Coffee in Papua New Guinea

Coffee is the most important source of village agricultural income. It is particularly important for both villagers and urbanbased businesses in the highlands where opportunities to earn cash income from other sources are limited. In the early to mid 1990s an estimated 1.7 million people (53% of the rural population) lived in households where cash income was earned from selling Arabica or Robusta coffee. Coffee generated an average of K364 million per year in export income over the period 2004–2006, which was 26% of the value of agricultural exports in this period.

Coffee Plant

Two types of coffee are cultivated in PNG. Arabica coffee, the most important, is usually grown between 700 m and 2050 m altitude, but occasionally as low as 100 m and as high as 2400 m. Robusta coffee, considerably less important, is usually grown between sea level and 550 m. Both types of coffee are grown in environments where average rainfall is 1700–5000 mm per year.

The production of Arabica coffee is highly seasonal. The main season varies a little between years and between locations, but is generally in the period May to September and particularly in June, July and August. A study of Robusta coffee found no definite harvesting season in the Gazelle Peninsula area, East New Britain Province. However, in the Milne Bay area further from the equator, the main harvest occurs between May and August with the peak in June–July.

Adoption and history

Coffee was first introduced to PNG in 1873 and was growing in the Rabaul Botanical Garden by 1890. Between about 1900 and 1940, several plantations were established in Central Province and around Wau in Morobe Province and by villagers in the Sangara area of Oro Province. However, coffee remained an insignificant cash crop until the early 1950s, when commercial production of Arabica coffee commenced on small expatriate-owned plantations and in villages in the central highlands. Before 1960, most of the Arabica coffee exported from PNG was grown in highland regions of Morobe Province, particularly in the Wau, Finschhafen, Kaiapit and Wasu areas, but during the early 1960s a rapid expansion of smallholder coffee production occurred in Western Highlands, Simbu and Eastern Highlands provinces. This expansion occurred as a result of extension activities, the absence of alternative cash-earning opportunities, high export prices for coffee, the construction of the Highlands Highway in the mid 1960s, and the example provided by the plantation developments.

Robusta coffee had been grown successfully in Oro and Milne Bay provinces, and in parts of Central, East New Britain, Madang and East Sepik provinces. However, production grew slowly in comparison to the rapid expansion that occurred in the highlands. Robusta coffee has always attracted significantly lower prices than Arabica.

The Australian Administration was forced to slow the rate of growth of coffee production in PNG to meet quotas imposed by the 1962 International Coffee Agreement. Measures taken included the prohibition
of further estate development; a ban on planting coffee on new agricultural leases, including settlement schemes; and reduction of extension and promotional activities in the smallholder sector. Despite these measures, smallholder production continued to increase at an average rate of 28% per year between 1961 and 1968. Most of this expansion occurred in Eastern Highlands, Western Highlands and Simbu provinces, where it is known that many Australian agricultural extension officers chose to quietly ignore the bans on assisting villagers to plant coffee.

Following the abandonment of the quota requirements of the International Coffee Agreement in December 1972, the PNG Government attempted to reinvigorate coffee extension and promotion activities, particularly in the less developed areas of the country, such as Southern Highlands Province. It is possible that the renewed extension and promotion efforts resulted in the significant increase in smallholder production that occurred in the 1970s, although other factors, such as high export prices, were more important.

In the early 1980s the government sponsored the development of smallholder coffee blocks. These were parcels of land removed from customary tenure and owned and operated by families or groups of families, separate from village plantings. The blocks had from 5 ha to 29 ha under coffee and were often managed by a professional organisation. The Coffee Industry Corporation (CIC) estimated that there were 636 coffee blocks in 2007. The current standard of management is highly variable, with many blocks producing poorly.

