Papua New Guinea confirmed its first case of Covid-19 on March 20, involving a foreign mine worker in Morobe Province. This prompted the government to declare a two-week state of emergency commencing March 24, which has since been extended by two months.
News of the first case caused some urban residents to rush to stores to stockpile groceries, raising questions about food security in the event of prolonged disruption to supply chains.
Restrictions currently in place include the suspension of domestic flights and incoming international flights; a ban on movement between provinces except for approved cargo, medical supplies and security forces; and home quarantine for everyone except essential workers.
The government’s swift actions were calculated to prevent PNG’s limited health care infrastructure being overwhelmed by community transmission cases. This is also a threat in other Pacific Island nations, which already have to contend with dangerous outbreaks of mosquito-borne illnesses, such as malaria and dengue fever.
As of April 3, PNG had yet to report any further cases beyond the mine worker, who was transported to Australia for treatment. This suggests that the containment measures are so far proving successful; by comparison, Fiji, the second-most-populous Pacific Island state after PNG, has seen seven cases, out of a global total of over 1m.
Marape’s agriculture agenda
Already a central pillar of the national economy, agriculture will be an even more crucial sector during the global Covid-19 pandemic.
Since he was elected prime minister by members of Parliament in May last year, Prime Minister James Marape has advanced an inclusive growth agenda.
Its focus was on using more of PNG’s resource wealth to diversify the economy and develop other sources of job creation and foreign exchange earnings, such as value-added agri-business and tourism.
PNG’s economy remains largely dependent on revenues from the extractive industries, leaving it vulnerable to downturns in the commodities cycle. Marape has consistently highlighted the potential of agriculture to offset this and become a new growth engine for the country. The prime minister told OBG that PNG has the potential to emerge as a “food bowl” for Asia if it can develop a viable commercial agriculture structure.
While the country has developed some agri-business success stories – notably in palm oil, but also coffee and, more recently, dairy and vanilla – most agriculture continues to take place on smallholder farms at the subsistence or semi-subsistence level. Approximately 85% of the population still relies on subsistence farming to meet daily nutritional needs.
Government estimates indicate that up to 30% of PNG’s vast landmass has moderate to very high agricultural potential, but only 4% is currently used for commercial agriculture. Putting in place the right incentives and strategies to unlock land for efficient mass production will remain one of the key priorities of the administration, once the Covid-19 disruption subsides.
Notwithstanding long-term challenges, the subsistence focus of most agriculture in PNG may prove to be beneficial as the country faces the prospect of supply chain disruption due to the pandemic.
With international flights and cargo movements currently constrained, PNG may have to rely more on local produce if the transportation of goods into and within the country becomes problematic.
James Rice, group CEO of Paradise Foods, told OBG that most of the population should be unaffected by supply chain issues as they are accustomed to consuming their own produce. “The challenge is in the two big cities of Port Moresby and Lae, which rely on imports as well as food coming down from the Highlands. We are already seeing a shortage of fresh fruit and vegetables from the Highlands in the cities, but not yet a shortage of imported food. Other non-food items are still arriving in PNG with only a slight delay,” Rice told OBG.
One factor working in PNG’s favour is that local food manufacturers have long maintained large raw-material inventories, to hedge against shipping disruptions or foreign exchange shortages.
While Covid-19 containment measures will have a detrimental effect on overall economic activity, there are signs that well-known local food brands may experience an upturn in PNG, at least in the short-term: Paradise Foods reported that sales during the last two weeks of March were 20% higher than expected, as urban residents stocked up on provisions.
Before the Covid-19 crisis hit, PNG was already pursuing a policy of food self-sufficiency that has seen it strengthen local production capacity for items such as bottled water, canned fish, poultry and the local staple of hard biscuits.
Consecutive governments have viewed food import substitution as key to providing a much-needed boost to foreign exchange reserves. To this end, the Marape administration announced in August 2019 it would allocate PGK200m ($58.4m) annually for an agriculture incubation programme to achieve food self-sufficiency by 2025.
Although GDP will be impacted in the short term by falling global demand for oil, gas and minerals, these continued efforts to boost local food production should provide long-term fiscal and social benefits for the largest Pacific island economy.
Source: Oxford business group