The coffee industry in Papua New Guinea is dealing with unusually low prices and poor production levels but there are significant opportunities, especially in speciality coffees. That was the view of a specialist in the international coffee trade at the 2019 National Coffee Industry Symposium in Port Moresby last week.

Hundreds of people attended the National Coffee Symposium last week in Port Moresby.

There is no shortage of demand for PNG coffee, according to Andrew Hetzel, a Coffee Value Chain Development and International Trade Specialist; the problem is the amount of supply.

‘It is just not being produced. There is market demand worldwide, as well as domestically, for PNG coffee.

Coffee producers during the National Coffee Symposium. Credit: BAI

‘It is really a matter of filling those industry needs in a way that is relevant in an industry that is quickly changing.’

Hetzel noted that the price of commodity coffee is at its lowest level since 2005.

‘The price in US dollars per pound is right now 90 cents. That is below the price of production in most countries, including PNG.’

Three sectors

Hetzel identified three global market sectors. First is commodity coffee, which tends to be lower grade and is traded globally. It accounts for about four-fifths of the global market.

‘At the top of value pyramid is specialty coffees. This is coffee that is achieved through relentless devotion to best practices.’

Other countries are more efficient than PNG in this sector, warned Hetzel. Brazil, for example, ‘produces at five times the rate of PNG.’

The second sector, said Hetzel, is differentiated certified coffees.

‘They are not necessarily different in terms of quality but they have some value added through certification for environmental or social sustainability.

‘This is a growing market segment and will add some value to coffee production; it is growing at 10 per cent worldwide.

‘At the top of value pyramid is specialty coffees. This is coffee that is achieved through relentless devotion to best practices.

‘They create unique and desirable characteristics for which the industry will pay substantial premiums.

PNG coffee prices in Adelaide Central Market. Credit: BAI

‘They are sold at between 1.5 to 100 times the trading price for commodity coffee.

‘This sector is growing globally at 10 to 15 per cent. In the US right now, more than half of the value in the US coffee market is represented by the specialty segment, even though it is only 10 to 15 per cent of the volume.’

Hetzel said assessing the health of PNG’s industry by the number of bags produced should not be the metric of success.

‘The goal should be to look at the higher value and that value could come at a lower volume.’

Australian assistance

Another speaker, Bruce Davis, the Australian High Commissioner for Papua New Guinea, announced during the event that a new Australian-funded program called Grow PNG will be launched soon to help move PNG’s coffee farmers up the value chain.

‘In 2019, 3000 coffee farmers will be trained in good agricultural practices.’

Its aim will initially be to develop coffee production in the Markham Valley in Morobe Province.

‘Grow PNG will develop new avenues of cooperation in agribusiness for small holder farmers to grow agriculture in PNG,’ said Davis.

Davis said the coffee industry in PNG has experienced ‘a tough few decades’, due to increasing competition, especially from Brazil and Vietnam.

He said the focus of the governments of Australia and New Zealand will be on training PNG’s coffee growers and roasters, organising coffee cupping competitions and helping businesses get accreditation so they can export.

‘In 2019, 3000 coffee farmers will be trained in good agricultural practices. A thousand will attain certified status.

\’Farmers involved in the process will receive about a 10 per cent premium above the going market rate for their coffee.

‘The shift to high value markets will also require regulatory and legislative changes to make the sector more efficient.’