A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
CONTENTS
List of Tables ........................................................................................................................................ iii
List of Appendices ............................................................................................................................... iii
Acronyms and Abbreviations ............................................................................................................. iv
Acknowledgements ............................................................................................................................. vi
Executive Summary .............................................................................................................................vii
1.
Introduction ................................................................................................................................1
1.1
1.2
1.3
1.4
2.
Study Methodology ...................................................................................................................2
2.1
2.2
2.3
3.
Regional and global markets and trade for cocoa and coconut products ..........................3
Export opportunities for Papua New Guinea cocoa and coconut products ........................5
Export trends and evaluation of the importance of products
as sources of foreign exchange ........................................................................................6
Cocoa and Coconut Industries’ External Environment
in Papua New Guinea ................................................................................................................8
4.1
4.2
4.3
5.
Data collection approach ...................................................................................................2
Data analysis .....................................................................................................................2
Stakeholder feedback ........................................................................................................2
Regional and International Trade in Cocoa and Coconut
Products .....................................................................................................................................3
3.1
3.2
3.3
4.
Background .......................................................................................................................1
Project rationale ................................................................................................................1
Study objectives ................................................................................................................1
Report outline ....................................................................................................................2
National development policies and objectives of the cocoa and
coconut industries .............................................................................................................8
The contributions of cocoa and coconut industries to the
national economy ..............................................................................................................11
Cocoa and coconut sector support institutions and
institutional arrangements .................................................................................................12
Cocoa and Coconut Industries’ Internal Environment in
Papua New Guinea ....................................................................................................................17
5.1
5.2
5.3
5.4
Cocoa and coconut agro-ecological characteristics, production
systems and development domains ..................................................................................17
Scale of production and productivity improvement ............................................................20
Post-harvest and quality issues .........................................................................................24
Marketing systems, market accessibility and value chains ................................................26
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
6.
Socio-Cultural Contexts and Economic Status of Rural
Smallholder Communities Dependent on Cocoa and Coconut .............................................27
6.1
6.2
6.3
6.4
6.5
6.6
6.7
7.
Review of Past and Ongoing R&D Activities at
Cocoa Coconut Institute ...........................................................................................................37
7.1
7.2
7.3
7.4
7.5
7.6
7.7
8.
Socio-economic characteristics of cocoa and coconut producers .....................................27
Identification of target groups in cocoa and coconut sub-sectors ......................................29
Cocoa and coconut production strategies pursued by cocoa
and coconut farmers ..........................................................................................................29
Livelihood options and strategies for cocoa and coconut farmers .....................................30
Social and economic status of cocoa and coconut farming communities ..........................30
Different needs and expectations of women and men producers ......................................33
Effects of gender, HIV & AIDS and environmental issues on the cocoa
and coconut sub-sectors ...................................................................................................33
Research that has been conducted and translated
into information and/or technologies for farmers ...............................................................37
Current R&D portfolio – its sufficiency in addressing industry
specific issues ...................................................................................................................45
Priority setting processes and their practicality at CCI.......................................................46
Adoption of technologies released from CCI .....................................................................47
Extension approaches and issues at CCI ..........................................................................48
Current international and regional collaboration by CCI ....................................................51
Comparative analysis of the current R&D approach versus the new
results based approach .....................................................................................................52
Review Findings and Recommendations ................................................................................53
8.1
8.2
8.3
8.4
8.5
Regional and international collaboration and trade in cocoa and coconut .........................53
Cocoa and coconut industries’ external environment in Papua New Guinea ....................55
Cocoa and coconut industries’ internal environment in Papua New Guinea .....................57
Socio-cultural contexts and economic status of rural smallholder
communities dependent on cocoa and coconut ................................................................60
Review of past and ongoing R&D activities at Cocoa Coconut Institute ............................64
References............................................................................................................................................144
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
List of Tables
Table 1:
Table 2:
Table 3:
Value (K’million) and share (%) of major agricultural exports, 2001 – 2008 ................ 11
Share of cocoa and coconut products of total exports and contribution to GDP .......... 11
Data showing the level of education for cocoa and coconut farmers
in East New Britain ...................................................................................................... 32
List of Appendices
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
Appendix F:
Appendix G:
Appendix H:
Appendix I:
Appendix J:
Appendix K:
Appendix L:
Appendix M:
Appendix N:
Appendix O:
Appendix P:
Appendix Q:
Appendix R:
Persons and organisations consulted..................................................................... 67
Regional and global markets and trade in cocoa products ..................................... 69
Regional and global markets and trade in coconut products .................................. 83
Export destinations of PNG cocoa and coconut products ...................................... 106
Trends in cocoa and coconut products export prices and values ........................... 107
Cocoa and coconut industries’ stakeholder relationships in PNG .......................... 110
Origins and history of the Papua New Guinea Cocoa Coconut Institute ................ 111
Summary of major cocoa and coconut development domains in PNG................... 112
Map showing main cocoa and coconut producing areas in PNG ........................... 113
Production trends of cocoa and coconut products in PNG ..................................... 114
Coconut products for further development in PNG ................................................. 117
Cocoa and coconut marketing and value chains in PNG ....................................... 119
Summaries of cocoa and coconut R&D programs and their outcomes at
Cocoa Coconut Institute ......................................................................................... 121
Sufficiency of current R&D portfolio in addressing specific industry issues ............ 133
Framework for monitoring the adoption of cocoa and coconut technologies
in PNG.................................................................................................................... 135
Cocoa and coconut technologies and/or information transferred to
farmers through CCI extension services ................................................................ 136
Relationship between the new thematic areas and current R&D disciplines .......... 137
Constraints, gaps and opportunities for the new R&D thematic areas ................... 139
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Acronyms and Abbreviations
ACIAR
AIDS
ANC
APCC
AR4D
ARDSF
AusAID
BCS
CBP
CCEA
CCI
CCRI
CEO
CFTC
CIF
CMB
COPM
CPL
CCRI
DA&L
DC&I
DIS
DoF
DoT
DNP&M
DC&I
DME
FAO
FAQ
FMS
FOB
GDP
GIS
GPP
GST
HIV
ICCO
IMF
IPA
JDP&BPCs
K
kg
KIK
LIFFE
LLGs
MASP
mm
MOA
MOMASE
Australian Centre for International Agricultural Research
Acquired Immunodeficiency Syndrome
Antenatal Clinic
Asia Pacific Coconut Community
Agriculture Research for Development
Agricultural Research and Development Support Facility
Australian Agency for International Development
Bogia Coconut Syndrome
Cocoa Pod Borer
Cocoa and Coconut Extension Agency
Papua New Guinea Cocoa Coconut Institute Limited
Cocoa and Coconut Research Institute Limited
Chief Executive Officer
Commodity Futures Trading Commission
Cost, Insurance and Freight
Copra Marketing Board of Papua New Guinea
Coconut Oil Production Madang Limited
Coconut Products Limited
Cocoa & Coconut Research Institute
Department of Agriculture and Livestock
Department of Commerce & Industry
Delivered-in-store price
Department of Finance
Department of Treasury
Department of National Planning & Monitoring
Department of Commerce and Industry
Direct Micro Expelling
Food and Agriculture Organisation
Fair Average Quality
Fair Merchantable Standard
Free-on-board price
Gross Domestic Product
Geographical Information System
Gross Primary Productivity
Goods and Services Tax
Human Immunodeficiency Virus
International Cocoa Organisation
International Monetary Fund
Investment Promotion Authority
Joint District Planning & Budget Priorities Committees
Kina
kilogram
Kokonas Indastri Koporesen of Papua New Guinea
The London International Financial Futures and Options Exchange
Local Level Governments
Mapping Agricultural Systems Project
millimetres
Memorandum of Agreement
Morobe, Madang, East Sepik and Sandaun provinces
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
MTDS
NADP
NARI
NARS
NCD
NDB
NEP
NPP
PCDDs
PM&E
PNG
PNGSDPL
PNG DSP
POM
R&D
SACS
SDR
SRS
TB
TR/J CRB
UK
USA
VCO
VCT
VSD
Medium Term Development Strategy 2005 – 2010
National Agriculture Development Plan 2007 – 2016
National Agricultural Research Institute
National Agricultural Research System
National Capital District
National Development Bank
Net Ecosystem Productivity
Net Primary Productivity
Polychlorinated dibenzodioxins
Planning Monitoring and Evaluation
Papua New Guinea
Papua New Guinea Sustainable Development Program Limited
Papua New Guinea Development Strategic Plan 2010 – 2030
Port Moresby
Research and Development
Smallholder Agriculture Credit Scheme
Special Drawing Rights
Stewart Research Station
Tuberculosis
Thomson Reuters/Jefferies Commodity Research Bureau Inc.
United Kingdom
United States of America
Virgin Coconut Oil
Voluntary Counselling and Testing
Vascular-Streak Dieback disease
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Acknowledgements
The review team would like to thank all those who enabled us to successfully complete this review. We
are grateful in particular to the following people: Able Philemon and the ARDSF team in Port Moresby for
facilitating the logistics for the visits to East New Britain and Madang Provinces; Dr Eric Omuru, the
senior management team and the research officers at Tavilo Research Station and Stewart Research
Station, respectively; Barnabas Toreu and the Cocoa Board team at Kokopo; Paul Arnold, President of
National Growers Association; Ayyamani Jagadish of Coconut Products Limited; Graham McLean and
John Duigu of AGMARK; Paul Virita of National Development Bank, Kokopo Branch; James Lulu and
Britain Tilom of East New Britain Savings & Loan Society Limited; Steve Woodhouse of FARMSET
Limited; Anton Banit of National Farmers Savings & Loan Society; Professor Alan Quartermain and
Hefung Hati of PNG University of Natural Resources & Environment; Hosea Turbarat of Kairak Vudal
Resource Training Centre; Tamil of Pristine Co. No. 101 Limited; Joe Pretno and Amos Basi of PNG Agri
Trade Limited; Alan Aku and Peter of KIK; Dr Oti Jigo of Department of National Planning & Monitoring;
Joseph Ingipa of Department of Commerce & Industry; Brown Bai of Rural Industries Council; Leka Mou
of Provincial & Industrial Support Services for Southern Region, DAL; Matthew Kanua and Potisha
Hombunaka of PNG Sustainable Development Program Limited; Ossi Mamia and his group of cocoa and
coconut farmers from Bitakapuk No. 2 Village, Toma-Vunadidiir LLG, Central Gazelle District; and Dr
Joachim Pantumari of National Department of Health.
We would like to thank all those who so generously contributed their time, expertise and information to
this review. In particular, the following people who provided invaluable information to the review team:
CCI senior cocoa and coconut research officers for the past research reports; Claire Parik for PNG cocoa
production statistics; Alan Aku for PNG and global coconut production statistics; farmers from Bitakpuk
No. 2 Village for their comments on cocoa and coconut extension services and Dr Pantumari for
information on HIV & AIDS in PNG. We thank Dr Omuru for his editorial comments. The review team is
also very grateful to KIK for their support during the course of the subsector studies.
Finally, the review team acknowledges the funding support of ARDSF which made the review of the
cocoa and coconut subsectors possible.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Executive Summary
Background
A review of cocoa and coconut sub-sectors in Papua New Guinea (PNG) was commissioned by Agricultural
Research and Development Support Facility (ARDSF) to understand the operating environment of cocoa and
coconut industries in PNG within the context of research and extension services provided by PNG Cocoa Coconut
Institute Limited (CCI). The program of support by ARDSF for CCI in the area of institutional capacity development
is based on the agricultural research for development (AR4D) framework which aims to link good science to
development impact. The overall objective of the ARDSF program is to assist CCI transform by realigning their
respective organisational objectives and institutional arrangements for more efficient and effective service delivery.
This report has been prepared to assist CCI to understand the operating environment of the cocoa and coconut
industries in PNG as the Institute proceeds with the planning process to determine its development objectives at
the program level whilst taking into consideration the outcomes of past cocoa and coconut research.
Review findings
Cocoa and coconut play a pivotal role in the livelihoods of the quasi-subsistence smallholder who dominate primary
production in PNG, being key direct sources of cash income, and in the case of coconut, nutrition at the same time.
Moreover, coconut palms are important not only because of the direct contribution of coconut products, particularly
copra and fresh nuts, to these livelihoods but also because a significant proportion of the stands are used to
provide shade for low input production of other food and cash crops.
Global cocoa and coconut market and trade issues
The analysis of regional and global market and trade trends for cocoa and coconut products show that there will
continue to be demand for cocoa, chocolate and coconut products by consumers in developed and developing
countries. The demand for these products will be sustained in the long term as populations increase and GDPs of
developed and developing countries improve. The demand for quality chocolate, coconut oil and desiccated
coconut products will continue to increase as certain natural ingredients in these products have been identified to
have heath benefits for people. The coconut industry should also focus on developing the other products such as
coconut shell based activated carbon and coir products for niche markets.
Unlike cocoa, the global coconut industry is confronted with the problem of senility of more than 50% of the current
coconut stands in most coconut growing countries. The various national governments will be required to help
address the senility issue through appropriate coconut rehabilitation programs utilizing the coconut based farming
systems for smallholders.
Over the years PNG has developed customer relationships with certain international cocoa and coconut product
buyers. The sustainability of these relationships is dependent on the quality of the cocoa and coconut products
produced by PNG growers and processors. It is therefore important that the key stakeholders in PNG need to
address quality compliance issues on a regular basis in order to maintain the credibility of cocoa and coconut
products from PNG in the global market arena.
The cocoa and coconut farmers in PNG have been benefiting from higher cocoa and copra prices over the last five
years because of improved prices since 2004. For cocoa sector, the other contributing factor has been the
inclusion of PNG as a country producing and exporting either exclusively or partially fine flavour cocoa which
attracts premium prices on the world market. However, the domestic prices of cocoa and the three coconut
products are subjected to changes in the prices of these commodities on the world market as influences by supply
and demand forces.
In terms of the importance of cocoa and coconut products as sources of foreign exchange, cocoa ranks third and
coconut products rank fourth, respectively, after crude palm oil and coffee in PNG. Combined cocoa and coconut
products generated over K434 million in foreign exchange for 2009 and cocoa contributed 78% while coconut
products contributed 22%.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
External environment of cocoa and coconut sub-sectors
In terms of national development policies and objectives of cocoa and coconut industries, the government has
developed the PNG Vision 2050 to guide the development of the country in the next forty years. For agriculture, the
vision proposes to expand production volume of all major cash crops to enable downstream processing, improve
the employment conditions of agricultural officers, and establish a unified agricultural plan by 2015.
Cocoa Board, Kokonas Indastri Koporesen (KIK) and CCI need to identify from the forty-two coastal districts where
impact cocoa and coconut development projects should be identified and advise the National Government
accordingly. PNG Development Strategy Plan 2010 – 2030 has set ambitious production targets for cocoa and
coconut industries to be reached by 2030. However, funding support through National Agricultural Development
Plan 2007 – 2016 for cocoa and coconut industries has not been forthcoming since 2007.
Both cocoa and coconut industries contribute to the economy of PNG through the generation of export revenue of
cocoa and coconut products, providing employment and income for rural households. Cocoa and coconut
products contributed only 2.3% and 1%, respectively, to the total agricultural export revenue and 1.5% and 0.7%,
respectively, to the GDP of PNG from 2001 to 2008. Nonetheless, these two industries engage around 460,400
rural households or 2.3 million people in forty-two lowland districts.
Cocoa Board, KIK and CCI also impact on profitability of the two industries through regulation, imposition of levies
and provision of research and extension activities. Currently, Cocoa Board and KIK are self funded agencies rely
on management levies derived from the export of cocoa and coconut products. However, self funding situation for
Cocoa Board and KIK may change in the near future if the assumption of primary stakeholders are verified through
proper economic analysis that the net income paid to the farmers is reduced by the industry levies.
The institutional support arrangements for cocoa and coconut industries show that both Cocoa Board and KIK
need to work more closely with CCI, their research and development (R&D) organisation. There needs to be more
regular consultation between these three key stakeholder agencies to address important development issues
affecting cocoa and coconut industries in PNG. These three key stakeholder organisations need to establish
partnerships with other stakeholders for the two industries in order to address other non agricultural related issues
(e.g. law and order, transport infrastructure, commodity production aspects affected by land tenure issues, health
issues affecting labour mobility and business skills for farmers) influencing the performance of cocoa and coconut
industries.
Internal environment of cocoa and coconut industries
An analysis of the agro-ecological requirements of cocoa and coconut show that both cocoa and coconut need to
be grown on fairly fertile soils with adequate rainfall to produce reasonable economic yields. However, only coconut
can grow in certain unproductive environments (e.g. dry lowland areas and atoll islands) where it is grown mainly
for food security purposes.
The main threats to the continued production of cocoa and coconut in PNG currently are serious pests and
diseases. Cocoa Board, KIK and CCI need to address these threats urgently by developing appropriate strategies
for long term effective control measures and convince the National Government to fund the implementation of
these strategies. An additional threat facing the coconut industry is the senility of 50% of the coconut palms in
PNG. KIK and CCI need to work together to access government funding in the next five years to assist
smallholders to replace their old dying palms.
It is often assumed that cocoa and coconut smallholders do not receive an adequate share of the export value. A
key finding of this study was that the value chain for both commodities is highly competitive and reflects the true
economic costs and risks of doing business in PNG. In the case of cocoa, the smallholder price is on average 70%
of the export price. The processing and trading margins are small, with operators relying on volumes to cover
costs. For copra, smallholders have been receiving around 67% of the export prices in recent years.
Quality is one of the major problems for cocoa and coconut products and is closely linked to the structure of
incentives along the value chain. Cocoa produced in PNG is a relatively homogenous commodity, with a high
proportion of output being graded at fair-to-average quality or equivalent to ‘bulk’ export category. Smoke damaged
or partially fermented beans, are being sold but with appropriate discounts in most cases which could be avoided
by smallholders with appropriate quality control. The quality of copra produced by smallholders suffers from
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
improper drying and smoke tainting. The major overseas buyers of coconut oil and copra meal in the European
Union (EU) have raised concerns in relation to the levels of environmental pollutants in the coconut products. KIK
and CCI in collaboration with major exporters of coconut products to the EU need to address the contamination
problems in order for PNG to retain its share of the EU market.
A major factor that is affecting the marketing systems, accessibility and value chains for cocoa not being effectively
addressed by key stakeholders is the remoteness of smallholders located away from major centres in the coastal
and maritime provinces. It is not feasible to either sell wet beans or have regular contact with cocoa processors.
The key constraint here is the overwhelming problem of transport including time taken and cost. The same issue is
also affecting copra producers in remote areas of PNG.
Socio-cultural aspects of cocoa and coconut farmers
PNG’s cocoa and coconut industries are faced with a difficult environment in which to operate. There are several
policy and institutional constraints that affect the incentives and decision making of smallholders and other industry
stakeholders. Nonetheless, the comparative advantage of PNG in the production of these commodities is obvious,
given the industry’s capacity to produce competitively within these constraints. Particularly, these crops and the
production systems in use allow smallholders to manage risk far better than any alternatives.
Cocoa and coconut are produced in multi-product systems with subsistence crops. However, importantly for
smallholders, there is no specialisation. The decisions and choices used in these systems are complex, designed
to deal with risk, but are rational.
CCI, Cocoa Board and KIK have paid less attention to understanding the socio-cultural and economic context of
rural communities dependent on cocoa and coconut for their livelihoods. These issues need to be addressed
concurrently with other important factors influencing the effectiveness and efficiency of production, processing and
marketing of cocoa and coconut products.
Cocoa and coconut R&D issues at CCI
While there have been important developments in developing higher yielding hybrids and some pest and disease
control measures, declining productivity and incursions of serious pests and diseases characterise cocoa and
coconut industries.
An analysis of past research activities and achievements, and to identify priority areas for technical research show
that uptake of new technologies has been very poor. The ultimate beneficiaries of the technologies face little
incentive to adopt. The development of cocoa hybrids and hybrid clones is been adopted gradually by smallholders
in certain provinces such as East New Britain and Madang because of easy access to the cocoa seed gardens.
However, the early yield decline of these new hybrids is major problem confronting the cocoa industry in PNG. CCI
needs to develop strategies to assist farmers address this problem in their cocoa blocks. For pest and disease
control measures, the recent development of the Integrated Pest and Disease Management (IPDM) technology
with four options of application has proven to be an effective control mechanism in the field.
For coconut, the underlying economics of smallholder production under customary land tenure, and the competitive
position of coconut oil deter growers from incurring the costs of adoption. Unfortunately, some of the arrangements
that governments have put in place to regulate the industry exacerbate the problem. Some options, such as the
marketing of ‘virgin’ coconut oil and the potential to use coconut oil as a replacement for diesel in internal
combustion engines, offer some market opportunities: but they do not seem likely to provide the basis for a large
scale revival of world demand for the oil. A suitable option for PNG is to focus on developing coconut as a food
commodity for the huge domestic market from the coastal to highland provinces.
CCI needs to strengthen collection of qualitative as well as quantitative data, but more importantly there is a need
for rigorous and routine data collection, data analysis and monitoring and evaluation of the outcomes and impact of
research. At present these do occur but on an ad hoc basis. This makes it extremely difficult to assess the
success of existing research and to plan appropriate future research programmes.
.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Most of the socio-economic studies conducted by CCI have been done in collaboration with donors and other
international R&D organisations, which have attempted to address the quality and smallholder problems through a
combination of regulation, encouragement of co-operative groups of smallholders and alternative extension
models.
The present study concludes that past research for the cocoa and coconut sub-sectors appear to have focussed
mainly on issues such as:
 the potential for increase in yields and better pest and disease resistance through genetic selection;
 better control of pests and diseases;
 the development of new coconut products and appropriate processing technologies for these products for
the benefit of smallholders; and
 improving the technical efficiency of fermenting and drying cocoa using combined solar-hot air dryer.
CCI, Cocoa Board and KIK have paid less attention to research that focused on:
 ways of positively influencing the institutional and policy environment facing cocoa and coconut growers;
 adoption pathways, increasing the likelihood of uptake of technical research, and identifying technologies
that are consistent with the incentives that smallholders face and their risk management strategies;
 understanding of alternative or complementary uses (such as intercropping) of land planted to cocoa and
coconut palms, and any necessary R&D to support policy change or structural adjustment in the context
of the increasing age of most palms; and
 develop appropriate copra dryer models for smallholder coconut farmers.
It is proposed that a research strategy for cocoa and coconuts should take account of:
 the importance of cocoa and coconuts to the livelihoods of rural farmers who produce these two crops
besides their other subsistence activities;
 alternative uses of land devoted to cocoa and coconut production;
 scope for R&D to address impediments that are limiting profitability of cocoa and coconut production;
 the potential for the R&D to be disseminated to, adopted and utilised by growers, processors and other
agents of change, including the generally poor performance of government extension agencies with
respect to cocoa and coconuts; and
 the nature of the markets for cocoa and coconut products, and the incentives that smallholders currently
have to invest in adoption of research outputs.
It is proposed that CCI, Cocoa Board and KIK to consider the socio-economic needs of smallholders who are
currently growing cocoa and coconut palms, not just the potential for research on cocoa and coconut production,
processing and marketing. That is, the research should recognise the multi-activity livelihoods and the multiproduct farm systems of most smallholder enterprises that are involved in cocoa and coconuts and the way in
which research addresses the role of cocoa production and processing, coconut palms, coconuts and coconut
products in their overall risk management and production strategies.
Research may also be useful in characterising and quantifying the incentive regime that smallholders face when
making decisions related to land use and their cocoa and coconut resources, and the impact of policy and
institutional factors in shaping those incentives.
On the policy front, there might be value in exploring the economic, policy and institutional factors that could
influence agribusiness investment in cocoa and coconuts, particularly with respect to modified nucleus estate
models. The key stakeholders should also play an advocacy role to influence decision making.
Recommendations
Twenty-six recommendations have been proposed in response to the various important issues identified in the
present review. It is hoped that CCI, Cocoa Board and KIK can consider these recommendations and address
them during the life of the new ten-year CCI Strategic Plan 2010 – 2019. The recommendations are outlined below
with background details for each recommendation provided in Section 8 of the report:
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Recommendation 1: Cocoa Board, KIK and CCI to work with cocoa and coconut farmers and processors to ensure
that quality of PNG cocoa and coconut products are maintained so that our products can compete globally.
Recommendation 2: Cocoa Board and KIK to require cocoa and copra traders to disclose the funds used for
purchasing cocoa and copra so the actual amount of revenue passed on to the farmers is determined.
Recommendation 3: Cocoa Board, KIK and CCI need to work together in identifying the national development
objectives as outlined in Vision 2050 and the PNG Development Strategic Plan 2010 – 2030 for growing and
sustaining the cocoa and coconut industries in the long term.
Recommendation 4: Cocoa Board, KIK and CCI need to establish appropriate industry forum for deliberating on
priority cocoa and coconut industries’ issues for policy formulation purposes and advice to Government.
Recommendation 5: The composition of CCI Board needs to be reviewed and independent competent
professionals should be appointed who have a better understanding of cocoa and coconut R&D issues within the
wider PNG socio-economic and agricultural development context for the benefit of the smallholders. This move is
to improve the current level of debate of cocoa and coconut R&D issues in CCI Board.
Recommendation 6: In order to address the gaps between cocoa and coconut agro-ecological studies, CCI needs
to explore innovative ways of undertaking coconut agro-ecological studies for understanding the basis of the way
the crop responses to various biotic and non-biotic factors in affecting its yield.
Recommendation 7: Cocoa Board, KIK and CCI in collaboration with the provinces need to develop appropriate
registration systems for collecting data from cocoa and coconut farmers in relation of land areas planted, age
profiles of crop plantings, land use patterns, food security and income generation data.
Recommendation 8: Cocoa Board and KIK to work with CCI in addressing the factors threatening the future growth
and sustainability of cocoa and coconut industries in PNG.
Recommendation 9: CCI to improve the database for cocoa and coconut development domains at the district and
LLG levels.
Recommendation 10: Cocoa Board, KIK and CCI in collaboration with other government agencies and the
provinces to address the major factors and opportunities affecting the scale of production and productivity of cocoa
and coconut as cash and food crops.
Recommendation 11: Cocoa Board, KIK and CCI to address the major factors affecting the post harvest and
product quality issues in the cocoa and coconut industries. Post harvest factors affect the quality of cocoa and
coconut products produced and if not addressed in a serious way and will impact on the reputation of PNG cocoa
and coconut products.
Recommendation 12: Cocoa Board, KIK and CCI in consultation with other public and private stakeholders to
explore practical ways of improving the various aspects of marketing cocoa and coconut products in PNG and
eventually for export.
Recommendation 13: Cocoa Board, KIK and CCI in collaboration with the provinces need to determine the
minimum sizes of cocoa and coconut blocks for subsistence, semi-commercial and commercial purposes to help
the farmers plan their cocoa and coconut business enterprises.
Recommendation 14: CCI to undertake studies for understanding the underlying factors influencing the behaviour
of cocoa and coconut farmers in order to address the current low farmers’ aptitude of farm management to improve
the production output from blocks.
Recommendation 15: Cocoa Board, KIK and CCI to address the poor state of affairs regarding the quality of
resources for farmers to pursue their cocoa and coconut farming enterprises. Appropriate information packages for
cocoa and coconut farming enterprises need to be developed by CCI for smallholders to use in accessing microcredit to rehabilitate their blocks.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Recommendation 16: Cocoa Board, KIK and CCI in collaboration with the provinces need to develop appropriate
registration systems for cocoa and coconut smallholders, processors, traders (buyers, transport providers, etc) and
exporters.
Recommendation 17: Cocoa Board, KIK and CCI need to: (a) understand the current production strategies
practised by cocoa and coconut farmers; and (b) develop new innovative cocoa and coconut production strategies
for smallholders to improve their productivity and production taking into account the resource limitations confronting
these farmers.
Recommendation 18: Cocoa Board, KIK and CCI need to: (a) understand the current livelihood options and
strategies for cocoa and coconut farmers; and (b) integrate these findings into new innovative production strategies
for cocoa and coconut farmers.
Recommendation 19: CCI needs to undertake further studies on the socio-economic status (i.e. food security, and
health status, education and literacy levels and labour mobility) of communities depending on cocoa and coconut
industries in other provinces outside of East New Britain Province so that this data can be used to plan, monitor
and evaluate appropriate cocoa and coconut R&D projects in the coastal provinces.
Recommendation 20: CCI needs to mainstream the different needs and expectations of women and men
producers in its cocoa and coconut R&D projects so that development inequalities between the genders are
addressed for the benefit of both women and men in cocoa and coconut farming communities.
Recommendation 21: CCI needs to mainstream gender, HIV & AIDS and environmental impact issues in its R&D
programs for cocoa and coconut farming communities. Cocoa Board and KIK also need to mainstream gender, HIV
& AIDS and environmental impact operations and when formulating policies for their respective industries.
Recommendation 22: CCI in consultation with Cocoa Board and KIK need to review all previous cocoa and
coconut R&D work to: (a) address the identified gaps in the cocoa and coconut R&D programs; (b) ensure that all
future cocoa and coconut R&D projects are subjected to proper cost benefit analysis before being considered for
implementation; and (c) publish all outstanding research data assessed to improve cocoa and coconut production
and processing.
Recommendation 23: CCI in consultation with Cocoa Board, KIK, provinces and other stakeholders to reassess the
current cocoa and coconut R&D programs and realign the cocoa and coconut R&D programs if deemed necessary.
Recommendation 24: CCI needs to: (a) reactivate the Research Assessment Committee and new members
appointed in 2010 to approve all proposed cocoa and coconut R&D projects for funding and implementation; (b)
ensure that all cocoa and coconut R&D projects are subjected to a cost benefit analysis for consideration by the
Research Assessment Committee; (c) all useful cocoa and coconut technologies and/or information for farmers
resulting from R&D projects at CCI must be considered and endorsed by the Research Assessment Committee
before approval by CCI Board for release to the industries.
Recommendation 25: CCI needs to develop and introduce the proposed monitoring system to assess the adoption
rates of the old and new cocoa and coconut technologies if possible by 2011.
Recommendation 26: CCI needs to ensure that collaborating international partners on cocoa and coconut R&D
projects should provide appropriate support to CCI to implement project components in PNG.
[xii]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
1.
Introduction
1.1
Background
The PNG Cocoa Coconut Institute Limited (CCI) is one of the six selected National Agricultural Research
System (NARS) organisations participating in the institutional capacity development and improved
networking efforts initiated under Agricultural Research and Development Support Facility (ARDSF)1
aimed at improving service delivery by the NARS organisations to the rural smallholders in the
agricultural sector in PNG. The program of support by ARDSF for the selected NARS was scoped in
2007 in a participatory process identifying nine broad thematic areas for institutional capacity
development. This was based on the agricultural research for development (AR4D) framework which
aims to link good science to development impact. Institutionalising Planning, Monitoring and Evaluation
(PM&E) in the NARS was the thematic area that was agreed to by all as the key entry point to engage the
NARS and stakeholders as they transform by realigning their respective organisational objectives and
institutional arrangements for more efficient and effective service delivery.
1.2
Project rationale2
CCI in its efforts to be responsive to its clients and stakeholder needs, has embarked on the institutional
transformation process under PM&E to improve its service delivery. As a first step, it has aligned its
vision, mission, goal and strategic objectives to the broader sectoral and national development goals and
priorities of the PNG Government. This process is being initiated through a results-oriented strategic
planning and program formulation process facilitated by ARDSF.
Planning for institutional transformation involves three levels: The first level is where an organisation
determines its overall direction in terms of where it wants to go given the needs of its stakeholders and
clients, and its prevailing strengths and weaknesses. The second level of planning occurs at the program
level. At this level, an organisation determines its development objectives at the program level whilst
taking into consideration past research and an assessment of the sub-sector in which the organisations
operates. The third level of planning occurs at the project level and this basically involves project /activity
planning.
1.3
Study objectives
CCI completed its institutional level strategic plan and is ready for programme level planning. In
preparation for and to aid the transformative planning processes for the cocoa and coconut sub-sectors,
ARDSF commissioned a consultancy to undertake a sub-sector study of the cocoa and coconut
industries in PNG. The study team comprised two consultants, one a biophysical scientist and the other a
social scientist. The study was to:
(a)
(b)
(c)
(d)
1
2
assess the regional and international collaboration and trade in cocoa and coconut;
assess the cocoa and coconut industries’ external and internal environments;
assess the socio-cultural contexts and economic status of rural smallholder communities
who depend on the cocoa and coconut industries for their livelihood; and
undertake a technical audit of past and ongoing R&D and extension programs.
ARDSF is a program of support to the Government of Papua New Guinea by the Australian Government, funded through the Australian
Agency for International Development (AusAID).
Extracted from the Terms of Reference of the ARDSF commissioned review of cocoa and coconut subsectors.
[1]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
1.4
Report outline
The report has been divided into the following sections: Section 3 – Regional and International
Collaboration and Trade in Cocoa and Coconut; Section 4 – Cocoa and Coconut Industries’ External
Environment; Section 5 – Cocoa and Coconut Industries’ Internal Environment; Section 6 - Sociocultural Contexts and Economic Status of Rural Smallholder Communities Dependent on Cocoa and
Coconut; Section 7 – A technical audit of cocoa and coconut R&D and extension programs at CCI;
Section 8 – Study findings and recommendations.
2.
Study Methodology
2.1
Data collection approach
The study involved both the review of secondary data from existing documentation and primary data
collected through interview of relevant persons. The work was broken down into the following parts (i)
inception meeting to refine and adopt the proposed analytical framework and methodology; (ii) review of
secondary information; (iii) primary data collection and analysis; and (iv) seminar presentation to
stakeholders for feedback before the report was finalised.
Key stakeholder representatives in East New Britain, Madang and Port Moresby were visited. The
consultations included open-ended semi-structured interviews, on a one-to-one basis or in small groups.
Stakeholders included: Government organisations/officials (e.g. Department of Agriculture & Livestock
(DAL) – Southern Region Provincial Industry Support Services, Department of National Planning &
Monitoring); CCI research and extension personnel; Producer groups, representative communities or
producer organisations; Shareholder Boards (KIK and Cocoa Board); Higher education sector (Vudal
University, University of PNG); Private sector cocoa and coconut extension and trading agents;
Agribusinesses (Farmset, New Guinea Islands Produce Agmark, Coconut Products Limited, Coconut Oil
Production Madang (COPM), Pristine Co. No. 101 Ltd); and Financial institutions (e.g. National
Development Bank, National Farmers Savings & Loan Society) focusing on rural industries products and
services. The details of field visits to CCI and relevant stakeholders in East New Britain, Madang and Port
Moresby are shown in Appendix A.
2.2
Data analysis
Data was obtained from Cocoa Board, KIK, CCI, Bank of Papua New Guinea and other relevant internet
websites for assessing the trends in regional and international cocoa and coconut trade. The analysis of
the external and internal environments of cocoa and coconut sub-sectors in PNG was based on data and
information provided by Cocoa Bard, KIK and previous sub-sector studies. The assessment of the type of
cocoa and coconut R&D work undertaken at CCI from 1986 to 2009 was based on information in the
research highlights of 1996, 1999 and 2000. Moreover, the updates on the various R&D programs were
provided by the Section Heads of Cocoa and Coconut Research Divisions at CCI.
2.3
Stakeholder feedback
The preliminary findings of the subsector study was reported to stakeholders during the CCI Industry
Support Services Workshop from the 19th – 23rd April 2010 held at Vudal in East New Britain. The study
team made a presentation to ARDSF team on the 14 th May 2010 and their feedback comments are also
included in this report. The final presentation of the subsector study was made to CCI and other
stakeholders during the first CCI program formulation workshop held at Kokopo from 7th – 18th June
2010. The stakeholder feedback in the form of comments in response to the study findings and
recommendations have also been incorporated in the relevant sections of this report.
[2]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
3.
Regional and International Trade in Cocoa and Coconut
Products
3.1
Regional and global markets and trade in cocoa and coconut products
3.1.1
Global cocoa supply, demand and markets3
The details of world cocoa supply, demand and stocks, cocoa market prices, trends in cocoa production,
trade in cocoa, cocoa and chocolate industries, and forecasts for the world cocoa economy to 2011/12
cocoa season are provided in Appendix B. The main features of world cocoa regional and global markets
and trade are outlined in this section below.
For the 1998/99 to 2007/08 period, world production and demand for cocoa showed an erratic upward
increase, with yearly growth rates between minus 11% and plus 12% for production and between minus
6% and plus 8% for grindings. This pattern characterized the world cocoa economy, which witnessed
seasons with a large production surplus, contrasting with seasons with a significant production deficit. It
was forecasted that from 2007/08 to 2011/12 grindings would moderately exceed supply.
During this period, the ICCO daily price ranged between SDR 604 and SDR 1,797 per tonne. The
minimum, reached in 1999/2000, reflected the fundamental situation of an estimated combined surplus of
almost 150,000 tonnes during the 1998/99 and 1999/2000 seasons, as well as a downward trend in
market prices, which had started in the 1970s. The maximum price (SDR 1,797 per tonne) was reached
in March 2008, resulting partly from a deterioration in the supply versus demand situation on the world
cocoa market from the previous season. This development in the cocoa market was also part of a wider
trend of large investors pouring money into the commodity.
World cocoa production has risen at an average annual growth rate of 2.8% during the ten-year period.
Africa’s share of world cocoa production has increased from around 67% in the second part of the 1990s
to a projected share of 70% in 2007/08, with its production rising at an average annual rate of 3% per
annum. Cocoa output in the Asia and Oceania region has grown at the same rate while production in the
Americas has stagnated.
Following liberalization of the cocoa marketing systems in the 1990s, farm gate prices in most cocoa
producing countries have been largely determined by international prices. As a result, farm gate prices
during the period under review have shown greater fluctuations in most cocoa producing countries
reflecting, inter alia, changes in international cocoa prices, variations in the international value of the
domestic currency, and specific local market structures and conditions, including taxation, competition,
distance from port and quality. Although world market prices in real terms were at the same level in
2006/07 as in 1995/96, real farm gate prices decreased in some producing countries due to appreciation
of local currencies leading to increasing production costs. However, farmers in some other countries have
seen the price received for their beans to increase in real terms during this period.
Between 1998/99 and 2007/08, primary cocoa consumption (as measured by total world grindings of
cocoa beans) generally followed an upward trend, growing at an average rate of 2.9% per annum.
Europe was by far the largest cocoa processing region but the most dynamic region was Asia, recording
an average annual growth rate of 7%.
3
The discussion on the main features of cocoa supply, demand and stock is adapted from ICCO (2008), pp. 25-27. ICCO
denotes International Cocoa Organisation, a global organisation composed of both cocoa producing and cocoa consuming
countries. There are fourteen (14) exporting countries (producers) and twenty-nine (29) importing (consuming) countries.
[3]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Consumption of chocolate confectionery products increased by 14% between 1997 and 2006 in selected
countries, including the major European countries, the United States, Brazil, Japan and Australia,
corresponding to an annual growth rate of less than 2%. Although overall chocolate consumption in the
mature markets increased at a relatively slow pace in volume, the cocoa and chocolate market has
witnessed, in recent years, some changes in consumers’ taste and in the perception of the benefits of
chocolate products on human health, leading to an increase in the consumption of “premium” chocolate.
In particular, consumers seem to have embraced the idea of dark high cocoa content chocolate as an
affordable luxury.
3.1.2
Global coconut supply, demand and markets
The details of world coconut supply, demand and stocks, coconut market analysis, trends in production,
consumption of coconuts and coconut products and prospects for coconut products are provided in
Appendix C. The main features of world coconut regional and global markets and trade are outlined in
this section below.
Coconut production appears to have been growing at around 2% a year since the early 1960s. However,
production of copra and coconut oil has stagnated while close substitutes such as crude palm oil and
soybean oil have grown to dominate world markets for edible vegetable oils. If the coconut production
data is correct, the differences must be explained by growth in coconuts going into domestic food
consumption and other alternative high value coconut products such as virgin coconut oil. Certainly the
data suggest that for most of the larger producers of the bulk of coconuts are consumed domestically for
food. For the Philippines and producers in the Pacific, however, most coconuts are processed into copra
for further processing into oil.
The declining share of coconut oil in world oil markets primarily reflects the products lack of
competitiveness with the other oils. Commercial coconut oil yields (59%) are high compared to other
vegetable oils (less than 20%), except palm kernel oil (44%). However, world copra is the lowest
compared to the other oilseeds produced. Coconut oil production would increase if copra production was
increased but this is an unlikely event with the current copra prices on the world market. There is now
very little commercial plantation production of coconuts: in many countries colonial era plantations have
reverted to smallholder control under traditional land tenure arrangements and with low or zero input
management practices.
Over 50% of harvested palms have been identified as senile, and are at the end of their life as viable
sources of copra and coconut products. The low prices of copra, and the strategies that smallholders use
to manage risk mean that incentives to replant are limited: while higher yielding varieties have been
developed, they are typically more management and input intensive. Moreover, even with precocious
hybrids, smallholders appear reluctant to face the loss of production of coconuts and inter-cropped crops
that replanting entails.
The underlying economics of smallholder production under customary land tenure, and the competitive
position of coconut oil deter growers from incurring the costs of adoption. Unfortunately, some of the
arrangements that governments have put in place to regulate the industry exacerbate the problem. Some
options, such as the marketing of ‘virgin’ coconut oil and the potential to use coconut oil as a replacement
for diesel in internal combustion engines, offer some market opportunities: but they do not seem likely to
provide the basis for a large-scale revival of world demand for the oil.
Although coconut oil production has been very small (2%) compared to crude palm oil and soybean oil
from 2004 – 2008, it will continue to be an important source of lauric oil besides palm kernel oil in the
world market. There are other coconut products such as desiccated coconut, coconut milk, coconut milk
[4]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
powder, coir products and activated carbon from coconut shell charcoal which have established niche
markets globally and regionally.
The major importing countries such as those in the European Union have raised quality issues
concerning the edible coconut products (e.g. crude coconut oil and desiccated coconut) and livestock
feed (e.g. copra meal) in relation to food and feed safety standards. The main concern of consumers is
related to the contamination of edible coconut products with dioxin4 and aflotoxin5. The challenge is for
coconut industry authorities in producing countries or countries of origin to train their coconut farmers to
manage their post harvest processes properly in order to produce quality coconut products.
3.2
Export opportunities for PNG cocoa and coconut products
3.2.1
Cocoa
Export marketing of PNG cocoa is left to the free market, which generally tends to fetch fermentary
owners 80% of the world market price. PNG growers have had this advantage compared to growers from
other countries whose incomes from cocoa are heavily taxed. Quality issues from initial production stages
cannot be emphasized enough as the end product, chocolate, sells in a very competitive market.
Export quality cocoa is the major grade of cocoa that PNG exports overseas. PNG also exports other
grades of cocoa like non-export quality, residue and nibs. Residue and nibs are quite negligible. PNG
does not have any grinding plants, so cocoa is exported in the dry bean form to overseas countries like
Singapore, the United States and the United Kingdom. In recent years, the United States has become the
dominant importer of PNG cocoa due to increased grindings in that country and the increased
consumption of chocolate and chocolate products in that country.
The major PNG cocoa destinations from 1997 – 2009 are shown in Figure D-1, Appendix D. The major
buyers of PNG cocoa include: US (26%), Singapore (21%), Malaysia (14%), Indonesia (11%), with
Thailand, Belgium and UK at 7% each and Germany at 5%.
3.2.2
Coconut products
Like cocoa, export marketing of PNG coconut products, namely, copra, crude copra oil and copra meal, is
left to the free market. Copra producers receive about 70% of the world copra market price. Quality
issues from initial production stages cannot be emphasized enough as coconut by-products sell in very
competitive markets.
The data on regional and global markets and trade in coconut from 2004 to 2008 for copra, coconut oil
and copra meal products are provided in Appendix C. In terms of global copra exports, the share of PNG
copra exports fluctuated from 6% to 23% from 2004 – 2008 and the average for the period was 15%
(Table C-9, Appendix C). The average share of PNG coconut oil exports was 2.3% for the same period
4
5
Polychlorinated dibenzodioxins (PCDDs), or simply dioxins, are a group of polyhalogenated compounds which are significant
because they act as environmental pollutants. Dioxins occur as by-products in the manufacture of organochlorides, in the
incineration of chlorine-containing substances such as PVC (polyvinyl chloride), in the bleaching of paper, and from natural
sources such as volcanoes and forest fires. Dioxins build up primarily in fatty tissues over time (bio-accumulate), so even small
exposures may eventually reach dangerous levels. Dioxins are a probable carcinogen, but noted that non-cancer effects
(reproduction and sexual development, immune system) may pose an even greater threat to human health. Exposure to high
levels of dioxins in humans causes a severe form of persistent acne, known as chloracne.
Aflatoxins are naturally occurring mycotoxins that are produced by many species of Aspergillus, a fungus, most notably
Aspergillus flavus and Aspergillus parasiticus. Aflatoxins are toxic and among the most carcinogenic substances known. After
entering the body, aflatoxins may be metabolized by the liver to a reactive epoxide intermediate or be hydroxylated and become
the less harmful aflatoxin M1.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
(Table C-11, Appendix C). Copra meal exports followed a similar trend with 2.8% (Table C-13, Appendix
C).
The data on export destinations of PNG copra, coconut oil and copra meal from 2007 – 2009 are shown
in Appendix D. The major export destinations for PNG copra have been Philippines and Australia (Table
D-1, Appendix D). The main international buyers for the PNG crude coconut oil include: Netherlands,
Germany, UK and Belgium (Table D-2, Appendix D). Australia and New Zealand are the main buyers of
PNG copra meal (Table D-3, Appendix D).
3.3
Export trends and evaluation of the importance of products as sources of
foreign exchange
3.3.1
Cocoa
The trends in cocoa export earnings from 1997 to 2009 are shown in Figure E-1 in Appendix E. There are
three distinct periods as reflected by the cocoa export values. The first period from 1997 to 2001 shows
that cocoa export values ranged from more than K50 – K125 million giving an average of K65 million per
annum. The cocoa export values from 2002 to 2006 ranged between K200 to K251 million in the second
period averaging at K234 million per annum. The cocoa export values ranged from K250 to K351 million
averaging at K323 million per annum from 2007 to 2009. The overall trend shows that the average export
earnings from cocoa increased by a factor of three in the second period and by five in the third period
since 1997. This signifies cocoa industry as an important source of foreign exchange for PNG national
economy. Cocoa is the third most important source of foreign exchange after oil palm and coffee,
respectively.
The general cocoa export trends and evaluation of the importance of cocoa as a source of foreign
exchange have been highlighted in the draft cocoa strategic plan 2008/09-2017/18 (Cocoa Board of
Papua New Guinea 2008). The main points are summarised below:
6
7
(a)
Significant increases in domestic cocoa prices have been observed from the mid-1990s,
primarily as a result of the devaluation of the Kina in September 1994 and the floating of
the Kina since October of the same year. Further depreciation of the Kina against the US
dollar and other major currencies resulted in price increases until 1989/1999 when prices
began to decline due to lower international prices. Both FOB6 and DIS7 prices rallied
strongly in 2000/01, reaching their highest levels in 2002/03 (over K6,000 per tonne) and
declined thereafter until 2005 when prices declined to below K5,000 per tonne for FOB and
below K4,000 per tonne for DIS prices (Figure E-2, Appendix E). There has been a gradual
increase in the domestic prices since 2006.
(b)
The high prices from 2001 to 2002 were mainly a consequence of the political
uncertainties in the Ivory Coast, the world’s largest cocoa producer. In 2006 and 2007,
prices have been on the recovery path, with the New York futures price closing at
$1,503.70 per tonne in 2006 and $1,881.90 per tonne in 2007, respectively, compared to
$1,474.80 per tonne in 2005. The corresponding PNG average fob price was K4,604 per
tonne in 2006 and K5,523 per tonne in 2007 compared to K3,751 per tonne in 2005.
FOB denotes free-on-board price.
DIS denotes delivered-in-store price.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
3.3.2
(c)
The high prices in 2007 and early 2008 were a result of a wider trend by large investors
who were switching from stocks and bonds to commodities in the hope of improving their
returns and diversifying their portfolios. This has been largely due to the excellent
performance of the commodity sector in 2007 which had prompted investors to continue
pouring money into this sector.
(d)
The close proximity between FOB and DIS average prices is a unique feature of the cocoa
industry in PNG (Figure F-2, Appendix F). Since 1996, the DIS average was 87% of the
FOB average price. In 2002/2003, the DIS was 99% of the FOB average, indicating that
local producers were receiving over those two years, almost exactly the world price for
their cocoa beans. This is a direct result of the Board allowing market forces to dictate
prices, and the open competition between private exporters in PNG. Apart from cocoa, no
other industry guarantees that the local producers get the “fairest” of prices. According to a
ICCO study, cocoa farmers in PNG receive high cocoa dry bean prices compared to the
growers in other cocoa producing countries (Table E-1, Appendix E). PNG cocoa growers
were receiving from 103 to 130 % as compared to other cocoa farmers in Africa, Americas
and Asia and Oceania.
(e)
Cocoa is an important cash crop for the provincial economies of East New Britain,
Bougainville, East Sepik and Madang provinces (Cocoa Board of Papua New Guinea
2008). The estimated gross earnings per province based on export earnings of
K231,131,000 in 2005/06 are as follows: East New Britain K106,320,000, Bougainville
K65,410,000, New Ireland K7,072,608, West New Britain K4,229,697, Madang
K18,236,236, Morobe K4,761,298, East Sepik K20,062,000, West Sepik K4,507,054 and
Oro K508,488.
Coconut products
The export volumes of copra, coconut oil and copra meal from PNG for the period between 1980 and
2008 are shown in Figure E-3, Appendix E. There has been a decline in the volume of copra exported
from PNG since 1980 and the lowest level of 8,400 tonnes was reached in 2002 and it has never
increased above 35,000 tonnes per annum. The general trend for coconut oil export volumes, on the
other hand, shows that the volumes have ranged between 27,000 to 64,500 tonnes. The export volumes
have been more than 40,000 tonnes since 2003 and the highest was in 2008 (64,500 tonnes) but
declined to 35,1000 tonnes in 2009.
The export values of copra, coconut oil and copra meal from 1980 to 2009 are shown in Figure E-4,
Appendix E. The three coconut products have generated more than K2 billion for the national economy of
PNG by the coconut industry during this period. The main export revenue earner is coconut oil compared
to copra and copra meal. The highest export value of combined coconut products was recorded in 2008
when the coconut product prices were high. Both the data on export values and average FOB and FMS8
copra prices (Figure E-5, Appendix E) show that the fluctuations in export volumes of the three coconut
products are determined by volatile changes in world coconut oil prices. For example, the global
economic down-turn influenced the fall in demand for coconut oil in 2009 and thus the copra and coconut
oil prices declined. This resulted in low export revenue generation from the three coconut products for
2009.
8
FMS denotes fair merchandise standard.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
3.3.3
Factors affecting export trends and foreign exchange
Generally, the domestic market behavior for cocoa and coconut products in PNG are dedicated by the
world market conditions. The global economic crisis was the single major factor that affected the prices of
all traded commodities including cocoa and all coconut products in 2009. The domestic prices
(farm/millgate prices) of cocoa and copra mirrored the low international cocoa and copra prices. Cocoa
price have always been relatively higher than copra over the years so farmers continue to produce cocoa
even during periods of low world cocoa prices. For the coconut industry, the prices of copra and coconut
oil are anticipated to increase in 2010 due to several reasons including: (i) recovery of many economies
from the global economic crisis increasing opportunity for trade; and (ii) low stocks in the world market
creating an increase in demand for export commodities including coconut products.
Increased price of cocoa and copra is the key factor for improving the domestic production of cocoa and
copra in PNG. However, there are two domestic factors that determine whether the potential production
of cocoa and copra are realized. Firstly, deteriorating road conditions pose difficulties for movement of
copra from rural areas to buying sites or oil mills. Secondly, high shipping costs for transporting bulk
cocoa and copra to market outlets from remote coastal and island communities continues to remain
another major obstacle. These factors coupled with low world cocoa and copra prices easily discourage
farmers from making more cocoa or copra as farmers wisely invest in other livelihood strategies while
waiting for prices to improve. The issues regarding poor road conditions and high shipping costs can only
be addressed by relevant government authorities (i.e. Cocoa Board, KIK, CCI, DAL, Department of
Works and Transport) working together with private sector players to improve the livelihoods of rural
cocoa and coconut farmers.
4.
Cocoa and Coconut Industries’ External Environment in
Papua New Guinea
4.1
National development policies and objectives of the cocoa and coconut
industries
4.1.1
Papua New Guinea Vision 2050
Wealth Creation is strategic focus area two in the Papua New Guinea Vision 2050 (Government of Papua
New Guinea 2009). The focus is to develop agriculture, forestry, fisheries, tourism and manufacturing
ventures to generate around 70% of GDP by 2050 with the balance coming from mining, petroleum and
gas ventures in the non-renewable sector. For agriculture, the vision proposes to establish two major
impact agricultural projects in all 89 districts, expand production volume of all major cash crops to enable
downstream processing, provide two agriculture extension officers per district, improve the employment
conditions of agricultural officers, and establish a unified agricultural plan by 2015 (Government of Papua
New Guinea 2009). Cocoa Board, KIK and CCI need to identify from the forty-two coastal and maritime
districts where impact cocoa and coconut development projects should be identified and advise the
National Government accordingly.
4.1.2
Papua New Guinea Development Strategic Plan (PNG DSP) 2010-20309
The goal of Agriculture & Livestock Sector under the PNG DSP is that “A world class agriculture sector
that is responsive to international and domestic markets for a diverse range of products and provides the
best available income and job opportunities” is developed in the next twenty years.
9
Adapted from Agriculture & Livestock, Part 5 Economic Sectoral Strategies, Papua New Guinea Development Strategic Plan
2010 – 2030. pp. 89-92.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Both cocoa and coconut industries have been identified as important subsectors of the Agriculture &
Livestock sector under the economic sectoral strategies. The PNG DSP has set ambitious production
targets of 310,000 tonnes for cocoa and 440,000 tonnes for copra, respectively, to be reached by 2030.
The plan has also identified a sequence of strategies starting at the base of a triangle for building a world
class agriculture sector: (i) efficient land administration, allowing landowners to profit from their land;
(ii) develop roads and supply chains to link producers to markets; (iii) provision of effective extension
services, (iv) utilise economic corridor concepts such as niche or organic farming or nucleus plantations;
and (v) enforce CODEX10 marketing standards. It is proposed that the successful implementation of the
strategies will improve agriculture production by five-fold, creating an estimated 267,400 additional jobs
and K7.2 billion additional income by 2030.
4.1.3
National Agriculture Development Plan (NADP) 2007-2016
The NADP highlights the importance of making the agriculture sector more efficient and competitive
through private sector development and growth and increased agricultural exports (DAL 2006). The
government, through NADP, originally made a commitment to invest about K246 million in the cocoa and
coconut industries in the next decade. The NADP’s priorities for the development of cocoa and coconut
industries are to promote economic production for domestic consumption, downstream processing, value
addition and export. However, the funding support that was committed in the NADP has not been
released to Cocoa Board, KIK and CCI since 2007.
4.1.4
Cocoa industry
The Cocoa Board has produced a draft Strategic Plan 2008/09 – 2017/18 (Cocoa Board of Papua New
Guinea 2008) which highlights the following:
(a)
(b)
(c)
(d)
The vision of the Board is to promote “a sustainable cocoa industry that enhances rural
livelihoods, and contributes to national well-being”.
The mission of the Board is to foster a productive industry by: (i) ensuring farmers’
profitability is maximized; and (ii) PNG’s market position as a supplier of high quality cocoa
is maintained.
The primary objectives are to: (i) increases farm productivity; (ii) maintain and enforce
cocoa quality standards; and (iii) maximize returns to growers by maintaining competitive
domestic markets.
The secondary objectives are to promote: (i) generic and niche markets targeting organic
nature of PNG fine/flavour cocoa; and (ii) cocoa downstream processing.
The plan proposes that the current Cocoa Board Act to be reviewed to align it with new developments in
the cocoa industry and improve its value to its stakeholders. The plan also promotes the idea of CCI
focusing on cocoa R&D while Cocoa Board works with the provinces and private sector to deal with
cocoa technology transfer issues.
The Cocoa Board plans to double cocoa exports to 100,000 tonnes by 2015. However, Cocoa Board will
need to review their production target in the light of what has been proposed in the PNG DSP 2010 –
2030. Although cocoa is a cash crop, it can make a significant contribution to the food security policy of
PNG through cocoa based food crops farming systems.
10
The Codex Alimentarius is an international framework in which national actions can be undertaken to achieve food safety
outcomes for consumers but at the same time promoting and facilitating fairness in international trade.
[9]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
4.1.5
Coconut industry
The important aspects of the current PNG Coconut Development Plan 2006 – 2010 (KIK 2005b) in
relation to the coconut industry development policy directions include:
(a)
The overall development goal is to: (i) alleviate extreme poverty and raise the living
standards in coconut communities and (ii) ensure environmental sustainability in coconut
production and processing systems.
(b)
The primary purpose of the development plan is to: (i) provide national leadership in
gaining the confidence of stakeholders to commit resources to rehabilitate the coconut
industry in provinces; (ii) encourage new investors to establish new agribusinesses
producing high value coconut products for niche markets; and (iii) enhance the
participation of stakeholders in the value adding based coconut enterprises for domestic
and export markets11.
(c)
The target measurable results to show objective has been achieved are: (i) coconut based
farming systems established in provinces by smallholders; (ii) smallholder coconut farmers
establish effective production and marketing groups in the provinces; (iii) coconut
replanting and new expansion are undertaken in the provinces by smallholders; (iv)
abandoned coconut plantations are redeveloped by interested stakeholders; and (v) new
coconut products developed by CCI for smallholders and agribusinesses.
The major factors that have limited the implementation of the above plan include: (i) KIK has insufficient
revenue base to provide seed funding to CCI for transferring coconut based farming systems to
provinces; (ii) provincial governments and private sector have been slow to support smallholders form
production and marketing networks; (iii) provincial governments in the coconut growing provinces have
not provided funding for provincial replanting and expansion programs; (iv) provincial governments have
not invested in the redevelopment of abandoned coconut plantations; and (v) the national government
has not provided any budget support to KIK and limited development budget support to CCI in the last
five years.
KIK plans to double coconut production to 200,000 tonnes of copra equivalent by 2015. However, KIK
needs to revise their projected coconut production target for 2015 in the light of the proposed copra
production of 440,000 tonnes proposed in the PNG DSP 2010 – 2030. KIK is working closely with CCI to
increase the production of other coconut products (virgin coconut oil, coconut soap, coconut vinegar, coir
products, etc) for domestic markets. Unlike cocoa, coconut is both a cash crop and a significant food
source in PNG. Coconut has become a significant food trade commodity in PNG, especially in the
highland provinces. KIK estimates that about 310 million nuts (equivalent to 52,000 tonnes copra) are
consumed in daily diets per year. It is also an important food source on atoll islands and during natural
disasters. For example, November 2007 cyclone Guba victims survived on coconuts for two weeks in Oro
Province until government food relief supplies arrived12.
KIK plans to review its current KIK Corporate Plan 2006 – 2010 (KIK 2005a) and PNG Coconut
Development Plan 2006 – 2010 and prepare a new ten-year Coconut Strategic Plan 2011 – 2020 in
2010. KIK will adopt the cascading logic framework to develop its new strategic plan. CCI and other key
stakeholders will be involved in drafting the new Coconut Strategic Plan.
11
Adapted from the mission of the KIK Corporate Plan 2006 – 2010.
12
Dr Eric Omuru, Acting Chief Executive Officer, CCI, personal communication, 2010.
[10]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
4.2
The contributions of the cocoa and coconut industries to the national
economy
The cocoa and coconut industries contribute to the PNG national economy through the generation of
revenue from exporting cocoa beans, copra, crude copra oil and copra meal to overseas traders (e.g.
buyers, processors and manufacturers). The two industries also provide employment and income for rural
households of PNG.
4.2.1
Export revenue from cocoa and coconut
In terms of export value over the period 2001 to 2008, all the major agriculture commodities contributed a
total of K6,196.8 million to the economy of PNG. In terms of total exports, major agricultural commodities
accounted for 8% with cocoa accounting for 2.3% and coconut products 1% (Table 1). Cocoa and
coconut products ranked third and fourth, respectively, as important agricultural export commodities
behind palm oil and coffee.
Table 1: Value and share of major agricultural exports, 2001 – 2008
Item
Value (K’million)
Share (%)
Ranking
Palm Oil
Coffee
4,000.3
4.91%
1
Cocoa
2,842.1
3.49%
2
1,847.7
2.27%
3
Coconut
Products
799.9
0.99%
4
Tea
Rubber
167.7
0.20%
5
Other
Exports
71,738.6
87.99%
139.1
0.17%
6
Total
Exports
81,529.4
Source: www.bankpng.gov.pg
Note: Coconut products consist of copra (126.6, 0.16%) and copra oil (673.3, 0.83%).
Over the period 2001 – 2009, cocoa and coconut products contributed about 1.5% and 0.7%,
respectively to GDP of PNG (Table 2). However, the small magnitude of contributions to GDP does not
indicate the true significant political, social and economic role both cocoa and coconut industries play in
PNG as highlighted in the sections 4.2.2 and 4.2.3 in this report.
Table 2: Share of cocoa and coconut products of total exports and contribution to GDP
Commodity
Palm Oil
Coffee
Cocoa
Coconut Oil
Tea
Rubber
Copra
Copra meal*
Others
Total
Nominal GDP***
Cocoa % of GDP
Coconut Products
% of GDP
2001
36.9
37.1
18.1
1.9
3.2
1.0
1.7
2002
2003
2004
2005
2006
2007
2008
40.5
28.7
23.5
3.5
1.9
0.9
1.1
38.9
27.6
23.8
6.2
1.8
1.1
0.6
40.6
26.2
20.2
7.5
2.1
1.3
1.6
0.6
32.1
38.7
16.3
7.7
1.7
1.5
1.4
0.6
39.5
30.9
18.8
5.5
1.9
2.2
0.8
0.4
43.6
26.5
17.9
7.9
1.3
1.5
0.7
0.6
46.2
23.8
15.8
9.3
0.9
1.5
2.1
0.6
664.0
963.7
10,396 11,655
1.2
1.9
1,083.0
12,567
2.1
1,081.6
12,652
1.7
1,217.5
15,195
1.3
1,089.6
17,132
1.2
1,541.3
18,716
1.5
0.6
0.8
0.8
0.4
0.8
0.2
0.4
20012009**
339.1
73.1
2,186.8
746.4
14.3
6.9
140.9
46.2
2,189.4
22,246
1.6
22,362
1.5
142,921
1.5
1.2
0.4
0.7
Source: www.bankpng.gov.pg
*Source: KIK Coconut Statistics 1980-2009
**Source: Cocoa Board Statistics Yearbook, 1998-2009; KIK Coconut Statistics 1980-2009 (Export values in millions of Kina)
***Source: International Monetary Fund, World Economic Outlook Database, October 2009
[11]
2009**
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Revenues from cocoa bean exports have fluctuated in the last two decades, in response to changing
prices. Between 1981 and 1990, cocoa was second to coffee as the main export crop in PNG, with
average annual export earnings of K47 million. During the decade from 1991 to 2000, export earnings
from cocoa continued to grow at an average of K60 million per annum, and from 2001 to 2004 increased
to K205 million per annum. Export earnings have averaged K227 million per annum over the past five
years, and now rank third in overall significance to the PNG agricultural economy, after oil palm and
coffee.
A total of about K2 billion has been contributed to the national economy of PNG by the coconut industry
from 1981 to 2008. Despite the challenges the industry has faced because of deregulation in 2002, it has
continued to generate an average of K80 million per year in the past five years. This represents 73% of
the amount generated before deregulation. In 2008, export revenue from coconut products reached its
highest level at K275 million, due to copra producers’ positive response to the high coconut product
prices that prevailed in the first half of the year. The production of more copra resulted to increased
coconut oil output and a record high total revenue for coconut products in 2008.
4.2.2
Employment and income generation
In the mid-1980s, it was estimated that the cocoa plantation sector directly employed about 8,000 people
(PNG Export Tree Crop Study, 1987). In addition, there is substantial indirect employment in the service
and processing industries. Out of the 486,000 households recorded for coastal regions in the country,
151,000 (31%) were involved in cocoa production (National Statistics Office 2001). It is estimated that a
total of 755,000 people are engaged in cultivating and processing cocoa in PNG.
The survey of ‘Cocoa Wet Bean Marketing in PNG’ (Gimbol, 1989) revealed that out of a sample of 167
smallholders interviewed, 92% relied on cocoa as their main source of cash income. By comparison, in
Yarbro and Noble (1989), 80-100% of the smallholders in ENB, East Sepik and Oro provinces reported
that cocoa was their main crop for cash income. Also, in a study of 100 cocoa growers and/or producers
in ENBP, the average annual income from cocoa production and sale was reported to be K2,867 per
smallholder household (Omuru et al 2001).
A total of 309,417 households were reported to be engaged in coconut cultivation in PNG (National
Statistics of Papua New Guinea 2001). This represents about 64% of the total households in the coconut
growing regions and 31% of total households in PNG. Currently, it is estimated that a total of 1.5 million
people are involved in growing, processing or consuming coconuts or coconut by-products in PNG.
4.2.3
Taxes
Cocoa and coconut smallholder farmers contribute to the internal revenue of PNG by paying the 10%
Goods and Services Tax (GST) on all items bought in registered GST business outlets. In 2006, the
National Government directed that 10% GST be charged on cocoa and coconut products export levies
collected by Cocoa Board and KIK, which has resulted in additional income for the consolidated revenue
for the country.
4.3
Cocoa and coconut
arrangements
sector
support institutions
and
institutional
The relationship between Cocoa Board, KIK, CCI and other stakeholders of cocoa and coconut industries
in PNG are outlined in Appendix F.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
4.3.1
Industry regulation and research and development functions
4.3.1.1 Cocoa Board
The Cocoa Board of Papua New Guinea was first established under the Cocoa Act 1974 and was known
then as the Cocoa Marketing Board of Papua New Guinea (Tautea, 2003). The Cocoa Board was
established to regulate the cocoa industry, to ensure a competitive market environment and that farmers
received fair prices for their cocoa. The Cocoa Act13 was revised in 1981 and the name changed to the
Cocoa Board of Papua New Guinea and the Cocoa Regulation14 came into effect in 1982. Its regulatory
functions extend over licensing of cocoa fermentaries, wet and dry bean dealers and exporters to
maintain a competitive market environment and maintain the quality standards for PNG cocoa.
The deregulation of cocoa marketing from the beginning allowed private buyers and exporters to enter
the market thus providing more competition and relatively better prices to cocoa farmers. However, this
benefit has not been realized in remote coastal parts of NG Islands, MOMASE and in other coastal
provinces in the Southern Region where cocoa is not a major cash crop.
Cocoa Board collects export levies to fund its recurrent regulatory functions per annum. The National
Government does not provide annual budget to the Board. However, over the years cocoa farmers,
processors and exporters have raised the concern that the Cocoa Board management and CCI research
levies are affecting the net income of cocoa farmers, the primary producers. At present cocoa farmers are
receiving around 70% of the free-on-board (FOB) export prices which is around 70% of the world cocoa
price.
A major concern expressed by cocoa industry stakeholders is that the National Government needs to
appoint competent independent members to the Cocoa Board. At the time of the subsector study Cocoa
Board did not have new directors appointed to the Board after two years of waiting. It is difficult for Cocoa
Board to address outstanding leadership and governance issues of the cocoa industry in the absence of
a functional board.
4.3.1.2 Kokonas Indastri Koporesen
The coconut industry was regulated by the Copra Marketing Board (CMB) since 1954. CMB had the
mandate of buying (monopsy) and marketing (monopoly) of all the copra produced in PNG until 2001.
The PNG National Government’s privatization policy made provision for the National Executive Council
(NEC) to restructure the coconut industry in March 2001. A National Government Task Force headed by
the Department of Agriculture & Livestock (DA&L) finalized its consultations with the coconut subsector
toward the end of 2001, and the NEC approved the restructuring process of the industry. The Kokonas
Indastri Koporesen (KIK) Act 2002 established the Koporesen on 28th March 2002. An interim Board was
appointed to oversee the establishment of KIK.
Legislative changes under the KIK Act 200215 and KIK Regulation 200216 enabled the deregulation of
copra marketing and promotion of downstream processing of coconut into higher valued coconut
products in PNG. The deregulation of copra marketing has allowed for more private buyers and exporters
to enter the market thus providing more competition and relatively better prices than the CMB of the past.
However, this benefit has not been realized in the Southern Region and other coastal provinces because
13
14
15
16
Government of Papua New Guinea. 1981. Cocoa Industry Act 1981. Government Printer, Port Moresby
Government of Papua New Guinea. 1982. Cocoa Industry Regulation 1982. Government Printer, Port Moresby.
Government of Papua New Guinea. 2002. Kokonas Indastri Koporesen Act 2002. Government Printer, Port Moresby.
Government of Papua New Guinea. 2002. Kokonas Indastri Koporesen Regulation 2002. Government Printer, Port Moresby.
[13]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
of the removal of copra market outlets with the abolishment of CMB. Unlike CMB, the private sector
buyers and exporters do not have the resources to subsidise the high shipping costs.
There is a need to register producers on either a smallholder or a plantation basis under the KIK Act
2002, which may be determined by the area under coconuts for each person or a family or a plantation.
The proposed registration system will assist KIK and CCI to develop a database to establish the profiles
of coconut farmers in PNG.
KIK collects export levies to fund its recurrent regulatory functions each year. The National Government
does not provide annual budget support to KIK. Like Cocoa Board, coconut farmers, processors and
exporters have claimed that KIK management and CCI research levies are affecting the net income of
coconut farmers, the primary producers. Currently, the coconut farmers have been receiving 67% of the
FOB export prices since 200017.
In 2006, KIK reduced industry levies by 16 to 22% in response to requests from certain stakeholders for
the reduction of industry levies in order to improve the net income of coconut farmers. However, the
reductions in levies have not drastically improved the net income of farmers in the last few years. There
are two possible reasons for this phenomenon. Firstly, any reduction in industry levies may not
necessarily be transferred to coconut farmers, as copra traders will only absorb these into their margins.
Secondly, the net income received by copra producers and the margins for the copra traders are
determined by world coconut oil prices so when these prices are low the margins and incomes for
farmers will also be low and vice versa.
Like the cocoa industry, the coconut industry also has similar leadership and governance issues. KIK has
an interim Board which has been performing the functions of a permanent Board as stipulated in KIK Act
since 2002. In the KIK Act smallholder representatives on the Board were to be nominated by provincial
coconut growers associations for consideration for appointment. However, it has been difficult for coconut
growers in most of the coconut growing provinces to agree to form a single provincial coconut growers
association. KIK senior management is currently exploring the possibility of allowing coconut growers to
form more than one association in each province. Smallholder nominations could then be drawn from the
associations for each coconut growing region every two years.
4.3.1.3 Cocoa Coconut Institute Limited
CCI undertakes cocoa and coconut research and development for Cocoa Board and KIK, respectively.
The Institute’s main cocoa R&D program is undertaken at Tavilo Research Station in East New Britain
and coconut research division is based at Stewart Research Station in Madang. A brief background on
the origins of Cocoa Coconut Institute Limited (CCI) is provided in Appendix G. Currently CCI R&D
programs are grouped under cocoa and coconut. The cocoa R&D division is located at Tavilo Research
Station in East New Britain. Stewart Research Station in Madang is where the coconut R&D division is
located.
Cocoa Board’s main concern for CCI is for the Institute to develop appropriate cocoa based production
and processing systems and technologies to enable smallholders to produce high quality cocoa beans for
export markets. The over-arching goal is to improve the net income base for the cocoa farmers and thus
contribute towards reducing poverty in cocoa farming communities.
17
Source: Alan Aku, Senior Projects Officer, Kokonas Indastri Koporesen, personal communication 2010.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
The main concern of KIK with CCI is that it undertakes relevant R&D and extension programs to develop
appropriate coconut based production systems and technologies to enable smallholders to produce high
value coconut products. The over-arching goal is to improve the net income base for the coconut farmers
and thus contribute towards reducing rural poverty in coconut farming communities.
CCI Board has faced significant problems in the area of governance and management in recent years.
Although CCI is established as a non-for-profit company under the Companies Act 1997, the Minister for
Agriculture & Livestock gazetted the Institute to become a statutory agency. This has resulted in CCI
being subjected to both the Companies Act and Regulatory & Statutory Authorities Act 2004. This
situation has made the appointment of a competent Chief Executive Officer (CEO) confusing and difficult.
CCI has been managed by acting CEOs since 2007 and this has had undesirable consequences on the
credibility and performance of the Institute. The overall research, development and extension issues at
CCI are discussed in Section 7 of this report.
The Institute receives annual funding from several sources to undertake its R&D and extension functions.
CCI has received on average K13 million per annum from 2003 – 2007 to fund its operations. The major
funding sources and their annual contributions during this period are outlined below:
(a)
(b)
(c)
(d)
4.3.2
The bulk of CCI budget (69%) was provided by the National Government which consists of
recurrent (56%) and development (13%) components.
International organisations collaborating with CCI on R&D projects contributed 4%.
Cocoa Board and KIK provide 8%.
CCI also generates a portion of its income through the sale of copra, cocoa beans and
cocoa planting materials which constitutes on average 23% annually18.
Other stakeholders of cocoa and coconut industries
4.3.2.1 Associations and cooperatives
According to KIK Act 2002 smallholders, plantations, buyers, processors and exporters are required to
form associations in order to be nominated to the KIK Board. However, since 2005 it has been difficult to
get the smallholders engaged in coconut production to form provincial associations. It is important to
emphasise the need for smallholders to be genuine coconut farmers growing coconuts and producing
coconut products in order to be eligible for membership in the coconut growers’ associations. This
criterion will minimize unnecessary petty politics and coconut theft problems in the coastal and maritime
provinces. The plantations, buyers, processors and exporters are yet to form associations.
The National Growers Association (NGA) is a lobby group for cocoa and coconut growers. It has a
representative on Rural Industries Council. At present NGA has a draft strategic plan19 and has started
to establish a database to profile all its members. It has started the data collection in Kokopo District in
East New Britain and also plans to establish branches in main cocoa and coconut producing provinces
for networking purposes. The NGA believes that CCI is an important entity provided it gives relevant R&D
technical support to cocoa and coconut industries on a timely basis.
There are currently registered cocoa and coconut growers’ cooperatives in the provinces. Despite the
problems that were faced by early cooperatives before and after independence, this seems to be a better
model of mobilising cocoa and coconut growers in the provinces (Kaiulo, 2002). The major issues that
need to be addressed in order to make the cooperatives more effective in production, processing and
marketing include: (a) practical strategies and objectives, (b) selected membership based on the type of
18
19
The intrusion of Cocoa Pod Borer in 2006 on CCI cocoa plantations drastically reduced the revenue from plantations by
almost 39% in 2007.
Paul Arnold, President, National Growers Association, personal communication, 2010.
[15]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
crop to be produced, (b) key members to be trained in technical areas of crop production, processing and
marketing, and (c) identify a technical partner such as CCI for cocoa and coconut (KIK 2005b).
4.3.2.2 Provincial and district administrations
It is important for Cocoa Board, KIK and CCI to establish viable partnerships with the provincial and
district administrations. This is because cocoa and coconut growers are constituent members of Local
Level Governments (LLGs) in the districts. It is common knowledge that LLGs, districts and provinces are
struggling to develop practical strategic plans for development purposes due to lack of human resource
capacity. Cocoa Board, KIK and CCI need to work with the provinces in identifying suitable areas for
either cocoa and/or coconut development at the LLG level. The major challenge is accessing funds for
rehabilitating cocoa and coconut industries in each district. Cocoa Board, KIK and CCI must convince the
Joint District Planning & Budget Priorities Committees (JDP&BPCs) that it will be worthwhile for their
farmers to engage in cocoa and coconut economic activities. This can be achieved by Cocoa Board, KIK
and CCI working together to develop cocoa and coconut business enterprises appropriate for
cooperatives or church organisations or medium scale business ventures.
4.3.2.3 National government agencies and PNG based non-government organisations
Cocoa Board, KIK and CCI need to establish good working relationships with the main national
government agencies which support agriculture development as an alternative to non-renewable
resource developments in PNG. The agencies which have links with the cocoa and coconut industries
include: the Department of Agriculture and Livestock (DA&L) for overall agricultural policy directions;
Department of Treasury (DoT) for recurrent funding considerations; Department of Finance (DoF) for
regulations of impress or trust accounts; Department of National Planning and Monitoring (DNP&M) for
development funding considerations; Department of Commerce and Industry (DC&I) for advice on
cooperative societies; Investment Promotion Authority (IPA) for advice on local and foreign investment
procedures; and National Agriculture Research Institute (NARI) for collaboration on food security
research approaches.
Cocoa Board, KIK and CCI in consultation with the Cooperative Societies Office, DC&I, will explore the
suitability of the Cooperative Societies Act 1985 to organize and mobilize cocoa and coconut growers on
a cooperative society basis for farming, processing and marketing their cocoa and coconut products in
domestic and overseas markets.
Cocoa Board, KIK and CCI should continue to work closely with IPA in terms of identifying and linking up
overseas investors with PNG cocoa and coconut industry stakeholders to establish new business
enterprises based on the production of various coconut products (e.g. coconut oil, charcoal and coir) in
provinces where it is feasible.
Cocoa Board, KIK and CCI may also explore the possibilities of securing funds from non-government
organisations such as PNG Sustainable Development Program Limited (PNGSDPL) to develop the
smallholder community based cocoa and coconut projects in the districts. PNGSDPL is currently
exploring the possibilities of collaborating with reputable business enterprises experienced in developing
viable smallholder-nucleus estate projects in Western Province and other parts of PNG.
4.3.2.4 International donor agencies
Cocoa Board, KIK and CCI need to review their past associations with international donor agencies and
assess the benefits and the costs of such partnerships. It is important to establish at the commencement
of each partnership agreements what benefits CCI, Cocoa Board and KIK will receive, the impact it will
have on their new visions/missions and how much it will cost to develop the partnership. For example,
[16]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
certain international donor agencies expect CCI to use its current R&D staff to undertake additional
project activities without providing additional resources for CCI to undertake these activities.
5
Cocoa and Coconut Industries’ Internal Environment in
Papua New Guinea
5.1
Cocoa and coconut agro-ecological characteristics, production systems and
development domains
5.1.1
Agro-ecological characteristics
5.1.1.1 Cocoa
Cocoa can be grown in most coastal provinces in PNG. The best agro-ecological conditions for potential
cocoa production in provinces include (Bleeker and Frenye, 1981): (a) mean annual temperatures of
25OC with a monthly mean minimum of 15OC, a mean maximum of 30OC and a daily range of 9OC; (b)
annual rainfall pattern of 1,500 – 2,500 mm and evenly distributed; (c) protection against strong winds;
(d) soils with good water holding capacities; and (e) soils which permit easy root penetration to 1.5
metres or more with high organic matter content (thick dark topsoils) and are relatively of high fertility.
Six areas of PNG are considered unsuitable for cocoa production based on rainfall patterns and soil
water holding capacities: (a) Most of South Fly District in Western Province, (b) from Malalaua in Gulf to
Hood Point in Central, (c) from Cape Vogel to East Cape in Milne Bay, (d) inland the Musa basin in Oro
(e) from Vincke Point to Kitumala Point in Morobe, and (f) from Awio Bay in West New Britain to Waterfall
Bay in East New Britain (Bleeker and Frenye, 1981).
In PNG young soils derived from either recently deposited volcanic materials or from alluvium and
containing high percentages of unweathered minerals are suitable for cocoa production. The three broad
groups identified in PNG include: (a) Soils formed on volcanic ash deposits (e.g. Bougainville, East and
West New Britain and Oro, (b) Well drained, not too heavy textured alluvial and colluvial soils associated
with some major river systems and fan surfaces, and (c) Soils formed on uplifted coral limestone having
deep soil with dark topsoils and are neutral to weakly acid in reaction (Bleeker and Frenye, 1981).
A study on root development of cocoa in PNG soils revealed that, on the basis of root response, major
attributes restricting root development were: drainage, effective soil depth, texture/structure and rainfall
as a function of the soil’s available water holding capacity (Frenye et. al. 1996). It should be noted that
sixty-three soil profiles were sampled from major cocoa growing provinces.
The studies on the agro-ecological requirements of cocoa has contributed towards a better understanding
on selecting suitable areas in PNG for potential cocoa production. However, the important findings on
agro-ecological studies on cocoa (e.g. Hanson et. al. 1998, Bleeker and Freyne 1981) have not been
included in suitable extension documents for CCI and provincial extension officers to use in advising
farmers about whether cocoa is a suitable crop to produce in a particular location. It is not socially and
economically responsible to promote the production of cocoa in areas not suitable for cocoa production
on a semi- or commercial basis.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.1.1.2 Coconut
Most suitable climate zone for coconut growing lies within the equatorial latitudes of about 10O N and S
and have 2,000-2,400 mm of rainfall evenly distributed, and sunshine hours in excess of 2,000 per year
(Williams et. al. 1987). Temperatures below 21OC is the approximate limit for reproductive growth in
coconut (Foale, 2003). Long hours of sunshine are also required for good yields.
Coconuts only really do well in the humid Tropics and most coconuts are grown near the sea (Williams et.
al. 1987). Sometimes, on small islands with steep hills inland, rainfall is less than the above, but
coconuts growing on sandy seashores thrive on seepage water from inland. For good yields, annual
rainfall should exceed 1,200 mm and dry seasons should be minimal.
Because coconuts are often grown in coastal regions, sandy soils predominate; they may be either coral
or quartz sands. Clayey alluvial soils are also suitable. Sandy soils, in general, support poorer growth
and yields are generally low. The palms often depend for their nutrients on underground water. On
quartz sands potassium and nitrogen deficiencies are common. On coral sands iron and manganese, as
well as potassium and nitrogen, may be deficient (Williams et. al. 1987). Clayey alluvial soils which are
not too acid, above pH 4.5, and rich in nutrients are the best coconut soils provided they are drained to
about 60 cm (Williams et. al. 1987). Coastal clays formed under marine or estuarine conditions are
generally the most nutrient-rich. Coastal clays, however, with a high sulphur content will become too acid
for coconuts when drained. Occasional inundation with brackish sea water with a salt content of about
1,000 ppm generally increases coconut yields on very acidic soils.
The above agro-ecological characteristics of coconut have made coconut to be cultivated in marginal
coastal areas and on atoll islands in the coastal and maritime provinces. A coconut nutrition study in PNG
revealed that there is wide spread nitrogen, potash and chlorine deficiencies in the coastal and maritime
provinces (Olliver et. at. 1999). Follow up studies need to be conducted to identify suitable areas for
coconut production. However, no in depth studies on the agro-ecological requirements of coconut have
been conducted in the provinces. The publication on cocoa and coconut growing environments in PNG
(Hanson et. al. 1998) omitted discussion on provincial coconut development. CCI needs to identify ways
to use the existing data in the publication to prepare provincial coconut development notes for extension
purposes. It is not socially and economically responsible to promote the production of coconut in areas
not suitable for coconut production on a semi- or commercial basis.
5.1.2
Production systems
5.1.2.1 Cocoa
There is no accurate information on the estimate of the area of land planted to cocoa in PNG. The only
reliable measure was reported in the 1975 – 1976, which showed that around 121,590 hectares was
planted to cocoa (Bleeker and Freyne 1981). The area under plantation was 45% and smallholders
accounted for 55%. No follow up data has been collected for the area planted to cocoa since that report.
The total estimated land area suitable for cocoa production has been estimated to be 2,199,500 hectares
in PNG (Bleeker and Freyne 1981). It is estimated, from the data provided, that only 5.5% of suitable land
available for cocoa production has been planted to cocoa in PNG. All cocoa plantations in the Southern
region have been abandoned since the 1970s due to lack of market outlets. The Cocoa Pod Borer moth
is currently the number one threat to PNG cocoa production base.
Cocoa is produced using a largely shade based system in PNG. Cocoa is under-planted with other food
crops such as bananas in the early stages of development. Shade trees such as Glyricidia planted after
cocoa trees becomes established. Coconut palms have been used as shade for cocoa trees even when
coconuts do not have high returns. In the 1970s, an estimated 75% of cocoa was inter-planted with
[18]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
coconut trees (Densley 1973). However, recent studies by CCI indicates that coconut palms complete
with cocoa for light, water and nutrients under poorly managed cocoa/coconut blocks and can reduce the
yield potential of cocoa. In areas where land shortage is occurring as a result of increasing population in
rural communities such as in the Gazelle Peninsular area in East New Britain, cocoa based farming
systems would be a practical alternative to the high density cocoa planting currently used in PNG. Under
this system, cocoa would be intercropped with other food and cash crops (e.g. turmeric, ginger, etc)
subject to market availability for these other crops.
5.1.2.2 Coconut
Coconut palms accounted for 248,000 hectares of land in PNG in 1972/1974 (Wheeler et. al. 1973) while
DAL (2002) reported that 260,000 hectares were planted to coconuts. KIK has estimated that the actual
area under coconut is currently at 220,000 hectares (APCC 2008). This is, however, based on the
following factors: 15% of the land under coconuts was lost to oil palm in 1980s and older coconuts in
abandoned plantations and smallholder blocks have been lost to pests/diseases and fire. The major biosecurity threats to the production base of coconut in PNG are beetle pests and the Bogia Coconut
Syndrome.
It is estimated that about 50% of the coconuts palms are senile in PNG (APCC 2008) because the major
coconut areas in the New Guinea Islands were planted by German colonialists. There are some older
palms still producing surprisingly high yields (Anon. 2005). In PNG, village people develop “sentimental
affection” for their palms over time because it not only provides food and cash but it is also used as a
permanent mark over land boundaries. In commercial coconut production, however, it is doubtful whether
the maintenance of old coconut stands is economically preferable to the substitution of the plantation by
new, improved planting material at an earlier age. The low returns from copra make it difficult for
plantations to undertake large scale replanting. Some coconut plantation owners are now exploring the
possibility of replanting coconuts over several years which should spread the cost and risk over time20.
The major challenge facing the adoption of hybrid coconuts in PNG is its high susceptibility to damage
caused by the Scapanes and related beetles. KIK is advising growers to select high yielding local tall
coconut varieties to be used for replanting while CCI develops a hybrid resistant to beetle attack and
Bogia Coconut Syndrome.
Years prior to independence, coconut was promoted to be planted as a cash crop on a mono-crop basis
allowing food crops to be intercropped only during the early years (Wheeler et al 1973). Growers were
advised to plant a legume cover crop such as Pueraria sp. under coconut palms. However, coconut as
mono-crop is becoming an uneconomical practice in situations where land shortages are occurring as
population increases in rural communities such as in the Gazelle Peninsular area in East New Britain.
The need to develop appropriate coconut based farming systems is being recognised as a practical way
of addressing this issue in the long term (CCRI 2002b).
5.1.3
Development domains
CCI developed a conceptual framework for cocoa and coconut development domains using the
Geographic Information System (GIS) in 2010 (CCI 2010). GIS is used as a planning tool to identify areas
with similar agricultural potential that could be targeted by specific cocoa and coconut development
projects. The GIS was linked to a structured biophysical and socioeconomic databases for PNG. The
biophysical and socio-economic data was disaggregated based on three variables, namely, agricultural
potential, population density and accessibility.
20
Mr William Gardner, Dylup Estates, personal communication, 2008.
[19]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
The highlands areas were not suitable agro-ecological zones for cocoa and coconut growing so were
omitted from further consideration, except Karimui in Simbu and Jimi Valley in the Western Highlands
were cocoa and coconuts are currently grown on a trial basis due to warmer micro-climatic conditions in
these areas (CCI 2010). Only agriculture potential and accessibility were used to determine the number
of cocoa and coconut development domains. Moreover, high and moderate accessibility were combined
into high-moderate group. The analysis in the second workshop resulted in the following:
(a)
(b)
(c)
(d)
Six development domains were identified based on agriculture potential and accessibility;
An estimated population of 2.3 million currently grows cocoa and coconut;
The total land area planted to cocoa and coconut (both existing and potential) is
approximately 96,936 square km (or 9,693,600 hectares);
Change in slope, annual rainfall and altitude, in relation to temperature, had a significant
impact on the agriculture potential outcome.
The important aspects of major cocoa and coconut development domain clusters are summarised in
Appendix H. A map showing the main cocoa and coconut producing areas based on development
domain clusters in PNG is provided in Appendix I.
Information from the Mapping Agricultural Systems Project (MASP) database was included in the cocoa
and coconut domains analysis which resulted in the commodity mix with other cash crops and staple food
crops by province and district. The domains for cocoa and coconut would be the guide for planning CCI
research and extension activities. They would be subject to change as new information is incorporated
into the MASP database over time.
In terms of specific cocoa and coconut project planning, CCI needs to undertake site visits to validate
agro-ecological aspects of selected sites in the provinces. Useful agro-ecological information for cocoa is
available in the study reported by Hanson et at (1998), however, there were two major limitations with this
work. Firstly, limiting factors for cocoa development were defined more for high input plantation
production rather than low input smallholder production, underestimating suitability for smallholders in
many provinces. Secondly, no attempt was made to prepare provincial coconut development plans in the
document. CCI should develop the provincial coconut development plans for provinces based on the data
provided by Hanson et al.
5.2
Scale of production and productivity improvement
5.2.1
Cocoa21
5.2.1.1 Scale of production
It is apparent from Cocoa Board statistics that annual production of cocoa is price sensitive – when prices
are higher more area is harvested, leading to higher production. Annual cocoa production has been
varying between 30,000 tonnes to as high as 51,000 tonnes from 2000 to 2008 (Figure J-1, Appendix J).
The highest production peak is attributed to high world cocoa prices in 2008. Thus, it can be assumed
that variation from year to year and the gradual increase in cocoa production is due to cocoa price
fluctuations and not to increased area planted to cocoa in the last nine years.
21
The discussion on cocoa production and productivity is adapted from PNGCCIL Strategic Plan 2010 – 2019, pp. 22-25.
[20]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
The analysis of annual cocoa production share by province from 2000 – 2009 showed the following trend:
East New Britain (46%), Bougainville (27%), East Sepik (10%), Madang (8%), New Ireland (3%), and
West New Britain, Morobe and others with 2% each (Figure J-2, Appendix J). It should be noted that
Bougainville has made significant recovery efforts after the civil crisis.
5.2.1.2 Production by sector
Cocoa in PNG has moved from a system where the majority of cocoa was produced in plantations, to a
system dominated by smallholders (Figure J-3, Appendix J). The plantation sector has been producing
less than 10,000 tonnes of cocoa since 1995 and has even declined further to less than 5,000 tonnes
since 2002. Currently the smallholder sector is producing 80% of the total cocoa output per annum.
The contribution from the plantation sector has declined significantly because of land tenure uncertainties
and low commodity prices, coupled with the high cost of production. One of the main reasons for the
significant increase for smallholder production is because this sector uses very little inputs in cocoa
production due to resource limitations.
5.2.1.3 Productivity of plantations and smallholders
Studies have been conducted on the productivity of cocoa and cost of cocoa production from 1989 to
1998. During these years productivity has fluctuated between 1,400 and 2,500 tonnes per hectare. No
studies have been done in recent years.
The average yield for PNG (based data from East Sepik, Oro and East New Britain) was 200 kg per ha.
Since then most other smallholder cocoa studies have focused on ENBP where the smallholder cocoa
yields have ranged from 320 to 620 kg per hectare in the past two decades. There have been gradual
increases from 1989 to 1999, but these declined in 2007.
The period of increased production correlates with the release of improved cocoa planting materials
(SG1, SG2 and Modified SG2 (big and small hybrids) between 1982 and 1995 and the recovery of prices
in the early 1990s. The result in 2007 was expected because of the low uptake in the initial years of the
release of higher yielding hybrid clones and the study sites. During periods when cocoa prices are low
farmers tend to move toward more copra production and sale of wet cocoa beans. In Bougainville, yield
per hectare ranged between 80 and 200 kg per hectare during non-flush periods. During the cocoa flush
period, average production per hectare ranged between 300 and 500 kg per hectare.
The genetic potential yield of the hybrid cocoa planting material developed at CCI is about 2,500 kg (dry
bean) per hectare. This means that smallholder cocoa productivity in the past decade has been
significantly below the potential yield levels of the current planting materials. When the most recent
smallholder cocoa yield figure of 366 kg per hectare is measured against the genetic yield potential, there
is a difference of 2,134 kg (Lummani 2008b). Smallholder farmers in PNG are low cost producers
compared to cocoa farmers in other countries. This is due to the low input farming system which is
prevalent throughout PNG. In general, transport comprises about a third of the total cost of production
and marketing for smallholders in PNG.
[21]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.2.2
Coconut22
5.2.2.1 Scale of production
The total annual copra production for the past decade is depicted in Table J-1, Appendix J. Annual copra
production from 2000 to 2009 has averaged around 97,313 tonnes per year. Annual copra production
dropped from 143,000 tonnes in 2000 to 64,000 tonnes in 2001 but it gradually started to increase in
2002 onwards and has fluctuated between 71,000 tonnes and 132,000 tonnes. Like cocoa, copra
production is very sensitive to prices changes.
The loss in annual copra production in 2001 prior to deregulation in 2002 is attributed to the former Copra
Marketing Board’s (CMB) inability to pay copra producers and/or transmitted a very low proportion of the
export price or a combination of both.
It appeared that deregulation of copra marketing in PNG by the removal of the CMB adversely affected
copra production in Southern region provinces and certain remote coastal areas and islands in Momase
(e.g. Sandaun and Siasi) and New Guinea Islands (e.g. Manus). This is due to lack of marketing
infrastructure and economical shipping routes in these areas. Before the deregulation, CMB provided
market outlets and subsided shipping routes in these remote areas. The very high domestic shipping
costs has rendered it unprofitable for private buyers to buy and ship copra from Southern region, other
remote coastal areas and island communities.
Annual copra production trends from 2002 – 2009 show that copra production has improved and it has
been maintained above 85,000 tonnes since 2004. This implies that private sector participants in the
