Papua Government Keen On Strengthening Cocoa Industry


A drive to strengthen the cocoa industry in Papua New Guinea is helping local growers draw a line under a difficult few years as rising international demand looks set to aid recovery.

All_eyes_on_1_trillionThe government is keen to carve out a niche for PNG as a centre for chocolate manufacturing, in line with its broader aim of boosting value-added industry. However, with many producers still feeling the impact of a cocoa pod borer infestation, which decimated crops from 2008 to 2013, it will take time for any expansion to generate results.

Moving to manufacturing

In early March, the government proposed to co-fund a feasibility study with foreign investors looking at the viability of establishing a chocolate factory in Wewak, the capital of East Sepik Province. The proposal came during a European trade delegation to PNG, led by Marc Pauwels, the CEO of the Belgian Chocolate Group, who noted that the company could also look into the possibility of producing products other than chocolate, such as cocoa drinks, vinegar and fertiliser.

Richard Maru, the minister for trade, commerce and industry, said that the government is prepared to meet half of the feasibility study costs. ?The study will include assessing government land to set up a cocoa nucleus estate from seed nurseries to planting cocoa on a company-owned cocoa estate with extensive support to outgrowers all the way to setting up and building a factory to manufacture cocoa and its by-products,? he explained.

His suggestion follows a previous proposal, put forward in 2013, to develop an integrated chocolate production line in Wewak. The government is keen to promote PNG as a potential manufacturing centre for the industry, highlighting its easy access to Asian markets and the duty-free status that local agriculture products enjoy in the EU.

Road to recovery

Efforts to broaden the cocoa industry?s base comes as growers continue to recover from widespread cocoa pod borer infestations, which destroyed many crops across Asia and crippled the industry in PNG. In the East New Britain region, which used to be PNG?s largest producer of cocoa beans, volumes fell from a high of 25,000 tonnes at the onset of the infestation in 2008 to just 4000 tonnes in 2013, prompting the majority of growers to abandon their fields.

A programme backed by the World Bank is helping play a part in the recovery. In 2014, the bank approved $30m for projects in six provinces for the Productive Partners in Agriculture Project, which is aiming to develop a stronger production chain for the industry since it launched in 2010. Working with state agencies and private sector firms, the funds are being used to supply disease- and pest-resistant seedlings, strengthen infrastructure to boost market access, and build links between growers and the business community. Priority was given to improving access to technology and services, which could help improve yields. About 234,000 cocoa seedlings were distributed under the scheme by the end of 2014, with a similar number still to be planted.

However, the government has warned that cocoa production will remain weak in 2015. It could be many years before output returns to pre-2008 levels of around 35,000 to 40,000 tonnes annually or earnings of $71m, when cocoa was second only to coffee in its contribution to agricultural export revenue.

Tapping potential

While any recovery will take time, producers could benefit from external factors, led by the challenges faced by African producers in the wake of the deadly Ebola outbreak. The disease sparked a jump in chocolate prices in 2014 of around 18%, amidst speculation that it could disrupt production across C?te d?Ivoire and Ghana, which combined account for around 60% of global cocoa bean output.

At present, almost all of PNG?s cocoa production is shipped overseas. The World Bank-backed programme, which aims to increase plantation sizes and improve yields, could see the country better placed to carve out a larger niche in the market, while industry reports forecasting a global cocoa shortfall of up to 1m tonnes by 2020 may well signal further potential for expansion.

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