Distribution of production and planting

Western Highlands and Eastern Highlands provinces continue to dominate coffee production in PNG, contributing about 82% of the total quantity of coffee produced in 2006. Other provinces that contributed to coffee production in 2006 were Morobe, Simbu, Enga and Southern Highlands. Robusta production has traditionally been dominated by East Sepik Province, which increased its output steadily during the 1990s, mainly as a result of new plantings in the Wosera and Maprik areas. However, production in East Sepik Province has fallen significantly since 2002 as a result of increased cocoa and vanilla plantings. Historically, Arabica coffee has accounted for about 95% of production, with Robusta the remaining 5%, but Robusta production has declined in recent years to less than 1% of total production.

There is little current information concerning the area of land planted to coffee in PNG. According to a 1999 estimate, approximately 70 000 ha were planted to coffee, of which 57 000 ha were smallholder plantings, with the remainder in the plantation and block sectors. In 2007, according to CIC figures, plantations had 4400 ha under coffee and the blocks an estimated 12 000 ha. Based on production from 2004 to 2006 and average yields, it is estimated there is 70 000–85 000 ha of smallholder coffee and 12 000–15 000 ha of plantation and block coffee.

Levels of production

Coffee production, measured by the quantity exported, increased rapidly between 1960 and 1980, but the rate of increase has slowed since 1980. There has been virtually no new coffee plantation development since 1961 and the plantation sector has declined since the mid 1980s. There were 107 coffee plantations operating in 1977, but only 33 in 2007. Hence the significant increase in production over the past 40 years has come entirely from the smallholder sector. Between 1985 and 2005 smallholder production doubled and its contribution to overall production increased from 65% to 85%. Conversely, production from plantations and blocks halved over this period and their combined contribution decreased from 35% to 15%.

Since 1978 the total annual production of coffee has exceeded 40 000 tonnes. Production peaked at 84 000 tonnes in 1989 and again in 1998. The variation in annual production that has occurred since 1980 is mostly explained by fluctuations in the export price and annual rainfall. Smallholder producers are very sensitive to returns on their labour and so are highly responsive to changes in price. Growth in production has been limited since 2000 by low prices (until 2004), high rainfall (in 2005 which resulted in a poor harvest in 2006) and deteriorating road access to many producing areas.

Survey data from village smallholders and plantations allows yields per hectare to be estimated. For the period 1960 to 1995, the average yield of smallholder Arabica coffee was about 950 kg/ha of green bean, while average plantation yields were almost twice this at 1650 kg/ha. There are significant differences between the highest and lowest reported yields, and where the same producers have been surveyed over a number of years, yields may vary considerably between years. On plantations, most of the variation can be attributed to differences in weather conditions between years, rather than greater or lesser attention to harvesting, as is probably the case with smallholders. However, yields on plantations appear to have decreased significantly in recent years; over the period 2000 to 2006, the average yield for plantations and blocks was 600 kg/ha green bean. This is probably more the result of changes in management than of climate.

There is an often-stated belief that coffee has a biennial bearing pattern in PNG (that is, if yields are high in one year, they are lower the following year). However, surveys by the Queensland Department of Primary Industries and by CIC over a number of years do not support this theory. Much published and unpublished data exist on coffee yields under experimental conditions, mostly from Aiyura in Eastern Highlands Province, but these are not reviewed here. Experimental yields range from less than 1 t/ha to more than 4 t/ha of green bean, with means in the range 1.5–2.5 t/ha.

Processing, exporters and markets

The Coffee Industry Corporation registered 17 exporters, 103 processors (58 ‘dry’ factories and 45 ‘wet’ factories) and 5 manufacturers, and estimated there were 5000 itinerant buyers, in PNG in 2007.

The majority of exporters and factories are located in Western Highlands and Eastern Highlands provinces. Most smallholder coffee growers process their raw coffee fruit (‘cherry’) to parchment stage before selling it either directly to factories or, more commonly, to itinerant buyers. A limited amount of coffee is sold to buyers or factories in cherry form. From time to time, attempts are made to ban cherry purchases to prevent theft of cherry from trees.

