Papau New Guinea

Global Subsidies, Agriculture, and Infrastructure in Papua New Guinea

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Written by Sean Jacobs, Guest Contributor

A global debate that has subsided in recent years concerns agricultural subsidies paid to farmers in developed economies. It used to be argued–strenuously at times by anti-globalisation protestors–that if only developed nations abandoned their agricultural subsidies, which amount to billions in the United States and the European Union, developing countries would receive a crucial boost. West African cotton producers would be able to compete with their handout-induced Mississippi competitors, or rice grown in Haiti would find a ready market in the U.S. and help to improve the livelihoods of Haitian farmers.

While broad discussion of this topic largely died with the Doha Round of global trade negotiations, the case for improving livelihoods in developing countries by stimulating agricultural output remains alive and well. Nowhere is this illustrated more clearly than in Papua New Guinea (PNG), a fast-growing island nation of nearly seven million people in the South Pacific. Despite PNG’s high urban population, 87 percent of its people still live in rural areas. Improved agriculture could help to make these areas more self-reliant, stable, and prosperous.

PNG’s unique geography and infrastructure deficiencies, however, present a major challenge. Port Moresby, the capital, has no road communications with any other major town–hence the country’s unusually heavy reliance on aviation. Until as recently as the 1930s, parts of the New Guinea Highlands, which have supported thriving agricultural communities for thousands of years, remained almost completely isolated from the outside world. Today, maritime and land connections to inland, resource-rich areas remain partial and insecure.

The foremost symbol of PNG’s infrastructure ailment is its 700km Highlands Highway. A crucial artery for carrying supplies to mining towns, it could be used also to carry large quantities of agricultural produce–if it were not riddled with car-sized pot-holes, and if whole sections were not at times buried or washed away by mud slides. As it is, truck drivers must inch along it at a tedious pace, constantly under threat from armed bandits who frequently set up makeshift roadblocks.

Countless other problems exist in PNG at the micro level, such as simple access to vehicles to bring vegetables to market. In the Highlands town of Kundiawa, local market vendors will tell you that the best produce in their area, grown no more than a few kilometres away, only reaches the town’s market if carried by hand, and never as far as Port Moresby or other cities and towns.

Better roads, bridges, and ports could solve many problems in PNG, but these require large investment, as well as a level of technical and managerial expertise the nation simply does not possess. Across the South Pacific, a number of large infrastructure projects have been completed with Chinese financial and technical assistance, only to languish afterwards from a lack of domestic expertise to administrate or service them. An aquatic center built in Western Samoa with Chinese aid in 2006, for example, began to fall apart after only a few years due to inadequate engineering maintenance.

These problems, although seemingly minor, ought to be kept in mind when pronouncements are made about the elimination of subsidies in developed countries and the ability of developing countries to avail themselves of regional and global supply chains. Closer examination reveals many local hurdles to agricultural output in developing countries that have little direct relationship with the government subsidies paid to farmers in developed economies.

PNG’s most recent budget commits 12 billion kina (US$5.8 billion), over five years, to upgrading the nation’s highways, roads, and ports. To place this fiscal commitment in context, 12 billion kina is equivalent to PNG’s annual national budget. This funding is apparently adequate, even for the historically troubled Highlands Highway. PNG Road Transport Association President Jacob Luke, for example, recently told PNG Report that “The government needs to allocate maybe AUD$2 billion (US$2.05 billion) to ensure a good road is reconstructed to last. This will eliminate security issues, [and ensure] timely deliveries and less maintenance.”

While these infrastructure challenges await funding, PNG’s economy, particularly domestic consumption, remains robust. The country has grown considerably over the past decade, thanks primarily to a strong mining sector. The nation’s large supermarkets literally run out of food during holiday periods, the banks are crowded, mobile phone ownership continues to rise to record highs, and the country’s airports handle more traffic than ever. But much of this consumption, while unquestionably good for the country, is exposing some of the supply gaps and inefficiencies in PNG’s economy. Removing agricultural subsidies in developed nations may not, in the end, do much to solve these problems.

Sean Jacobs is a former Australian youth volunteer in the Pacific who has worked with all levels of government in PNG. He currently lives in Canberra, Australia.

Photo: Carl Parkes (cc).