2013, Volume 16, Paper 95
ISSN 1442-6951

Meeting the Demand for Fresh Produce from the PNG LNG Market: Opportunities and Challenges

Associate Professor Hui-Shung (Christie) Chang – Principal Research Fellow at the Institute for Rural Futures, School of Behavioural Cognitive and Social Sciences, University of New England, Armidale, 2351, Email: huishungchang@gmail.com.

Robert Lutulele – Divisional Manager of the Research, Policy and Communications Division, Fresh Produce Development Agency (FPDA), Goroka, Papua New Guinea. 

Rebecca None – Former Economist, Fresh Produce Development Agency (FPDA), Goroka, Papua New Guinea. 

Zenaida Maia – Capacity Training Officer, Fresh Produce Development Agency (FPDA), Goroka, Papua New Guinea. 

Paul Hape –  Extension Officer of Fresh Produce Development Agency (FPDA), Goroka, Papua New Guinea.

We would like to thank the NZAID for providing funding through its Institutional Strengthening Project of FPDA, the FPDA management for providing logistic support for this study, and key industry players who gave their time freely for the interviews and shared their views and insight generously. We would also like to thank Professor Michael Bourke of the Land Management Group, RSPAS, The Australian National University, and Emeritus Professor Roley Piggott of the School of Business, Economics and Public Policy, University of New England, for helpful comments on the early draft of this paper.

Abstract

The US$15 billion investment in the PNG LNG project has been making headlines since its inception in 2006. The Project was forecast to generate significant export revenues and to generate much positive impact on the PNG economy for the coming 30 years. The demand for fresh produce was forecast to increase significantly to feed the substantial labour force at the project sites as well as in other supporting sectors. The objectives of this study were to estimate the requirements of the LNG project for fresh produce and to determine the potential for PNG farmers and supply chain operators to supply the Project. In this study, we estimated that demand for fresh produce from the PNG LNG market to be in the order of 130 tonnes a week (or 20 tonnes a day) at the peak of the construction period from 2012-2013, valued at 500,000 kina (or A$250,000) per week to local communities if the LNG market for fresh produce could be captured completely by local supplies. However, during the construction phase, nearly 80% of this demand would most likely to be met by imports because of concerns over quality, variety and consistency in supply of local produce. In addition, after the initial construction phase and by 2014, demand for fresh produce from the PNG LNG market would be reduced to around 2 tonnes a week during the operational phase due to a significant reduction in labour force. This means the impact of the PNG LNG project on the local fresh produce industry is not only short-term but uncertain, depending on the ability of local suppliers to meet buyers’ requirements for quality, variety and consistency in supply, which, in turn, will depend on whether long-standing supply chain issues can be addressed adequately and quickly by government and industry. Failing to do that, local suppliers will miss the opportunity to supply to the huge LNG market in the same way they have missed supplying to higher value formal markets.

Key words: PNG LNG project, demand, fresh produce, supply chain

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