‘Six-month farmers’ are a big problem in Papua New Guinea’s coffee industry Tom Kukhang, the Coffee Industry Corporation’s Chief Scientist, tells Business Advantage PNG. But there is a solution.
Coffee roasting. Credit: Pacific Islands Trade & Invest.
While it is is among the world’s top 20 coffee producers, PNG boasts the ideal environment to create an even more significant coffee industry. It has excellent soil, rainfall and the right climate. Yet, according to the Coffee Industry Corporation’s (CIC’s) Kukhang, while the potential is outstanding, the industry remains challenged by what he calls ‘six-month farmers’.
‘These farmers are only committed to the crop during the harvest period, when they can take advantage of sales.
‘If farmers work together the consistency of the crop improves.’
‘They are not committed to making a living from the crop. This is because they often receive low prices when they sell their coffee to the exporters,’ Kukhang says.
The bulk of PNG’s coffee exports are current bought by four major European coffee vendors, which produce coffee blends for mass consumption.
Strategy
The Coffee Industry Corporation has implemented a strategy of mobilizing farmers into groups in an attempt to address farmer’s concerns about low prices.
PNG coffee scientists Tom Kukhang, Dr Mark Kenny, and Dr Nelson Simbiken. Credit: Malum Nalu.
If farmers work together, the consistency of the crop improves; it is a strategy that provides the growers with larger crop volumes, putting them in a stronger position to negotiate the sale price with the exporter.
‘When they go as individuals to the roadside or market to sell their coffee, they have no power. The Coffee Industry Corporation’s approach to mobilise the farmers is a good strategy.’
Kukhang says eventually the grower co-ops will allow the farmers to deal directly with small roasters throughout the world, removing the ‘middle man’.
‘This is one way of getting the farmers to receive some good income, which will keep them interested in growing coffee and committed to the crop.’
Standards
Kukhang says the market demands quality coffee and consistency from growers. Raising the standard of Papua New Guinean coffee is accordingly fundamental to the success of the industry.
One way is to mobilize the farmers to work together using a minimum standard. This will ensure they produce quality coffee that the market can rely on, Kukhang explains.
‘The Coffee Industry Corporation must work harder to support smallholder coffee growers.’
In line with the Coffee Industry Corporation’s strategy, the World Bank is seeking to improve the livelihoods of smallholder farmers through its Productive Partnerships in Agriculture Project for Papua New Guinea.
David Freyne, former General Manager for Research on the Coffee Industry Corp (CIC) Board and former Project Manager for the Productive Partnership in Agriculture Project PNG (PPAP), says the program provides farmers with the support they would not otherwise receive.
Freyne says the extension officers, whose role it is to provide farmers with technical advice, are in urgent need of training. He believes the Coffee Industry Corporation must work harder to support smallholder coffee growers.
‘Because farmers have limited technical and management skills this poses significant challenges.’
‘A lot of extension officers don’t go to see the farmers and the Coffee Industry Corporation’s systems work against them rather than assisting. The result is that many just don’t do any work,’ Freyne says.
Promotion
Infrastructure in Papua New Guinea continues to deteriorate and, because farmers have limited technical and management skills, this poses significant challenges for the coffee industry.
‘We need to do a lot more promotion of Papua New Guinean coffee in Australia.’
Kukhang says the Coffee Industry Corporation must support farmers by providing them with technical advice and the resources to manage their businesses. He says promotion of smallholder farmers and their crop to overseas markets should be a priority for the Coffee Industry Corporation.
‘Australia is one of the best coffee markets in the world. We need to do a lot more promotion of Papua New Guinean coffee in Australia,’ Kukhang says.
Both Kukhang and Freyne agree the industry has a long way to go when it comes to providing the necessary training, achieving consistently good quality coffee and changing farmers’ attitudes.
“Consistency is what the market wants,” Kukhang says.
USD 0.2505
AUD 0.4028
GBP 0.1991
EUR 0.2413
NZD 0.4453
JPY 38.9
SGD 0.3413
When co-ops are selling direct to roasters, how much are they selling for, K15, K20 or K30 or what? And what percentage of this goes into the pocket of the REAL grower?
I think one important thing to keep in mind is , its hard work growing coffee and getting to the stage of parchment. I think if growers are not rewarded, in particular the young generation, then who will put in the hard effort to grow coffee for export? There MUST be an incentive to grow coffee and the only incentive I see and in talking to growers I know, is high price for grower which is what I’ve advocating for the 4 years.
Coffee is big business. In January 2017 it was worth US$100b. Producing countries including PNG only collected US$20b. The rest of the money US$80 is in coffee consuming countries in the retail business. You are in the business because you make money. PNG needs to be smarter than the Latin Americans and penetrate that market to make the industry more beneficial for our people.
I appreciate what you are doing and I fully support you. What you are advocating is good and necessary. However, other pieces need to be logically aligned and juxtaposed to drive productivity and increase return on investment for the farmer. Otherwise we and our rural people are doomed to be slaves forever while opportunists thrive. This is the unfortunate fate of business.
[…]
Tom, how are we to be smarter than the Latin Americans and what are your suggestions on penetrating the market so the industry is more beneficial for our people (as you state).?
