A new factory in Papua New Guinea’s Highlands has begun processing locally-grown potatoes. This is part of an import substitution plan that could provide thousands of jobs, cut the price of frozen foods and save valuable foreign currency, explains Gallit Tamir, Business Development Manager for Innovative Agro Industries.

Highlands AIC frozen food factory. Credit: IAI

After the success of its K128 million joint venture with Ilimo Dairy Farm, Innovative Agro Industries (IAI) teamed up with the Southern Highlands Provincial (SHP) Government to form Highlands AIC to produce frozen vegetables.

‘Our production method is very sophisticated and incorporates the leading technologies in the food industry,’ Tamir tells Business Advantage PNG.

Instead of freeze-drying fresh produce, the Highlands AIC is equipped with a quick-freezing processing line that guarantees the products won’t stick to each other or create a frozen solid block that is difficult to cook or consume.

‘The individually quick-frozen (IQF) technology ensures that whatever the product is—potato fries, pineapple, strawberries, sweet potato, taro, blueberries—it is individually frozen, in whole or cuts, providing the consumer with excellent taste and nutrition values.

‘Cooking these frozen products is far easier and the produce is not disfigured as a result of the IQF process.’

Growing potatoes

Potato farmers in the Highlands. Credit: IAI

‘Our research shows that PNG imports around 4000 tons of frozen potato fries annually, all of which can be replaced by the Highlands AIC,’ says Tamir.

The frozen fries produced at Highlands AIC will be sold to retailers in all parts of the country and to institutional buyers, including caterers, hotels, restaurants, small shops and kai bars in PNG cities and towns.

‘Frozen fries were chosen as its first product because there are thousands of farmers in the Highlands who grow potatoes, currently with poor access to the domestic markets.’

Inspired by the Kuk Early Agricultural Site, which is considered the birthplace of agriculture in PNG, the frozen fries will be marketed and sold under the brand name KUK at ‘a very competitive price’, she says.

Expansion

Quick-frozen method. Credit: IAI

Tamir says the Highlands AIC venture is not only directed at import substitution. The aim is to export other locally grown products such as pineapples, taro and varieties of berries.

‘It will act as a sustainable bridge for small holder farmers to markets both domestic and overseas,’ says Tamir.

‘Frozen fries were chosen as its first product because there are thousands of farmers in the Highlands who grow potatoes—currently with poor access to the domestic markets.

‘By freezing them we are able to preserve the product, overcoming the logistical challenges while providing the consumer with a top-quality product.’

The production line capacity for potato fries is two tons of final product per hour.

All the potatoes are grown in the Highlands (Western Highlands, Eastern Highlands, Enga, Jiwaka and Southern Highlands). The venture involves hundreds of farmers, who’ve been specially trained.

‘Working with the the National Agriculture Quarantine and Inspection Authority and Fresh Produce Development Agency, we have introduced new varieties of [potato] seeds, in addition to the seeds imported in the past,’ she says.

‘The new varieties of potato are even better suited for fries, with a higher dry matter content and reduced sugar levels.’

Tamir explains that these varieties require less oil and time for frying, which translates to better organoleptic (sensory) quality and longer shelf life.

Highlands AIC is supported with funding from Israel’s Export Credit Agency, ASHRA, and the Israel Discount Bank (IDB) with a total investment of US$14 million (K47 million).

What this may mean for business

• PNG-based businesses can be price-competitive against imports in agribusiness.
• Papua New Guineans are highly skilled in agriculture. If this can be combined with manufacturing capacity, there are opportunities for growth.
• Import replacement could help alleviate PNG’s foreign exchange problems
• The government has a strategy to diversify the economy and has flagged it may offer additional incentives in agriculture.