Papua New Guinea’s Morobe Province recently issued titles to landowner groups for a small percentage of the fertile Markham Valley. Grow PNG’s David Stewart tells Business Advantage PNG that this has sparked interest from third-party investors in what could become a case study for the development of the country’s agriculture sector.

Handover event at the Markham Valley. Credit: Grow PNG

A recent handover of titles to landowners in the Markham Valley in Papua New Guinea’s Morobe Province should pave the way for private sector investments in agriculture in the region, according to Grow PNG Country Director David Stewart.

Twenty-four landowner groups received titles for a total of 8,000 hectares of land in a ceremony hosted by the Markham District Development Authority and Morobe Provincial Government in June. Grow PNG, a non-profit backed by the World Economic Forum and the Australian Government which aims to help realise Papua New Guinea’s agricultural potential, played a central role in bringing together the various stakeholders.

“Any investor coming in needs to be culturally aware. They need to understand the lessons of the past.”

This deal “opens the gates for third-party investors to build agricultural partnerships with landowners,” Stewart tells Business Advantage PNG, adding that one investor with an existing footprint in the country is already in discussions with 13 of the landowners.

“It’s up to the landowners to decide whether they want to rent the land or own part of that business. That’s quite a long negotiation, it will take a while. But as of this year, those doors are now open, and investors are lining up and querying which landowners they should be talking to,” he says.

Model for growth

Stewart believes that streamlining the process of obtaining land titles – which, in the case of the Markham Valley, involved PNG’s Department of Lands and Physical Planning, the Morobe Provincial Government and the Markham District local government – is key to encouraging the growth of agriculture.

The Markham Valley and the neighbouring Ramu Valley (which is situated mostly in Madang Province) have a combined 405,000 hectares of arable land and were identified in a 2021 International Finance Corporation report as the potential “breadbasket” of Papua New Guinea. However, only 59,000 hectares are used for commercial farming, mostly palm oil plantations owned by New Britain Palm Oil Limited. An additional 16,000 hectares are used by smallholder farmers.

At least K3-5 million is needed to set up a commercial plantation, according to Stewart. With landowners lacking the funds and unable to borrow through commercial banks, Stewart says this provides an opportunity for outside investors – providing they act responsibly.

“Any investor coming in needs to be culturally aware. They need to understand the lessons of the past, understand why landowners get annoyed from time to time because they feel they might be missing out on benefits,” he says.

For example, Stewart notes that investors previously negotiated directly with landowners. As a result, he says that Markham District wasn’t able to assist with resolving land disputes, because it had not been part of the initial deal-making process. Now that land titles have been formalised, Stewart says the district will be able to play a more-active role in supporting deals, enabling it to assist in dispute resolution.

Investors must also “educate and nurture and bring landowners into the business,” Stewart said, and consider “inviting some level of ownership so they [the landowners] can go off and fly by themselves in their own time.”

Separately, Stewart notes that investors should soon find soil and land data easier to access, thanks to a project led by CSIRO, the Australian government’s scientific research agency, to revitalise the Papua New Guinea Resource Information System. An initial A$2.8 million (K7.4 million) case study in Morobe Province is scheduled for completion in 2026.

Interventions to assist small-scale farming

Despite his organisation’s focus on commercial ventures, Stewart says smallholder farming can also be a driver for PNG’s economic growth.

He argues that government interventions, specifically construction of irrigation and the provision of loans to buy small equipment, are needed to assist smallholders. He mentions that the private sector can also play a role, and points to Trukai Industries’ Smart Farmer program, in which it is partnering with tertiary institutions to teach farmers about irrigation rice farming.

“When it’s land that farmers are already using, they can get bigger with machinery and irrigation – you don’t require titles to do that,” he says.

“Interventions would only have to happen for three or four years. After that, smallholder farmers would have the wherewithal to get a normal commercial loan.”

Stewart estimates an intervention in the Markham Valley could increase the income of 20,000 people by K1,000 per week – or around K50,000 per year.

“It doesn’t seem like a lot. But if you take 20,000 people multiplied by K50,000, it’s an incredible amount of money [K1 billion], and the effect on the nation’s GDP would be massive.”

Cashing in on higher crop prices

Papua New Guinea’s agricultural sector stands to cash in from rising prices for key commodities, with cocoa up 87 per cent and coffee up 40 per cent year to date as of November 12, according to Kina Bank.

Agricultural commodity prices have averaged above their respective 2024 budget estimates and 2023 actuals, although they remain below 2022 levels, according to the PNG government’s mid-year economic and fiscal outlook published November 13.

Cocoa prices have risen due to supply shortages amid crop diseases and unfavourable weather conditions in major producing countries in West Africa, the government report noted.