Australia has a unque opportunity to help Papua New Guinea reverse declining living standards

The coffee industry used to be the backbone of much of the economy. Twenty five years ago annual production was around 1.2 million bags a year. This year it will struggle to reach 700,000 bags. In the same period the population of PNG has grown by around 75 per cent….especially in the Highlands where most of the coffee is grown.

The most recent agricultural industry to really grow in Papua New Guinea is palm oil. In 2019 production was around 640,000 tonnes, but in 2020 it fell to 540,000 tonnes.

In a nation where upwards of 80 per cent of the population live in rural or coastal areas, any decline in agricultural production is a worry, but such dramatic declines are truly alarming.

That is why a decision by the Marape Government earlier this year to impose a new tax on fertiliser imports utterly defies comprehension! This tax will cost of the palm oil sector alone close to K60 million a year, with about K20 million to be paid by smallholder producers.

And why was the tax imposed? I am grateful to one of the strong leaders of the PNG agricultural sector, Robert Nilkare, for providing the answer!

The tax or levy on imported fertiliser was imposed as a "greenhouse gas emissions reduction measure", according to Mr Nilkare, the Chairman of the PNG Palm Oil Producers Association. As he has rightly pointed out, the greatest driver of greenhouse gas emissions in PNG is the unchecked deforestation of the nation's vast forest resources!

There is no additional tax on the destruction of PNGs tropical forests, increasingly by PRC companies, but also operators from Malaysia and other South East Asian nations.

I have spoken to a range of Papua New Guinea agricultural producers and experts. There is common agreement that the key to rebuilding income producing agriculture, such as coffee, cocoa, copra, and palm oil is fertiliser! It is especially needed today in the palm oil sector, but also in the coffee and cocoa producing areas.

What has happened in key coffee and cocoa growing areas is that people on the land have abandoned these crops and are just planting vegetables and fruit basically for the survival of their own families and communities. The people who once diligently tended crops have given up because of the absence of extension and advisory services, the cost of fertiliser and pesticides, and inadequate infrastructure, particularly rural roads.

The tax on fertiliser could not have come at a worse time for farmers, and for the Papua New Guinea economy. It is a tax farmers just cannot afford to pay, and it is a burden on even the major producers who are vital to the PNG economy.

That brings me to the key proposal I want to advance today.

A proportion of the $A2 billion which has been set aside for the AIFFP should be immediately offered to the Papua New Guinea government to jointly drive a massive program to rebuild the agricultural export sector.