The Papua New Guinea Highlands has the potential to see a lucrative coffee boom if only it can weather key production and price issues, argue the International Food Policy Research Institute’s Rishabh Mukerjee and colleagues.

Smallholder coffee producers in PNG Highlands. Credit: Australian Centre for International Agricultural Research

Coffee is one of the most important smallholder cash crops in Papua New Guinea, accounting for US$156 million of export earnings – or 1.4 per cent of total export revenues – in 2021.

Moreover, 55 per cent of households in the PNG Highlands region produce coffee, according to the International Food Policy Research Institute (IFPRI) 2023 PNG Rural Household Survey.

In March and April 2024, IFPRI and the University of Goroka conducted 24 focus group discussions with coffee producers in Simbu and Eastern Highlands provinces to better understand the challenges and opportunities associated with coffee production and marketing in PNG.

PNG’s unique coffee challenges

During our study, we measured the second-harvest yield (representing around 30 per cent of total annual yield) of an average non-dwarf coffee tree in the Kofena community. Based on the estimated red cherry yield, we found that approximately 417 to 560 kgs of dry parchment (partially processed coffee beans) can be harvested per hectare per year.

Our findings were similar to those by a 2017 Australian Centre for International Agricultural Research study in Eastern Highlands province, which reported an average of 386 to 522 kgs of dry parchment per hectare per year.

As a result, PNG lags behind many other top producers. For example, Colombia, the world’s second-largest Arabica coffee producer, and Indonesia, the world’s 11th-largest Arabica coffee producer, produce an average of 1,080 kgs and 937 kgs of dry parchment per hectare per year, according to the US Department of Agriculture.

Furthermore, low coffee yields in the PNG Highlands are often exacerbated by pest infestations, with three-quarters of our sample communities losing more than half of last season’s harvest to a small species of beetle known as the Coffee Berry Borer (CBB).

Lack of market access and price inconsistency pose further challenges for PNG coffee producers. During the harvest season in March to June 2023, dry coffee prices ranged between K3.5 and K7.0 per kilogram, with the highest price being paid at the onset and end of the season when the coffee bean supply was relatively low.

A key finding from our research was that communities associated with coffee associations or located near coffee processors benefited from extension services to improve output quality and, as a result, were able to negotiate an extra K2-3 per kilogram for their harvest.

However, overall low adoption of coffee certification in our sample suggests an important unrealised potential for achieving higher premium market values.

Steps and solutions

To overcome production challenges, efforts should be directed towards increasing productivity through improved farm practices. This should be combined with better market access and infrastructure, including strategic investment in midstream (handling, packaging, storing, etc.) and downstream (market infrastructure, logistics etc.) actors.

While the Coffee Industry Corporation and exporters like PNG Coffee Roasters and Monpi Coffee offer extension certification and provide support to coffee associations in accessing domestic and global markets, there is a potential to boost PNG coffee’s market value by identifying areas that qualify for organic certification. However, price premiums must be built into a transparent production, grading, and marketing system that incentivises and rewards producers for high-quality output.

Having access to cost-effective pest-control solutions and guidance on the correct usage of fertilisers, soil management and proper pruning practices are some crucial steps to boost production and control CBB attacks.

Establishing and providing financial support to coffee associations can strengthen market ties, enabling farmers to negotiate better prices.

Encouraging direct contracts with international buyers could provide profitable market opportunities and financial incentives to ensure quality output.

This piece was written by Rishabh Mukerjee and Helmtrude Sikas-Iha, both of the International Food Policy Research Institute, and Damaris Warambukia, University of Goroka. It is an edited version of an opinion piece in Devpolicy Blog and has been reproduced here with permission. The authors’ research was funded by the Australian Department of Foreign Affairs and Trade and the Australian Centre for International Agricultural Research.