Cocoa in Papua New Guinea

Cocoa is the third most important source of village agricultural income, after coffee and fresh food. In the early to mid 1990s, an estimated 850 000 people (27% of the rural population) lived in households where cash income was earned from selling cocoa. Cocoa generated an average of K218 million per year in export income from 2004 to 2006, which was 14% of the value of agricultural exports in this period.


In PNG, cocoa is grown up to 800 m altitude where annual rainfall ranges from 1800 mm to over 5000 mm. Seasonality data indicate that more cocoa is produced between May and July than in other months, but the pattern varies considerably from place to place.

Adoption and history

Cocoa was introduced to PNG by German settlers around 1900. Commercial cocoa production developed slowly despite a series of subsidies and concessions introduced by the Australian Government during the 1920s. Low copra prices during the Depression also encouraged plantation owners to diversify into cocoa production. The industry was severely affected by World War II, when about two-thirds of PNG’s cocoa trees were destroyed.

Following the war, global demand for cocoa increased substantially and the Department of Agriculture, Stock and Fisheries promoted expansion of the industry. Copra plantation owners were encouraged to interplant cocoa with coconut, and soldier settlement cocoa estates (for Australian ex-servicemen) and smallholder blocks were established on the Gazelle Peninsula in East New Britain Province, around Lae in Morobe Province and around Popondetta in Oro Province. These efforts resulted in a major expansion of the industry: the total area planted to cocoa increased from about 3700 ha in 1951/521 to around 49 500 ha in 1965/66. Total production increased from 485 tonnes to around 15 500 tonnes over the same period. The expansion occurred mostly in the plantation sector, which accounted for about 95% of all cocoa produced in the year 1965/66. However, after 1965 smallholder cocoa production increased significantly and by 1979 had surpassed plantation production. This expansion in smallholder production was concentrated in East New Britain and Bougainville provinces, and these two provinces have continued to dominate the smallholder sector.

Distribution of production and planting

Most PNG cocoa is produced in the north-east lowlands of the Gazelle Peninsula in East New Britain Province and on north-east Bougainville Island. Other provinces that contributed to cocoa production in 2006 were East Sepik, Madang, New Ireland, Sandaun, West New Britain and Morobe.

In 2006, smallholders accounted for 90% of national cocoa production, with the plantation sector contributing the remainder. This reflects the continued decline of the plantation sector over the past 30 years.

There are no accurate estimates of the land area currently planted to cocoa in PNG. Based on production of 40 500 tonnes from smallholders and 4500 tonnes from plantations in 2006, and average yields of 0.25 tonnes/ha and 0.5 tonnes/ha respectively, the area devoted to smallholder cocoa is probably about 160 000 ha and for plantations, 9000 ha. The area of plantation cocoa in 1973 was 55 000 ha.

Levels of production

The expansion of the plantation sector in the post-war period, coupled with the later increase in smallholder production, saw the overall production of cocoa, measured as total exports, reach 35 500 tonnes in 1975. Production then declined in the late 1970s and remained stagnant until the mid 1980s. Smallholder production increased steadily during this period and the decline in production after 1975 occurred in the plantation sector. Factors influencing the decline of the plantation sector included decreases in both yield and production on formerly expatriate-owned plantations that had been returned to local villagers; uncertainties associated with the Land Acquisition Act; and the increasing age of cocoa trees. The continued growth of the smallholder sector, coupled with a slight recovery in the plantation sector, saw exports reach 46 000 tonnes in 1989. During the 1970s and 1980s, Bougainville produced about half of PNG’s cocoa. The Bougainville civil war of 1989–1997 caused the closure of plantations and a marked decline in smallholder activity in that province. Production there fell from 18 600 tonnes in 1989, to 7500 tonnes in 1990, and remained in the range 3000–5000 tonnes from 1991 until 2001. National cocoa exports were affected by the decline in Bougainville production, but increased production in East New Britain from 1989 onwards reduced the impact and that province replaced Bougainville as the leading cocoa producer.