copra trade have addressed the marketing and shipping issues in remote parts of coastal and maritime
provinces. For example, KIK has allowed the private sector participants to export copra out of remote
areas in PNG like Alotau in Milne Bay and Kieta in Bougainville. In addition, major copra oil mill operators
such as Coconut Products Limited (CPL) and Coconut Oil Production Madang (COPM) and copra
exporters such as Kimbe Bay Shipping Agency have provided their own shipping vessels to buy copra
from remote areas and have revived copra production in these areas.
The data on average annual copra production from 2000 – 2009 shows that there are five major copra
producing provinces in PNG: East New Britain (38,121 tonnes), Madang (22,421 tonnes), Bougainville
(12,368 tonnes), New Ireland (11,127 tonnes), and West New Britain (9,330). Bougainville used to be the
major copra producer however, due to the civil unrest in the province, copra production had fallen. In
recent years production in Bougainville has been recovering since 2003.
Regionally, the New Guinea Islands produced 73.9% of total copra production, MOMASE accounted for
23.6% and Southern produced 2.5% based on data from 2009. For the Southern region, main copra
producing province has been Milne Bay. Note that prior to deregulation, in the year 2000, the New
Guinea Islands accounted for 69% of the total copra production, Momase produced the similar proportion
at 25% and Southern produced 6%. Hence, the share of copra production has increased in New Guinea
Islands, Momase has stayed the same and Southern has experienced a significant decline in copra
production after the deregulation.
5.2.2.2 Production by sector
The plantation sector was the dominant player of the industry from 1950 onwards but by early 1980s, the
smallholder sector commenced to become the leader in terms of copra production (Figure J-4, Appendix
22
The discussion on coconut production and productivity is adapted from Omuru (2005).
[22]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
J). Total annual copra production from plantations has declined from 74,455 tonnes in 1980 to reach its
lowest level at just over 17,000 tonnes in 1991. Production recovered briefly in 1992 and 1993 to reach
over 40,000 tonnes and stagnated thereafter, managing just over 20,000 tonnes annually up to 2001.
Smallholder production increased significantly in the early to mid-1980s and slowed from 1987 to 1994
but recovered markedly in 1995 and 1996. However, it slowed again in 1997 and 1998 due to adverse
weather conditions caused by cyclone Justin and the El Niño-induced drought in 1997. Although the
registration of sectors by plantations and smallholders were omitted under the KIK Act 2002, it is
assumed that smallholders still produce around 80 % of the copra while plantations manage around 20%.
The main reasons for the changes in the pattern of copra production between smallholders and
plantations are: (a) large scale planting of coconuts by smallholders after World War 2 that continued well
into the 1960s and 1970s; and (b) neglect and abandonment of many plantations due to high production
costs, low prices, and land tenure uncertainties in the 1970s and the early 1980s.
The deregulation of the CMB removed the systems that were in place to determine the production by
sector, thus making it difficult to separate plantation production from smallholder production. However,
KIK estimates that about 80% of total copra production currently comes from the smallholder sector. KIK
is in the process of re-establishing systems that will facilitate the estimation of coconut production by
sector.
5.2.2.3 Productivity of plantations and smallholders
The average copra farm productivity in the plantation sector in PNG has been 773 kilograms per hectare.
On the other hand, the average copra yield for smallholders has been 742 kilograms per hectare for
smallholders in East New Britain from 1989 – 2001.
Earlier hybrid coconut trials have shown that copra yields of 2,000-3,000 kilogram per hectare is possible
for 5 year old stands, and the best ordinary PNG Talls can produce as much as 1,500 kilograms per
hectare of copra. This implies that the actual average yield per hectare in PNG is about 740 to 2,250
kilograms per hectare lower. Based on May 2005 prices, this would translate to a reduction in potential
income of about K490 to K1,496 per hectare.
A greater number of the current coconut stands are near senile and the lack of replanting in the past two
decades is contributing to the declining productivity. Efforts to replant with Renell Tall x Malayan Dwarf
hybrids in the past ended in futility due to the extreme susceptibility of the genetic material to Scapanes
beetle attack. CCI is embarking on an integrated pest management strategy that should enable farmers,
particularly in PNG’s major coconut producing region (New Guinea Islands) to replant with selected local
Tall cultivars.
5.2.3
Bio-security threats to cocoa and coconut industries
Cocoa and coconut crops in PNG are affected by certain bio-security threats consisting of insect pests
and plant diseases. The major ones continuing to affect the production of cocoa in PNG include: VSD23
disease, pod rot (caused by the Phytophthora palmivora fungal) and Cocoa Pod Borer. For coconuts,
Scapanes beetle complex, especially for the hybrids derived from Rennel tall x Malayan dwarfs, and the
recently identified Bogia Coconut Syndrome caused by a phytoplasma. CCI, in collaboration with other
key stakeholders, plays the lead role in monitoring the progress of the various bio-security threats in the
provinces throughout PNG.
23
VSD denotes Vascular-Streak Die-back caused by the fungus Oncobasidium theobrome (Basidiomycete).
[23]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.3
Post-harvest and quality issues24
5.3.1
Actors in the post-harvest handling of cocoa and coconut products
The main actors in the post harvest segment are categorized into primary, secondary and key
stakeholders. Primary stakeholders include the smallholder farmers, co-operative groups, large plantation
owners, youth groups and non-government organisations (NGO) groups involved in cocoa and coconut
farming. Smallholders comprise the bulk of this group. Mobilising of farmers into cooperative groups has
been encouraged by the Cocoa Board and KIK in collaboration with the Department of Commerce and
Industry. A major reason for this is to mobilise resources and production to create economies of scale.
The secondary stakeholders comprise the traders or buyers, suppliers/agribusinesses, transport owners,
processors. In the cocoa industry, traders include wet and dry bean buyers/dealers who facilitate buying
of wet bean from farmers who do not yet have processing facilities and dry bean where there are no
major exporters in the area. In the coconut industry, traders include coconut or green copra or copra
buyers.
The key stakeholders include Commodity Boards (Cocoa Board of PNG and KIK), National and
Provincial Governments, LLGs and Extension providers (e.g. CCI). Refer to Appendix F for their interrelationships.
The processing of cocoa beans in PNG is covered by various laws and regulations. These are
administered by the Cocoa Board of PNG. The Cocoa Board issues licenses to approved fermentary
operators and keeps records on the cocoa that these fermentaries produce. It is illegal to process cocoa
without being licensed by the Board.
Processing of coconut products in PNG is covered by various laws and regulations and is monitored by
KIK. At the buying depot or point copra moisture content is tested and then classified into Hot Air (first
grade), Fair Merchantable Standard (FMS/average grade) or Smoke (second grade copra). Copra sold to
the three oil mills is crushed and exported as crude coconut oil (CNO) and copra meal by-product, whilst
the rest of the copra (about 16% to 20%) is exported directly to overseas buyers. The downstream
processing facilities include one oil mill in Rabaul and two mills in Madang.
5.3.2
Processing and value addition
5.3.2.1 Cocoa
Cocoa processing involves fermentation and drying of wet cocoa beans to dry beans, followed by
bagging for sale. Growers can either sell wet beans to dealers registered with the Cocoa Board or
process their cocoa into dried beans and sell them to either registered dry bean buyers or exporters. If
the farmer owns a fermentery, the wet beans go straight into the fermenting boxes after breaking the
pods. However, cocoa farmers who have a wet bean dealers licence can also buy wet beans from other
farmers, either at their fermentery or at the selling farmers’ blocks. In this case, cocoa is sold as wet bean
and then loaded into boxes for fermenting. In general, full fermentation of wet beans occurs after seven
days in the fermenting boxes. During the fermentation process the beans are turned once every day.
Most smallholders sell their cocoa in wet bean form to dealers. However, it is reported that smallholders
have increasingly processed their own cocoa for sale over the years (Lummani, 2003). Almost all
plantations have fermentaries and sell only dried beans direct to exporters.
24
The discussion on post harvest and product quality issues is adapted from PNGCCIL Strategic Plan 2010 -2019, pp. 28-30.
[24]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.3.2.2
Coconut products
The post harvest processing of dry coconuts into copra in PNG is either by the finger cut method or split
nut method. The latter is the most common method of drying copra in PNG. The nuts are de-husked
using a sharp spike and then split in half with the meat intact, then bagged and transported to the drier.
The copra is dried using coconut shells; husks or wood and usually takes about four days to process. The
dried copra is knocked out of the shell after drying and is bagged for transportation to the nearest copra
buyer, exporter or one of the oil mills for processing into crude coconut oil. The finger cut process is
carried out by splitting whole nuts with an axe and the kernel (green meat) is removed with the aid of a
copra knife. The kernel or green meat is then bagged, taken to the dryer and loaded onto the drying bed.
It takes about two to three days to dry copra using firewood or coconut husks as fuel for the furnace.
The copra sold to the local copra oil mills is processed into CNO and exported to overseas markets from
PNG. The largest copra oil mill is located at East New Britain while the other two smaller copra mills are
located in Madang, respectively. There are two by-products produced from expelling copra and these are
CNO and copra meal (one tonne of CNO yields 38% copra meal). The meal is usually cleaned and
packed for sale in domestic or overseas markets for livestock feed. The volume of copra meal exports
has increased since 2002 as a consequence of the increase in the production of CNO.
Unlike cocoa, there are other alternative high value coconut products that can be produced by coconut
producers or processors. There are business groups (e.g. Tropic Frond Oils Ltd, Buka Metal Fabrication
Ltd and Emirau Marine Resources Ltd) involved in processing and utilising coconut oil for producing
coconut cosmetic products and/or bio-fuel for vehicles and small ships. Small scale processing
technologies have been promoted by KIK and CCI in recent years (Kaiulo 2009). However, there are
serious constraints to downstream processing of coconut in PNG (Omuru, 1999). These include small
and fragmented domestic markets, shortage of skilled manpower and capital, deficient port and shipping
facilities, giving rise to high freight costs and insufficient export market connections.
KIK and CCI will be assessing the economic potential of the certain coconut products for income
generation by smallholders and plantations. These products include: desiccated coconut, virgin coconut
oil (VCO), coconut bio-fuel, coconut fibre, coconut shell charcoal, and coconut timber that require further
investigations. The discussion on the various aspects of these products is provided in Appendix K.
5.3.2.3
Processing Issues
There are certain issues that the stakeholders of cocoa and coconut industries need to address for
improving the quality of cocoa and coconut products from PNG. For cocoa the major issues include: (a)
Lack of proper inspection of CPB infested beans may reduce quality of cocoa in PNG; (b) Smoked tainted
cocoa beans; and (c) Acidity (optimum pH is 3-4) and high shell content of PNG cocoa beans. The major
problems with copra processing include: (a) smoke tainting and (b) lack of a standard copra dryer design
for smallholders.
[25]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.4
Marketing systems, market accessibility and value chains25
5.4.1
Actors in the marketing of cocoa and coconut products
The marketing of dry cocoa beans and coconut products begins at the farm level (Figure L-1 for cocoa
and Figure L-2 for coconut, Appendix L). Two sectors are involved at the producer level. These are the
smallholders who account for about 80% of total production and large-plantations which account for the
balance of 20% in both cocoa and coconut industries. The next level is the wet bean or copra buyers or
dealers, who buy the unprocessed cocoa beans or copra, then the dry bean or dried copra buyers26 and
exporters. Between the farm level and exporters there are transport providers who move the produce
from the farm to the export premises. Before the product is exported, it is assessed by quality assessors
(Cocoa Board) or inspectors (KIK) to determine if the products comply with industry accepted standards.
From the exporters, the products are exported to overseas buyers and eventually reaches the
consumers.
5.4.2
Domestic markets
5.4.2.1 Cocoa
There are two tiers in the domestic cocoa market: The first is the wet bean market where smallholder
farmers who do not have a fermentery sell wet bean to wet bean buyers registered with the Cocoa Board.
Most smallholders participate in this market. However, there has been an increasing trend in smallholders
processing their own cocoa for sale over the years.
The second tier is the dry bean market where trade in dried cocoa bean takes place. Dry bean can be
sold directly to exporters or to registered dry bean buyers who then sell the produce. Almost all
plantations have fermentaries and sell only dried beans to exporters.
In the 2007/08 cocoa year, there were sixty-six wet bean dealers mostly based in East New Britain, and
forty-one dry bean dealers in PNG, with 15 (37%) in East New Britain and 12 (29%) in Bougainville.
5.4.2.2 Coconut products
Copra industry also has a two-tier market or dual marketing system. The first is the green copra market
where the fresh kernel of the coconut is sold to processors that dry them to make copra. This market is
somewhat small, mostly concentrated in the New Guinea Islands provinces of East New Britain and New
Ireland. The second market is the dry copra market. Copra is produced by farmers and is either sold to
traders or buyers that sell to exporters or can be sold directly to exporters or oil mills.
In terms of domestic consumption, only coconut industry has the potential to develop dynamic local
industries based on various edible and non-edible coconut by-products in PNG. Currently, KIK has not
developed any form of licensing for domestic coconut traders. It may be necessary for KIK to develop
appropriate quality monitoring systems for coconuts by-products produced by families in rural areas for
marketing in the local urban markets or retail shops. KIK will have to collaborate with the other
government agencies such as the Department of Health and town authorities to prevent people from
purchasing products not approved by the appropriate government authorities.
25
26
The discussion is adapted from PNGCCIL Strategic Plan 2010 – 2019, pp. 30-32.
The dry bean or copra dryers are either independent operators or act as agents for exporters.
[26]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
5.4.3
Export markets
5.4.3.1 Cocoa
The Cocoa Board issues two types of export licenses, namely: restrictive and unrestrictive export
licenses, respectively. Companies with a restrictive export license are allowed to process (using their own
fermentaries) and export cocoa from their own farms or plantations only, while those with an unrestrictive
export license are allowed to buy and process cocoa purchased from mostly smallholder farmers for
export. In 2008, there were two export companies with restricted licenses and 16 companies with
unrestricted export licenses.
The main markets for PNG cocoa over the last ten years have been USA (32%), followed by Singapore
(23%), Indonesia (11%), Malaysia (11%), Thailand (6%), Belgium (6%), Germany (5%), UK (4%) and
others27 (2%).
5.4.3.2 Coconut products
KIK issues four types of licences, namely: buy copra only and sell to copra mills or copra exporters; buy
and export copra only; buy and process only; and , buy, process and export crude coconut oil and copra
meal. In 2010 KIK issued the following licences: twelve buy only; five buy and process only; sixteen buy
and export only; and three buy, process and export.
Most of PNG’s copra is exported to Australia and the Philippines. The bulk of crude coconut oil is
exported to Netherlands, Germany and UK, whilst the copra meal is exported mostly to Australia and
New Zealand.
6
Socio-Cultural Contexts and Economic Status of Rural
Smallholder Communities Dependent on Cocoa and
Coconut
6.1
Socio-economic characteristics of cocoa and coconut producers
6.1.1
Number and size of farms
No accurate data is available from CCI, KIK and the Cocoa Board on the number of farmers and size of
farms for both cocoa and coconut industries. The available data are at best sketchy and the data reported
here have been drawn mainly from socio-economic studies that had been undertaken since the 1990’s.
Over 150,000 households in the coastal and island regions are actively involved in cocoa production,
representing about 16% of total PNG households. In contrast, a total of 309,417 households were
engaged in coconut farming which, represented about 31% of total households in PNG (National
Statistics Office 2001). This works out to about 0.75 million and 1.5 million people who are involved in
cocoa and coconut farming, respectively. Cocoa is primarily an export crop and has no other subsistence
use, therefore the 150,000 families involved in cocoa farming can also be taken as 150,000 cocoa
farmers. Coconut, on the hand, has many uses (both subsistence and for cash). A freight subsidy study
conducted in 2001 (CMB 2002) reported that there were a total of 80,918 copra farmers. This represents
about 26% of the total number of households engaged in coconut growing.
27
The “others” is made up of Australia, New Zealand, Netherlands, Spain and China.
[27]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Studies on smallholder cocoa, conducted mainly in the East New Britain since 1974, indicate that the
average area of cocoa holdings per household ranged from 1.8 (Godyn 1974) to 3.25 hectares (Curry et
al 2007). The average coconut farm size was about 2.20 hectares in 2000 (Omuru 2001a).
6.1.2
Aptitude of farm management
Low adoption of good farming practices by smallholder farmers has been identified as a core problem in
both cocoa and coconut industries. The factors that may have led to this situation includes the lack of an
effective extension system, lack of interest by farmers to improve their block maintenance standards, land
shortages, poor infrastructure associated with high transport costs (e.g. Omuru et al 2001) and lack of
accessibility to rural finance. Moreover, the low world cocoa and coconut oil prices trigger a negative
impact on the cocoa and coconut production value chains that eventually diminishes the interests of the
farmers in producing the two cash crops. All of these have resulted in low farm productivity and data
collected from East New Britain by Omuru et al (2001) highlighted specific factors important in influencing
the level of farm management displayed by cocoa and coconut farmers:
(a)
For cocoa output were: (i) price of cocoa (87%); (ii) price of goods sold in shops (72%); (iii)
family cash requirements (67%); (iv) change in buying price (64%); (v) accessibility to
transport (60%); and (vi) payment of school fees (58%).
(b)
For copra the most important factors influencing output were: (i) price of copra (79%); (ii)
change in buying price (69%); (iii) school fees (62%); (iv) accessibility to transport (61%);
(v) price of goods sold in stores (56%) and (vi) cash requirements (55%).
(c)
In terms of extension effectiveness, 62% of the respondents were visited by an extension
agent in 1998. Thirty-eight per cent had no such visits. Forty-nine per cent felt the visits
were really useful, 40% thought the visits were fairly useful while 11% thought the visits
were not useful. Most of the extension visits were for fermentery inspections (21%),
farm/block inspection (17%), field demonstration of weed/pest control (17%), and
management advice (16%) and loan advice (14%).
(d)
Ninety per cent of the sample farmers indicated a willingness to adopt research-induced
technologies if they were available. The major reason for those willing to innovate was to
increase crop production and desire to earn more income.
The lack of positive support by different national and provincial governments to the key stakeholders of
cocoa and coconut industries over the years has resulted in cocoa and coconut farmers struggling to
sustain their livelihoods in a fragile rural business environment. This unfortunate situation has made the
farmers become indifferent to improving the output of their cocoa and coconut blocks. The farmers in
general manage their blocks with little or no inputs and just collect what they can find to produce cocoa or
copra which is similar to foraging rather than farming (Curry et al 2007).
6.1.3
Quality of farming resources
Land, equipment (e.g. wheel borrows), tools, processing plants (hot air dryers), chemicals (e.g. fertilizer,
herbicide, etc) and labour inputs are required for producing cocoa and coconuts. Most cocoa and coconut
farmers have inadequate farm inputs due to financial constraints (Omuru et al 2001, Garalom 2010).
Omuru et al (2001) found in a baseline socio-economic survey that 84% of sampled farmers owned
cocoa fermentaries while 16% were without fermentaries in East New Britain. Fifty-six per cent of the 36
coconut farmers had copra dryers while 44% were without dryers or were using other farmers’ dryers to
process their copra. Very few farmers use fertiliser and herbicide on their farms (Omuru et al 2001). High
input costs and the lack of information were the major reasons for non-use of fertilisers and chemicals.
[28]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Unlike oil palm and rubber farmers, cocoa and coconut producers do not have farm input loans from
coconut oil mills or copra exporters. In the oil palm and rubber industries, farm input loan systems are
available to oil palm and rubber farmers to enable their farmers to procure essential tools and chemicals
on loan. These farmers repay as they produce and sell fresh fruit bunches or cup lump rubber. For cocoa
and coconut producers it is difficult to develop such a system because of the inherent nature of the two
industries (e.g. farmers are widely scattered in remote areas).
One major factor affecting the quality of farming resources in the agriculture sector is the lack of credit
facilities available for farmers to access. The establishment of the Smallholder Agriculture Credit Scheme
(SACS) with an initial capital of K10 million implemented through the National Development Bank (NDB)
was to assist farmers in the agriculture sector to improve their farm outputs28. However, the allocations to
cocoa and coconut industries were not sufficient to meet all the needs of the growers. There were loan
repayment problems between the growers, CCEA and the Bank which needed to be addressed before
this scheme could benefit the farmers. The last Steering Technical Meeting held in 2005 between DA&L,
NDB and commodity boards revealed that most of the allocations were drawn down with most framers
defaulting on loan repayments.
6.2
Identification of target groups in cocoa and coconut sub-sectors
The main target groups for cocoa and coconut sectors include the following: (a) Smallholders (80%) and
plantations (20%) that produce the cocoa and copra at the farm level; (b) Trucking and shipping agents
that move the farm produce to buying points, processing plants or exporters’ premises; and (c) Licensed
traders buy, process and export cocoa and coconut products to overseas markets. The details on the
different types of target groups in cocoa and coconut sub-sectors are covered in section 5.3.2.1 where
the actors in marketing of cocoa and coconut products are discussed.
In terms of cocoa and coconut farmers’ registration systems, CCI and National Growers Association have
developed preliminary farmer profile databases in selected provinces or districts. However, Cocoa Board
and KIK in collaboration with CCI need to develop appropriate registration systems to profile the
smallholder and plantation producers of cocoa and coconut by provinces, districts and LLGs. Currently,
Cocoa Board and KIK need to work with CCI and the provinces to establish appropriate databases for
their respective primary producers.
6.3
Cocoa and coconut production strategies pursued by cocoa and coconut
farmers
6.3.1
Cocoa production strategies
Curry et al (2007) described a three stage production strategy profile of cocoa smallholder farmers who
mostly grow new hybrid cocoa in East New Britain. Stage I is referred to as the immature phase from 1 –
3 years after planting of new seedlings. Farmers can harvest pods for producing wet beans during this
time. Stage II is when the trees reach their mature phase from 3 – 8 years after planting. The trees are at
their high production stage and pests and disease levels are starting to rise on the farm. The first two
stages were referred to as ‘farming stages’. However, the current strategy is one where farmers are not
active in replanting and replacing the mature trees that have exceeded their productive age and are
progressing into what is referred to as stage III (i.e. yield decline stage with a high pest and disease
levels). The trees are 8 or more years old and at this stage farmers are ‘foraging’ for whatever they can
harvest from low yielding senile trees just to earn some money to get by. The cocoa block is no longer a
28
SACS was established with the assistance of World Bank funding to enable smallholders to access credit for improving their
agribusiness enterprises.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
viable and sustainable livelihood strategy to them. The incidence of pests and diseases in stage III has
been found to be high and is not surprising given the low labour input and low investment on the farms
that have been observed. So far CCI has not been able to develop appropriate farming strategies to
address this phenomena in the production of hybrid cocoa.
6.3.2
Coconut production strategies
Although a similar kind of strategy has been observed in coconut production, the time phase is longer
compared to cocoa. For tall coconut varieties, Magat (2007) identified three development stages, namely:
(a) Stage I – field planting to 6 years before the palms start to bear nuts; (b) Stage II - mature stage
where peak production starts from 7 years after planting up to 25 years of age; and (c) Stage III - the
period from 26 – 60 years and the time when farmers should commence replacing the old palms is after
40 years using the under-planting technology which involves the planting of new coconut seedlings under
older palms. It is therefore important for CCI to complete the research work on coconut rehabilitation trials
using the under-planting technology and publish extension documents on this technology for farmers to
use. High yielding local talls can be used to under-plant the old coconut palms in areas where there is
severe beetle pest infestation pressure to allow the use of currently produced hybrid coconut palms.
The coconut hybrids produced from crosses between tall and dwarf varieties have a shorter productive
life cycle by 20 years than the tall varieties. The hybrids are the highest yielding varieties and may
produce 50% to 100% more than most talls during the first twenty years Bourdeix et al (2005). However,
these varieties require good agronomic management levels in order to achieve their full potential
compared to the locally adopted talls. It should be noted that hybrid coconuts are not widely adopted by
the smallholders and plantations in PNG because of their high susceptibility to severe beetle damage.
6.4
Livelihood options and strategies for cocoa and coconut framers
Past studies have shown that smallholder famers have adopted a farming system that involved intercropping garden food with cocoa and coconut (Lummani 2008b). In fact, a recent survey on smallholder
cocoa farmers showed that garden food (33.3%) was the main source of food and main source of income
(33.3%) for smallholders. The surplus is sold in town and roadside markets to earn a supplementary
income. For male household heads, the main source of income was market sales (34.7%), followed by
cocoa (18.7%), fishing (13.7%), PMV (8.7%), betel nut and mustard (6.7%), piggery (3.3%) and poultry
(2%). For female household heads, the main sources of income were garden food (46.7%), followed by
cooked food (20%), betel nut and mustard (12%), cocoa (8%), ice block (2.7%) and formal employment
(2%).
However, an earlier study reported that the average annual income from the production and sale of dried
cocoa bean, wet cocoa bean and copra was K2,803, K64 and K794, respectively, per household (Omuru
et al 2001). For food crops the average income was K201 per household. Other sources of income
included livestock breeding and sale, fishing, trade store, bakery, PMV and hire of chain saws. Savings
habits were found to be very poor. Only 1% of the households reported that they regularly deposited part
of their income while most farmers (62%) only made deposits during the good times.
6.5
Social and economic status of cocoa and coconut farming communities
6.5.1
Food security
In cocoa and coconut farming communities food security is becoming an issue in highly populated areas
such as Gazelle Peninsular in East New Britain and Karkar in Madang provinces. This is related to the
fact that high population density changes the land use patterns for cash cropping and food production. In
[30]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
a recent socio-economic survey, the 7.4% of the households surveyed, indicated that food security was
becoming an issue (Lummani 2008b).
In order to address food security issues in rural communities where cocoa is a major cash crop, NARI
has undertaken research work on cocoa farming systems in the 1980s and 1990s. However, very little of
these information has been translated into appropriate extension packages for cocoa farmers to adopt.
Cocoa framers from Bitakapuk No. 2 Village in the Gazelle Peninsular indicated to the review team that
they were not practicing any particular cocoa farming system developed by NARI29.
Unlike cocoa, coconut is an important food source for most Papua New Guinean families from the islands
and coastal areas to the highland provinces. It is estimated that an additional 310 million nuts worth about
K155 million30 annually, are consumed in daily family diets. Coconut has also proved that it is a versatile
food source during drought and natural disaster times. For example, the victims of the recent Cyclone
Guba survived on coconuts for two weeks before government relief supplies arrived in the remote areas
in Oro Province31. It is also common knowledge that coconut water can be the only source hydration fluid
on remote atoll islands where coconut palms are growing. KIK and CCI continue to pursue the research
programs on coconut based farming systems at the Stewart Research Station in Madang. The details of
the coconut farming systems are covered under the Coconut Agronomy and Farming Systems in section
7.2.2.2 in this report.
6.5.2
Nutritional and health status
Although CCI does not address nutrition and health status of cocoa and coconut farming communities
directly, it is important that these issues be integrated into CCI R&D programs in the long term. A recent
survey in East New Britain showed that all the households surveyed grew a variety of food crops and
greens for family consumption and for supplementary income (Garalom 2010). However, in most villages
where cocoa and coconut are cultivated, there are no regular health services for monitoring the nutrition
and health status of family members. Gillet (1989) showed that it is important for rural families to have
balanced meals on a daily basis because either poor nutrition or over nutrition over prolonged periods
can lead to serious health problems for family members. The poor health status of cocoa and coconut
farming family members can result in low labour productivity and affect cocoa and copra outputs from
their farms.
Grellier and Omuru (2008) analysing FAO Nutrition Country Profile of PNG data, from 1964 to 2000,
concluded that (a) 27% of the total population is classified as ‘undernourished’ and surveys undertaken
over the last 15 years indicated widespread nutritional deficiency, and in the past five years the number
of children presenting with malnutrition has increased; (b) in rural areas there is a high prevalence of
stunting, low weight, and wasting in children less than 5 years of age; and (c) there appears to be some
regional variation, with a lower prevalence of underweight, stunting and wasting in urban areas; a greater
risk of stunting in the Highlands, and higher levels of wasting in coastal regions.
In respect to HIV & AIDS, Grellier and Omuru (2008) reported that poor nutritional status increases
susceptibility to transmission of HIV, it also increases vulnerability to the impact of the virus in PNG.
Women are at particular risk of both HIV infection and of poor nutritional status; this vulnerability will
increase if/when the HIV epidemic results in decreasing food security and increasing levels of poverty.
29
30
31
A meeting was held on 1 March 2010 with the village people of Bitakapuk No. 2 Village in the Toma area in Central Gazelle
District , East New Britain to gauge their views on the extension services received from CCI and other extension providers.
The K155 million is estimated by multiplying 310 million nuts by the average fresh nut price of 50 toea in local markets
(Information provided by Industry Affairs Division of KIK, 2010).
Dr Eric Omuru, Acting Chief Executive Officer, CCI, personal communication 2010.
[31]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
It is therefore, important for CCI to partner with provincial health authorities during health and nutrition
awareness programs to advise village farmers that some part of their cocoa and copra income should be
used to buy nutritious food for family consumption.
6.5.3. Education and literacy levels
A recent study by Garalom (2010) revealed that about half of the male household heads and female
household spouses completed grade 6 primary level education. A higher proportion of female spouses
(17.8%) completed grade 8 level basic education compared to their male counterparts (10.4%) (Table 3).
However, more male household heads attained grade 10 level high school education (22.9%) compared
to their female spouses (8.9%). Only 4.2% of male household heads attained college and university level
qualification while only 4.4% of the female spouses reached grade 9, 12, college and university centre
level qualification. About 1.4% and 11.3% of the male and female heads, respectively, did not have any
formal education. The data also revealed that about 55% of the 205 siblings surveyed attained grades 7,
9 and 11 (8%), grade 10 (23%) and grade 12 (14%). Only about 2% of them completed college, technical
school or university level qualification. However, for the remaining 69% of the siblings no indication is
given about which proportion of them is of non-school age.
Table 3: Data showing the level of education for cocoa and coconut farmers in East New Britain
Level of education
Grades 2 & 3
Grades 3, 5, 7 & 9
Grade 6
Grades 7, 9 & 11
Grade 8
Grade 9
Grade 10
Grade 12
Grades 9 &12, college & university centre
College, university & technical schools
Male household head
Female household
spouses
6.6%
2.1%
50%
51%
10.4%
17.8%
22.9%
8.9%
Siblings (205)
12%
8%
10%
23%
14%
4.4%
4.2%
1.95%
Source: Garalom (2010)
A number of educated Papua New Guineans are beginning to realise that it is important to invest in an
agricultural commodity based business project in their villages, as part of their retirement plans, after they
cease their formal employment with either the public or private sector. This group of Papua New
Guineans are actively investing in agricultural projects in provinces such as East New Britain, New
Ireland, Madang and Bougainville where cocoa and copra have established production, processing and
marketing networks.
6.5.4
Labour mobility
Omuru and Fleming (2001) studied the relationship between hired and unpaid family labour smallholders
producing cocoa and copra in the Gazelle Peninsula, East New Britain Province. Unpaid family members
were found to substitute for hired labourers when the wage rate for hired labourers was relatively high.
It was also found that males were paid 4.5% more than females in cocoa production but females are paid
5% more than males in copra production. Wage rates for hired labour in cocoa production were found to
be substantially higher (by 27.5%) than wage rates in copra production. The differential was greater for
male labourers than for female labourers and probably reflected greater profitability in cocoa production.
A simple quantitative analysis of the responsiveness to wage rate by cocoa smallholders employing hired
male and female labour indicated that households are quite sensitive to the wage rate in employing male
hired labourers but not when employing female hired labourers.
[32]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Most of the female spouses surveyed indicated that they frequently spent about 80 – 100% of their time
selling food crops at the market. Garalom (2010) observed that this can “compromise collective tendance
of cocoa gardens, especially if households are not well organised to make proper use of their time and
other resources available to them. This can be compounded by other factors, such as the attendance to
schools by economically active young members (i.e., more than 10 years of age) of the households”.
Past studies also show that due to the low levels of education of farming households, off-farm formal
employment opportunities were either limited or absent. This enabled available labour to be used on the
cocoa and coconut farming activities. Low levels of labour input into farms was also affected by
customary, church and other social obligations and the distance of farm blocks which are located in far
away areas from the farmers place of residence.
6.6
Different needs and expectations of women and men producers
CCI programs and projects need to be very explicit in the way they articulate equality among men and
women as this influences the development process. This would make agricultural research for
development meaningful and useful for both men and women. The socio-economic framework of
development entails women and men producers having equal access to resources (economic, social,
political), control over those resources (including decision-making), having equal access to different
opportunities (agriculture extension) and reaping benefit equally. All analyses should be done using a
gender lens, which will involve asking whether CCI’s interventions are reaching out and benefitting
women and men farmers equally. In addition, CCI has not undertaken studies on how the different types
of lineage (e.g. patrilineal versus matrilineal) in various cocoa and coconut farming communities influence
the needs and expectations of women and men producers.
6.7
Effects of gender, HIV & AIDS and environmental issues on cocoa and
coconut subsectors
6.7.1
Gender issues
As far as gender issues are concerned, both men and women assist each other in undertaking various
tasks required for producing cocoa and coconuts. Gender issues also affect labour mobility in cocoa and
coconut producing communities. For example, it is customary for the women to take care of the sick in
the family. This implies that the workload for men increase in producing cocoa and coconut when family
members fall sick. Certain aspects of food production also suffer when women take time to look after the
members of the family who are sick.
CCI is yet to develop appropriate research protocols where various aspects of gender issues affecting
labour supply and specialisation in cocoa and coconut framing communities can be monitored over time.
The process of mainstreaming gender into CCI R&D activities has commenced recently32. It is important
for all CCI staff to understand the significant effects gender has on the economics of cocoa and coconut
production in rural areas in PNG.
Gender mainstreaming should be done at two levels (a) internal (within CCI through its policies, systems
and organisational culture) and (b) external (interface with stakeholders through programs and projects).
There is a need to internalize gender sensitivity as CCI goes through the program formulation process.
32
Dr J Ravusiro presented a paper on Gender and HIV/AIDS mainstreaming at the Project Inception Workshop on the
National Cocoa and Coconut Production Improvement Project, 19th – 20th April, 2010, Kairak Training Centre, PNG
University of Environment and Natural Resources, Vudal.
[33]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
6.7.2
HIV & AIDS
6.7.2.1 Trends of HIV & AIDS spread in PNG
The data collected from the different surveillance sites, such as VCT (voluntary counselling and testing),
ANC (antenatal clinic) and TB (tuberculosis), have showed a high increase in the level of the epidemic in
PNG (Anon 2007 and Anon 2008). From 1987 to 1996, there was a gradual increase in the total number
of infections from 6 to 570 and from 1997 to 2006 there was an exponential increase from 918 to 18,484.
The number of new HIV infections surpassed 5,000 for 2007 – 2008 period, indicating that the spread of
HIV is on the increase despite the awareness programs conducted to educate people to avoid
behavioural trends that promote the risk of HIV infections.
The relevant findings are summarised below (Anon 2007 and Anon 2008):
(a)
At the end of 2006, the national HIV prevalence was estimated to be 1.28% among youth
and adults aged 15 to 49 years, with an estimated 46,275 people living with HIV in PNG.
All other HIV related indicators also projected increases in 2007 and 2008 in the numbers
of new infections, in the numbers of AIDS related deaths and in the numbers of orphans
(0-17 years).
(b)
The trend of the epidemic is projected to greatly increase, especially in the rural areas
where 85% of the PNG population lives. It is projected that from 2007, the prevalence
among rural populations will become higher than the urban prevalence with the numbers of
people requiring treatment projected to also increase.
(c)
In 2008, a total of 5,084 newly diagnosed HIV infections were reported bringing the total
cumulative HIV infections to 28,294 by the end of December 2008. More females (59%)
than males (40%) were reported with HIV infection in 2008, which could be due to the
greater number of females being tested (71%) than males (29%). The median ages were
27 in females and 33 years for males, showing that women and female youths are infected
at younger ages than men. The number of infected children continues to increase with
another 112 (4.0%) children under the age of 15 years diagnosed with HIV.
(d)
Ninety-three % of all reported HIV cases in 2008 were reported from eight provinces
including National Capital District (40%), Morobe (7%), Madang (2%) and the five
highlands provinces (Western Highlands Province 17%; Eastern Highlands Province ,15%;
Enga 7%; Southern Highlands Province, 5% and Simbu 2.5%). The high total number of
reported HIV cases in NCD is partly due to NCD being the only site for testing in PNG for
almost ten years.
The significance of the HIV infection data to cocoa and coconut subsectors is related to the spread of HIV
infections across age and sex groups. More females (34%) between the ages of 15 and 24 years,
compared to 14% in males had HIV infection. However, for the age group of 35 years and above, more
men (27%) than women (13%) have been infected. Moreover, the projections for HIV infections to
increase in the rural areas where 85% of PNG population resides is a huge challenge for cocoa and
coconut subsectors. Thus, HIV & AIDS will be an important factor affecting labour mobility in the
agriculture sector, including cocoa and coconut industries, in the long term. Therefore, it is crucial to
develop effective strategies and targeted interventions to reduce the spread of HIV in the rural areas.
[34]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
6.7.2.1 Impact of HIV & AIDS on agricultural systems
The ARDSF commissioned a study to investigate ways in which HIV and AIDS are likely to impact on
farming systems, food and nutrition in PNG (Grellier and Omuru 2008). A key focus of the study was the
potential implications of HIV and AIDS on labour availability within farming systems. At present there is
very limited understanding of labour inputs and requirements particularly within smallholder and
commercial plantation systems in PNG. ‘Labour’ was investigated from a socio-economic perspective
which highlighted key issues that impact on the availability and effectiveness of labour inputs. The key
findings relevant to cocoa and coconut sub-sectors are outlined below:
(a)
Labour tends to be viewed as the number of people or amount of time it takes to complete
a given task. However, in PNG total labour availability is not the key issue due to high
levels of un-/under-employment. In terms of HIV and AIDS, other labour issues are more
significant and these are:
(i)
(ii)
(iii)
Critical activities (tasks that have to be undertaken to produce a ‘satisfactory’ yield
e.g. preparing land, planting, weeding)
Critical timing issues (activities such as spraying or harvesting which have to be
undertaken at specific times. If labour is not available at these critical times then
entire harvests can be lost).
Critical skills issues (skills which are formally taught or informally acquired over time
but which are essential, and if lost will have a major impact on production levels and
household welfare)
(b)
Households affected by HIV and AIDS change their existing labour patterns and the
opportunity costs of these changes need to be factored into research. Some opportunity
costs occur directly as a result of HIV and AIDS, e.g. if women divert time from
subsistence labour to domestic labour (caring for the sick) then they have less time
available to spend on food production. This will reduce nutritional security. Other
opportunity costs are likely to impact more on industries than households e.g. specialist oil
palm harvesters may be reluctant to move from freelance to formal plantation employment
due to insufficient incentives.
(c)
CCI needs to widen its scope of research from an agronomic focus to include a socioeconomic approach. This would strengthen understanding of the outcomes and impact of
their existing scientific research and ensure that future research programmes/interventions
are relevant to the needs of smallholder farmers and commercial plantations. CCI is
currently undertaking such socio-economic approach but in limited way due to finding
constraints.
(d)
CCI needs to strengthen collection of qualitative as well as quantitative data, but more
importantly there is a need for rigorous and routine data collection, data analysis and
monitoring and evaluation of the outcomes and impact of research. At present these do
occur but on an ad hoc basis. This makes it extremely difficult to assess the success of
existing research and to plan appropriate future research programmes.
(e)
The current focus of research is on production issues and commercialization. Research
agendas are policy- rather than needs-led and increasing opportunities for income
generation takes precedence over increasing nutritional security.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
(f)
CCI should develop stronger links and partnerships with different sectors e.g. health,
transport and education; and to actively engage with civil society organisations in order to
help to prevent/mitigate unintended consequences of research (e.g. is research reducing
or increasing vulnerability/impact to HIV infection and impact by sub-sector, gender,
household type etc?) It would also increase the impact of positive aspects of research by
enhancing opportunities to disseminate research findings and get the findings of research
out into practice.
CCI is yet to develop appropriate research protocols where effects of HIV and AIDS on labour
productivity in cocoa and coconut framing communities could be monitored over time. The process of
mainstreaming HIV and AIDS into CCI R&D activities has commenced recently33. It is important for all
CCI staff to understand the significant effects HIV and AIDS will have on the production of cocoa and
coconut in rural areas in PNG in terms of affecting the productive labour force.
6.7.3
Environmental impact
Currently, cocoa is produced on land areas that have been cleared previously for food gardens. For
coconuts, forests or bush land areas were cleared to cultivate coconuts under the German Colonial
Administration in New Guinea Islands and Momase in 1940s and Australian Colonial Administration in the
Southern region in 1950s.
Certain cocoa and coconut farming practices need to be modified in relation addressing the carbon
dioxide sources and sinks in cocoa and coconut production systems. Forster et al (2007) concluded that
carbon dioxide is by far the largest contributor to the anthropogenically enhanced greenhouse effect. In
PNG farmers do not dispose of empty cocoa pods, dead plant parts and husks from their blocks. Farmers
normally just pile up the dead plant parts in heaps under cocoa tress or coconut palms to decompose and
sometimes burn them. Decomposing plant parts are potential sources of carbon dioxide to the
atmosphere (Forster et al 2007).
The piles of dried plant parts also become excellent breeding sites for many of the serious insect pests
such as Scapanes beetles. The cocoa and coconut producers must be trained to decompose the dead
plant parts by burying them in the soil or pulverise dry empty cocoa pods into mulching material for cocoa
trees and coconut palms for weed control and soil moisture conservation.
The current use of herbicides for weed control, pesticides for insect pest control and other chemicals for
disease control purposes are also likely to affect the environment surrounding the cocoa and coconut
farms. Omuru (2001a) reported that smallholders and large plantations were using chemicals (e.g.
gramoxone, a non-selective herbicide) to control weeds on their farms. The Integrated Pest and Disease
Management (IPDM) strategy has also incorporated the use of chemicals for improving soil nutrition,
weed control, pest control and disease control (for details refer to section 7.1.1.3) in cocoa. Residues
from the chemicals used in improving cocoa and coconut productivity can also have negative side effects
on the natural balance of surrounding environment in the long term. For example, nitrous oxide is emitted
by fertilizers when applied to soils (Forster et al 2007). It is therefore important to train farmers on the
correct procedures for applying these chemicals for improving the output of their cocoa and coconut
produce.
Cocoa trees and coconut palms could be potential sinks for carbon dioxide in the atmosphere. Coconut
carbon sequestration studies undertaken by Roupsard et al (2008) showed that coconut plantations,
when cultivated under optimal conditions (e.g. high fertility, no seasonal drought, selected varieties,
optimum productive age) displayed amongst the highest levels of photosynthesis or Gross Primary
33
Dr J Ravusiro presented a paper on Gender and HIV & AIDS mainstreaming at the Project Inception Workshop on the
National Cocoa and Coconut Production Improvement Project, 19th – 20th April, 2010, Kairak Training Centre, PNG
University of Environment and Natural Resources, Vudal.
[36]
A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Productivity (GPP) and Net Primary Productivity (NPP: the sum of growth and of litter production)
reaching annual GPP and NPP values close to the most productivity ecosystems, i.e. the tropical
evergreen broadleaved forests. The levels of ecosystem respiration were also very high for the coconut
plantation but had regular levels of ecosystem carbon balance (Net Ecosystem Productivity, NEP)
compared to tropical forests.
Roupsard et al (2008) noted an interesting physiological behaviour of coconut palms in terms of biomass
allocation. It was reported that a coconut palm, contrary to a dicotyledonous tree (e.g. cocoa), does not
allocate much of its NPP into permanent structures (e.g. stems and coarse roots), instead allocates more
than 85% into perishable structures (e.g. fruits or nuts, leaves, peduncles and fine roots) that turn into
litter. The litter is than either respired by the ecosystem or becomes part of the soil organic matter in the
long term. This litter-oriented fate of carbon is unique and cannot be accounted for effectively using
regular forestry inventories of carbon sequestration, such as simple evaluation of carbon build up in the
stems. Thus, additional studies are needed to understand the carbon accumulation in the soil organic
matter under coconut plantations, in addition to that accumulated in the coconut biomass and the litter.
It could be inferred, with caution, from the findings by Roupsard et al (2008) that coconut palms could still
be effective sinks for carbon dioxide even when cultivated in dry coastal areas or on atoll islands. It would
be an opportunity for CCI to conduct field experiments to develop a simple biomass inventory system for
coconuts to compare the proportions of biomass being allocated to perishable structures between wet
and dry sites in PNG.
7.
Review of Past and Ongoing R&D Activities at Cocoa
Coconut Institute
7.1
Research that has been Conducted and Translated into Information and/or
Technologies for use by Farmers
The cocoa and coconut R&D work undertaken in PNG from 1928 to 1980 and from 1981 to 2002 has
been reviewed by Omuru (2001, 2003). This section focuses on the R&D activities undertaken by CCRI
from 1986 to 2003 and by CCI since 2003 to the present time. The review team identified research
findings that have been translated into information and/or technology for use by farmers.
7.1.1
Cocoa R&D programs
7.1.1.1 Cocoa breeding
The major aim of cocoa breeding at CCI is to develop new cocoa varieties that will improve growers’
income. The main emphasis is on the development of hybrid-derived clones for the release of
ecologically targeted poly-clonal varieties as the main breeding strategy. The main cocoa breeding R&D
outcomes are outlined in Table M-1 in section M.1, Appendix M.
The existing cocoa planting materials, known as SG1 and SG2, grown in PNG are Trinitario x Upper
Amazonian hybrids (CCRI, 2000c). The hybrid SG1 was released to the cocoa industry in 1981/1982.
These hybrids are propagated by seeds and show high yield variability and their yields decline
significantly after five to six years. In order to address these problems, the Cocoa Breeding Section at
CCRI (now CCI) modified its breeding strategy to focus on the development of hybrid-derived clones. In
1995, twenty-nine promising hybrid clones (HC) were selected and tested in East New Britain, East
Sepik, Madang and New Ireland provinces. These three poly-clonal varieties were further grouped into
big (HC-B), intermediate (HC-I) and small (HC-S). An information bulletin was published on the
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provisional release of the three poly-clonal cocoa hybrid varieties which included performance characters,
cocoa quality and disease resistance index (CCRI, 2000f).
The three poly-clonal varieties of cocoa hybrid clones were provisionally released in 2000 after two to
three years of field testing in the provinces and a final release was made in 2003 after a further four years
of field testing. The provisional release was the result of a very strong desire by cocoa growers to plant
the new poly-clonal varieties of cocoa clones in their blocks and the growers were impressed by the
earliness and productivity of these new cocoa varieties.
Resistance or tolerance to pests and diseases (e.g. black pod or pod rot 34 and VSD) and cocoa quality
index were the overriding factors to high yield when the hybrids were selected for final release by CCI in
2003. Moreover, CCI only released the big and small hybrid clones in 2003 based on the preferences of
cocoa farmers.
Three other related technologies were also developed as result of the development of new poly-clonal
hybrid cocoa varieties which included: Juvenile Budding Technique, Chupon Budding Technique and
Formation Pruning Technique of the hybrid clones (for details refer to section M.1.1 in Appendix M). The
information provided on the hybrid clones shows that these new varieties required higher level of field
management compared to SG2 hybrids.
There were two major problems that the modified cocoa breeding strategy was to address through the
use of hybrid cocoa clones:
(a)
(b)
Yield variability in SG135 and SG2 cocoa hybrids.
Yield decline after the 4th to 5th year of production.
The issue of yield variability has been addressed by the use of hybrid clones and grouping both the
hybrids and clones into big and small sizes. However, the modified strategy has not addressed the
problem of early yield decline and it continues to be a major constraint to cocoa production in PNG (CCI
2008a). Accordingly, the Cocoa Breeding Section continues to undertake trials to address this issue. The
ultimate aim of the cocoa breeding program is to produce hybrids and hybrid clones that are not only high
yielding with pest-disease resistant and good cocoa quality, but also should have a longer phase of the
maximum yield plateau by at least five additional years. It is too costly both for smallholders and
plantations to continue to use the current hybrids and hybrid clones with a drastic decline after five years
of peak production. The economic implications are that farmers need to plan for replanting or
rehabilitation of their cocoa blocks after the 5th year of production.
7.1.1.2 Cocoa agronomy
The major goals of the Cocoa Agronomy Section are to undertake agronomic research relevant to the
growing conditions and planting materials in PNG, and to develop practical and economically viable
recommendations for small- and large-scale growers. A summary of important cocoa agronomy R&D
programs and outcomes is outlined in Table M-2 in section M.1.2, Appendix M.
There is some strategic cocoa agronomy R&D work that has been completed but is yet to be developed
to a stage where it can be recommended to the cocoa smallholder and plantation sectors. The previous
R&D work on the yield response of cocoa hybrids to inorganic fertilizers has been inconclusive (CCRI,
1990).
34
35
Black pod or pod rot caused by the fungus Phytophthora palmivora causes major losses to the cocoa industry.
SG1 is no longer used as a planting material.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
The research work on weed control is important because weed control makes up a larger portion of the
total field variable costs for cocoa plantations (33% reported by Omuru and Lummani (2001)) and
smallholders (54 % reported by Omuru (2001)). In addition, weed control has a significant effect the yield
of cocoa. For example, trials on the effects of weed-control intervals on early flowering and yield showed
that monthly slashing and application of blanket sprays of herbicides at intervals of 1, 2 and 3 months
resulted in over 60% of trees flowering early and yields of 1.6 – 2.0 tonnes per hectare in the third year of
production (Yinil et. al. 2006). It was also shown that slashing after two months or more, combined with
inconsistent weeding intervals, resulted in large tree losses to pest attack, delayed early flowering,
resulting in low cocoa yields. However, no economic analysis was conducted for this study, so it is not
possible to establish whether the increased yields and resultant income gained from the sale of cocoa
could cover the cost of manual labour and herbicide application.
The on-farm trials of hybrid cocoa in seven provinces revealed that the smallholders have differing levels
of managing their cocoa blocks. The poorly managed blocks resulted in delayed onset of cocoa
production and low yields compared to better-managed blocks. It was recommended that with low input
management, a smallholder was better off using the SG2 hybrids instead of hybrid clones. It is for this
reason that CCI is still producing hybrid cocoa for smallholders who prefer low input management for
producing cocoa.
The other important cocoa technology that the Section has worked on is the use of new hybrid cocoa
clones for rehabilitation by chupon budding. The usefulness of the technology was released based on the
yield results generated after two years from trials conducted at Tavilo Research Station. CCI needs to
confirm whether this innovative technology has been successfully adopted by cocoa farmers to
rehabilitate old cocoa blocks. Moreover, CCI should also explore whether this technique can be used to
sustain yields after the 5th year of cocoa production in hybrid clones.
7.1.1.3 Plant (cocoa) pathology
The overall goal of the Plant Pathology Section is to develop an Integrated Management Control (IMC)
for the major cocoa diseases in PNG. The R&D work is conducted under four programs: epidemiology,
chemical control, genetic control and cultural practices.
Since the establishment of CCI in 1986, the Plant (Cocoa) Pathology Section continues to concentrate on
research into black pod (or pod rot), a disease that causes the heaviest cocoa crop loss in PNG. The
outcomes of the main cocoa pathology R&D programs are summarised in Table M-3 in section M.1.3,
Appendix M.
The strategy of the pathology program to develop an integrated management control for major cocoa
diseases in PNG has now been modified to emphasise the Integrated Pest and Disease Management
(IPDM) approach to control major cocoa diseases. The change in strategy is the result of pathology R&D
research work conducted at CCI that identified that tent building ants and two small beetles (Scolytid and
Ntidulid) as the main vectors for spreading Phytophthora spores from infected pods to healthy ones in the
blocks. Like in many other plant diseases, insects are important vectors that spread diseases. These
research findings also reveal that appropriate cultural or crop husbandry practices are important
considerations in developing IPDM control strategies. The data collected at CCI Tavilo station showed
that there was a significant increase in pod numbers on trees in the plots that received IPDM treatment.
The overall aim of IPDM is to improve the smallholder cocoa farm management levels by integrating pest
and disease management techniques into the farmers’ routine block management strategies (Lummani
2008a). When IPDM techniques are applied, the life cycle of insects pests such as Cocoa Pod Borer
(CPB) and vectors of Phytophthora are interrupted so more cocoa pods can reach maturity and thus be
harvested and processed for sale. CCI has developed an IPDM strategy with four options and economic
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evaluations were undertaken for each option to establish an economic optimum (Lummani 2008a). The
IPDM options are briefly outlined: Option 1 – low IPDM consisting of current practice, but must start with
good planting materials; Option 2 – medium IPDM consisting of weekly harvest, sanitation, manual weed
management, cocoa and shade pruning related to crop cycle; Option 3 high IPDM consisting of weekly
harvest, sanitation, weed management, cocoa and shade pruning related to crop cycle plus chemical
inputs (e.g. Glyphosate and Gramoxone (Herbicide) and Urea/NPK (Fertilizer); and Option 4 –
maximum IPDM consisting of weekly harvest, sanitation, weed management, cocoa and shade pruning
related to crop cycle plus chemical inputs (e.g. Ridomil+Dichlorvos (Fungicides+Insecticides), Glyphosate
and Gramoxone (Herbicides), Urea/NPK (Fertilizer) and Insect Vector Control: Chlorophyrifos 10 ml + 15
liters water).
The preliminary results showed that option 2 appeared to be more economical for smallholders compared
to options 3 and 4 (Lummani 2008a). However, further data collection and analysis need to be conducted
to validate the economic advantage of IPDM before it can be released as an improved cocoa farming
technology to the farmers.
7.1.1.4 Cocoa entomology
The Cocoa Entomology Section focuses on the control of the most economically damaging insects pests
of cocoa using an Integrated Pest Management (IPM) approach.
The major achievements of this Section have been in developing control methods to ensure that the
damage done by cocoa insect pests are kept to a threshold level so cocoa farmers can be able to harvest
a reasonable cocoa crop during peak seasons and off peak periods. A summary of important Cocoa
Entomology R&D programs and outcomes at CCI is outlined in Table M-4 in section M.1.4, Appendix M.
The entomology R&D investigations in the following aspects of cocoa insect pest problems have
contributed in significant ways to the understanding of dealing with:
(a)
(b)
(c)
the prolonged activity of the major cocoa wood boring beetles, Pantorhytes (Pantorhytes
plutus) and Longicorns (Glenea aluensis);
the advancing infestation on pod by the pod sucking Mirids (Helopeltis clavifer and
Pseudodoniella typical); and
screening cocoa clones for resistance or tolerance to Pantorhytes weevil.
The Section continues to use the IPM approach in addressing new insect pests in cocoa. The R&D focus
of the Section has shifted towards the management of Cocoa Pod Borer (CPB) moth (Conopomorpha
cramerella) in cocoa blocks since March 200636. The CPB if left unchecked in cocoa blocks can reduce
yields by as much as 50%. This Section has contributed in significant ways to the overall containment of
the CPB pest problem in East New Britain, Madang and Sandaun provinces.
The Section has been collating relevant CPB management information and establishing appropriate
international collaborations and contacts. The relevant technical information has been used to develop
the PNG CPB management strategies. Moreover, international collaborations have resulted in four Donor
funded projects which are at their first stage of implementation. The projects are as follows:
(a)
(b)
36
Managing CPB in PNG through improved risk incursion management capabilities, IPM
strategies and stakeholder participatory training. Funded by ACIAR.
Host plant resistant to CPB, a participatory approach. Funded by CFC/ICCO.
CCI. 2008d. Entomology Section Report. Presented at the CCI 2008 Annual Research Review Meeting held at PNG University of
Natural Resources and Environment, 24 – 28 November 2008, Vudal Campus.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
(c)
(d)
CPB morphotypes and host plants – six components. Funded by Mars Inc.
Bio-security. Funded by ACIAR/Mars Inc.
7.1.1.5 Cocoa quality
The overall goal of the Cocoa Quality Section is to undertake research into addressing different quality
aspects of PNG cocoa. Cocoa from PNG is criticised by some end users for some of its quality aspects
such things as smoke tainting and high shell %age. The Cocoa Quality Section attempts to address and
solve these problems. A summary of important Cocoa Quality R&D programs and outcomes at CCI is
outlined in Table M-5 in section M.1.5, Appendix M.
The Section has contributed towards cocoa R&D efforts through its studies on mini-box fermentation and
solar driers for smallholders. The challenge is to assist smallholder cocoa farmers to produce quality
export cocoa beans. The major quality issues with PNG cocoa relate to smoke tainting, acidity and high
shell %age. The main findings of the research conducted on-farm trials are (CCRI 2002b and 2003b):
(a)
Solar driers (2m x 2m drying bed) eliminated the smoke contamination problem and
reduce labour inputs because wood fuel was not necessary. However, the dryer design
needed to be improved to enhance its effectiveness in drying cocoa. It was also shown
that a combined solar-hot air dryer was needed to be developed for cocoa growing areas
with long wet seasons such as West New Britain.
(b)
Mini-boxes to hold 200 – 250 kg were also developed to accompany the solar dryer
technology. However, smallholders could not harvest sufficient wet beans to fill the miniboxes for proper fermentation. Insulated food/drink containers were tested and proved to
be effective for fermenting small quantities of wet beans. However, it was found that the
smallholders would rather use these insulated containers for other cash income activities.
Small wooden boxes (15, 40 – 100 kg wet bean capacity) were built to address the
problem of over-fermentation.
The other important function the Section performs is related to the assessment of cocoa genotypes for
quality attributes. The quality assessment of cocoa beans from new hybrids and hybrid clones is
assessed on the following: bean count per 100g, shell content (%), fat content (%) and flavour
characteristics (i.e., cocoa flavour, acidity, bitterness, astringency, and fruitiness). The physical
characteristics of hybrids and hybrid clones are measured against known Trinitario clones (e.g., 12-101,
KA2-101) and PNG blind37 for flavour attributes.
7.1.2
Coconut R&D programs
The CCI coconut research division is located at the Stewart Research Station (SRS) in Madang Province.
7.1.2.1 Coconut breeding
The main research activities of the coconut breeding programme after CCRI took over were conducting
surveys and germplasm collection throughout PNG for coconut breeding. The main research emphases
were to attain higher yielding palms, fast growth, canopy shade precocity, adaptation to local
environments, and resistance to insect pests. A summary of important Coconut Breeding R&D programs
and outcomes at CCI is outlined in Table M-6 in section M.2.1, Appendix M.
37
PNG blind is a stock of cocoa maintained by CCI, probably of Trinitario origin.
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In 1973, the PNG Government approved the testing and promotion of hybrid coconut production and
expansion of seed gardens under the Hybrid Coconut Program (Omuru 2003). However, by 1985 the
Hybrid Coconut Programme was considered to be a failure. Some of the reasons for this failure are
summarised as follows (Omuru 2003): (i) poor seedling quality received by farmers (e.g. receiving more
dwarf nuts rather than hybrids); (ii) low pollen quality and poor nursery practices; (iii) pest damage, as
certain of the parent materials and hybrids were highly susceptible to beetle attack; (iv) leaf diseases; (v)
no proper parental selection, lack of progeny trials and neglect of demonstration plots; and (vi) the
absence of records or observations on growth, yields or pests and disease susceptibility in the seed
garden. A review of research options by DAL with the support of ACIAR concluded that the only option
was to introduce insect pest tolerant planting materials. This responsibility was taken over by CCRI in
1986 (Omuru 2003).
Over the years, CCI has cooperated with various international agriculture R&D agencies to establish a
national coconut breeding program in PNG. The following have been achieved:
(a)
Cooperation with ACIAR in 1989 resulted in a national survey of coconut populations to
assess the genetic diversity in PNG. This was followed by the collection of coconut
ecotypes form different parts of PNG and the establishment of a field genebank in 1993 at
Stewart Research Station (SRS).
(b)
The selection of diversity for population improvement resulted in the identification and
establishment of 45 talls and 13 dwarf accessions as part of the International Coconut
Genebank for South Pacific (ICG-SP) at SRS. Data are currently being collected to
characterise these accessions. The collected data has been sent to CIRAD in France for
entry into a terminal database for sharing with other coconut breeding programs in
COGENT member countries. The ultimate aim is to establish the genetic differences in the
coconut collections currently held in various coconut research stations in the COGENT
member countries.
(c)
For assessment of General Combining Ability (GCA) of selected ecotypes, selected
ecotypes have been crossed with three dwarf testers (Malayan Red Dwarf, Malayan
Yellow Dwarf and PNG Brown Dwarf). The parents showing the best combining abilities in
hybrid combinations will be used in coconut improvement programs in PNG. The possibility
of producing coconut hybrids from crossing local talls (both PNG and introduced) with the
Malayan Dwarfs and the PNG Brown Dwarf will only be known after the General Combing
Ability trials are completed and the data analysed.
The work on screening for insect pest, especially beetle pests, is progressing very slowly due to financial
constraints. This is an important coconut breeding component that needs urgent follow up work to identify
the resistant coconut varieties to the beetle pest in PNG. Both for smallholders and plantations, resistant
coconut varieties are the most economical, environmental and sustainable method of controlling the
beetle pest.
7.1.2.2 Coconut agronomy and farming systems
The Coconut Agronomy and Farming Systems section address several aspects of coconut cultivation and
management. A particular emphasis is given to the agronomic requirements of coconut hybrids, which
are being developed by CCI, and to farming systems research.
Most coconut palms in Papua New Guinea were planted before the Second World War. The palms are
very old and produce low yields, resulting in low income to growers. As a result, coconut blocks are
neglected and poorly maintained, which reduces copra production and foreign currency earnings of the
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country. It is also a very inefficient use of land resources in PNG and this has been recognised as a major
problem that the Section addresses in its research. Two approaches are being investigated: (a) Underplanting of high-yielding coconut hybrids in old coconut groves; and (b) Intercropping with alternative
cash crop species. Several combinations of intercropping are being tested: coconut and vanilla; coconut,
banana and pineapple; coconut and pineapple; coconut, cocoa, banana and kava; and coconut, cocoa,
pepper and kava.
New coconut hybrids are also being developed by CCI. Coconut hybrids are usually more precocious and
higher yielding than the tall varieties commonly grown in PNG. The Institute believes that the hybrids
have the potential to significantly increase copra production in PNG. However, the full realization of this
potential may require different agronomic and farming systems practices. This issue is being addressed
in several trials: (a) Response to fertilizer application; (b) Coconut density trial in cocoa (new hybrid
clones) and coconut intercropping; and (c) Intercropping hybrid coconuts with alternative cash and food
crop species.
A summary of important Coconut Agronomy and Farming Systems R&D programs and outcomes is
provided in Table M-7 in section M.2.2, Appendix M.
The results of a study on the nutritional status of coconuts in PNG was reported in 1999 (Ollivier et al,
1999). The results of leaf analysis from twenty three sites around PNG showed significant widespread
nitrogen deficiencies and geographic variations in potash deficiency. Chlorine deficiency varied at various
sites and was closely related to prevailing wind pattern. Preliminary results of a fertilizer trial at Stewart
Research Station revealed a positive yield response to nitrogen and chlorine-based fertilizer applications.
None of the data from fertilizer trails, coconut density trials in cocoa and coconut intercropping, and
intercropping of coconuts with other food and cash crops have been further developed to a stage where
these can be packaged as appropriate technologies for releasing to coconut farmers. The reasons for the
delay in packing these research findings into useful technologies for coconut farmers is not known.
The project on poverty alleviation using the “coconut based farming and livestock integration approach:
an on-farm intervention” is a promising area for the coconut agronomy and farming systems focus. In the
project agreement, COGENT provided seed funding to establish the project and CCI was expected to
contribute in kind (time, personnel, etc) and cash to implement the project. The project required three
rural coconut-farming communities to participate in the coconut based farming systems approach. If the
approach proved successful, than it would be replicated in other parts of Madang and other coastal
provinces.
Prior to the commencement of the project CCI requested that only two rural communities should be
involved. This request was based on the financial capacity of CCI and the staffing limitations in the
coconut research division. However, COGENT insisted that the number of rural communities could not be
varied as the other participating countries were also going to be engaging three rural communities.
The preliminary results showed that the farmers were willing to adopt the coconut based farming systems
approach because of the likely benefits they would be receiving in the long term. Nonetheless, lack of
consistent funding for operational and logistic aspects of the project from CCI resulted in the nonimplementation of certain components of the project. For example, the second socio-economic survey
was not conducted for assessing the impact of the project on the livelihoods of the farmers and their
families at the end of the project. The lesson to be learnt from this project is that international donors
such as COGENT should be flexible to modify project designs in order to accommodate the financial
challenges confronting the recipient research institutions in developing countries such as PNG.
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7.1.2.3 Coconut pathology
There is no separate program on coconut pathology at CCI. However, with the outbreak of the Bogia
Coconut Syndrome (BCS) in Madang at the end of 2007, there is an urgent need to have a plant
pathologist located at the Stewart Research Station to focus on coconut diseases. The current Acting
Head of Cocoa Plant Pathology Section has recommended the recruitment of a plant pathologist to be
located at Madang. The casual organism for BCS has been identified and delimiting surveys have been
done in the hot spot areas in 2008 – 2009 (Kembu et. al. 2009). Strategic research needs to be
undertaken to identify resistant coconut varieties to the BCS caused by a phytoplasma.
Since late 2007, KIK has been coordinating all the matters relating to the BCS under the direction of the
BCS Technical Steering Committee. The following stakeholders are involved in monitoring the BCS in
Madang: KIK, CCI, DA&L, National Agriculture Quarantine Inspection Authority (NAQIA), Oil Palm
Research Association (OPRA) and Madang Division of Primary Industry. CCI has undertaken preliminary
field identification of BCS symptoms in East New Britain and Bougainville in 2010.
7.1.2.4 Coconut entomology
The devastating insect pest attacks by beetles, namely: scapanes beetle (Scapanes australis),
rhinoceros beetle (Oryctes rhinoceros) and black palm weevil (Rhynchophorus bilineatus) continue to
limit the coconut expansion and replanting programs in the New Guinea Islands.
The entomology research programme for coconuts to investigate control measures commenced in 1992
after the establishment of facilities in 1991. Continuing serious damage and loss of coconuts focussed
the Institute’s entomology section’s research on new ways of pest control. Past attempts to control
Scapanes and rhinoceros beetle by conventional use of chemical pesticides have failed (CCRI, 1998b).
CCI has undertaken some strategic research on effective control measures on damaging insect pests of
coconuts and these are summarised in Table M-8 in section M.2.3, Appendix M.
Relevant R&D work has been undertaken by CCI in collaboration with international organisations and
other participating countries to identify a synthetic attractant of the beetle Scapanes australis. The
synthetic attractant was used in plastic traps specifically for trapping beetles in coconut blocks or farms.
The beetle trapping technology has not been developed to a stage where CCI can release it to the
coconut industry.
The data from screening local coconut populations for resistance to beetles has not been collected so far
due to financial and staffing constraints at CCI. This work needs to be funded in order to establish the
resistance of the selected elite coconut varieties before these can be released to coconut farmers.
7.1.2.5 Coconut downstream processing38
PNG has traditionally produced copra from coconut. The Copra Marketing Board (CMB, now KIK)
indicated that it would support research into downstream processing of coconut in the late 1990s. The
promotion of the coconut value addition was an important strategy as certain by-products of coconuts
such as coconut oil fetched a higher price on the world market than copra.
CMB initially recruited a food technologist from the Philippines to manage the Coconut Downstream
Processing (CDSP) Unit located at Stewart Research Station in Madang in 2000. Due to administration
difficulties of managing the Unit from Port Moresby, CMB transferred the Unit to CCRI in 2001 and in
38
Background information provided by KIK and the Coconut Downstream Processing Section at Stewart Research Station,
Madang.
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2003 the Unit was upgraded to a Section. By 2003, the Section had developed a CDSP R&D program
with six components: (a) Development of suitable coconut oil extraction techniques for small enterprises;
(b) Development of edible by-products; (c) Coir and geo-textile product development and coco fibrewood-cement boards; (d) Studies on the utilisation of crude coconut oil as bio-diesel; (e) Development of
a suitable and affordable copra drier for the smallholder farmers; and (9) Studies on domestic and
international marketing of coconut by products.
The progress of the CDSP R&D programs currently undertaken at CCI are provided in Table M-9 in
section M.2.4, Appendix M. The progress for each of these programs is as follows:
(a)
(b)
(c)
(d)
(e)
(f)
Suitable oil extraction technologies: The testing of three technologies (RAM press, Micro
Direct Expeller and Modified Natural Fermentation) have not been subjected to economic
evaluation to assess their economic viability under various coconut processing enterprises
in PNG.
Development of edible coconut products: A lot of training has been conducted on the
technologies for producing the edible coconut products. However, no economic
evaluations have been conducted to assess the profitability of producing these edible
products by smallholder farmers and small enterprises in rural areas.
Development of coir and geo-textile products: Some initial work has been done but more
research is required to establish which particular products will be economical to produce.
Utilisation of crude coconut oil as bio-diesel: The coconut oil lamp is an innovative
technology for village households. This is relevant to the needs of village people in rural
areas where kerosene is very expensive. This technology needs to be finetuned so CCI
can release it to coconut growing communities.
Affordable copra drier: No work has been conducted on this project. CCI needs to work
with KIK to devise a suitable copra dryer for smallholders so production of smoke copra
can be reduced immediately.
Domestic and international marketing of coconut by-products: There is no progress in this
area. CCI needs to work with KIK to establish a database for marketing coconut products.
KIK is currently producing its own coconut market reports on a quarterly basis.
7.2 Current R&D portfolio – its sufficiency in addressing industry specific issues
The review of the current cocoa and coconut R&D programs at CCI by Omuru (2000, 2003) shows that
the various research programs evolved as cocoa and coconut industries were being established after the
Second World War in PNG. During the Australian Colonial Administration era, village people in coastal
and maritime provinces were encouraged to plant cocoa and coconut for income generation purposes.
The cocoa and coconut R&D programs were established in order to address the production problems that
confronted the cocoa and coconut producers, both smallholders and estate owners, in PNG.
The current R&D programs at CCI are addressing the important issues regarding the specific needs of
cocoa and coconut industries as outlined in section 7.1. In order to determine whether CCI R&D
programs are addressing specific industry issues, it is important to establish what a cocoa or coconut
farmer would expect from these two crops. The review of the outcomes of cocoa and coconut R&D
programs at CCI in section 7.1 shows that in order for cocoa and coconut crops to remain useful to
farmers in the long term, these two crops must be profitable for investing resources (i.e. time, labour and
cash).
The conclusion that can be drawn from the literature that has been reviewed is that cocoa and coconut
crops must be high yielding over a longer period of time, pest and disease tolerant and beans and nuts
should be of good quality. Moreover, the crop husbandry techniques developed for managing farms must
take into account the additional socio-economic obligations the farmers have in their communities
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besides growing cocoa and coconut. The farmers need to understood and be convinced that the
improved crop husbandry techniques will increase and sustain the productivity of their cocoa and coconut
farms before they can adopt them.
The summaries of current R&D programs at CCI and the industry issues they are addressing are
provided in Table N-1 for cocoa and Table N-2 for coconut in Appendix N. All the R&D programs at CCI
are important in terms of improving the profitability of both cocoa and coconut enterprises. Cocoa
downstream processing is not at a stage where it can be further pursued in the cocoa industry in PNG.
However, the current R&D programs need to be realigned in relation to the new thematic areas identified
in the new CCI Strategic Plan 2010 – 2019.
7.3
Priority setting processes and their practicality at CCI
No matter how good or brilliant a piece of agricultural research activity can be, it is of little value to the
cocoa and coconut farmers if it is not directly linked to investigating a defined part of or some aspect of a
problem affecting the wellbeing of these farmers engaged in producing cocoa and coconut products in
rural areas. A comprehensive analysis of priority setting processes at CCI up to 2001 was reported by
Omuru (2001). The methods used for agricultural research priority-setting at CCI and some key issues
that constrained their implementation were highlighted.
The R&D priority setting at CCI needs to be reviewed with the objective of improving the existing process
of assessing proposed R&D projects from scientific and economic perspectives. The following
observations are made in relation to R&D priority setting at CCI:
(a)
Annual Research Reviews: The hosting of research review meetings on an annual basis
where major industry stakeholders are invited to attend is too expensive for CCI to
continue. The possibility of holding these meetings every second year needs to
considered. This is related to the nature of cocoa and coconut research currently
undertaken where most of the experimental trials require more than two years to complete,
while breeding programs need at least 15 years to complete. Combined cocoa and
coconut research review meetings should continue. Separating research reviews for cocoa
and coconut has been counterproductive in terms of exchange of ideas and experiences.
(b)
Approvals of new proposed R&D projects: This function should be undertaken by the
Research Assessment Committee on a quarterly basis or when the need arises for the
committee to meet. This committee will continue to assess the research reports and new
project proposals before their presentation to the CCI Board for approval. In addition, all
scientists proposing new research projects should present the proposal at an internal CCI
seminar for feedback from other scientists and economists.
(c)
Benefit Cost Analysis: Ex ante economic analysis systems need to be properly established
at CCI. As part of the proposed process, both agricultural scientists and economists need
more training regarding their respective roles in undertaking cocoa and coconut research.
The scientists need to understand that their research projects are of little value to the
cocoa and coconut farmers if they are not going to contribute to improving the livelihood of
the farmers in rural areas. As a consequence, all cocoa and coconut R&D projects must be
subjected to proper economic evaluations before these can be approved for
implementation. The economists, on the other hand, need to understand that without the
generation of cocoa and coconut R&D data they have little justification for their
employment at CCI.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
7.4
Adoption of technologies released from CCI
7.4.1
Problem of monitoring technology adoption at CCI
Assessment of the adoption of research-induced technologies has been neglected for a long time in
agricultural R&D in PNG. One of the major reasons for this neglect is the absence of processes to
monitor the adoption and implementation of new technologies that were and/or are being developed
(Omuru 2003). Although several breakthroughs in cocoa research were made in the 1960s and early
1970s, their adoption and use by cocoa growers and the associated costs/benefits have not been
measured.
The CCI has not made any serious attempt to develop a process to monitor the adoption and
implementation of new cocoa and coconut technologies that have been developed at Tavilo and Stewart
Research stations. For example, CCI has been using a list of core extension activities to undertake its
extension functions in the provinces and also transferring available cocoa and coconut technologies to
the farmers from 2003 to 2006 (Appendix P). In the past information generated was not analysed to
assess the rate of adoption by sector (plantations or smallholders) and province, whether the new
materials were for new planting or rehabilitation of existing trees, when farmers obtained information on
the new varieties (technologies). For the first time, Omuru (2003) made an attempt to address this area of
investigation at CCI. Two technology adoption case studies were developed for cocoa hybrid clones and
hybrid coconut.
7.4.2
Rate of adoption
Omuru (2003) stated that the conventional way to estimate the rate of adoption for a new technology
would be to estimate the percentage of production emanating from the technology. This is difficult to
implement in practice, so the rate of adoption was calculated by taking the proportion of areas planted to
the new varieties relative to the estimated total area under cocoa. The analysis for cocoa industry
showed that from 2000 to midway 2002, the plantation sector rate of adoption was less than 6% and for
the smallholders it was less than 1%. It should be noted that similar work needs to be undertaken for
coconut hybrid varieties to assess the impact of the technology in coconut farming communities.
The initial aim of the monitoring program developed by Omuru (2003) was to assess its appropriateness
for generating information and effectiveness of the flow of information to the CCI Economics Section for
analysis. The format was improved as monitoring progressed, however, there is room to integrate other
information requirements that are important to research and extension planning or for other ex post
economic analyses.
7.4.3
Proposed monitoring framework
Omuru (2003) highlighted that new cocoa and coconut technologies developed at CCRI are sometimes
unique in terms of how their adoption could be monitored. This is related to the nature of the cocoa and
coconut industries. For example, new crop varieties are distributed from CCRI’s distribution centres and
can be monitored, but where technologies are commercialised and distributed by private enterprises
(e.g., solar dryers and beetle traps), it may not be easy to monitor from the institute level. Therefore, a
proposed monitoring framework should be established to cater for each technology, if necessary. Such a
framework would consist of appropriately designed monitoring processes. The information collected
would help assess the likely benefits or returns to farmers from adopting the technology.
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A proposed monitoring framework that encompasses three monitoring processes was proposed by
Omuru (2003) shown in Appendix O. The information generated from processes 1 and 2 would be
forwarded to the Economics Section at the CCI headquarters (Tavilo) on a monthly basis for entering into
specifically designed databases for analysis.
7.4.4
Reasons for low adoption rates
Although formal evaluation of adoption rates for the various cocoa and coconut technologies are yet to be
undertaken, it is general knowledge that adoption rates of technologies developed or modified at CCI is
very low. The analysis by Omuru (2003) for the adoption of cocoa hybrid clones in East New Britain
confirms this general conclusion. Several possible reasons have been suggested and these include39: (a)
Lack of knowledge by farmers of the developed technologies; (b) Farmers unwillingness to change their
farming practices; (c) Poorly funded and uncoordinated extension system; (d) Lack of market access in
remote rural areas; (e) High transport costs for farms to cart hybrid seedlings to blocks; (f) Lack of farmer
support by Government (e.g. provision of farm credit, farm input subsidy); and (g) Competing demand
from other social activities for household labour.
CCI did not do much to address this issue from 2007 to 2009 because its extension programs were not
funded. It is hoped that funding available in 2010 will enable CCI to identify suitable alternative strategies
and test them in the provinces to address the low adoption rates. These include (Nongkas 2010): (a)
Changing the mindset of farmers to be more commercially oriented, through livelihood and business
management courses; (b) Placing an emphasis on demonstrating the benefits of good farming practices
through the use of intensively managed model farms; (c) Use of local farmers themselves as the agents
of dissemination of good farming practices; (d) Utilise Didiman Ward Committees in the local
communities to be involved in the planning and monitoring of the extension activities (overseeing
management of the model farms); (e) LLGs and District officers will also be partners in the planning and
monitoring of the program; and (f) Contract out extension services to service providers in the provinces
and districts.
7.5
Extension approaches and issues at CCI
CCI became responsible for cocoa and coconut extension, in addition to R&D functions, when Cocoa and
Coconut Extension Agency (CCEA) was merged with Cocoa and Coconut Research Institute (CCRI) in
2003. The extension structure of CCEA was adopted by CCI and renamed it “Extension Liaison” under
the “Industry Services Division (ISD)”. The merger not only resulted in additional responsibility of
extension on top of R&D functions, but all outstanding tax liabilities of CCEA were also transferred to
CCI. This created additional administration and financial challenges for the CCI Board to deal with, apart
from securing sufficient resources to support its cocoa and coconut R&D programs.
The Extension Liaison structure has not been reviewed in the last seven years in terms of its
performance in the delivery of cocoa and coconut technologies to farmers.
7.5.1
CCI’s extension organisational structure
The ISD has three sections, namely, Extension Liaison, Training, and Economics. These sections are
managed by respective Managers. Whist the Training and Economic Sections are based at Tavilo, the
operational coverage of Extension Liaison Section, extends down to the provinces and districts.
39
Mr Alfred Nongkas, Acting Executive Manager – Industry Support Division, CCI, personal communication 2010.
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The planning and implementation of the CCI extension programs in the provinces are facilitated by
separate MOAs. The MOAs cover the different participatory roles and responsibilities of parties involved,
their commitments for joint funding, and the sharing of resources (e.g., manpower, office space, land,
etc).
Provincial Program Managers and support staff (District Extension Officers, Field Extension Officers,
Administration Clerks, and Secretaries) are currently located in twelve coastal provinces. Regional
Managers are located in the New Guinea Islands Region (Tavilo), MOMASE Region (Madang) and
Southern Region (Port Moresby), respectively. Support staff for Regional Managers are limited to an
office secretary if only operating from a separate office space from provincial CCI offices. ISD had the
following staff ceiling in 2009: 70 permanent staff and 94 casual staff40. This was an unsustainable staff
ceiling with respect to 2009 CCI resources and in 2010, the staff ceiling has been reduced to 54
permanent officers and 64 casual staff in 201041.
7.5.2
Effectiveness of the current CCI extension approach
The current cocoa and coconut technologies and/or information transferred to farmers are outlined in
Appendix P. The intensity of transfer of cocoa and coconut technology activities to farmers varies from
province to province and district to district. The regions where most cocoa and coconut technologies are
being transferred are in the NG Islands (e.g. East New Britain) and MOMASE (e.g. Madang).
CCI has realised that the current extension approach is ineffective and too expensive to maintain in the
long term. The reasons suggested for the cause for this ineffectiveness are many but the main ones
include: inadequate funding for extension; lack of trained CCI extension officers in the provinces; lack of
refresher training for the current extension officers; current extension officer to farmer ratio is too big
(1:3000); farm equipment and vehicles are too old; current extension structure too cumbersome and topheavy; lack of credit facilities for farmers and farm input subsidy; and farmers’ unwillingness to change,
which has led to the slow or nil uptake of introduced technologies.
The provincial program managers have also been requested to identify extension service providers in
their respective provinces. This should enable CCI to identify suitable partners it can link up with
undertaking extension activities in the provinces.
The views of two major private sector clients42 of CCI’s cocoa and coconut R&D outputs in East New
Britain is that CCI should concentrate on its R&D programs and allow the provinces in collaboration with
private sector participants to deal with cocoa and coconut extension programs in the provinces and
districts. However, these clients did not indicate how they would get updated information on the various
cocoa and coconut technologies from CCI to continue to improve their engagement with farmers, other
stakeholders and value chain actors in production, processing and exporting enterprises. There have
been cases where private sector players adopt these technologies (e.g. improved cocoa cultivars) to
improve their production capacity on their cocoa plantations. The private sector players then develop
“extension programs” to encourage farmers’ groups in specific areas, with easy access, to improve their
production capacity. The private sector organisations then buy from these smallholders to increase their
cocoa volumes for export purposes. The experience from a few provinces (e.g. Madang, East New Britain
and East Sepik) indicates that the private sector players will only focus their extension efforts with cocoa
and coconut farmers in areas with high accessibility and not with those in remote areas.
40
41
42
CCI. 2008j. Provincial Extension Program Report. Presented at the CCI 2008 Annual Research Review Meeting held at PNG
University of Natural Resources and Environment, 24 – 28 November 2008, Vudal Campus.
Mr Alfred Nongkas, Acting Executive Manager, Industry Support Division, CCI, personal communication, 2010.
CPL and NIGP-AGMARK indicated to the consulting team that CCI should concentrate on cocoa and coconut R&D
programs and allow the provinces in collaboration with the private sector players to deal with extension issues in the provinces.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
The private sector clients pointed out that it is the responsibility of the Government to provide extension
to farmers in remote areas. They indicated that they are profit-oriented organisations so they invest in
specific areas where their profits will be increased. The question is how are the private sector players
contributing to extension in the provinces? It is assumed that the private sector players consider the
marketing services they provide to be their contribution towards extension services in the cocoa and
coconut industries. All private sector players indicated that high freight cost of picking up cocoa and copra
from remote coastal areas and island communities is a major concern. It is suggested that this should be
an opportunity for private sector players to collaborate with KIK, Cocoa Board and CCI to approach the
national government for a freight subsidy scheme for domestic cocoa and coconut trading.
Currently CCI is the only government-funded agency undertaking research on the various cocoa and
coconut technologies (development of new cultivars, field husbandry and processing) and conducts
training programs in the provinces to train the smallholders for them to be given the opportunity to assess
whether these technologies are suitable for adoption for producing cocoa and coconut products for
income generation purposes. The cocoa and coconut technologies developed or modified at CCI are
produced as public goods for public consumption by both farmers and cocoa and coconut business
entities. At this stage private sector organisations engaged in cocoa and coconut industries do not have
technical expertise and capacity to conduct their own cocoa and coconut R&D programs on their
plantations.
The issue of the private sector in PNG being able to invest in cocoa and coconut R&D will be determined
by the profitability of new innovations and that these must be of a type that can be protected by
intellectual property rights (Huffman and Just 1999). A review of applying intellectual property rights as a
mechanism for appropriating R&D benefits by Omuru (2003) concluded that the effectiveness of
intellectual property rights in dealing with appropriability problems and in encouraging private investment
in agricultural R&D has been sub-optimal. Furthermore, establishing and enforcing intellectual property
rights entail costly transactions, in terms of: (i) definition or specification costs, (ii) application processing
costs, (ii) enforcement costs, and (iv) transfer negotiation costs. Omuru (2003) argued that a lack of
understanding and consideration of informal social norms and customs in policies developed by formal
institutions for the development and dissemination of information to farmers, adoption of new
technologies might be relatively lower. PNG is no exception and therefore it is important to develop
farmers’ participatory research approach in undertaking cocoa and coconut R&D programs at CCI.
Not enough information on various cocoa and coconut technologies released by CCI is reaching the
cocoa and coconut farmers in village wards in districts. For example, farmers in Bitakapuk No. 2 Village
in Gazelle District, East New Britain, indicated that insufficient information from CCI on various cocoa and
coconut technologies was reaching them43. The representatives of the financial institutions44 that were
consulted at Kokopo raised a similar concern.
In terms of extension literature on cocoa and coconut production, CCI produced a draft Cocoa
Technology Manual 2002 (CCRI 2002a), a publication titled “Joseph and Lucy Grow Cocoa” (CCI 2005)
and the latest publication titled “Integrated Pest and Disease Management for Sustainable Cococa
Production” (Konam et al 2008). These documents are suitable for agriculture extension officers to use in
advising smallholder farmers interested in producing cocoa in the provinces. The “Joseph and Lucy Grow
Cocoa” publication has been circulated but CCI has no record of how many of these are being used by
43
44
A meeting was held on 1 March 2010 with the village people of Bitakapuk No. 2 Village in the Toma area in Central Gazelle
District , East New Britain to gauge their views on the extension services received from CCI and other extension providers.
The study team met with the following representatives of the financial institutions in Kokopo on 2 March 2010: (a) Mr Paul
Viritia, Branch Manager – Kokopo, National Development Bank; (b) Mr James Lulu – Marketing Team Leader and Mr Britain
Tilom – Lending Team Leader, East New Britain Savings & Loan Society; and (c) Mr Anton Banit, Finance & Admin.
Manager, National Farmers Savings & Loan Society.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
agriculture extension officers in the provinces. On the other hand, CCI has not produced any extension
publication on coconut production and processing for smallholders. This is a challenge KIK and CCI need
to address as a matter of urgency. It needs to be pointed out that the information required by financial
institutions on cocoa and coconut production is needed to assess the profitability of smallholders and
plantations producing cocoa, coconut or both crops. CCI needs to prepare appropriate cost benefit
analysis showing the profitability of producing cocoa and coconut on either small- , medium- and largescale enterprises.
CCI management has commenced the process of reviewing the current extension approach with the
objective of developing a better extension strategy using the cascading logic systems (Nongkas, 2010).
It is apparent that the current extension system used by CCI has done poorly in eight out of the
seventeen areas that were identified as important for a sustainable extension system.
7.6
Current international and regional collaboration by CCI45
A growing feature of R&D at CCI has been the increase in collaborative research undertaken with
regional and international organisations. The collaborations for cocoa and coconut R&D are outlined
below.
7.6.1 Cocoa and coconut R&D collaborations
The cocoa R&D programs where international R&D organisations have collaborated with CCI are outlined
below:
(a)
(b)
(c)
(d)
Cocoa Breeding – Participated in an internationally co-ordinated trial testing of 54 cocoa
clones, funded by the Common Fund for Commodities, International Cocoa Organisation
and International Plant Genetic Research Institute. Ten countries were involved.46
Plant Pathology – Technical expertise provided by CIRAD47 to strengthen the technical
capacity of Plant Pathology Section.
Cocoa Quality – Small-scale processing technology research was funded by ACIAR48.
Collaboration with Queensland DPI (technical expertise) and the University of New South
Wales (engineering input on the design of the solar dryer).
Economics – ACIAR funded project implemented by the Economics Section with the
Universities of New England and Western Australia. Socio-economic baseline studies of
cocoa and coconut industries in East New Britain were conducted under this project.
The coconut R&D programs where international R&D organisations have collaborated with CCI are
highlighted below:
(a)
45
46
47
48
49
Coconut Entomology: INCO-DC49 funded a few beetle projects at CCI and international
collaboration with INRA50 and CIRAD from 1997 – 2002 where coconut beetle control
methods were developed.
The discussion is adapted from Omuru (2001b), pp: 19-20.
The ten countries were Brazil, Ecuador, Trinidad, Venezuela (American continent), Cameroon, Ghana, Ivory Coast, Nigeria
(Africa) and Malaysia, PNG (Asia Pacific).
CIRAD denotes Centre de Coopération Internationale en Recherche Agronomique pour le développement and it is committed
to ensuring that its capacity to imagine the farming systems of the future benefits the world's poorest populations, sustainable
development and global public goods.
ACIAR denotes Australian Centre for International Agriculture Research and its mandate is research for development – it seeks
to promote innovation through science and technology and better institutional frameworks.
In November 1994, the European Council adopted the Specific Research and Technological Development (RTD) Programme
in the Field of Cooperation with Third Countries and International Organisations - known also more simply as INCO
(International Cooperation). The objective of this initiative was to provide the Fourth RTD Framework Programme with a
tool with which to react to the growing globalisation of science and the economy.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
(b)
(c)
Coconut Breeding: (i) The Institute pioneered the first coconut collection and genetic
diversity study in PNG from 1987 – 1993 under the funding support of ACIAR; and (ii)
Participated in an international coconut germplasm gene-bank project undertaken in
collaboration with the International Network for Coconut Genetic Resources (COGENT) 51.
The Institute continues to manage the international coconut gene-bank in Madang for the
South Pacific region. The program comprises of collection, characterization, introduction,
conservation and utilization of coconuts and these activities are integral part of the
coconut-breeding program.
Coconut Agronomy and Farming Systems: (i) Some technical expertise was provided by
CIRAD in the area of response of coconuts to inorganic fertilisers and established the
coconut farming systems; and (ii) Participated in an international project on coconut based
farming system under the international poverty alleviation program funded by Asian
Development Bank from 2002 – 2004. Ten APCC countries were involved52.
7.6.2 Benefits of R&D collaborations
An important aspect of collaborative research arrangements is the generation of research ‘spill-overs’,
where one country’s research is adopted in another. In the case of CCI, the collaborations are within the
institutional sphere of the commodities in its research mandate and are, therefore, of common interest to
its collaborators. For example, selected hybrid cocoa clones from the international cocoa-breeding project
where CCI participates with nine other countries, are being used in cocoa-breeding programme.
In general, for CCI, the ‘spill-in’ of new knowledge in terms of interaction, exchange of ideas and
networking enhances the Institute’s research capacity to address complex cocoa and coconut industry
issues. However, where such collaboration results in research ‘spill-ins’ that requires sophisticated
equipment and expertise to apply, it may not be feasible or desirable for an institute like CCI to purchase
such expensive equipment. Therefore, it is crucial that spill-in costs and benefits are recognised and
addressed in the initial stages of project formulation in the future. For example, CIRAD assisted CCI with
the secondment of three of its scientists to assist with cocoa plant pathology, coconut agronomy and
coconut entomology work. While the technical assistance provided was a positive contribution, the
agreement to engage CIRAD scientists also required CCI to pay annual fees for these scientists. These
fees have become an additional financial liability for CCI over the last several years because the Institute
has not been able to pay these outstanding annual fees from its limited recurrent budget.
7.7
Comparative analysis of the current R&D approach versus the new results
based approach
In terms of setting strategic objectives and organisational arrangements in agricultural research, CCI
currently is using the scientific excellence approach. This approach focuses on scientific specialisation for
addressing cocoa and coconut development issues. This has resulted in the establishment of cocoa and
coconut research divisions with sections specialising in breeding, agronomy and farming systems, plant
pathology, entomology, quality control and downstream processing. A socio-economic section has also
been established to undertake economic evaluations of CCI R&D programs/projects and assess the
socio-economic aspects of cocoa and coconut farming communities.
50
51
52
INRA Versailles-Grignon is one of nineteen centres that comprise the INRA organisation. The centre gathers 1400 individuals
working on three research areas: (i) plant genomics and integrative biology, (ii) innovation, agricultural production, and
environment, and (iii) human health, microbiology, and food quality.
COGENT is a global research network formed under the International Plant Genetic Resources Institute (IPGRI).
Ten APCC countries included Philippines, Indonesia, India, Sri Lanka, Bangladesh, Thailand, Vietnam, (Asia), Fiji, Samoa
(Pacific).
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
CCI, like other NARS institutions in PNG, has realised that the current R&D approach has restricted the
Institute to scientific excellence rather than addressing a broader strategy such as income generation for
reducing poverty in cocoa and coconut farming communities. CCI has now, under the ARDSF program,
accepted a change in its approach to undertake R&D for the benefit of its primary beneficiaries the cocoa
and coconut farmers. The goal of the new Strategic Plan 2010 – 2019 is “improved livelihoods of rural
communities dependent on the cocoa and coconut industries” and the purpose is “improved productivity,
product quality and diversification; optimal and sustainable scale of production; and effective and
accessible marketing systems” The plan has six thematic areas of focus that CCI should be addressing.
These include: (a) Productivity improvement, (b) Scaling and sustainable production, (c) Marketing
systems, (d) Information management and communication, (e) Regulatory, legal and policy environment;
and (f) Institutional capacity strengthening.
It is apparent from Appendix Q that CCI needs to critically realign its current R&D disciplines to be
accommodated within the six thematic areas or programs. The constraints, gaps and opportunities
analysis in Appendix R can help clarify how the current R&D programs should be realigned under each
thematic area.
The review team participated in some of the ARDSF sponsored workshops on strategic and program
formulation planning and observed that the scientists and support staff at CCI have difficulties in
accepting the fact that it was time for a reality check on the current R&D approaches used at the Institute
for addressing the issues affecting the cocoa and coconut industries in PNG. It has taken a lot of patience
and time for ARDSF team to guide and work through the new concepts of undertaking R&D with CCI
staff. This situation has come about simply because CCI and other PNG NARS organisations were only
in-ward looking influenced by the scientific excellence approach and using out of date R&D approaches
to address critical commodity industry issues. Although it has taken longer than expected, the experience
of guiding CCI staff to understand and accept the principles of AR4D for adopting a new way of doing
cocoa and coconut R&D has been a very worthwhile cause.
8.
Findings and Recommendations
The Australian Centre for International Agriculture Research (ACIAR) conducted two studies, one on a
review of the future prospects for the world coconut industry and past research in coconut production and
product (ACIAR 2007a) and the other on Papua New Guinea coffee and cocoa policy linkages (ACIAR
2007b). The findings from the present review on the key issues affecting cocoa and coconut industries
concur with the overall findings of the two previous subsector studies conducted by ACIAR in PNG. The
findings of the present review are highlighted in five sections below with relevant recommendations made
at appropriate places in each section for the consideration of key stakeholders of cocoa and coconut
industries.
8.1
Regional and international trade in cocoa and coconut products

