Exports hit by cocoa slump

cocoa slump

COCOA exports from Papua New Guinea are expected to drop dramatically in the next year due to the rebellion on the island of Bougainville. Government sources in Port Moresby are now estimating the country’s total exports will come in at about 35,000 tonnes, against the 46,000 tonnes for the 1989-90 year. This news compounds an increasingly dismal com modity outlook, with copra prices lan guishing and concerns about the future of the coffee industry after support funds ran out.

With about 45 per cent of Papua New Guinea’s cocoa crop produced on Bougainville, the civil dislocation there will have a serious effect on both pro duction and exports. While the uprising centred around the large Pangiina cop per mine, the violence spread through out the island and many plantation workers who had been brought from the Papua New Guinea mainland bore the brunt of rebel attacks as, eventually, did the plantation managers which led to their also leaving the island with their families. The smallholders remaining on the island are generally unsympathetic to the uprising, but have been hit by the government’s blockade.

The island, at the time of writing, is now virtually cut off. However, some shipments have made it to the port of Rabaul, but authorities are suspicious that much of that cocoa is stolen from

plantations by Bougainvillians who have

helped themselves. A good harvest was expected due to substantial amounts hav ing being spent in recent years by com

panies to expand and maintain planta

tions. Certainly, smallholder growers will try and keep production going even with the troubles, but it seems likely that the plantations will fall into disrepair in the coming months. There is no sign of the government re-establishing its writ over the island in the short-term.

Traders in other parts of Papua New Guinea have felt some relief as world cocoa prices headed upwards, with re ceipts rising 49 per cent per tonne in the first five months of 1990. But the Cocoa Stabilisation Fund, even with greatly re duced pay-outs as a result, is still being propped up by government loans and will certainly run out of money by the end of 1990.

But copra growers have little to be cheerful about.

Copra Marketing Board general mana

ger Joseph Bae said recently that de pressed world prices for the commodity and the Bougainville crisis had had a

dramatic effect on copra production output was declining rapidly. Bae said the recent kina devaluation had helped growers but not enough: the Papua New Guinea currency was still at a high level against other currencies. “The hard kina policy acts to keep the costs of imports down and restrains inflation,” he said.

“But it probably also penalises exporters of coconut products because copra and coconut oil prices fall and the US dollar weakens revenue in kina terms will be

double depressed.”

Copra and cocoa growers have now taken their battle into the political arena in an effort to further the desperate bat tle for survival which they see facing both copra and cocoa. The Planters Association of Papua New Guinea has launched a campaign for the removal of the Agriculture and Livestock Minister,

Galeng Lang. They are demanding in

terest-free loans for cocoa and coconut

research, rescheduling of development

credit to the industry, a new industry corporation and grower appointments to

the commodity boards. They complain

all these decisions had been made by the government, but not implemented. The problem for the government is that its finances have been severely stretched by the Bougainville crisis, both in terms of lost earnilngs and the cost of the army actions there.

Planters Association executive director David Loh said both the cocoa and copra industries were experiencing their most difficult times ever and plantations were going up for sale all over the country, particularly in the islands off the main land. The two industries now owe about 40 million kina (U 5539.2 million) in commercial bank loans and are having great difficulty meeting repayment sche dules. Despite a Government assurance to reduce interest rates from 11 per cent to about six per cent, banks had gone ahead and increased these rates to 15 per cent much to the industries’ hor ror, he said. Loh has reported that many plantations are continuing to lay off staff and restricting work to three or four days a week.

The planters placed a large advertise

ment in newspapers calling for Prime Minister Rabbie Namaliu to replace Lang with someone who would “assist and support the rural sector in its struggle for survival”. The advertisement said that in a time of low commodity prices, high interest rates and lack of law and order in rural areas, the growers needed a minister who was “capable of fighting for the needs of rural industries”.

Meanwhile on the coffee front, one company has come out and urged far mers to diversify away from that crop.

The general manager of Kainantu De

velopment Corporation (KDC), John

Wilkinson, said the current low prices

for coffee should cause farmers to turn to other areas of agricultural and indust rial development. KDC manages 45 cof fee plantations, mostly in the Eastern Highlands Province. Wilkinson said that when the Coffee Stabilisation Fund ran out of money at the end of the year, coffee growers and the local economy would probably collapse with the grow ers being unable to repay bank loans;

they might even lose their plantations,

he said.

He argued that there was a great need for massive agricultural development of the country’s rich soils and an even grea ter need for onshore manufacturing of many of the items now imported. “In stead of importing finished goods, we need to look at importing technology, management skills and equipment . . . and setting up our own manufacturing and processing industries,” he said.

Meanwhile, the Government has been warned of widespread trouble in coffee

growing provinces if the Coffee Develop

ment Agency (CDA) is abolished.

Former Agriculture and Livestock Minister Gai Duwabane said the agency had been established by the Wingti Gov ernment because it could better serve smallholder growers to get better yields from their coffee trees, and that since it had been set up coffee production had increased.