I grew up growing coffee to help pay for school fees and my experience tells me it’s hard work. How do you expect the young generation to grow coffee and produce the quality expected? Is it from earning K3-K4/kg after all that hard work? I don’t think so. Village Coffee plan if you take time to read is , give the growers $4/kg (K9-K10/kg? Now you may say that is impossible and if you do that then that is the problem we have in PNG. […]
Some things for the CIC to consider: Co-ops, repairing or upgrading existing infrastructure, in the long run, is not going to be a long-term sustainable solution. And, the whole quality argument kind of lacks teeth in light of the fact that a lot of roasters start mixing in larger quantities of robusta when prices of high quality arabica go up; and coffee that tastes slightly ferment, is given a new tag, and marketed at niches! As long as the cup doesn’t give of a chemical taste, coffee being subjective as it is, can always find a market. It all comes down to price again, being the biggest incentive. A few cents more in the pound won’t make a long term difference. The question to ponder is how to restructure the coffee value chain, so that the grower is capturing more than the measly 2% retail value that they get, with the 40% plus going to retail end of that funnel. You can’t have small growers scale and end up capturing that remaining value, unless, they are given a piece of the pie at the other end, but…, it would be too radical to suggest that small growers own a piece of a company that imports to consuming countries and sells retail?!
Joe has given some ideas that we have not tried. Some of his ideas relate to what you are doing. We also have some very critical local issues that we have not addressed and these continue to become major obstacles for coffee development. I repeat we just have to be smarter than the Latino’s.
CIC has initiated a National Coffee Cupping Competition (NCCC) to bring coffee co-ops coffee for international quality grading since 2014. There appears to be widespread poor quality coffee produced due to non-uniform processing methods and lack of extension. Few co-ops produce very high quality coffee. Inconsistent quality still remains a problem for example Coops that produce quality coffee in 2014 with high score failed to produce similar quality in succeeding years 2015, 2015.
But, very encouraging market opportunity came to fore, with few coops selling direct local roasters after the competition. Few coops have to wait for four to six months to receive they monies which is a disappointment. CIC needs reduce waiting time through revolving fund in the future for farmers to get paid immediately just as they do bringing their parchment coffee to roadside buyers.
Coops is a better way of extending technical training and marketing coffee which is within the resource capability of CIC. Non funding support by the Government for Research and Extension section of CIC is limiting further work to improving the agronomy and processing and business knowledge of coffee farmers.
Agree with transport accessibility, law and order and land owner ownership issues. As can be seen from the outset, Government been supportive for the industry all thru, we have to make available technical advise that is relevant to be formulated into polices to save the industry and compete in the market off shore for a better PNG.
YES ! definitely, accessibility to good markets and exporters.
I have a hectare of coffee garden, and also have started buying coffee in Chuave, Okapa, and Goroka in 2016.
it costs so much to move coffee to a mill, and than to sell to an exporter in Goroka town.
Even for the middle man like me, huge costs and risks are involve.
I hope to see infrastructure development and improvements especially in the roads and bridges in areas such as Purosa, Okapa, Siane, Elimbari, Karamui and the list goes on.
I believe that is the first and foremost thing to do is enable easy access for farmers, or buyers to bring out coffee.
That needs to be address before we continue to push for farmers associations etc…, Even farmers associations have difficulty in moving their coffee to sell to exporters.
In the areas which I have worked in, I have not seen any improvements in the lifestyle of farmers who are part of an association.
I therefore believe that whats being captured here in this news is not the Secret to Fixing PNGs coffee industry.
Currently when farmers noticed the cost they have to put up with to bring coffee into Goroka for selling or processing, they basically give up as it defeats they aim of making profit.
Moses has hit the nail on the head.
A report produced by ACIAR (ASEM/20004/042) in 2008 states that the failing transport and road infrastructure is one of three overarching issues that are a constraint to achieving quality coffee. The other two being law and order; and the insecurity with land ownership and tenure in PNG. This is still the case in 2016, as I have witnessed first-hand. Accessibility either way is a big issue, and unless this is addressed, how do the CIC’s extension officers get to the grower on a routine basis; and, how does the grower get their coffee out to the market.
I note that CIC’s strategy also mirrors ACIARS recommendations, i.e. standardising processing systems in order to achieve consistency in quality. However, the better price for that consistent quality is generally plus a few 10s of cents more above the quoted price on the New York C, not plus dollars, which when translated to the volume produced by small growers, is relatively negligible. A significant difference in price to ensure grower motivation could only be achieved, as ACIAR stated, with a “parallel increase in scale”, attained via cooperatives. So, I am curious to know how they propose overcoming the cultural obstacles that were identified in the said report, with cooperative structures in the coffee growing regions of PNG, so that they can indeed capture more than the measly 1-2% of the retail value they get now.
One crucial factor to consider is the accessibility of roads for the transportation of coffee beans. For the strategy of mobilizing farmers into associations to work and to make it accessible for technical support personnel to visit and train.
This is where the National Government comes into ensure that road infrastructure and systems are maintained to acceptable standards.
Based on our experience with farmers, road/airstrips/jetties remain major considerations to enable market access. In 2003 we advised governments with the same, a Colin Hunt study confirmed our knowledge, the state responded with economic roads in 2004 in the media. Prior to that we established the FSS Program (Freight subsidy Program) for our farmers in disadvantaged areas with poor road/airstrips/jetties. This program continues today. Our technical programs are in place to equip our people, our farmers but we lack the government support to deliver the training to our farmers. I do agree with your comments Moses, and we at CIC have done our bit to advise all governments since CIC came into existence.