Niugini Organics, an expanding exporter of organic coconut products made in PNG, is showcasing a business model which benefits smallholder groups in East New Britain. Business Advantage PNG spoke with director Dennis Hill to find out more.

Directors Debra and Dennis Hill with the Niugini Organics team. Credit: Jody Cleaver.

Niugini Organics has exported organic coconut products manufactured at its headquarters near Keravat in East New Britain since 2008.

A PNG-owned company, it produces coconut oil and soaps from its 1,150 square metre manufacturing factory.

The company has a growing export market, which is most established in Australia and New Zealand, where its products are found in thousands of health stores and supermarkets.

Niugini Organics Director Dennis Hill tells Business Advantage PNG his company is continuing to develop its export markets, especially in Europe, the United States, and even Kazakhstan.

‘Our strategic advantage for doing business here is obviously the supply of coconuts in a town that happens to have a good port with a reasonable amount of direct overseas shipping,’ says Hill, who founded the company with his wife, Debra.

Landowner contribution

The foundation of Niugini Organics’ business is a strong partnership with local smallholders who supply coconuts, with around 200 groups now involved in the operation.

An operation with smallholder groups has been critical for Niugini Organics. Credit: Jody Cleaver.

Hill says Niugini Organics has focused on establishing the smallholder operation as an integral part of its business.

‘We specifically run it as a smallholder operation, not a buying point where we just buy coconuts. We have a buying plan and a schedule we put out weeks in advance, and all of the smallholders are also organically certified,’ Hill explains.

With PNG’s agricultural sector looking for a boost, Hill believes the smallholder model should potentially provide wider benefits for other businesses in the industry.

‘The smallholder model, where you have an integrated company that really sticks to its own business and does what it is good at—which is producing a product—isn’t utilised enough,’ Hill said.

‘Then they utilise smallholders to do what they can do—that’s a model that works. It is a bit of a pity in a way that more businesses don’t follow that model.’

Company growth

Hill said Niugini Organics has no intention of changing its model by becoming a landowner in East New Britain. Instead, the company will continue to focus on the production of its goods.

‘One thing that we don’t want is the issue of large land ownership and the complications that brings,’ Hill explains.

‘There is a certain amount of ethical decision-making there. Everything is better served by sharing it out. You can utilise your capital for expansion of the core business without spreading it over things such as the cost of land ownership.’

Hill says Niugini Organics’ regular investment in coconuts from local landowner groups was directly benefiting the area of East New Britain.

The next generation of coconut farmers on East New Britain. Credit: Jody Cleaver.

‘Coconuts are a big expenditure for us. We are spending between K1000 and K2000 each day, 7 days a week,’ Hill notes.

Challenging times

Copra, the dried meat of the coconut, remains one of PNG’s leading agricultural exports, despite global demand declining significantly in recent decades.

In 2014, PNG exported more than 48,000 tonnes of copra, which was worth K63.7 million to the country, according to Bank of PNG statistics. This was a significant increase on 2013, as prices improved during the first half of the year.

Prices have fluctuated throughout 2015, as production from leading producers—including the Philippines and India—has dropped. Copra oil averaged K2,550 per tonne on the export market in the March quarter.