Regional and global markets and trade for cocoa and coconut products
There will continue to be demand for cocoa, chocolate and coconut products by consumers in developed
and developing countries. The demand for these products will be sustained in the long term as
populations increase and GDPs of developed and developing countries improve. The demand for quality
chocolate, coconut oil and desiccated coconut products will continue to increase as certain natural
ingredients in these products have been identified to have heath benefits for people.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
For the coconut sector, coconut oil production has been very small (2%) compared to crude palm oil and
soybean oil. However, it will continue to be an important source of lauric oil besides palm kernel oil in the
world market. The coconut industry should also focus on developing the other products such as coconut
milk, shell based activated carbon and coir products for niche markets. The coconut industry authorities
in producing countries must ensure that safety food and health standards are complied with for attracting
premium prices and retaining their competitive edge in the long term.
Farm gate prices in most cocoa and coconut producing countries have been largely determined by
international prices. As a result, farm gate prices show greater fluctuations in most cocoa and coconut
producing countries reflecting, inter alia, changes in international prices of cocoa, copra and coconut oil,
variations in the international value of the domestic currency, and specific local market structures and
conditions, including taxation, competition, distance from port and quality.
The global coconut industry is confronted with the problem of senility of more than 50% of the current
coconut stands in most coconut growing countries. The various national governments will be required to
help address the senility issue through appropriate coconut rehabilitation programs utilizing the coconut
based farming systems for smallholders.

