coffee

Sepik  Agriculture Development Project

 

Coffee

Coffee is the second leading agricultural commodity in Papua New Guinea (PNG), after oil palm, and contributes substantially to foreign exchange earnings, employment and national GDP. Between 2012 and 2017, coffee accounted for 27% of total agricultural export and 6% of GDP, translating to about K450 million annually.

Coffee income feeds into transport, construction, manufacturing, retail and wholesale, insurance, banking and other allied industries. It is grown in 18 of PNG’s 22 provinces by more than 450,000 households representing around 3.3 million people. Coffee is the main cash crop of the highlands people of PNG.

Prospects for growth in the global market for coffee are looking bright. According to the International Coffee Organization (ICO), global production of coffee has shown an upward trend over the last 20 years.

The major traditional consumer markets for coffee are the EU, US and Japan which account for 53% of the global coffee market. These markets have shown a modest increase in consumption of coffee of 1.5% per annum year on year over the last five years. However, these figures only reflect volume. The consumption habits of consumers in these markets are changing leading to a higher demand for higher-quality, high-value specialty coffees.

Historically PNG has had an excellent reputation for high quality fine flavour arabica coffee but the long-term trend has been one of decline over the last 20 years. In the period from 2012-2016 production declined to an average of 47,532 tonnes per annum, and PNG’s share of the global market has halved to just 0.53%.

Volume is not the only concern for coffee producers; quality is a vital factor that determines market price and price premiums or discounts for low quality. The industry faces problems with falling yields, inconsistent quality and pest and disease problems such as coffee berry borer (CBB), coffee leaf rust, coffee green scale and pink disease. This is a pity because PNG coffee is a great product with much potential for growth. PNG coffee is highly rated among specialty coffee drinkers. Consumer reviews of PNG are highly positive with comments such as “Excellent taste with nutty and spicy undertones”, “This is great coffee and very good value”, and “This coffee is of superb quality with a full aromatic flavour”.

There are two varieties cultivated in PNG:

• Arabica coffee is cultivated in the Highlands region at areas between 700 – 2050 meters above sea level.
• Robusta coffee is cultivated in coastal areas at sea level to 550 meters above sea level.

 

The Coffee Industry Corporation is the regulator of the coffee industry in the country, since 1963, although marketing of the crop is largely left to the hands of private companies licensed by CIC. Its Industry Operations Division looks after industry regulations, export control, promotions and marketing, while the Research & Grower Services Division (R&GSD) takes charge of research and grower services.

The presence of CBB in the Jiwaka and the Eastern Highlands provinces is much more serious because they are major coffee growing provinces in PNG and are well connected by road and air, and are in close proximity to other major coffee growing provinces like Simbu, Western Highlands, Enga and Southern Highlands. Together, these six provinces account for about 95% of the total coffee production in PNG. In 2017 the National Executive Council approved K20 million to combat CBB. In 2018, the CIC received K5 million to continue with CBB containment and eradication program.

The CIC Industry Strategic Plan for 2013-2018 (CIC-ISP) underlines that investments in coffee will benefit the majority of the population in PNG. The goal of the CIC-ISP is to increase financial returns, productivity, product safety, quality and market access for smallholder coffee farmers and other actors along the value-chain. CIC has set ambitious targets to increase productivity of village farmers and the plantation sector. In the medium term, CIC plans to stabilize production above 1.2 million bags in 2018 and see further 5% increase per year, every year going forward.

 

Source: Extract from Ministerial Statement