tree to cup. Within those areas, additional recommendations include boosting awareness and consumption of PNG coffee domestically and abroad, and hosting coffee competitions and other events. In this latter vein, CIC, PHAMA, and PPAP put on the National Coffee Symposium. The two-day event in May covered topics within the three pillars, but with a significant focus on differentiation. The three organisations see differentiation, including specialty and certified coffees, as key to reversing the local industry’s decline. It will help them earn not only greater recognition, but also higher prices – two trends that will, in theory, motivate farmers back into coffee and drive improved production and quality. According to CIC, about 85 per cent of PNG coffee is organic (though not all certified) and about 21 per cent of coffee exports are specialty, up from only five per cent in 2002. “We are very pleased that many of our farmers, processors, and exporters are now looking at tapping into those differentiated markets,” Dambui says. “That’s where the market is and that’s where the future is.”