PNG COFFEE INDUSTRY

Doing Business with Europe 23rd February 2012

MR. NAVI ANISChief Executive Officer

Coffee Industry Corporation LtdGOROKA, EASTERN HIGHLANDS PROVINCE

INTENT OF PAPER

1 THE COFFEE INDUSTRY CORPORATION LTD2 CURRENT STATE OF THE COFFE INDUSTRY3 CHALLENGES

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COFFEE INDUSTRY CORPORATION LTD

Established under the CIC (Statutory Powers & Functions) Act 1991.

CIC Ltd – a company registered under the Companies Act, empowered with State Regulatory powers & functions.

Merger of - Coffee Industry BoardCoffee Development AgencyCoffee Research Institute

Represented by Government (3) and the Indusry (9):* Smallholders (6)* Blockholder (1), Plantation Processor (1), Exporters (1)

Coffee Industry Corporation Ltd

• Functions– Industry Regulation– Research & Extension– Marketing & Promotion

• Mission– Maximise financial returns to all coffee growers;

&– Contribute towards the Government’s economic

and social policy goals.4

Status of Coffee in PNG• Relative importance of coffee in agriculture

– Major source of income for around 50% of the coffee growing population– Earns K460 million/year of which 60-70% goes to coffee households

050000

100000150000200000250000300000350000400000

Coffee Coconut Cocoa Oil Palm Rubber

Households Involved in Agricultural Export Activities

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PNG Coffee IndustryProduction

EHP32%

Others9%

Simbu8%

WHP45%

Morobe6%

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Production by Province Production by Sector

The World Coffee IndustryProducing Countries

PNG is one of 60 coffee producing countries; it accounts for 1.1% of world exports. Major producers are Brazil, Vietnam, Colombia and Indonesia

40.5

16.2

11.5

8.1

4.2

3.9

3.7

3.4

2.9

2.6 2.5

2 1.8

1.5 1.1 1.1

0.9 0.8 0.7 0.6

0 5 10 15 20 25 30 35 40 45

BRAZIL VIETNAM

COLOMBIA

INDONESIA

INDIA ETHIOPIA

GUATEMALA

MEXICO PERU

HONDURAS

UGANDA

COSTARICA

IVORYCOST

ELSALVADOR

PNG NICARAGUA

THAILAND

KENYA VENEZUELA

CAMEROON

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PNG Coffee IndustryProduction & Export Volumes and Values

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0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Vol

ume

('000

bag

s)

0

100

200

300

400

500

600

Val

ue (k

ina

in m

illio

ns)

Production (bags) Export Volume (bags) Export Value (kina)

PNG Coffee Industry• Major Issues/Challenges

– Stagnation in production.– Decline of the estate sector.– Inconsistent smallholder coffee quality with resultant

discount (up to 14%) in the World Market (NY “C”).– Potential threat of Coffee Berry Borer.– Rural infrastructure and transport.– Land tenure issues– Coffee Theft (Cherry)– Lack of Investment (growth & production)

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• Production

– Mobilisation of smallholder coffee growers as production units(cooperatives)

– Demand driven research and extension (PRAP)– Rehabilitation of all aging senile coffee trees:– Establishment of nurseries– Expansion into new growth areas

• Marketing– Increase organic coffee exports from 5% to 30%

by 2018 • Mobilisation of smallholder coffee growers

(cooperatives) –• Promote marketing systems which revolve around

quality and price premiums• Product development for niche market

– Product Profiling & Consistency– Certification– Branding

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Chart 9: Exports by Grade in 2010

A/AA 4.9%

X 9.3%

PSC26.4%

Y1 44.7%

Y3 4.8%

Robusta0.9%

Others9.0%

Trade – Exports to Europe

• NO TRADE BARRIERS with TRADING Coffee to Europe.

• Sanitary and Phytosanitary Standards – NAQIA• Exports Documents – PNG Customs• Roast & Ground – Nutritional Content

Labelling - Local Chemistry Laboratories or overseas.

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PNG Coffee Industry

PSC, 16%

X, 10%A, 9%

Y1, 60%

T, 3%Rob, 1%

Organic, 1%

Australia22%

USA20%

Japan8%

Others 10%

Germany40%

Exports

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Exports by Grade Exports by Destination

Coffee Industry• Coffee remains the single most important commodity at the

small holder level in PNG.

• Smallholder coffee growers remain the backbone of the industry given the decline in the estate sector.

• Industry Stagnant for the last 10-15 years . To overcome this investment (rehabilitation & new planting) is required.

• PPAP Project timely & represents the single biggest intervention since the Coffee Leaf Rust Eradication Program (late 1980s).

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Coffee Industry Corporation Ltd

Yumi Lukautim Kopi Na Kopi Bai Lukautim Yumi

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