Export opportunities for PNG cocoa and coconut products
Global demand for cocoa and coconut products will continue to exist in the future. PNG will continue to
produce and supply of high quality cocoa and coconut products (copra, coconut oil and copra meal) in
response to the global world demand. However, it is important for Cocoa Board and KIK to ensure that
farmers and processors maintain reasonable quality standards so international traders can continue to
prefer our PNG cocoa and coconut products.
The major buyers of PNG cocoa from 1997 – 2009 have been: United States (26%), followed by
Singapore (21%), Malaysia (14%), and Indonesia (11%). The other buyers importing less than 10%
include: Thailand, Belgium, UK, Germany and others. For the period from 2007 – 2009 the following
countries have been importing PNG coconut products: Philippines (65%) and Australia (32%) for copra;
Netherlands (48%), Germany (26%) and UK (10%) for coconut oil; and Australia (91%) and New Zealand
(6%) for copra meal.
KIK and other coconut stakeholders will have to explore new markets for new coconut products (e.g.
virgin coconut oil, coir products, shell charcoal, etc) that may be developed by credible investors in
partnership with local stakeholders.
Recommendation 1: Cocoa Board, KIK and CCI to work with cocoa and coconut farmers and processors
to ensure that quality of PNG cocoa and coconut products are maintained so that our products can
compete globally.