In 2006/07, six exporters accounted for 85% of the coffee exported from PNG: PNG Coffee Exports (21% of the market), New Guinea Highlands Coffee Exports (19%), Niugini Coffee, Tea and Spice (17%), Monpi Coffee (13%), Kongo (8%) and Pacific Trading (7%). In 2006, PNG exported coffee to 29 countries, with 89% of the exports going to just four: Germany (40%), Australia (20%), the United States (20%) and Japan (9%). Minor destinations included Malaysia, New Zealand, South Korea and South Africa.

Future prospects

The PNG coffee industry, despite its problems, has maintained a reasonable degree of international competitiveness. During the early 2000s world coffee prices were at historical lows, but the devaluation of the kina helped maintain kina returns to PNG growers. In 2005, in association with adverse weather conditions in Brazil and an upturn in the normal coffee price cycle, Arabica prices reached their highest level since 1998. Prices have remained firm since. The average export price for PNG coffee in 2006 was 40% higher than in 2004. The World Bank predicts that coffee prices will remain relatively stable until 2010 and will then decline until 2015.

Fundamental changes in the world coffee market will have major implications for the future of the PNG industry. Over the last decade or so the world coffee industry has boomed at the retail level but remained stagnant at the producer level. In the early 1990s the retail value of the world coffee industry was about US$30 billion; it now exceeds US$70 billion, but the growers’ share of profits has fallen from 40% to 10%. The future success of exporting countries, such as PNG, depends on being able to adjust to this new reality.

In addition, there has been a huge increase in the output of low-quality Robusta coffee from Vietnam and medium-quality Arabica coffee from Brazil. The abundant availability of low-priced coffee has brought about a permanent shift in demand. If PNG’s coffee industry is to remain viable in the longer term it must produce more, better-quality coffee. This can be done through a number of mechanisms including grower groups where members are committed to producing higher grade coffee and who are rewarded with higher prices for their products.

The PNG Government has set a production target of 90 000 tonnes by 2016. Expansion to these levels is likely to be constrained by limited areas of suitable land in the highlands and ongoing pressure on land; low world prices; inadequate road access for many producers; and possibly by increasing rainfall associated with global climate change. A potentially serious insect pest, coffee berry borer, is present in Papua (Indonesian New Guinea) and only urgent quarantine action along the border will prevent it moving into PNG in future years. If this pest becomes established in the PNG highlands it is likely to have a severe effect on coffee production.

The most important issue for the PNG coffee industry is to improve the quality from existing plantings. If it can succeed in doing this, it has a bright future and coffee will continue to make a substantial contribution to highlanders’ living standards.

Colonization of Papua New Guinea

In 1884 Germany and Britain established Protectorates in the eastern half of New Guinea and adjacent islands. Germany took the northeast and adjacent islands and Britain took the southeast and adjacent islands. The western boundary of both Protectorates was the 141 degree east longitude. The western section of the island had been annexed by the Dutch in 1828.

From 1884 to 1899 German New Guinea was administered by a private company, the Neuguinea Kompagnie. When the company failed, the Protectorate was formally taken over, as a colony, by the Imperial German Government. In 1914, at the outbreak of World War I, Australia occupied the German colony. Australian military occupation ended in 1921 when the League of Nations declared the territory to be the Australian Mandated Territory of New Guinea. In the south, the British declared their Protectorate to be a British colony in 1888. In 1906 the British handed the colony to the Commonwealth of Australia which renamed it the Australian Territory of Papua.

Following the Japanese invasion in 1942, parts of both New Guinea and Papua were under Japanese or Allied (American and Australian) military occupation. After the war (1945) the Australians administered Papua and New Guinea as one territory, the Territory of Papua and New Guinea, until 1975 when the Territory became the independent state of Papua New Guinea.

