Papua and New Guinea - Current economic position and prospects (Vol. 2 of 3) : Agriculture, livestock, forestry and fisheries; transport; population, manpower and education

RESTRICTED EAP8 Vol. 2 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF THE TERRITORY OF PAPUA AND NEW GUINEA (in three volumes) VOLUME II AGRICULTURE, LIVESTOCK, FORESTRY AND FISHERIES TRANSPORT POPULATION, MANPOWER AND EDUCATION September 3, 1969 East Asia and Pacific Department  CURRENCY EQUIVALENTS US$1. 00 0. 89Z9 Australian dollar $A 1.0 US$1.12 $A 1,000,000 = US$1, 120, 000  This report was written by a Mission which visited the Territory of Papua and New Guinea in March of 1969. The Mission was composed of Messrs. Shu-Chin Yang (Chief), Guenter H. Reif, OS. Kamanu (Economists), and Joa Jose Vieira (Agricultural Economist). Mr. Orville J. McDiarmid was also with the Mission for part of the time.  TAELE OF CONTENTS Volume II Annex I - Agriculture, Livestock, Forestry and Fisheries Page No. AGRICULTURE Copra .,.* ...................... .......ase 2 Rubber ....... . ....*........* 5 Coffee .................................... 6 Cocoa ..................................... 7 Tea ... is * * is is ......... .s...* ....... * 7 Other Commercial Crops ................. 8 Subsistence Agriculture ............... 9 LDTESTOCK @*7@******X*@ @v * 10 FOLESTKY ......... .. 12 FISHERIES .... 13 THE DEVELOPMENT PROGRAM Agriculture ....................... 1 Beef Cattle ............. s .............. . .. 18 Timber .*..*...* .... ........ * ....*... * . 18 CONCLUSIONS ...................... 19  ANNEX I AGRICULTURE, LIVESTOCK, FORESTRY AND FISIHERIES 1. The Territory's economy is based essentially on primary pro- duction. Agriculture, including livestock and, to a much lesser extent forestry and fisheries, supply the bulk of the needs of the indigenous population and earn the lion's share of the country's foreign exchange. The sector engages nearly all self-employed indigenes, and more than half of the local people employed in the monetary sector. With quite ample supply of land, the sector offers large scope for development. AGRICULTURE 2. Information on subsistence agriculture, on which the great majority of the local people's livelihood depends, is very scanty. Pro- duction in the subsistence economy, mainly food, has grown more or less at the same rate as population. In recent years, increasing interest has been shown by the indigenes in such crops as peanuts, rice, sugar cane, bananas, etc., to broaden their diet as well as to sell surpluses for cash. 3. Value of production of commercial crops, as indicated by their export value, appeared somewhat stagnant for two or three years but in- creased considerably in 1967/68 (29 percent increase over 1966/67 in ex- port earnings from agricultural crops), partly because of the improvement of world market prices for the Territory's major exports, such as copra and cocoa, and partly because of the increases in quantities of most crops. Production of commercial crops has generally continued its rising trend in recent years, with a particularly sharp rise in coffee produc- tion, but a somewhat slower increase in copra output. 4. In general, the increase in production has been due mainly to the expansion of areas under planting, as average yield for most crops has remained more or less stagnant in recent years. From mid-1963 to mid-1967 total gross acreage (including multi-planting) under four prin- cipal commercial crcps (coconut, cocoa, rubber and coffee) increased by 23 percent to 840,000 acres, representing an average annual increase of 5.3 percent. Most of the acreage increase occured during 1963 - 1965, when the annual rate of increase was 7 percent as compared with 3.6 percent during 1965 - 1967. It took place largely in the area under indigenous control, and consequently the indigenous share in the combined acreage under these four crops increased from 40 percent in mid-1963 to 47 percent in mid-1967. Increase in acreage during 1963 - 1967 was particularly rapid for areas under coffee, followed by cocoa; but for coconut, the most important crop, it was rather slow. Although reliable statistics are not available, the area under tea seems to have increased also fairly rapidly.  -2- Copra 5. Copra - the most important commercial crop of the Territory - accounts for approximately one-half of the total value of production of all commercial crops, and more than one-third of total export earnings. Its production occupies more than two-thirds of the total area under commercial crops, and coconut plantations provide employment for more than half of rural wage labor. In recent years, new plantings by the indigenes have increased far more rapidly than those by non-indigenes. While indigenous new plantings averaged annually at 14,500 acres during the last two years, new plantings by non-indigenes were only 4,500 acres per annum. As a result, the share of indigenous production has increased to one-third of total copra production from one-fourth five years ago. 6. Copra production recovered in 1967/68 from a setback in 1966/67, when it was affected by unfavorable weather. However, the average yield of copra per acre in the Territory at 0.4 long ton for plantations is low as compared, for instance, with 0.5 long ton per acre estimated for the Philippines and 0.8 long ton for Malaysia (in both cases, including small- holder production), the two major world copra producers. Average yield of indigenous producers is even lower. One possible reason for the re- latively low yield of indigenous coconut was that the palms were too densely and too haphazardly planted, resulting in insufficient soil nutrients and inadbquate soil aeration. Also, the Mission was told that there were areas in which as much as two-fifths of new indigenous coconut plantings never reach maturity because of inadequate care. On both indigenous and non-indigenous coconut fields, tlhe use of fertilizer is loT. Even on the non-indigenoUs coconut planting, only 7 percent of the total area received an,,r fertilizer. In the fertilizer trials conducted by the Department of Agriculture, Stock and Fi3heries (DASF) under controlled conditions, good results have already been obtained in increasing yield several fold, and also in tree rejuvenation. But it is understood that suc4 good -results cannot be, expected from many areas. Another aspect worth investigating is that in every crop year a certain amount of coconuts - believed to be substantial in certain areas - is not harvested but left to rot on the ground. 7. The small increase in replanting and new planting in the plan- tations is said to be attributable to rising costs of labor, which re- presents half of the prime cost of production. According to the latest sample survey of the Department of Agriculture, Stock and Fisheries, the average prime operating costs of copra produced in the plantations had increased from $A 66 per ton in 1962/63 to slightly over $A 85 in 1966/67, or 29 percent. In 1967/68, because of the sharp increase in the world copra price and the more than 10 percent increase in production, the Territory's coconut producers should have had a substantial improvement in their profit margins. However, in the long run the coconut industry has to improve its efficiency to supply its products at competitive prices in relation to other copra as well as other fats and oil exporters.  Table I.1 Acreage, Production and Exports of Principal Commercial Crops 1962/63 1964/65 1966/67 Acreage (in thousand acres) Coconuts 495 550 575 Cocoa 129 150 164 Rubber 3- 34 ho Coffee 26 47 61 Total 682 782 8 40 Production (in thousand tons) Copra 14.0 118.6 115.7 Cocoa 13.3 19.4 20.1 Rubber 4.8 5-