Export trends and evaluation of the importance of products as sources of foreign
exchange
The cocoa farmers in PNG have been benefiting from higher cocoa prices over the last five years
because of improved cocoa prices since 2004. The other contributing factor has been the inclusion of
PNG as a country producing and exporting either exclusively or partially fine flavour cocoa. For coconut
products, the global prices of coconut products also showed gradual increases from 2004 – 2008.
However, the domestic prices of cocoa and the three coconut products are subjected to changes in the
prices of these commodities on the world market as influences by supply and demand forces.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
In terms of the importance of cocoa and coconut products as sources of foreign exchange, cocoa ranks
third and coconut products rank fourth, respectively, after palm oil and coffee. Both cocoa and coconut
products generated over K434 million in foreign exchange for 2009 and cocoa contributed 78% while
coconut products contributed 22%. At the present time the actual proportion of revenue received by
cocoa and copra producers is not known. It is important for Cocoa Board and KIK to obtain information on
the amount of funds used by licensed cocoa and copra buyers per annum so the revenue passed down
to the farmers can determined.
Recommendation 2: Cocoa Board and KIK to require cocoa and copra traders to disclose the funds used
for purchasing cocoa and copra so the actual amount of revenue passed on to the farmers is determined.
8.2
Cocoa and coconut industries’ external environment in Papua New Guinea