Communications in Papua New Guinea

Traditional methods of communication between villages included conch shells, drums, gongs, smoke signals and, across highland valleys, yodelling. Objects sent over longer distances could carry particular meanings. Europeans introduced Western communication techniques which, until World War II, served mainly expatriate, not PNGan, interests. In 1955 the Administration established a Department of Communications which was handed over to the Postal and Telecommunications Services in the Department of Public Utilities at Independence in 1975.

In 1993, sophisticated postal, telephone and fax services, radio and television broadcasting and newspapers, cater to the needs of industry and commerce and the 15 percent of the population who live in the urban areas. Radio and radio telephones, or personally delivered messages are the most important means of communication for villagers.

Postal and telephone services are provided through the government-owned Post and Telecommunication Corporation. The telephone system has been linked to the international system since 1967. The microwave repeater stations which relay messages across the country are mostly solar powered. In 1992 the telecommunications system was completely automated and had international links to most countries. In August 1993 a section of the system was upgraded by the installation of satellite antennas with unlimited overseas capacity. The telecommunications service is expensive because of the cost of land lines through rugged terrain, unrealistic compensation claims by villagers for mountain top repeater sites, the high wages of skilled labor, and the fact that there are few subscribers (32,000 in 1992). In 1976 PNG joined the Universal Postal Union which entitles it to reciprocal mailing rights with countries throughout the world.

The government-owned National Broadcasting Commission runs two national services, one with advertising, and a provincial network. There is also an Australian-owned commercial television station which provides mainly overseas English language programs in Port Moresby and several other urban centres. The most important newspapers are the English language daily Post Courier, the English language weekly Times of Papua New Guinea and Wantok, a Tok Pisin daily.

See also: Why Internet Connectivity and Cost Reduction should be a top priority for this Papua New Guinean Government

Constitution of the Independent State of Papua New Guinea

The Constitution, which was adopted in August 1975, immediately prior to Independence, sets the national goals as: integral human development; equality and participation in development; national sovereignty and self-reliance; and conservation of natural resources and the environment. The Constitution guarantees the right of freedom from inhuman treatment, forced labor, arbitrary search and entry, conscience, thought, religion, expression, assembly and privacy. These rights apply to people whatever their race, tribe, place of origin, political opinion, color, creed or sex. The Head of State is the monarch of Great Britain, represented by the Governor-General, who appoints and dismisses the Prime Minister on the proposal of the national parliament, and other Ministers on the proposal of the Prime Minister. The Governor-General is appointed on the proposal of the National Executive Council (cabinet). The Constitution also provides for a national parliament, a National Executive Council, an independent judicial system, a public service, police force and defense force.

In 1991 the Constitution was amended to increase from 6 to 18 months the grace period of immunity from votes of no confidence allowed to an incoming government. In September 1993 Prime Minister Wingti proposed that the Constitution be amended to reverse the legal convention of a person being considered innocent until proved guilty and introduce compulsory identification cards. These proposals met with strong resistance from church and community groups and students and were, at least temporarily, shelved.

Constitutional Planning Committee

Established by the House of Assembly in 1972, the Constitutional Planning Committee (CPC) considered the timing of self-government and Independence, regional interests, and control of foreign investment, as well as the development of the Constitution. The CPC became part of a personal power struggle among parliamentary leaders in the three years before Independence and some of its more radical recommendations were rejected by the House of Assembly.

Copper and Gold in Papua New Guinea

Most gold miners who prospected for gold in the 19th century had worked the Australian fields. There was a rush, initially from northern Queensland, to the Lousiade Archipelago, and then to the mainland, in the northeast of British New Guinea and later still to the Lakekamu River in the south. By 1900 gold constituted over 50 percent of the exports of British New Guinea. Mining of copper, which began in 1910 at Sapphire Creek, in the Astrolabe Range near Port Moresby, was disrupted by World War I but resumed in the 1920s.

