Slowdown in agro-sector

Business, Normal

The National, Friday August 2nd, 2013


THE agriculture, forestry, and fisheries sector is projected to grow at 2.7%, just below the 2013 Budget projection of 2.8%, according to the Mid Year Economic and Fiscal Outlook (MYEFO) Report released yesterday by Treasurer Don Polye.

The report said this growth, while strong, reflected lower commodity prices, including weather and infrastructure-related issues. 

“Commodity prices have remained low in the first half of the year and this has translated into lower production, especially as farmers in cash crops like copra, face difficulties in raising production in the face of rising costs,” it said.

“Weather has affected production in the first quarter with increased rainfalls affecting mobility and quality of crops. 

“Cocoa production is expected to be same as last year with the Cocoa Pod Borer (CPB) still impacting affected provinces, especially East New Britain. 

“With respect to coffee production, despite the expectations of a good crop this year, infrastructure concerns, lower price, security and matured trees are likely to reduce production. 

“A development that is expected to place further downside on the agriculture sector in 2013 is the damage to one of the major coconut oil processing facilities in May. 

“There are three recognised coconut oil mills registered in the country. 

“Two are based in Madang and one in East New Britain. 

“With the closing down of the Madang mill for refurbishment since last year, and the recent destruction of the coconut oil mill in East New Britain, there is currently only one recognised mill in operation.

“It is unknown when production will resume at the Madang mill, however, in the meantime, coconut oil production is expected to be half of its total capacity. 

“In contrast, palm oil production continues to grow each year with companies managing their replanting programmes to ensure minimal loss is encountered. 

“Palm oil production is expected to hold up in 2013 and this is expected to provide some support to the agriculture sector in 2013.”

The report said the mining and quarrying sector growth has been revised up to 20% from the 2013 Budget forecast of 17.8%. 

“This upward revision is due to an improvement in production estimates provided to Treasury since the time of the 2013 Budget,” it said.

“The oil and gas sector is expected to continue its contracting trend in 2013 and this is due the natural decline of the oil fields. 

“The contraction of the oil and gas sector offsets the strong forecasts from the other sectors in 2013.”