PNG cocoa faces several challenges: Local expert

THE Papua New Guinea cocoa industry faces several challenges including pests and illegal operations, a local expert says.
“The local cocoa industry is currently faced with many challenges,” Labui Bua, an agriculturist who had extensive involvement in government-run organisations and agriculture extension work, said.
He said major challenges included addressing the endemic cocoa pod borer (CPB) insect that had destroyed almost 50 per cent of the crop since 2006.
Bua added that research and development of newer and better varieties had also stalled in the last decade as a result of reduced funding.
He said quality had also become an issue for the industry as strict quality parameters had not been enforced resulting in PNG recently losing its fine flavour statues from 90 per cent down to 70 per cent.
“These challenges combined have resulted in the PNG cocoa crop falling from a peak of around 60,000 metric tonnes to around 30,000 tonnes today; and it is still dropping,” he said.
Bua, who is also in the cocoa business, said: “The Cocoa board of Papua New Guinea has stated that exports generated approximately K250 million in revenue for PNG last year, down from a peak of approximately K400 million in the early 2000s.
“The board has also approved and allowed foreign owned businesses to come into the cocoa industry in PNG to compete with locally owned cocoa exporters.
“These foreign-owned companies are large trading houses based overseas that have previously bought from and supported the same local exporters they are now competing against.”
Bua said Outspan (PNG) Ltd was one such company based in Singapore with cocoa operations in Africa, South America and other areas; they were putting significant financial pressure on local exporters with a view towards driving competition out of the market.
“Once they have removed the local exporters from the market they will then start to reduce prices paid to farmers and make larger profits to the detriment of PNG,” he said.
As per PNG’s Cocoa Act and PNG Cocoa board regulations and guidelines, registered cocoa exporters are required by law to conform to Investment Promotion Authority’s national enterprise status.
This means that foreign exporters must have a 50 per cent or more ownership by PNG nationals.
Bua said since Outspan (PNG) Ltd’s incorporation on April 10, 2000, it had 100 per cent shareholding by Olam International, a company incorporated and based in Singapore.
“The PNG Cocoa board even revoked its licence in 2006 due to noncompliance yet they are still operating in the market,” he said.
Bua said PNG welcomed overseas interest and investment in the cocoa industry; however, it should be done through the support and development of local PNG businesses.
“Overseas based business with interest in cocoa can buy directly through locally owned exporters from where they are based,” he said.
“Partnership with local cocoa exporter is encouraged to create a fair and equal participation by local PNG cocoa exporters.
“Outspan being an international company competing with PNG local exporters and businesses has been a major factor in some local companies losing market share and even going out of business.”
Bua said PNG had major quality issues with its cocoa that include smoke taint, adding on to this with unfermented beans being bought and exported out of the country by a single foreign owned cocoa exporter.
“PNG’s current rating status of 90 per cent fine flavour, will be slashed to 70 per cent should they be allowed to continue to operate in PNG,” he said.
Bua said the PNG Cocoa Act and Cocoa Board regulations and guidelines were in line with the Company Act and Investment Promotion Authority Act.