Trukai to expand its Papua New Guinea rice production despite uncertainty, says CEO Worthington-Eyre

With the Papua New Guinean Government remaining tight-lipped on progression of its proposed rice policy, Trukai Industries has decided to go ahead with the expansion of its rice growing business in PNG, Chief Executive Officer Greg Worthington-Eyre tells Business Advantage PNG.

David Tima Trukai’s senior operator (left) and Michael Maran (Chingwam Cooperative chairman) (right). Source: Trukai Industries

David Tima, Trukai’s senior operator (left) and Michael Maran, Chingwam Cooperative chairman (right). Source: Trukai Industries

In April 2016, the National Government was reported to have signed an agreement to develop a K7 billion (US$2.2 billion) rice venture in Central Province, as part of a policy for Papua New Guinea to become self-sufficient in rice by 2030. (Most rice consumed in PNG is currently imported.)

No further details of the policy have been released since, and Trukai Industries’ Greg Worthington-Eyre says the industry is waiting to find out whether a proposed review of the policy has been implemented.

Trukai Industries, currently the dominant player in PNG’s rice market with a 75 per cent market share, recently made several submissions to government for the development of large-scale rice farming in PNG.

Worthington-Eyre says the government has not yet responded to these proposals.

With one session of parliament remaining ahead of the election, Worthington-Eyre says he is unclear as to when any decisions will be made.

Import quota

Naima, the Indonesian company allegedly awarded 80 per cent of the rice import quota in the proposed agreement, would effectively take Trukai’s market. Worthingon-Eyre says this would shut Trukai down.

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‘We have made the decision that we are going to get on and grow rice regardless of any decision or lack of discussion.’

As the government continues to delay a decision on whether to implement the policy or not, Trukai Industries is seeking to expand its business by developing a rice-growing corridor adjacent to the Highlands Highway in Morobe Province.

‘We have made the decision that we are going to get on and grow rice regardless of any decision or lack of discussion,’ says Worthington-Eyre.

Plantation development

Trukai CEO Greg Worthington-Eyre. Credit: Trukai.

Trukai CEO Greg Worthington-Eyre. Credit: Trukai.

Trukai Industries is developing a 500-hectare rice plantation near Rangiampum, located on the Highlands Highway about two hours outside of Lae.

The proposed plantation is part of a standing agreement with the Chingwam Rice Growers Cooperation, with which Trukai Industries currently partners on an existing 80-hectare site.

‘That will give us 580 hectares in that area. And we’ve got another site up to 150 hectares to be cultivated at another location nearby,’ he says.

Trukai Industries has also recently entered discussions with the National Agricultural Research Institute to grow rice commercially in a joint agreement. Confirmation of a commercial agreement is expected in the coming weeks.

Rice growing corridor

Worthington-Eyre says the Chingwam Cooperative is a catalyst for the development of a rice-growing corridor.

Trukai Industries will harvest the rice and transport it to Lae for milling and packing.

‘The company is also in discussions to develop around 1000 hectares in the Highlands near Mount Hagen.’

This month, the company will install a hulling mill at its facility in Lae, and it is currently in discussions with the Trukai Industries’ board about investing in storage and drying facilities at selected locations along the highway.

Trukai Industries’ strategy is to develop about 2000 hectares of rice along a corridor. This includes a long-term plan, the aim of which is to use a method of irrigation to increase the frequency of crops.

The company is also in discussions to develop around 1000 hectares in the Highlands near Mount Hagen.

Unique model

Worthington-Eyre says growing rice in the Highlands requires a unique model in which the rice grown in those areas is distributed for sale within the local area.

‘Bringing rice from the Highlands down to Lae for milling is not economical, considering the cost of transportation in Papua New Guinea,’ says Worthington-Eyre.

‘If all goes well, we buy the rice from the smallholder farmer.’

‘What makes our model attractive is that we engage local people to manage our rice crops, teaching them to operate the machinery and care for the investment. Local people are also employed in the downstream processes to prepare the rice for market, adding further opportunity.’

Trukai Industries employs a nucleus model whereby the company establishes a large-scale mechanised plantation, but engages numerous smallholder farmers around that plantation to grow rice.

‘They contract to us on a smallholder basis to grow the rice variety that we need, and we help them grow it by using the central plantation as a centre for excellence.’

‘If all goes well, we buy the rice from the smallholder farmer.’

Costs

The infrastructure cost to establish a rice industry from scratch is significant and brings with it a lot of risk. Weather, logistics, poor infrastructure and road quality all add costs to the industry, reducing competitiveness.

‘The cost of setting it up from scratch is extraordinary, and it is support from local people that makes a project in Papua New Guinea sustainable. This is extremely important in any model executed, and we feel our engagement with the people is where it should be.’

Comments

  1. Frank Thomas says:

    Trukai Industries Limited your decision is welcomed especially the Morobean people. The 2000 hectares corridor of the Highlands Highways is brilliant. Please also consider Finschhafen district where rice is self sufficient. For this commodity people their will take it on by organizing themselves into cooperative to give them the numbers. In terms of agronomy and production the people have been growing and consuming rice for a very long time since the arrival of Lutheran Missionaries of Germany. Do consider them in this large scale operation and utilize the expertise and extensive life long living that they have. This project will give advantage to them for the cash economy converting from the staple dieting and living. Trukai Industries Limited you are realizing what is real and pursuing to achieve your objective and goals. With you Trukai Industries Limited all the way.

  2. I could not agreed more with the model of Trukai Industries to fill the needs of the internal market and taking into consideration local labor as “partners” and not “workers” is really novel. Reducing importations of any commodity is a plus for any country and it’s environment. PNG needs “target” projects not “plantation platforms” that destroy the delicate environmental of the forest as it happened in Madagascar and other tropical countries forest. Vanilla for example is a crop with HUGE possibilities in PNG as long as the farmers are in control of the whole process that is from planting to harvesting to curing the vanilla beans. When the whole cycle is done inside the country is when you increase; production, quality and revenue. On the vanilla process the farmer takes the most risk as they planted, grew and cut the bean this is where the risk is when you give the beans away green to be cured by others you are giving the profit of your hard work to others (the curing middlemen that take the bean to Indonesia) and this is where the profit is as there is no risk in curing it is all profit. This is what the vanilla farmer does not understand neither does the buyer of green beans wants the farmer to understand so he and he alone makes the most with the least of risk. Therefore Trukai Industries partnership with the PNG people is indeed morally, environmentally and yes profitable for everyone. ,

  3. RPerry Clunn says:

    The decision taken by Trukai Industries to move forward with their rice expansion plans is very positive. Despite the government endorsement towards Naima Industries and the reported K7Billion investment will mean initial revenue generation I suspect, will be through export sales with a small portion to flow back into the PNG domestic market due to the economics of scale and deriving a ROI
    Never the less Trukai is decisive to move ahead as outlined with mid to long term benefits towards the industry to be realised, advancing farming opportunities,down stream benefits for the people and the economic and environmental gains in developing the bio-agriculture sector.
    Well Done Trukai

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