I HAVE read in the dailies and listened on the radio with great interest, the idea to farm rice in Papua New Guinea.
Generally this idea is good for the country as it will boost food security, create economic opportunities, and eventually lead to export – thereby bringing in much required foreign exchange currencies.
However, ideas are not easily said than done when there are a lot of risks involved which requires stringent requirements for legal as well as technical efficiencies.
Likewise the idea to farm rice in the Central Province is a largely flawed idea as the premium is very high, rice import, processing, packaging and distribution is currently provided by Trukai Industries and there is the possibility of business failure, legal actions, trade wars and condemnation from higher authorities – like the World Bank.
Rice farming was introduced in Papua New Guinea in the 1950s but the crop required a lot of labour hours and thus it was done away with.
Small holder farmers were not able to allocate time to attend to other farming practices such as raising livestock and subsistence farming and doing household chores as rice farming was likely to take a big chunk of the household labour hours – assuming Papua New Guinea has a mixed farming system.
It is therefore a nightmare for the government to allow rice to be grown in the country after almost seventy years.
Against this backdrop, if the proposed rice farming in the Central Province is given the nod to go ahead, I think it will be definitely in the high risk end of the investor’s investment portfolio.
Because if the rice cultivation is either done on a monopoly or an oligopoly structure, the return on labour will be very low relative to other industries – given the heavy labour hours required for rice cultivation.
As a result of a decrease in the return on labour, the government will allow the company to take over import business currently held by Trukai Industries.
This will impact on employment, business good will, various agreements and standard trading instructions set by the World Bank.
Nonetheless, the government had already given a 80 percent import quota to the same company which shows the favouritism demonstrated by the government to one particular company.
The government had failed miserably to preserve and promote existing business reputations and therefore it should not proceed with the rice project in Central Province.
Mike H, via email