National development policies and objectives of cocoa and coconut industries
The second pillar of the PNG Vision 2050 is “wealth creation” and agriculture is one of the core programs.
Cocoa Board, KIK and CCI need to work together identify the specific objectives pertaining to the
promotion, growing and sustaining the cocoa and coconut industries in PNG. The vision supports
cultivation, production, and downstream processing of agricultural commodities such as cocoa and
coconut in the districts. The new R&D programs being developed for CCI with the input of the
stakeholders should be aligned with the Vision 2050 agriculture objectives for implementation.
PNG Development Strategy Plan 2010 – 2030 emphasises agriculture as a core sector in PNG’s
economic development. It is proposed that PNG should be able to produce 310,000 tonnes of cocoa and
440,000 tonnes of copra equivalent by 2030. This is a challenge for Cocoa Board and KIK to reorganise
the two commodity industries in order to achieve the proposed targets in the next 20 years.
National Agriculture Development Plan 2007 – 2016 highlights the importance of making the agriculture
sector more efficient and competitive through private sector development and growth and increased
agricultural exports. NADP’s priorities for the development of the cocoa and coconut industries are to
promote economic production for domestic consumption, export and downstream processing and value
addition. Government, through NADP, originally made a commitment to invest about K246 million in the
cocoa and coconut industries in the next decade. Cocoa Board and KIK have been waiting since 2007 to
receive the funds.
For the cocoa industry Cocoa Board plans to double cocoa exports to 100,000 tonnes by 2015. Although
cocoa is a cash crop, it can make a significant contribution to the food security policy of PNG. Cocoa
Board and CCI need to review all the previous research conducted on cocoa farming systems by DAL
(now NARI) in order to determine the future direction cocoa farming systems in relation to addressing
food security issues. Cocoa Board has produced a draft Strategic Plan 2008/09 – 2017/18. The plan: (i)
proposes for its current Cocoa Board Act to be reviewed to align it with new developments in the cocoa
industry and improve its value to its stakeholders; and (ii) promotes the idea of CCI focusing on cocoa
R&D while Cocoa Board works with the provinces and private sector to address the cocoa technology
transfer issues.
KIK has proposed to: (i) double coconut production to 200,000 tonnes of copra equivalent by 2015; and
(ii) increase production of other coconut by-products for domestic markets. Coconut is both a cash crop
and a significant food source in PNG and also an important food source during natural caused disasters
(e.g. cyclone victims in Oro in 2009). Coconut is a ssignificant food trade commodity in PNG and KIK
estimates that 310 million nuts are consumed per year. KIK plans to: (i) review its current coconut
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development plan and prepare a new strategic plan 2011 – 2021; and (ii) CCI and other stakeholders will
be involved in prepare the new Coconut Strategic Plan. This plan will be developed using the cascading
logic framework.
Recommendation 3: Cocoa Board, KIK and CCI need to work together in identifying the national
development objectives as outlined to in Vision 2050 and the PNG Development Strategic Plan 2010 –
2030 for growing and sustaining the cocoa and coconut industries in the long term.