Gold was found in the Bulolo River, on the edge of the Eastern Highlands, in the 1920s and a rich strike was made at Edie Creek, near Wau, in 1926. Because of the mountainous nature of the terrain it was necessary to fly in equipment from Salamaua on the coast. In 1933 gold was the Australian Mandated Territory’s most valuable export.

Copper was discovered in Bougainville, North Solomons District, in 1964, and a vast open cut mine was developed by Bougainville Copper Limited in 1967. Copper and gold mining began at Ok Tedi in 1984. Alluvial gold was found at Mt Kare in 1988. In 1992 gold was being extensively mined at Porgera and on Misima Island. In October 1993 an agreement was signed to exploit the rich Lihir gold deposit. In November 1993 Highlands Gold (65 percent owned by Mount Isa Mines Pty Ltd) discovered gold in the Frieda River area. Some known deposits, such as gold and copper at Wafi and gold at Hidden Valley, have not yet been exploited.

Copper and gold have been the most important exports since the late 1970s. In 1992 PNG was the world’s fourth largest exporter of copper concentrate. Copper and gold exports were valued at over K1000 million and accounted for 60 percent of GDP. Mining is dominated by foreign-owned companies. The national government has reserved the right to take a 30 percent share in mining projects and has taken 10 percent to 30 percent shares in major projects. Royalties from these projects form an important part of the government’s revenues. Negotiations are continuing on most projects regarding the extent of the involvement of the local landowners. Changing claims by local landowners for compensation and share in mining ventures has been a major problem for PNG governments. Concern has been expressed, both within PNG and by environmental groups outside the country, over the failure to control adverse environmental effects, both physical and social, of mining. Mining is highly capital intensive and to date has generated relatively few jobs for PNGans. All copper is exported as copper concentrate and only a small amount of gold is processed in PNG.

Copra and Copra Oil in Papua New Guinea

Copra is an important source of village income. In the early to mid 1990s, an estimated 527 000 people (17% of the rural population) lived in households where cash was earned from selling copra. From 2004 to 2006 copra and copra oil generated average annual export earnings of K93 million; this was only 6% of the total value of agricultural exports in this period. Most of this amount (85%) was earned from copra oil exports.

Three economic products are derived from the nut of the coconut palm: copra, copra oil and copra meal. Although coconut will regenerate naturally from seed in coastal locations, almost all coconut palms in PNG have been planted by people. In PNG, coconut is grown in environments where mean annual rainfall ranges from 1000 mm to 6500 mm. It is cultivated from sea level to 1000 m altitude; however, the commercial cultivation of coconut is mostly restricted to coastal locations. Coconut normally bears all year round, but production falls significantly during droughts.

Adoption and history

Although the cultivation and use of coconut in PNG long predates European settlement, the commercial cultivation of coconut palms in PNG commenced in the 1880s, in the Gazelle Peninsula area of East New Britain Province. Coconut meat, dried to copra, was initially in demand for soap manufacture and later for margarine production. Plantation development expanded quickly throughout the New Guinea Islands Region because of high copra prices during World War I. Commercial coconut planting commenced in the coastal areas of Southern Region in 1907, after Australia took over the administration of Papua from the British Colonial Office.

The production and export of copra increased rapidly during the first decades of the twentieth century. Export volumes were recorded as 10 324 tonnes in 1909/10 from a planted area of 16 000 ha, 31 500 tonnes in 1921/22 and 91 500 tonnes in 1936/37. Copra was the most important export commodity from PNG during this period. In 1921/22 it contributed 90% of all exports. Copra production and export declined significantly during World War II due to very low prices and the disruption of trade and commerce. Production and exports returned to pre-war levels in the early 1950s when copra exports comprised around 70% of total exports. However, the relative importance of copra and copra oil exports has declined greatly since then. Until the late 1950s, most copra produced in PNG was grown on plantations. Smallholders produced an estimated 20% of copra in 1954/55.

