The latest figures from the Bank of Papua New Guinea reveal the negative impact of the global pandemic on PNG’s agricultural sector. Exports of all the country’s major agricultural commodities fell in the 12 months to September 2020, although some falls were partly offset by improved prices.

A palm oil plantation.

Last week, the President of Papua New Guinea’s Farmers and Settlers Association, Wilson Thompson, reflected on the ‘dismal’ state of the country’s agricultural production and exports, in spite of the support provided to the sector by programs such as the World Bank’s Productive Partnerships in Agriculture project.

So, how bad is the export situation for PNG’s major agricultural commodities, such as palm oil, coffee and cocoa?

Palm oil

According to the latest provisional export figures produced for the Central Bank’s Quarterly Economic Bulletin, palm oil exports fell from 642,000 tonnes to 552,000 tonnes in the 12 months to September 2020, a fall of around 16 per cent.

Much of the fall can be attributed to a significant decline in demand for palm oil in Europe, the main destination for PNG’s palm oil exports.

Fortunately, the decline in export volumes for this typically volatile commodity was offset by improved prices from May 2020 onwards.

‘The 5600 tonnes of coffee exported in the September 2020 quarter represented the country’s lowest September quarter figures since the Bank’s current export statistics began in 1990.’

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Overall, therefore, the situation for PNG’s palm oil exporters was not too bad. The Bank of PNG reported export receipts of K339.8 million in the September 2020 quarter, compared to K289.2 million 12 months earlier.

However, higher prices are not set to last, according to Fitch Ratings. It suggests palm oil prices this year are likely to average around US$560, a significant drop from the nine-year highs of December 2020, when prices reached as high as US$900 per tonne.

Coffee

PNG’s coffee exports fell dramatically by 68 per cent in the 12 months to September 2020, from 51,800 tonnes to 31,800 tonnes, ‘reflecting,’ in the words of the Bank of PNG’s latest bulletin, ‘the impact of the COVID-19 pandemic on global supply chains.’

Indeed, the 5600 tonnes of coffee exported in the September 2020 quarter represented the country’s lowest September quarter figures since the Bank’s current export statistics began in 1990.

‘2020 gave the cocoa sector its best September quarter for exports since 2017.’

A price increase of 1.3 per cent to K8,814 per tonne compared to September 2019, was not enough to avoid a massive drop in export receipts for coffee, down from K140.9 million in September 2019 quarter to just K52.0 million in the quarter ending September 2020.

Cocoa

Cocoa exports fell by 17 per cent in the 12 months to 30 September 2020. Again, lower demand in Europe was partly to blame.

Cocoa prices fell slightly over the same period, by just 0.3 per cent.

In spite of this, 2020 gave the cocoa sector its best September quarter for exports since 2017.

Copra

Lower export volumes made for a disappointing 12 months for PNG’s coconut growers.

Copra exports fell by 45 per cent in the 12 months to 30 September 2020, while copra oil exports fell by 22 per cent.

Counter-intuitively, the copra price rose slightly while the copra oil price fell significantly.

Tea and rubber

Koitaki Rubber Plantation in Central Province.

PNG’s tea and rubber exports were also badly hit. Tea exports fell by 80 per cent, while rubber exports fell by 33 per cent.

The lower exports meant PNG was unable to take advantage of a significant rise in the global price for tea (it rose by 40 per cent in the September 2020 quarter).

The rubber price fell 6.7 percent to K3,500 per tonne in the quarter, compared to the September 2019 price.

Longer view more positive

While the immediate-term situation appears troubling, the longer term view is more encouraging for the agricultural sector, if the production obstacles identified by the Farmers and Settlers Association’s Wilson Thompson can be overcome.

The Bank of PNG Governor Loi Bakani is expecting GDP growth for PNG to recover to around 2.5 percent in 2021, with higher activity in the agriculture, fisheries, forestry and mineral sectors, as well as a ‘general pickup’ for other businesses.

The United Nations’ Food and Agriculture Organisation is also predicting global markets will start to recover from the COVID-19 economic recession in 2021, while it predicts global agricultural production will increase by 13 per cent ‘between 2017/2019 (three-year average) and 2029’.