New bank lending policies
pp. 36-37 · Read in the full issue
hit the big coffee growers
Reluctance on the part of banks to lead to coffee growers in Papua New Guinea would lead to the rapid deterioration of plantations, according to the Premier of Western Highlands Province, Lukas Roika. West ern Highlands accounts for about 50 per cent of Papua New Guinea’s coffee pro duction.
The banks are holding back advances to agricultural producers for two reasons. First, with prices being so low they are obviously concerned about the ability of some growers to service their loans. Second, the national government has imposed tight controls on bank lend ing in order to limit the money supply and fight inflation and domestic demand
for imports.
Roika has now asked the government in Port Moresby to make money avail able so that growers can maintain planta tions. These plantations are scattered all over the province, with some being hun dreds of hectares in size. Several of these large commercial operations have been bought in recent years by local groups from foreign owners and are clearly suf
fering from lack of capital spending.
The Premier said that local people, frustrated at not being able to get loans, were deliberately neglecting their crops and allowing bush to grow over the plantations. He warned that if there was a similar decline allowed to occur in the other main production area, Eastern Highlands Province, the country would suffer even more serious foreign ex change declines and complications with quota allocations under the International Coffee Agreement. “I know we have an economic crisis but this must not be used as an excuse to totally ignore certain in dustries,” said Roika.
Meanwhile, the latest report from the country’s central bank, the Bank of Papua New Guinea, warns that the downward adjustments in bounty pay ments and support prices for agricultu ral commodities will have a major impact during 1990. In the quarter to March this year, export volumes of coffee in creased by 31 per cent to 9200 tonnes.
The high volumes were the result of the continuous rundown of stocks. But the export price received dropped by 48 per cent in the March quarter to K 1217 (US$ll94) a tonne, compared with K 2329 (US$22B9) in the March 1989 quarter. The low prices more than offset the increased volumes.
In fact, Papua New Guinea’s coffee production fell in 1989 according to fi gures just released in another bank
document. Last year the country produced 1.03 million bags, 19 per cent down on 1988.
Cocoa exports also increased in the first quarter of 1990 up 39 per cent
to 11,700 tonnes. The bank’s March quarterly economic bulletin said this re suited from increased production of hyb rid cocoa from rehabilitated and new
cocoa plantations. Shipments continued
from North Solomons Province during the quarter but the loss of exports from the province since the Bougainville re bels declared independence is likely to have a significant impact on the total of Papua New Guinea’s exports for the re mainder of the year. Cocoa export prices fell by 29 per cent to an average of K 726 (US$7l3) per tonne compared to an average of K 1024 in the corresponding period of the previous year.
But copra suffered declines in both export prices and volume: the volume sent out of the country was down by 13 per cent over the previous March quar ter to 15,700 tonnes. The decline was attributed to falling production and the closure of the depot at Kieta in the North Solomons the country’s main copra depot. The average price received in the quarter was KlB5 (US$181) per tonne, 26 per cent lower than the March 1989 figure. The bank reports that the Government’s review of the indstry con tinues following the exhaustion of the Copra Stabilisation Fund, and the world price for copra oil continues to be de pressed as a result of increased availabil ity of substitutes, such as soya oil.
The bad news continued on the palm oil front, too.
Volumes exported went down by four per cent to 32,900 tonnes in the March quarter, largely due to bad weather. But prices fell by 20 per cent to K 243 (US$23B) a tonne.
In other agricultural crops, tea exports brought export revenue of K 1.7 million (US$l.66 milion), 42 per cent higher than the previous March quarter and rubber exports also rose by 17 per cent to K 700,000 (U 55687,050), partly helped by a slight increase in the export
price.
Export receipts from logs and other
forestry products increased by two per
cent to K 23.3 million (U 5522.86 million), but marine export income fell by five per cent to K 1.9 million (US$l.B6 mil lion), □