From the 1950s the Australian Administration adopted policies to develop smallholder and village copra production. Increased extension activities resulted in the establishment of an estimated 75 000 ha of smallholder and village coconut palms between 1955 and 1965. Most of this development was on village land, not formal settlement schemes. Smallholders produced about 48 500 tonnes of copra in 1971, which was around 35% of national copra production. By 1975/76, smallholders contributed more than 40% of national production, a reflection of both the decline of the plantation sector and the expansion of the smallholder sector. By 1975/76 however, copra and copra oil comprised only 5% of PNG’s total exports. This decline in export share was primarily due to the development of the coffee, cocoa and mineral industries during the 1950s, 1960s and 1970s.

Distribution of production and planting

Smallholder copra production is dominated by East New Britain Province, which contributes around one quarter of total production. Other provinces that make significant contributions to smallholder production are Madang, New Ireland, Bougainville and West New Britain. Most plantation copra is produced in Madang and East New Britain provinces (particularly in the Gazelle Peninsula area). In 2005, East New Britain Province accounted for 46% of all copra produced and Madang Province 20%. Smaller amounts came from New Ireland, Bougainville and West New Britain provinces.

It was estimated in 1998 that coconut plantations covered approximately 53 000 ha and smallholder plantings about 128 000 ha. In a large proportion of these areas coconut is interplanted with cocoa, an innovation that was first pioneered in PNG in the 1950s and that increases overall economic productivity of land under coconut for both plantation and smallholder producers. Most coconut palms in PNG are of the ‘tall’ variety and many are now aged, which reduces productivity. Age is thought to be a greater problem in the plantation sector, where approximately half of coconut palms are 70–80 years old.

Levels of production

Since the 1970s, the smallholder sector has grown in importance relative to the plantation sector. In 1988, smallholders contributed around 70% of total production, and by 1998 this proportion had increased to 82%. The plantation sector has continued to be adversely affected by extreme fluctuations in world market prices and, more importantly, by the rising costs of inputs, particularly fuel and labour. The sector has also been constrained by investment uncertainty (particularly as a result of the Plantation Redistribution Scheme in the 1970s, which bought back plantation land from owners and returned it to the previous customary owners).

Smallholder producers are sensitive to variations in the export prices paid for copra and copra oil and this largely explains the peaks and troughs that have characterised PNG production levels from the 1970s to the 1990s. Very low prices between 1985 and 1995 saw copra production reach its lowest levels since the late 1940s (despite K35.4 million of government price assistance and stabilisation funding over the period 1990–95). However, price increases during the 1990s saw production increase again.

The marked decline in copra production in 1998, despite the fact that prices were still increasing, was associated with the opening of a new Copra Marketing Board copra oil mill in Madang. Since the 1960s, the proportion of copra being processed domestically into copra oil has steadily increased. By 1990, copra oil surpassed copra in total export value.

Copra production was also adversely affected by significant declines in export prices in 2000 and 2001. In 2002, copra production fell to its lowest level since 1947 and in 2003 copra production reached a historical low of less than 9000 tonnes. Deteriorating infrastructure and increasing transport costs, fewer purchasing depots, and a switch from exporting copra to processing it into oil within PNG have contributed to this decline.

Copra oil production fell in 2001, but recovered in 2003. In 2006, the value of copra oil exports (K60 million) was more than seven times that of copra exports (K8 million).

Copra meal, a low-value by-product of copra oil production, is exported for stockfeed. Copra meal exports averaged 14 000 tonnes/year during the 1990s, with an average value of K1.6 million/year.

Average smallholder yields are typically in the range 400–700 kg of copra/ha, with a mean of about 500 kg/ha. Like other export tree crops, plantation copra yields are higher than those for smallholders, with a range of 700–1000 kg/ha in nationwide surveys and an overall average of about 900 kg/ha.