Coconut and coconut industries contributions to the national economy
The cocoa and coconut industries contribute in a substantial way towards the agricultural export revenue
base in PNG. From 2001 – 2009, both cocoa and coconut products contributed 29% and 13%,
respectively, to the total export revenue by major tree crops. In terms of total commodity exports,
agricultural commodities contributed 8% with cocoa accounting for 2.3% and coconut products 1% during
this period. In terms of actual revenues, cocoa export earnings averaged around K227 million since 2006
and coconut products export earnings have averaged around K80 million in the last five years. In terms of
GDP contributions, cocoa contributed 1.5% and coconut products provided 0.7%.
Although the GDP contributions of these two cash crops are relatively small, these two crops engage a
total of 2.3 million people (estimated 460,417 households) in the coastal provinces. Cocoa farming is
restricted to the MOMASE and New Guinea Islands regions while coconut farming occurs in most of the
coastal and maritime provinces. Cocoa farming generates, relatively, higher income compared to copra
production.
Smallholder cocoa and coconut farmers contribute to the internal revenue of PNG by paying 10% GST on
items purchased from GST registered business outlets. Cocoa Board and KIK are also contributing to
PNG internal revenue by paying GST on export levies collected.

Cocoa and coconut sector support institutions and institutional arrangements
Cocoa Board is the regulator cocoa industry in PNG. It issues licences to cocoa fermentery owners, wet
and dry cocoa dealers and cocoa exporters. It also ensures to maintain a competitive market
environment and enforces industry accepted quality standards. Cocoa Board funds its regulatory
functions by collecting cocoa export levies on a per tonne basis with no budget support from the National
Government. Like Cocoa Board, KIK is regulates a deregulated coconut industry in PNG. It issues
licences to buyers, processors and exporters of coconut products. It also ensures that a competitive
market environment is sustained and industry accepted quality standards are maintained. KIK funds its
regulatory functions by collecting export levies on coconut products on a per tonne basis with no budget
support from the National Government.
CCI undertakes cocoa and coconut R&D programs on behalf of Cocoa Board and KIK, respectively.
Cocoa Board and KIK own CCI on 50 – 50% shareholding basis. The shareholders main concern with the
R&D programs is that CCI develops appropriate cocoa and coconut based farming and processing
technologies for smallholders to produce high quality cocoa beans and coconut products for domestic
and export markets. The overall objective of CCI R&D programs is improve the net income base for
cocoa and coconut farmers in rural areas. The composition of CCI Board needs to be reviewed and
competent independent professional persons should be appointed who understand the wider R&D issues
in the cocoa and coconut industries.
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Cocoa Board, KIK and CCI need to work closely with other key stakeholders of these two industries,
namely: cocoa and coconut associations and cooperatives, provincial and district administrations,
national government agencies (DA&L, DNP&M, DoF, DoT, DC&I, IPA and NARI) and international
donors. Over the last decade Cocoa Board, KIK and CCI have not made serious attempts to collaborate
with industry stakeholders in addressing cocoa and coconut industry development issues.
Recommendation 4: Cocoa Board, KIK and CCI need to establish appropriate industry forum for
deliberating on priority cocoa and coconut industries’ issues for policy formulation purposes and advice to
Government.
Recommendation 5: The composition of CCI Board needs to be reviewed and independent competent
professionals should be appointed who have a better understanding of cocoa and coconut R&D issues
within the wider PNG socio-economic and agricultural development context for the benefit of the
smallholders. This move is to improve the current level of debate of cocoa and coconut R&D issues in
CCI Board.
8.3
Cocoa and coconut industries’ internal environment in Papua New Guinea

