The National, Thursday 03rd May 2012
THERE is an often stated fallacy that PNG has vast areas of fertile agricultural land, waiting to be developed. It doesn’t. Most of PNG is steep mountains, swamps or subject to extended flooding, savannah and shallow tropical soils, where fertility is sustained by continuous decomposition of leaf litter from forests. Remove the forests and fertility rapidly depletes.
The country does, however, have fertile pockets, most of which support relatively high and growing populations and intensive horticulture (as in parts of the Highlands, Gazelle and Maprik, for example), as well as cash crops, much grown well below their productive capacity.
It also has larger areas of poor to moderate land, suitable for certain agricultural or other land-use activities, if managed appropriately, using suitable selected (eg drought/damp resistant) plant or animal species/cultivars, intercropping or other inputs, or perhaps other interventions, from drainage to irrigation. In PNG there’s also sometimes a misconceived notion of an ideal or panacea crop, with some farmers ready to uproot whole plantings of productive tree crops for some untested or temporary bonanza crop. In reality, as with most traditional food gardens, with diverse inter-planted crops, there may be a variety of crops, or livestock, which perform well, often in some combination.
Major commercial producers usually need to specialise, and especially with oil palm, which requires processing promptly after harvest, seek extensive accessible areas to enable maximum throughput through their mills and associated economies of scale.
Minimum commercial areas for crops range from several thousand hectares with oil palm, to a hectare or less with some high value horticultural crops or spices (the vast areas committed for SABLs are clearly not genuine agricultural projects). Smallholders produce the majority of most PNG tree crops (except tea, sugar and oil palm and rubber – also with substantial smallholder production).
Most smallholders prefer to hedge their bets, reducing risks, safeguarding food security and producing some preferred household or culturally valued products, while forfeiting opportunities of periodic bumper returns.
A close relationship with a major (or nucleus) enterprise, to support with research, planting material, innovation, marketing, extension is a well-proven model in oil palm, but also rubber, spices and other crops and livestock, partnering private investors or cooperatives. Such partnerships form the basis of support projects, such as PPAP, for coffee and cocoa smallholders. Certain locations may provide ideal growing conditions for a crop, but that doesn’t necessarily make it the best choice. Some other crop may have better market prospects and fetch better or more reliable returns to land or available labour.
Generally the traditional tree crops already grown in PNG provide a reliable bet for continued focus. Their markets are large and generally face rising demand, for example for chocolate or rubber tyres in major emerging markets (such as China). Agricultural commodity prices, including food prices leapt around 2006-08, including from panic trade restrictions by some countries on some staple crops. Prices largely slid in 2008-09, but have subsequently trended up again. In the longer term, prices are likely to remain firm, if volatile, in the face of growing world population, limited (and even declining) areas of agricultural land – some areas even becoming unproductive (with desertification, salinisation and pollution), restraints on further productivity gains and the spread of various serious pests and diseases (including exotics), the uncertain trend towards biofuels, especially when mineral fuel prices are high, and increased household expenditure on luxury products (chocolate, etc) with growing wealth in emerging markets.
Market demand and hence prices change, and some crops will invariably gain favour, or even be discovered, or substituted. Some vegetable oil prices are now closely linked to (mineral) oil prices; minor crops invariably experience volatility, thanks to small markets and usually localised production, so a local drought, cyclone or conflict, can force up prices overnight (as with Madagascar’s cyclones with vanilla), dropping back almost as quickly as production recovers; failing to compete on quality with traditional producers (or gaining a bad name from trade abuses – like false quality specification) will also severely undermine prices and market prospects for all producers. With minor crops, even when making the necessary commitment to quality and standards, it’s preferable to spread the risk, by producing a range of crops, probably including a reliable traditional major crop.
When cardamom prices rocketed in the early 1980s, and vanilla two decades later,some ill-advised producers replaced their main cash crops (cocoa and coffee) to enjoy the spice bonanza, only to find prices crash, especially for poorly processed product (eg cardamom smoked over fires), just as the main crop prices rose.
Paul Barker is executive director of the Institute of National Affairs
