Introduction

The Industry Operations Division of the Corporation is mandated to perform the regulatory function, corporate services and publish reports on the international and domestic market trends and developments. The core activities of the division are Licensing, Inspections, Export and Quality Controls, Economics, Marketing and Promotions. The division also provides other important support services to the Corporation including finance, human resource management, properties and general administration.

The Corporation’s Economics section is primarily responsible for collection, compilation and dissemination of information on coffee production, price and export statistics, based on data collected through compulsory daily and monthly returns submitted to the Corporation by all registered processors and exporters.

Production

Coffee production has increased on average by 3% per year from 650,000 (39,000 tonnes) bags since independence in 1975 to stabilize at 1.12 million bags until 2005. From 2006 to 2016 production has declined on average by 2% with a record drop in 2015 to 733,831 bags (44,030 tonnes). In 2016, soared to 1.13 million bags, 65% or more than half on 2015 production.

PNG coffee production in the last decade (2007-2016) average 995,000 bags (59,700 tonnes) a year. The peak production in the period was seen in 2011 (89,000 tons) while the lowest was in 2015 (44,030 tonnes).

Production is dominated by village-based small farmers, who produced 85% of the annual crop. It is estimated that there are some 400,000 rural households in PNG that depend upon coffee to provide all or part of their income and about 70% of those living in rural areas. Plantations or larger estates (4%) and intermediate sized holdings or ‘blocks’ (11%) of between 10 and 20 hectares produced the remainder.

Coffee is grown in 16 provinces of PNG, but production is mainly centred in Eastern Highlands, Western Highlands, Jiwaka, Morobe and Simbu provinces. These provinces account for over 90% of production. East Sepik supplies most of PNG Robusta exports. The Arabica coffees produced in PNG, especially those produced on the larger estates, are considered to be among the finest gourmet coffees in the world.

(Figure 1)

Exports

PNG exports almost all (99.9%) coffee it produces in green bean, less than 1% is exported in roast and ground form. The trend in exports therefore resembles that of production. Exports have averaged 960,000 (57,600 tonnes) bags per year worth K510 million in the past 10 years.

(Figure 2)

Major export grades continue to be Y1 grade 58%, followed by Premium Smallholder Coffee (PSC) grade at 12%, X grade 9% and A grade 6%. PSC grade has fetched premium price of 64% per kilogram over Y1 grade.

United States continue to be the main buyer of premium coffee takes in more than 57% and 41% of A and X grades, respectively. Australia imports over 19% of PSC grade while Germany ships most of Y1 grade (55%). New Caledonia picks up most of Robusta coffee (78%) while Australia receives about 43% of Y3 grade.

(Table 1)

Exports of Certified Coffees

Despite the general decline in production, the exports of verified and certified coffees (4C, TK, UTZ and RFA certified), Organic, Fairtrade and Fairtrade Organic coffees grew steadily by 22% on average in the last 5 years. Exports of certified coffees constitutes 5% of the annual exports. Exports of Organic, Fairtrade Organic and Fairtrade coffees in 2016 totalled 3,482 tonnes, an increase of 24% compared to previous year. In 2016, exports of 4C, UTZ, RFA and TK compliant coffees grew significantly by 61%, or more than half the previous period. The growth in exports of certified coffee attributed to the increase in number of licensed or certified coffee farmers, consequently earning increased returns to farmers who are participating in certification programs.

Major Export Markets

The main markets for PNG coffee are Germany, which usually buys well over 36 % of total exports, followed by United States (25%), Australia (16%) and Japan (5%), Belgium (5%), New Zealand (2%) and Russia (2%). These countries take over 90% of annual exports.

Exporter Market Share

From a total of 22 exporters in 2016, the top six (6) exporters took over 78% of total exports. Those six were PNG Coffee Exports (PNGCE) 23%, New Guinea Highlands Coffee Exports (NGHCE) 20%, Outspan 10%, Monpi 9%, Kongo 8% and Gabiga 7%. The other 16 exporters were responsible for the remaining 25%. The two national exporters, Gabiga and Kongo, continue to remain in the top six position in the last two years, displacing NGCT&S one of top five exporters, in terms of exporter market share in 2016. All the same, the top three (3) exporters ( PNGCE, NGHCE & Monpi) who have links to major international trade houses, continued to dominate the market taking over 50% of annual exports.

In terms of exporter market share by grade, PTC continued to export the most A/AA-grades (34%), Monpi shipped the most X/AX-grade (39%) while PNGCE continued to export the most Y1-grade (31%) and Y3-grade (34%) coffee. The most PSC grade (36%) was shipped by NGHCE, whereas Kundu continued to be the only exporter that exported 100% of Robusta coffee in 2015 and over the last five years.