Papua New Guinea’s agriculture export income in 2015 was less than half of 2011 levels, according to recent Bank of Papua New Guinea data. Income from palm oil exports was at its lowest level since 2009, while coffee exports were less than half the value of four years ago and income from rubber exports almost halved in a year.

New Britain Palm Oil exports in Kimbe. Credit: NBPOL

Some of the decline is attributable to lower export prices. The bank’s most recent Quarterly Economic Bulletin says in 2015 coffee prices were down from 2014 levels by 1.2 per cent. Palm oil prices fell by 18.5 per cent; tea by 5.8 per cent; and rubber by 16.7 per cent.

Other prices rose in 2015. Cocoa prices were up by 14.4 per cent from 2014 levels, copra prices by 1.3 per cent and copra oil prices by 3.8 per cent.

Weaker prices were not the only factor. The lower income was also the result of significantly lower production levels.

‘The net effect was a 2.2 per cent decline in the weighted average kina price of agricultural, logs and marine product exports,’ the Bulletin says. ‘Excluding logs, the weighted average kina price of agricultural and marine product exports declined by 5.9 per cent in 2015, compared with 2014.’

Less production

Weaker prices were not the only factor. The lower income was also the result of significantly lower production levels.

Coffee and cocoa prices. Source: Bank of Papua New Guinea

The Bulletin notes coffee export volumes declined by 11.6 per cent to 42,800 tonnes in 2015. ‘This was attributed to lower yield from the ageing and rehabilitated coffee trees, combined with the adverse impact of the El Niño drought,’ it notes.

‘Cocoa volumes declined in the year by 8 per cent on 2014 levels, to 30,900 tonnes.’

Higher production from Brazil, Vietnam and Colombia also ‘put downward pressure on global prices.’ Sales income from coffee was K393.5 million, a fall of 12.6 per cent from 2014 levels—and only 42 per cent of the 2011 level. Coffee accounted for 29 per cent of PNG’s agricultural export income last year.

Cocoa volumes declined in the year by 8 per cent on 2014 levels, to 30,900 tonnes. The Bulletin explains this was mainly due to the ‘on-going impact of the cocoa pod borer disease and the dry weather conditions’.

However, the price of cocoa increased by 14.4 per cent, which the Bulletin attributes to lower production from the world’s largest producers, the Ivory Coast and Ghana, which experienced unfavourable dry weather conditions.

‘The increase in (the cocoa) export price more than offset the decline in export volume, resulting in export receipts of K255.7 million in 2015, an increase of 5.2 per cent from 2015,’ the Bulletin says. The 2015 sales of cocoa were only 73 per cent of 2010 levels, however.

Weak volumes

Copra and palm oil prices. Source: Bank of Papua New Guinea.

Sales of PNG’s largest agricultural export, palm oil, fell. Volumes were 486,900 tonnes in 2015, a decline of 5.4 per cent from 2014 levels.

‘The combined effect of the decline in prices and volumes resulted in a 22.9 per cent decline of palm oil export sales in 2015’

The Bulletin noted that lower international prices were the result of weak demand from the major consumer, China, and increased world supply of soy oil as substitute.

The combined effect of the decline in prices and volumes resulted in a 22.9 per cent decline of palm oil export sales in 2015, to K837.6 million. Palm oil constituted 61 per cent of PNG’s agricultural export income last year.

Copra volumes declined by 30.3 per cent from 2014 levels to 33,600 tonnes. Prices increased slightly, however: up by 1.3 per cent due to lower production from the world’s major producers: the Philippines and Indonesia. Nevertheless, the decline in volumes more than offset the increase in price, resulting in a 29.4 per cent decline in income in 2015 to K45.0 million.

Rubber exports weak

Rubber performed poorly. Volumes in 2015 declined by 31.3 per cent from the previous year’s levels to 2200 tonnes. The Bulletin attributes this to the adverse impact of the El Niño dry weather. Prices also fell by 16.7 per cent from 2014 levels, which resulted in a 42.8 per cent fall in income to K7.9 million in 2015. Sales of rubber exports in 2015 were only 19 per cent of their 2011 levels.

‘A long term comparison of total annual agriculture sales reveals volatility in the sector.’

Copra oil, which last year accounted for 2 per cent of PNG’s agriculture export income, was a bright spot. Volumes increased to 14,600 tonnes, a rise of 31.5 per cent from the previous year. Prices were also 3.8 higher than in 2014, reflecting a ‘lower supply of copra from the Philippines and Indonesia due to unfavourable wet weather conditions,’ the Bulletin notes. Income from copra oil rose by 36.6 per cent to K39.2 million.

A long term comparison of total annual agriculture exports reveals volatility in the sector. Export income in 2015 was above the levels of 2009 and 2013, but well below the levels of 2010–12 and 2014.