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In 2013, Banzaid commenced the Papua New Guinea Cash Crop Development Project. The project’s long term goal was improved sustainability for the agricultural production of the coffee growers of the Baiyer Valley. Recently we submitted the final report to the Ministry for Foreign Affairs and Trade (MFAT) on their part in the funding of the project. This article summarises what happened, and the issues faced by the project.

Papua New Guinea is one of the most diverse countries in the world, with over 850 indigenous languages and tribal societies in a population of seven million. As early as 1948, Australian Baptist missionaries had gone into the highlands of Papua New Guinea, and in the 1970s had been part of introducing coffee as a cash crop to the Baiyer valley. However, much of this work was undone when tribal conflicts broke out in the mid-1980’s. Since then coffee growers have struggled to make good returns on their crops. The Baptist Union of Papua New Guinea (BUPNG) had negotiated a peace agreement, and approached Banzaid for help to rebuild the economic situation in the Baiyer Valley.

‘BU Kofi’ was formed and registered in PNG as a social enterprise company owned by the Baptist Union of Papua New Guinea. Proposed funding for the establishment and setup of the company came from three sources: The MFAT Sustainable Development Fund (NZD 698,979); donations from New Zealand Baptist Churches through Banzaid (NZD 100,000); and grants from the Government of Papua New Guinea (PGK 1,000,000 equivalent to NZD 575,000 at the time of budget preparation). As a social enterprise company, the aim was to maximize the returns to village farmers for their crops. Any profits from the company operations would be reinvested in the company, or used in community development programmes in the target districts.

The objectives of BU Kofi were to:

A) Improve the market chain from grower to factory by establishing a trading operation to buy direct from the growers and get the parchment coffee to the factories in Mount Hagen;

B) Support and facilitate the government agriculture extension services to reach the remote areas of the project districts; and

C) Establish a demonstration farm able to provide seedlings of improved coffee varieties to replenish and upgrade the plantation stocks of the growers and to trial additional cash crops that could be introduced to reduce dependence on the single coffee crop.

The project saw 5 years of activity. The first year was taken with the legal processes of setting up the company, recruiting management staff, and building the base for operations in Kumbareta. The second year saw the establishment of the seedling nursery for new coffee seedlings and establishing a place in the market for BU Kofi. It was a learning period for the trading staff, with significant losses in the coffee trading activity. At the end of the two years, we had still only received a quarter of the promised PNG Government Funds. The third year began to show the intended shape of the project, with a successful rice crop on the farming side, a small profit from the trading side, and a second instalment of the PNG Government funds. However, years four and five ran into a succession of obstacles. A drought in the PNG Highland districts impacted both farming and coffee growing. PNG Government funding dried up, halting construction of a rice hulling facility, and limiting trading funds.

What was intended to be a 3-year project, concluding in March 2016, was extended by a further 2 years. This decision was made after discussions with MFAF around the obstacles experienced and the limited progress made. The extension did not grant any further NZ funding but was intended to give the project time to see if they could consolidate the progress made. However, violence around the 2017 PNG national elections forced the suspension of all activity.

Achievements of the project’s three objectives

Year 3 (2015) came closest to achieving objective A. In 2015, 220 tonnes of parchment were traded, with a small profit margin. This result indicated that the concept of improving the market chain should be viable, however the project was overtaken by challenges in the remaining years, and the full extent of hoped for results were not met. Discussions with relevant government organisations during the planning phase of the project showed full support for implementing extension services (objective B). However, through the project we discovered that government services were far more limited than we had anticipated. The seedling nursery was successfully established as part of objective C. However, due to the lack of progress with extension services, there was limited uptake by farmers. Surplus seedlings were sold to another district. Rice was trialled as an option for additional cash crops with limited success due to lack of handling and processing facilities.

All the objectives struggled to reach their full potential due to multiple factors that were mostly beyond the control of management.

Through the project, several political, economic, social and environmental issues worked against success. First, the project failed to receive the full level of promised PNG government support and funding - only 50% of the promised funding was received. This impacted project financial planning from beginning to end. Secondly, the project operated through a difficult time for not only the PNG economy, but also the social environment. There were increased civil disturbances around the 2017 parliamentary elections. This level of inter-communal disunity and violence lead to a suspension of project activity in 2017, and the project has struggled to restart. Environmental circumstances also affected the project’s success, with a drought in 2015/16 that affected the Highland districts.

While these issues were out of management’s control, there were things that could have been done differently to possibly make the project more durable. Firstly, having an overall supervisor with business skills would have encouraged cohesion between the two parts (trading and farm) of the project and would have provided a stronger business drive to the project. Secondly, reliance on the PNG government funding to achieve the objectives was too heavy. The lesson is perhaps not that we should avoid any promises from the Government, but to treat them with caution and not to put too much weight on them until they are actually in hand.

The Future

While the need and the relevance of this project was well demonstrated, it is struggling for survival. The context of Papua New Guinea is a difficult environment for project operation. While this can be discouraging, it only emphasises the need. This report marks the end of New Zealand funding for the project. However, BUPNG have declared their intention to work with the facilities that have been established and the remaining available funds and attempt to continue operations as a coffee trading company for the benefit of the Baiyer Valley community. Banzaid is committed to maintaining the partnership and will continue to work with the BUPNG to support the progress of the project. The most challenging issues for continuation will be the ongoing political, social and economic issues of the country of PNG. We continue to pray for the BUPNG in their commitment to serving their people.

  pdf A more detailed report can be downloaded here. (649 KB)

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