Processing, exporters and markets

Copra production is labour intensive. It involves collecting fallen coconuts, de-husking and splitting them, and removing and drying the coconut meat. Nowhere in the world has coconut harvesting been mechanised. The Copra Marketing Board (CMB), which became the Kokonas Indastri Koporesen (KIK) in 2002, has always regulated the marketing and export of copra in PNG. The CMB enjoyed a monopoly over all aspects of the copra industry. However, in recent years KIK has issued a limited number of private sector export licences, mostly for copra oil.

Until recently, KIK purchased copra from growers at fixed prices at depots and sub-depots. However, between 2001 and 2005 a significant reduction in the number and geographic extent of active purchasing depots occurred, from 22 depots in 11 provinces in 2001, to 15 depots in 10 provinces in 2002, and 10 depots in 9 provinces in 2005, a reflection of the shift in copra purchasing activity from CMB/KIK to the copra oil mills. Most copra in the Islands Region is now purchased by Coconut Products in Rabaul. This change has disadvantaged smallholder producers who do not have access to the mills and who were previously serviced by CMB/KIK depots, which have now ceased purchasing.

Two large copra oil mills currently operate in PNG: Copra Oil Production Madang Ltd in Madang and Coconut Products at Toboi near Rabaul. The Toboi mill is over 50 years old and has been extensively refurbished. The Madang mill was set up by KIK, but later sold to a private company. In addition to these two mills, a number of very small operations produce copra oil using direct micro-expelling (DME) technology. The Middleton family operation on Karkar Island, Madang Province, produces high-quality copra oil that is used locally to make a number of products including soap, cosmetics and shampoo.

In 2001, 55% of the copra produced in PNG was exported to Europe, particularly to the United Kingdom and the Netherlands; 40% was exported to Japan; and 5% to Singapore. These countries were the major export destinations for PNG copra throughout the 1990s. In 2001 a major shift in the destination of PNG copra took place, with more going to Europe and less to Japan. In 2005, most copra was being exported to Germany (83%) and the remainder to Australia (8%), Singapore (7%), Solomon Islands and India. This shift in the destination of exports occurred at the same time as the rapid decline in copra export volumes, and fluctuations in the figures need to be viewed in that context. The main export destination for copra oil in 2005 was Australia, with Europe a minor destination. By 2008, most copra in PNG was being processed into copra oil and exported to Europe.

Future prospects

For many households, copra provides the only source of cash income, but the PNG copra industry is in crisis, with production falling sharply in recent years. Internationally, the PNG copra industry is at best only marginally competitive. Copra oil prices declined for several decades until 2001 when the price for copra increased and reached US$1130 per tonne in late 2007, the highest nominal price since 1984. Price increases have been brought about by structural changes in the world copra oil market. These have been driven by the diversion of other edible oils, particularly palm oil, away from their traditional uses into the rapidly expanding biofuel market. Nevertheless, the World Bank forecasts a significant fall in real copra oil prices through to 2015. When prices are poor, the comparatively low yields of PNG copra make it uncompetitive. The once vibrant trade in copra at the village level is now stifled by the closure of buying depots, a deterioration in roads and shipping services, increasing transport costs, and the absence of financial services to support copra purchases by private buyers.

The demand for copra is derived from the demand for copra oil and prices of the two products follow each other closely. Europe was the main buyer for copra. The European Union (EU) applied a zero tariff on oilseeds and meals (including copra), but a much higher tariff on vegetable oils (including copra oil). This resulted in a significant trade distortion that encouraged the importation of copra over copra oil and explains why the EU became the world’s largest importer of copra.

The World Trade Organization Uruguay Round led to a reduction of the tariff margin between copra crude oil and refined oil. Since then there has been a steady decrease in Europe’s copra crushing capacity and an increase in oil imports. The last Europe-based copra crushing operation (Walter Rau in Germany) closed in 2007 and there is no longer any market for copra in Europe. The copra market is now limited to buyers in Bangladesh, the Philippines and mills in other Pacific island countries (Fiji, Solomon Islands and Vanuatu). The increasing interest in copra from these countries is a reflection of supply problems facing their own industries rather than of growing international demand for copra. These markets, while not sustainable in the long term, provide PNG a few years breathing space to develop a copra industry that is based entirely on oil exports.