National production remained relatively low throughout the early to mid 1990s. Three factors contributed to depressed levels of production during this period. First was the continued slump in production in Bougainville Province, particularly in the plantation sector where production had essentially fallen to zero. Second was the decline in the plantation sector in general, due to rising costs of production associated with the devaluation of the kina and increasing wages, and also to land disputes on the Gazelle Peninsula. Third was the volcanic eruptions near Rabaul in 1994, and the drought in 1997, both of which adversely affected production.

Exports increased again from 1999 and reached a peak of 49 000 tonnes in 2005. This recovery was associated with smallholders’ response to higher export prices and increased production in Bougainville Province. The recovery in Bougainville was greatly assisted by aid-funded rehabilitation programs and road rehabilitation. Among the smaller cocoa-growing provinces, production has increased in East Sepik, Sandaun and Madang provinces over the past decade. In contrast, it has declined in New Ireland, West New Britain, Manus, Oro, Milne Bay and Central provinces.

Mean smallholder yield of dried cocoa is typically 200–400 kg/ha, and up to 600 kg/ha. The Cocoa and Coconut Institute uses 250 kg/ha as a working average for smallholder yield. Mean yields on plantations are higher at 400–600 kg/ha and are as high as 1500 kg/ha on the best plantations. Much published and unpublished data exist on cocoa yields under experimental conditions, mostly from Keravat and Tavilo in East New Britain Province, but these are not reviewed here.

Most smallholder cocoa trees are more than eight years old and are characterised by a lack of pruning. A lack of maintenance of cocoa leads to a high incidence of pests and diseases and under-harvesting. There is considerable scope for increasing yield per hectare of smallholder cocoa through a number of relatively simple means without expanding plantings. These measures include pruning trees, shade management, and control of the most important pests and diseases.

Processing, exporters and markets

About 2500 cocoa dealers licensed to buy wet bean from producers were registered in PNG in 2003. Dealers process the bean (which involves fermentation and drying) and sell it to exporters. Around 5500 licensed fermentaries were operating throughout the country, with more than half in East New Britain Province and many in villages. More than twenty cocoa exporters were registered but not all were active. In 2005, Agmark Pacific was the major cocoa exporter, accounting for 70% of the market. The next largest exporters were Sepik Coastal Commodities (16%) and Outspan Limited (6%).

In 2006, about 27% of cocoa produced in PNG was exported to the United States, 17% to Belgium, 16% to Malaysia, 16% to Singapore, 11% to Indonesia, and smaller volumes to Thailand and Germany. The United States and Singapore have been the main export destinations for PNG cocoa since the early 1990s.

Future prospects

The very high prices of the late 1970s and early 1980s resulted in large increases in cocoa plantings worldwide followed by a huge increase in global production over the next decade. The creation of large cocoa stocks dominated the market for more than 10 years, leading to a price slump of unprecedented duration. PNG’s smallholder cocoa sector survived the prolonged depressed market essentially intact. A competitive marketing system and the low value of the kina guaranteed a modest regular income for growers that could not be provided by any alternative income source.

In 2002, when civil unrest began to affect Côte d’Ivoire production (the world’s largest cocoa exporter), prices began to move up sharply and have remained at reasonably firm levels since then. Medium-term prices will depend on the political developments in Côte d’Ivoire. In late 2007 the World Bank projected an average price of about US$1.90/kg during 2008 and slightly lower in 2009. Longer term real prices are then projected to decline slightly as supply increases more rapidly than demand. Even at these prices, PNG smallholders will receive a good return to labour for planting, maintaining and harvesting cocoa. However, whether these prices are sufficient to bring about investment in new cocoa plantings remains to be seen.

The PNG Government has set a target of 100 000 tonnes of cocoa exports by 2016. Land in suitable growing environments (fertile soil and rainfall less than 3500 mm/year) is limited. Hence significant expansion will have to come from higher yields per tree rather than an increase in the area devoted to cocoa plantings. Cocoa pod borer, a serious insect pest, has the potential to cause a severe reduction in PNG cocoa production, as it has in Indonesia, Malaysia and the Philippines. It appeared in the Keravat area in East New Britain in early 2006 and has spread to other locations on the Gazelle Peninsula and has been found elsewhere since then.

Further significant increases in export volume will depend on increasing smallholder yield per hectare. The best options for increasing the value of cocoa exports are through improving quality and entering into speciality niche markets.

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