Access to land is preventing New Britain Palm Oil from expanding its beef and palm oil production businesses. PNG Country Manager Robert Nilkare tells Business Advantage PNG, there is a need to develop more agriculture leases in Papua New Guinea.

Oil palm plants. Source: New Britain Palm Oil

As it celebrates 50 years of operation, New Britain Palm Oil (NBPOL) is looking to expand its diversified subsidiaries has plans to construct a new power plant in Oro Province.

While its core business is palm oil, NBPOL also produces sugar, beef, and biomass-based power.

At present, NBPOL has 84,000 hectares of estate palm oil, and manages 42,000 hectares of smallholder estates. It operates in West New Britain, Madang, Morobe, Oro, New Ireland and Milne Bay provinces. NBPOL also has an operation in the Solomon Islands.

‘It would make economic sense to expand in areas where we now operate, but some of our provinces, like West New Britain, I think we’ve almost exhausted all the freed-up state land that’s left there.

‘Ninety-five per cent of the company’s crude palm oil is exported, the bulk into Europe.’

‘There are also other issues: land tenure and security of state leases, trying to deal with landowners, poor infrastructure and law and order.’

Exports

New Britain Palm Oil’s Robert Nilkare. Source: EMTV

Nilkare says 95 per cent of the company’s crude palm oil is exported, the bulk into Europe. He says a free trade agreement between PNG and the EU gives NBPOL a competitive advantage, coupled with the company’s RSPO (Roundtable on Sustainable Palm Oil) certification.

‘It gives us a small premium. The processing is done in the UK, meaning the costs are in kina but the income is in United States dollars.’

As a result, Nilkare says, the company is the ‘Central Bank’s best friend, I hope’.

Last year, he says, was a ‘mixed year’, with production levels up due to a combination of weather, soil, and management. ‘However, prices of CPO (crude palm oil) still remained on average low in 2017, but slightly higher than the previous year.’

Beef

The company has 15,000 hectares of grazing land on which it runs about 20,000 head of beef cattle. All beef is consumed domestically.

‘In fact, we don’t produce enough for domestic consumption. We provide just under 50 per cent of what the country needs, and that’s why the majority of beef in PNG is imported.

‘Apart from selling sugar direct to the retail market we do supply the sugar to industrial users in PNG for food ingredients.’

‘If we had more land, we would increase our beef production.’

Sugar

NBPOL has 7000 hectares of land producing sugar, some of which is exported.

‘Apart from selling sugar direct to the retail market we do supply the sugar to industrial users in PNG for food ingredients.

‘A by-product of sugar production is ethanol, of which we currently produce around 2 million litres per annum. It is primarily exported; there is a small domestic market.

‘Our ethanol markets are traditionally Korea, New Zealand and Australia.

‘NBPOL has two biogas plants producing electricity.’

‘If we produced more sugar, we would either have to produce a downstream product or start looking at exporting, and there’s no point in that, because we would be competing with the big producers within our region: Fiji, Australia and Thailand.’

Biogas

NBPOL workers. Source: NBPOL

NBPOL has two biogas plants producing electricity in West New Britain Province, and is about to start a third.

‘We also have plans to build one in Oro Province in Popondetta, and in Milne Bay. First and foremost, we must meet our demands, and then whatever excess we have we will then sell back into the grid.’

Since its takeover by Malaysia’s Sime Darby in 2015, NBPOL has made few changes.

‘It been pretty much business as usual. I think the only changes have been in adjusting to the Sime Darby reporting procedures,’ he says.

‘That has involved a total upgrade of the company’s IT systems.

‘We’ve had 50 years of sustainable development, and I guess we’re looking forward to another 50 years—and beyond.

‘The company will continue to grow and improve, and in the process develop the country, and its agriculture base.’