Beyond conventional copra and copra oil, some high-value coconut products offer better longer term prospects. These include virgin coconut oil, coconut cream, coconut timber and biofuel.

Papua New Guinea Creative Arts

In traditional societies, music, singing, dancing and decoration were associated with festivals and a wide variety of daily activities. People decorated their bodies as well as their bags, weapons, canoes and houses. Dances and songs were handed down from one generation to the next or composed for special events. From the 19th century missions discouraged traditional artistic culture, because much singing, dancing, architecture and sculpture was associated with pagan beliefs. Almost the only artistic activity encouraged by most missionaries was the singing of hymns.

In the 1970s a creative arts movement which included writers, painters, sculptors and musicians was associated with the development of nationalist sentiment in the years preceding Independence. An annual national literature award was established in 1979 to encourage young writers. Most of the writing is in the English language. Writers, musicians and visual artists often blend traditional and Western styles and themes. In the 1980s bands such as Sanguma performed Western style popular music influenced by PNG traditional culture. Indigenous forms of urban popular musice. g., string band music: songs accompanied by guitars and sometimes other instrument shave developed. These are widely disseminated by radio and on cassette tapes. Popular songs are mostly in indigenous languages, including Tok Pisin.

Cults and Millenarian Movements in Papua New Guinea

Cargo cults, which included the belief that European goods (cargo) could be acquired by practicing rituals, have been reported since the 1890s. Central to most cargo cults was the belief that Western goods had been manufactured by the spirits of the ancestors and misappropriated by white men, and that the white men would leave when the spirits returned with the goods. One of the earliest well-documented cargo cults is the Vailala movement (also known as the ”Vailala Madness”) in the Gulf of Papua in 1919 which predicted that the ancestors would bring goods by steamship or aeroplane.

In an outburst of cargo cult activity after World War II, people in various parts of PNG ceased hunting, fishing and working in the gardens in the belief that their ancestors would arrive with food. In the Madang district in 1945 Yali founded the Rai Coast Rehabilitation Scheme on the assumption that the Administration would reward loyal PNGans with cargo. When the Administration failed to do so, he formed an influential cargo cult movement. The colonial Administration often confused attempts to establish cooperative and welfare movements for radical reform of village society with cargo cults.

Millenarian cults did not necessarily share the belief in cargo but predicted that their followers would achieve a state of perfect happiness on the arrival of the Millennium. Most cults incorporated some Christian beliefs and practices. Melanesian cults have received much attention from anthropologists, sociologists and theologians.

Currency of Papua New Guinea

Prior to European contact, trade was conducted by barter or, in some areas, shell money, which was made by grinding into discs, polishing and stringing together special kinds of shells. The best-known shell money is that of the Tolai people in New Britain. Under the New Guinea Currency Coinage and Tokens Ordinance 1922-60, shell money was legal tender in New Britain until 1964. Shell money is still used for bride price and small purchases in some New Britain markets, and for traditional ceremonial purposes in other parts of the country.

During the colonial period, German, British and, later, Australian currency was used. Between 1928 and 1945 attempts to circulate coins specially designed for PNG were largely unsuccessful. Australia introduced decimal currency in 1966. At Independence in 1975, PNG issued its own currency. The main unit is the kina which is divided into one hundred toea. There are toea coins of various denominations, and a one kina coin. Higher denominations of the kina are issued as banknotes. At its introduction in 1975 the kina was issued with a value equivalent to that of the Australian dollar. In 1992 K1 exhanged for around $A 1.50 and $US 1. Exchange rates are set by the central bank, the Bank of Papua New Guinea. Current policy is to maintain a strong and easily convertible kina. The exchange rate is tied to the currencies of PNG’s main trading partners.