Cocoa and coconut agro-ecological characteristics, production systems and development
domains
In terms of agro-ecological characteristics, cocoa and coconut require favourable climatic and soil
conditions in order to produce good economic yields. However, unlike cocoa coconut can withstand a
wide variety of soils, especially in marginal environments, to be able to produce some yield. Both cocoa
and coconut are sensitive to drastic weather changes such as droughts caused by El Nino and cyclones.
In the past, more agro-ecological research was conducted for cocoa than for coconut in PNG. It is
therefore important that CCI in collaboration KIK and other stakeholders develop research proposals on
coconut agro-ecological studies.
Both the cocoa and coconut industries, like the other cash crop industries in PNG, suffer from a lack of or
unreliable baseline information. The last comprehensive data on the production, yield, age profile and
land use of tree crops is from the mid-1970s prior to independence. Nothing has been collected
systemically on land planted, numbers of bearing and non-bearing trees and yields since then. This
presents a significant impediment to understanding the structure and incentives of cocoa and coconut
industries. A starting point for cocoa and coconut industries is that field surveys should be conducted to
collect data on various aspects of production for smallholders and plantations in major cocoa and coconut
producing provinces. The data collection through field surveys will require substantial funding from the
National Government. In order to address this critical issue of data collection, KIK has developed a
registration system for smallholders and plantations which has been designed to collect the following type
of information:





land planted to coconut palms and the number of coconut palms for each smallholder and
plantation by LLG, district and province;
age profile and yield of trees by province and district;
the spatial dimension of coconut growing (e.g. what other activities does coconut compete with
for land and possible potential for expansion);
the profile of smallholders particularly the composition of subsistence crops that are cultivated
for food security and family income generation.
the profile of plantations particularly the composition of other cash crops that are cultivated for
business revenue.
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In the absence of essential baseline data for cocoa and coconut production, it has been difficult to
quantify the impact of cocoa and coconut R&D outcomes for the two industries and compare projects in a
portfolio approach to determine where the most benefits may lie.
The major bio-security threats to the continued production of cocoa in PNG include: VSD disease
(caused by the fungus Oncobasidium theobrome), pod rot (caused by the Phytophthora palmivora fungal)
and Cocoa Pod Borer. In addition, early yield decline in the new cocoa clonal varieties affects the long
term yield sustainability under field conditions. The main bio-security threats for coconut production
include: Scapanes beetle complex, especially for the hybrids derived from Rennel tall x Malayan dwarfs,
and the recently identified Bogia Coconut Syndrome caused by a phytoplasma.
Unlike cocoa, the current coconut population in PNG is also suffering from senility. The low returns from
copra have not made it economical to undertake large scale replanting in plantations. It is more feasible
to do gradual replanting of parts of a plantation over time which may be more economically preferable
and could also facilitate future re-plantings as the plantation would consist of different age groups. The
funding support of the National Government is needed to implement large scale coconut replanting and
expansion into new areas in MOMASE and the Southern regions in the medium term.
Six significant development domains for cocoa and coconut were identified at a macro-scale level with
suitable areas for cocoa and coconut development in terms of agriculture potential, population density
and market access. The six development domains were to be used as a guide for identifying constraints
and opportunities for each domain during the program formulation workshops.
CCI needs to prepare the domains using a similar approach used by Hanson et al (1998) but at the same
time address two major limitations regarding their approach. Firstly, limiting factors for cocoa
development were defined more for high input production than low input production, underestimating
suitability for smallholders in many provinces. Secondly, no detailed analysis were provided for provincial
coconut development potentials in relation to land suitability classifications used in the document.
Recommendation 6: In order to address the gaps between cocoa and coconut agro-ecological studies,
CCI needs to explore innovative ways of undertaking coconut agro-ecological studies for understanding
the basis of the way the crop responses to various biotic and non-biotic factors in affecting its yield.
Recommendation 7: Cocoa Board, KIK and CCI in collaboration with the provinces need to develop
appropriate registration systems for collecting data from cocoa and coconut farmers in relation of land
areas planted, age profiles of crop plantings, land use patterns, food security and income generation
data.
Recommendation 8: Cocoa Board and KIK to work with CCI in addressing the factors threatening the
future growth and sustainability of cocoa and coconut industries in PNG.
Recommendation 9: CCI to improve the database for cocoa and coconut development domains at the
district and LLG levels.

Scale of production and productivity improvement
For both cocoa and coconut industries, the plantation sector was the dominant player until the mid-1970s
for the coconut industry and late 1970s for the cocoa industry, where the smallholder sector commenced
to produce more than the plantation sector. Currently, smallholders produce 80 % of the total cocoa and
copra in PNG while plantations account for the balance of 20 % of the production.
A characteristic of PNG smallholder sector of the cocoa and coconut industries are their low productivity
in terms of cocoa or copra yield per hectare compared to the plantations. Yield is a function of plant
variety, soils, climate and quantities of inputs applied. However, yield is just one indicator of the
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economics of an agriculture enterprise. Other key factors that drive production include the unit cost of
production especially in terms of labour effort and the scope for and return from alternative crops and
risk. That is, the economics of continued production may still be worthwhile in a low input system. CPL is
farming cattle under coconut plantations in East New Britain. Under this system, coconuts provide shelter
for cattle and animal droppings contribute to the organic matter content of the soil for improved pasture
growth and coconut performance (growth and productivity).
The major challenges confronting the cocoa and coconut industries include: (i) lack of resources (e.g.
tools and equipment) for smallholders; (ii) lack of farm management knowledge and skills; (iii) lack of
credit facilities; (iv) lack of marketing facilities; (v) high transport costs; (vi) fragmented markets; (vii) over
50 % of palms are senile; (viii) lack of hybrid coconut variety resistant to beetle attack and Bogia Coconut
Syndrome; and (ix) lack of IPDM for coconut farming systems.
There are certain opportunities in the cocoa and coconut industries which could be used to address the
challenges and these include: (i) improved cocoa planting materials; (ii) IPDM and CPB management
packages for reducing cocoa yield losses due to pest and diseases; (iii) farmer field schools for coconut;
(iv) extension teams available in most cocoa and coconut growing provinces; and (v) potential funding
available from Provincial Governments, Districts (through JDP&BPCs).
Recommendation 10: Cocoa Board, KIK and CCI in collaboration with other government agencies and
the provinces to address the major factors and opportunities affecting the scale of production and
productivity of cocoa and coconut as cash and food crops.

Post harvest and quality issues
The main issues of concern affecting the quality of PNG cocoa include: smoked tainted cocoa beans;
acidity (optimum pH is 3-4) and high shell content of cocoa beans; lack of processing facilities for
smallholders; lack of proper inspection of CPB infested beans which may reduce quality of cocoa; and
cocoa farmers lack information on updated cocoa processing techniques.
The opportunities for CCI, Cocoa Board and other stakeholders to address the challenges for cocoa are
as follows: adoption and utilization of IPDM technology by farmers to reduce CPB and other pests and
diseases; maintain good collaboration with international donor agencies; availability of GoPNG funding at
the District and LLG level; and maintain good relationship with key stakeholders.
The main factors affecting the quality of coconut products include: smoke taint in copra; small and
fragmented domestic market for coconut products/by-products; lack of small scale copra dryer for
smallholders; lack of information on appropriate small scale processing equipment for small- and medium
business operations; and limited downstream processing of coconut products at a small scale level.
The opportunities for stakeholders to address the challenges for coconut industry are as follows: (i)
develop and adopt IPDM technology for farmers to reduce beetle attacks and Bogia Coconut Syndrome;
(ii) develop appropriate combined solar and hot air dryer technology for reducing smoke tainting in
coconut; (iii) market led diversification into high value coconut products (e.g. small scale virgin coconut oil
production); (iv) maintain good collaboration with international donor agencies; (v) availability of
government funding at the District and LLG level; (vi) Government recognition of large scale coconut
rehabilitation; and (vii) maintain good working relationships with key stakeholders.
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Recommendation 11: Cocoa Board, KIK and CCI to address the major factors affecting the post harvest
and product quality issues in the cocoa and coconut industries. Post harvest factors affect the quality of
cocoa and coconut products produced and if not addressed in a serious way and will impact on the
reputation of PNG cocoa and coconut products.

Marketing and value chains of cocoa and coconut products
The challenges for the cocoa and coconut industries are as follows: lack of marketing facilities in some
areas (e.g. the Southern region and remote parts of MOMASE and NG Islands); lack of credit facilities to
smallholders and plantations; high cost of fuel for transport and operations; high cost of transportation;
and poor road and shipping infrastructures in remote areas; and farmers not treating cocoa and coconut
farming as business.
The opportunities that cocoa and coconut industries can take advantage of include: National Agriculture
Bank being revived in the provinces with new management approach; funding available from NADP;
funding available from Provincial Governments, JDP&BPC and LLGs; extension teams available in
almost every cocoa and coconut growing province; and private sector actors showing signs of their
willingness to help mobilizing growers to improve productivity and production; private sector willingness to
address.
Recommendation 12: Cocoa Board, KIK and CCI in consultation with other public and private
stakeholders to explore practical ways of improving the various aspects of marketing cocoa and coconut
products in PNG and eventually for export.
8.4

Socio-cultural contexts and economic status of rural smallholder
communities dependent on cocoa and coconut
Socio-economic characteristics of cocoa and coconut producers
There is no updated information on the number of farms and farm sizes for their cocoa and coconut
farmers in PNG. The last crop census conducted by DAL was reported in 1988. On average, it would be
reasonable to assume that a family could plant 3 hectares to cocoa. Farm sizes for coconuts would
depend on whether the land is customary or state lease. Village people use coconuts as landmarks
indicating land boundaries in gardening areas near villages. It is possible for village people to have
access to 2 hectares of land in old coconut plantations. Cocoa Board, KIK and CCI need to determine the
minimum sizes of cocoa and coconut blocks for subsistence, semi-commercial and commercial purposes
to assist farmers to plan their cocoa and coconut business enterprises.
In general, cocoa and coconut farmers display low management aptitude in managing their farms. This is
reflected in the low production output of smallholder cocoa and coconut blocks. This may be related to
the low adoption rates of good farming practices such as standard crop husbandry techniques (e.g. weed
control, pruning, etc). One of the major causes of such a situation is the lack of effective extension
system for training the farmers to manage their blocks properly. The other important factor which
influences the level of block management shown by smallholders is the low commodity prices. When
prices are high farmers will attend to their blocks. The other pressing family and community commitments
can also affect the time farmers allocate to managing their blocks. Cocoa Board, KIK and CCI need to
understand the underlying factors governing the behaviour of cocoa and coconut farmers in order to
develop appropriate policy and R&D projects to improve farmers’ aptitude of farm management and, thus,
improve the production output from their block.
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Smallholder farmers need physical (e.g. land, tools, etc), chemical (e.g. fertilizer, weedicide, etc) and
labour inputs for producing cocoa and coconuts. However, smallholders have inadequate farm inputs due
to financial constraints. The lack of appropriate micro-finance facilities in most provinces makes it difficult
for cocoa and coconut farmers to access credit. The other important factor affecting the availability of
micro-credit to cocoa and coconut farmers is the low economic returns to the agriculture commodities,
especially copra. Most micro-credit institutions are reluctant to provide loans for copra projects. KIK and
CCI have to identify a suitable combination of coconut by-products (e.g. coconut oil, coconut oil soap, coir
products, etc) with higher rates of return which smallholders can produce for income generation purposes
and, thus, make coconut farming economically viable for micro-credit sources to provide loans for
coconut rehabilitation projects in the rural areas.
Recommendation 13: Cocoa Board, KIK and CCI in collaboration with the provinces need to determine
the minimum sizes of cocoa and coconut blocks for subsistence, semi-commercial and commercial
purposes to help the farmers plan their cocoa and coconut business enterprises.
Recommendation 14: CCI to undertake studies for understanding the underlying factors influencing the
behaviour of cocoa and coconut farmers in order to address the current low farmers’ aptitude of farm
management to improve the production output from blocks.
Recommendation 15: Cocoa Board, KIK and CCI to address the poor state of affairs regarding the quality
of resources for farmers to pursue their cocoa and coconut farming enterprises. Appropriate information
packages for cocoa and coconut farming enterprises need to be developed by CCI for smallholders to
use in accessing micro-credit to rehabilitate their blocks.

Identification of target groups in cocoa and coconut sectors
Currently, Cocoa Board and KIK do not have updated information on their primary producers. Cocoa
Board and KIK in collaboration with CCI and the provincial administrations need to develop appropriate
registration systems for profiling the smallholder and plantation producers of cocoa and coconut by
provinces, districts and LLGs. These information could form the basis of annual crop census for cocoa
and coconut industries in PNG.
Recommendation 16: Cocoa Board, KIK and CCI in collaboration with the provinces need to develop
appropriate registration systems for cocoa and coconut smallholders, processors, traders (buyers,
transport providers, etc) and exporters.

Cocoa and coconut production strategies pursued by cocoa and coconut farmers
Cocoa farmers, in general, have been practising a three stage production model which consists of Stage I
(immature trees starting to bear coco pods, 1 – 2 years old), Stage II (mature trees at their peak yield
period, 3 – 6 years old) and stage III (trees more than 6 years old). In Stage III farmers do not care much
for the cocoa trees but just harvest pods they can find. From an economic perspective, there should only
be a 2 stage production model. Stages I and II should be should be the farming phases while Stage III
should be the replanting stage. For coconut, a similar production approach has been practised by farmers
using the local talls consisting of three stages, namely, Stage I (immature palms, 1 – 6 years) Stage II
(mature palms at peak production phase, 7 – 25 years) and Stage III (older palms with declining yields,
26 - 60 years ). However, replanting or under-planting should commence after 30 years when palms still
have reasonable yields. It is not economical to replant or under-plant when the coconut palms are at the
senile stage.
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Cocoa Board, KIK and CCI need to: (a) understand the current production strategies practised by cocoa
and coconut farmers; and (b) then develop appropriate cocoa and coconut production strategies for
smallholders taking into account the resource limitations confronting the farmers.
Recommendation 17: Cocoa Board, KIK and CCI need to: (a) understand the current production
strategies practised by cocoa and coconut farmers; and (b) develop new innovative cocoa and coconut
production strategies for smallholders to improve their productivity and production taking into account the
resource limitations confronting these farmers.

Livelihood options and strategies for cocoa and coconut farmers
Cocoa and coconut farmers also invest time and resources in making food gardens. This is because the
income from the sale of cocoa and coconut products are used for major family needs such as school fees
and church festivals. The garden food is also a main source of food and income. The men normally
undertake the following other livelihood activities: sales of cocoa and copra, deep water fishing, PMV
business, piggery and poultry. The women, on the other hand, take care of the food gardens, and sell
cooked food, betel nut and mustard, cocoa and ice block. In some situations, the family members also
seek formal employment opportunities. A surprising finding is that the average annual incomes from
cocoa and copra are comparatively low. In general, most farmers have poor savings habits and it could
be argued that the income from these two crops is not adequate to put aside money for savings after
other major pressing family needs are met.
Recommendation 18: Cocoa Board, KIK and CCI need to: (a) understand the current livelihood options
and strategies for cocoa and coconut farmers; and (b) integrate these findings into new innovative
production strategies for cocoa and coconut farmers.

Social and economic status of cocoa and coconut farming communities
In cocoa and coconut farming communities food security is gradually becoming an important issue in
highly populated provinces where these crops are cultivated as major cash crops in areas such as
Gazelle Peninsular in East New Britain. Cocoa Board, KIK and CCI in collaboration with other
stakeholders need to address this issue by developing new cocoa and coconut farming systems which
incorporate food production components. KIK needs to focus on developing coconut not only as a cash
crop but an important food source in PNG.
It is interesting to note that health and nutrition data were not covered in past studies by CCI. The
production of garden foods by the farmers indicates that family nutritional needs are met by the variety of
root staples and greens.
The past socio-economic studies by CCI have not covered the education and literacy aspects of the
cocoa and coconut farmers. It is important to understand the educational and literacy level of the farmers
to assist CCI in preparing appropriate extension documents when transferring cocoa and coconut
technologies. In general, most male household heads and their spouses only have a Grade 6 level of
education while the children have attained Grade 7 or higher education.
Studies by CCI show that: (a) unpaid family members substitute for hired labours when wage rates for
hired labour are high; (b) males were paid slightly more than females for cocoa production while female
were paid more in copra production; (c) female spouses spent more time selling food crops at local
markets because of disorganised producer households; and (d) other factors affecting the levels of labour
input into blocks include economically active youth attending schools and parents attending to customary,
church and other social obligations.
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Recommendation 19: CCI needs to undertake further studies on the socio-economic status (i.e. food
security, and health status, education and literacy levels and labour mobility) of communities depending
on cocoa and coconut industries in other provinces outside of East New Britain Province so that this data
can be used to plan, monitor and evaluate appropriate cocoa and coconut R&D projects in the coastal
provinces.

Needs and expectations of women and men producers
At present there is limited data to assess whether the needs and expectations of women and men
producers of cocoa and coconut are articulated sufficiently to ensure that agricultural development
inequalities between women and men are addressed so that cocoa and coconut production benefits both
genders. Local customs also influence the type of needs and expectations of male and female producers
in each cocoa and coconut producing communities. CCI needs to undertaken studies on understanding
how the main types of lineage (e.g. patrilineal versus matrilineal) in cocoa and coconut farming
communities influence the needs and expectations of women and men cocoa and coconut producers.
Recommendation 20: CCI needs to mainstream the different needs and expectations of women and men
producers in its cocoa and coconut R&D projects so that development inequalities between the genders
are addressed for the benefit of both women and men in cocoa and coconut farming communities.

Gender, HIV & AIDS and environmental impact on the cocoa and coconut sub-sectors
Both men and women assist each other in undertaking various tasks required for producing cocoa and
coconuts. CCI is yet to develop appropriate research protocols where various aspects of gender issues
affecting labour supply and specialisation in cocoa and coconut farming communities could be monitored
over time. The process of mainstreaming gender into CCI R&D activities has commenced. It is important
for all CCI staff to understand the significant effects gender has on the economics of cocoa and coconut
production in rural areas in PNG.
HIV & AIDS will affect labour productivity in cocoa and coconut industries in the coastal provinces as the
main age group affected ranges from 15 – 35 years. HIV infections are projected to increase in the rural
areas, thus, pose a huge challenge for cocoa and coconut subsectors. Provincial administrations need to
develop effective strategies and targeted interventions to reduce the spread of HIV in rural areas. CCI is
yet to develop appropriate research protocols where effects of HIV & AIDS on labour productivity in
cocoa and coconut framing communities could be monitored over time. It is important for all CCI staff to
understand the significant implications of HIV & AIDS on the production of cocoa and coconut in rural
areas in PNG.
The current smallholder crop husbandry practises for cocoa and coconut production need to be reviewed
in relation to decomposing cocoa and coconut plant parts acting as sources of carbon dioxide build up in
the atmosphere. The farmers need to be educated to convert on dead plant parts from cocoa and
coconut into organic mulching materials.
Cocoa and coconuts are also potential sinks for the carbon dioxide in the atmosphere. Coconuts have
been reported to have very high gross primary productivity and net primary productivity (NPP)
comparable to tropical forests. However, further studies are needed to understand how coconuts partition
85% of their NPP to perishable structures unlike dicotyledonous trees such as cocoa.
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Recommendation 21: CCI needs to mainstream gender, HIV & AIDS and environmental impact issues in
its R&D programs for cocoa and coconut farming communities. Cocoa Board and KIK also need to
mainstream gender, HIV & AIDS and environmental impact operations and when formulating policies for
their respective industries.
8.5

Review of past and ongoing R&D activities at Cocoa Coconut Institute
Cocoa and coconut technologies released
The new cocoa hybrids and clones, were provincially released in 2000 because of strong interest by
farmers for the new hybrids and clones only after three years of field trials in the provinces. CCI made a
full release of these new cocoa varieties in 2003 after an additional four years of field testing. These new
varieties have higher yielding capacity but still have not the addressed the problem of early yield decline
which continues to be a major problem, in addition to bio-security threats affecting cocoa production in
PNG. The extension bulletins on the new hybrids and clones, budding techniques and formation pruning
were also released in 2000. However, these documents have not been updated, printed and circulated.
No coconut technology developed by CCI has been released to date. The technology on hybrid
production from crosses between Rennel Tall and Malayan Dwarfs currently used was introduced to PNG
in 1973. However, the hybrids produced from these genetic materials are highly susceptible to beetle
attack and by 1985 the Hybrid Coconut Programme was considered to be a failure. The demand for
cocoa hybrids is far greater in NG Islands and MOMASE than for the coconut hybrids.
CCI has developed four IPDM options for cocoa farming in East New Britain to control the Cocoa Pod
Borer. Agronomy and plant protection technologies have been incorporated into IPDM options and these
have been tested on-station and on-farm trials. However, no IPDM technology has been developed for
coconut to date for to address the critical beetle complex pest and the recently discovered Bogia Coconut
Syndrome.
The small scale coconut processing technologies need to be subjected to Benefit Cost Analysis to
determine whether these processing technologies will provide reasonable net returns to farmers in rural
areas.
It was also evident that some of the cocoa and coconut R&D findings do not get published after the trials
are completed. Very few of the cocoa and coconut technologies have been translated into extension
materials for farmers. Inadequate planning is devoted to proposed cocoa and coconut R&D projects by
the researchers at CCI. Limited literature review is undertaken for most of the proposed cocoa and
coconut R&D projects unless it is part of a postgraduate program.
Recommendation 22: CCI in consultation with Cocoa Board and KIK need to review all previous cocoa
and coconut R&D work to: (a) address the identified gaps in the cocoa and coconut R&D programs; (b)
ensure that all future cocoa and coconut R&D projects are subjected to proper cost benefit analysis
before being considered for implementation; and (c) publish all outstanding research data assessed to
improve cocoa and coconut production and processing.
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
Relevance of cocoa and coconut R&D programs
The current cocoa and coconut R&D programs are addressing specific industry issues but need to be
realigned with the new CCI Strategic Plan. The funding limitations at the Institute delay the
implementation of current planned cocoa and coconut R&D trials. CCI needs to ensure that proper
economic evaluations (i.e. Cost Benefit Analysis) will be undertaken for each R&D project in the future.
CCI needs to develop appropriate extension packages using data/information from previous cocoa and
coconut R&D outcomes to address specific industry issues.
In terms of human resource needs, there is a need for CCI to recruit the following qualified staff: (a) a
plant pathologist to work full time on coconut diseases at Stewart Research Station (SRS); and (b) an
economist to be located at SRS to evaluate all coconut R&D projects.
Recommendation 23: CCI in consultation with Cocoa Board, KIK, provinces and other stakeholders to
reassess the current cocoa and coconut R&D programs and realign the cocoa and coconut R&D
programs if deemed necessary.

R&D priority setting at CCI
CCI addresses R&D issues based on what cocoa and coconut industries identify as important. However,
the process for the two industries and CCI to determine these priorities is not clearly established. It is
important for the Research Assessment Committee to be reactivated and new members appointed in
2010. The Research Assessment Committee has not been functioning since 2003. There were no
Research Review Meetings from 2003 to 2007. The last one was held in 2008 and no review meeting
was conducted in 2009 due to funding constraints. The key question this study raises is how were the
current R&D programs were prioritised and approved since 2003?”
Cost Benefit Analysis (CBA) systems are still being developed at CCI. All future cocoa and coconut R&D
programs need to be subjected to a CBA before they are considered by the Research Assessment
Committee.
Recommendation 24: CCI needs to: (a) reactivate the Research Assessment Committee and new
members appointed in 2010 to approve all proposed cocoa and coconut R&D projects for funding and
implementation; (b) ensure that all cocoa and coconut R&D projects are subjected to a cost benefit
analysis for consideration by the Research Assessment Committee; (c) all useful cocoa and coconut
technologies and/or information for farmers resulting from R&D projects at CCI must be considered and
endorsed by the Research Assessment Committee before approval by CCI Board for release to the
industries.

Adoption of technologies
Although a few cocoa and coconut technologies have been released to the industries, there is no process
at CCI to monitor the adoption and implementation of old or new technologies being developed. Several
technologies in cocoa production were developed but none of these have been monitored to assess the
level of adoption. An attempt has been made to assess the adoption rates of cocoa hybrid clones in ENB.
For new cocoa hybrids and clones released, only one % of smallholders and 6 % of plantations adopted
these new cocoa varieties. A monitoring system has been proposed and this should be tested and refined
by CCI at Tavilo and SRS as soon as possible.
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A Review of Cocoa and Coconut Subsectors in Papua New Guinea 2010
Recommendation 25: CCI needs to develop and introduce the proposed monitoring system to assess
the adoption rates of the old and new cocoa and coconut technologies if possible by 2011.

Extension approach and issues
The current CCI extension system was adopted when CCEA was merged with CCRI in 2003 to form CCI.
The current structure of ISD linked to the provinces is too cumbersome and expensive. Staff ceilings of
cocoa and coconut R&D divisions are strugglingly to maintain a critical mass in their sections for
undertaking serious cocoa and coconut R&D studies to address the key issues in both industries. CCI
needs to review its extension approach and determine the best pluralist approach it should adopt in order
to make a significant impact on successfully transferring its cocoa and coconut technologies to farmers.
CCI has already commenced the process of identifying partners in the two industries in the provinces
who can assist in transferring its cocoa and coconut technologies to farmers.

International and regional collaboration by CCI
CCI needs to review the current cocoa and coconut R&D collaborative partnerships. So far CCI has
benefited from its collaborations with ACIAR, COGENT and CIRAD in the area of cocoa and coconut
R&D programs over the years. However, CIRAD has turned out to be an expensive partner because
CIRAD requires CCI to meet certain portion of the overhead costs associated with the engagement of its
scientists in PNG.
Recommendation 26: CCI needs to ensure that collaborating international partners on cocoa and coconut
R&D projects should provide appropriate support to CCI to implement project components in PNG.

Current R&D approach versus new R&D results based approach
CCI in the past operated without an overall gaol and purpose to link its R&D programs in a meaningful
way to the cocoa and coconut sub-sectors. CCI used scientific excellence approach to organise its cocoa
and coconut R&D programs without clearly articulating their outcomes to the needs of the two industries.
CCI now has clearly defined its goal and purpose in relation to the two industries to commence
developing its R&D programs using the cascading logic framework to link its programs to the two
industries. CCI will need to realign the current cocoa and coconut R&D programs which are discipline
based under the proposed six thematic areas. CCI has commenced addressing this issue under the
ARDSF program formulation process.
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