Thursday, June 07, 2012

Wider consultation urged on K5 billion rice project

The Consultative Implementation and Monitoring Council (CIMC) has called on the government to consider wider public and private sector views  before endorsing the controversial K5 billion Central province rice project, The National reports.
 It said this was the consensus among participants at a recent agriculture conference in Lae organised by the CIMC.
 The project proposes to secure 100,000 hectares using customary land, under a special agriculture business lease (SABL), for the purpose of producing rice or other agricultural/economic activities, purportedly to cater for PNG’s domestic demand and export to overseas markets.
 “On the bargaining table is a request for 80% increase in tariff on imported rice (and levy on other domestic producers) to facilitate NAIL’s investment in the project,” the CIMC said.
 “There was considerable discussion on the subject in the plenary session and various presentations, during the conference.”
 The CIMC said while the proposed trading monopoly would be lucrative to the investor, most of the participants raised concerns as to whether:
·         The investor would realistically establish such a vast area of rice, without an initial pilot project;  
·         It would be feasible without major sustained protection; and
·         It could deliver the many promises the potential investor is making to the people of Central province and PNG as a whole.
 “Furthermore, while it is recognised that rice can grow in PNG, and many farmers across the country are now planting it, sometimes as an interim crop whilst developing tree crops, many suggested that this project is not feasible and is baseless because this company has not grown any rice in PNG to date, nor has such large scale mechanised (or hand grown/harvested) rice production been demonstrated, as viable or competitive,” CIMC said.
 In particular:
  • ·         The company had not secured any/much of the PNG rice market yet through competitive means, let alone established any export trade;  
  • ·         Securing 100,000 hectares of land for rice cultivation (which is roughly equivalent to all the land under oil palm production in PNG) would include replacing other existing land use by local communities, including betel nut growing areas as well as food gardens;  
  • ·         As the project required technical know-how for it to commence, the proponents acknowledged large numbers of technical expertise would have to be brought in from outside, seemingly marginalising the landowners;  
  • ·         Raising the current tariff threshold to levels anywhere near 80% would breach PNG’s international trade obligations, and resulting in retaliatory consequences;  
  • ·         Having a monopolised market domestically, with all other industry participants, and ultimately consumers, paying import fees to the dominant player, was unlikely to be short-lived. Once monopolies were established, with heavy protective barriers (potentially pushing prices up threefold), the beneficiaries rarely gave them up readily, arguing that their venture needed the protection to maintain the viability of their industry. This may not have mattered too much in sugar, a non-essential item, but would be serious for a staple food, like rice.

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