Kumul Consolidated Holdings establishes agriculture joint venture in East Sepik


The holding company for Papua New Guinea’s state-owned enterprises, Kumul Consolidated Holdings, is making its first foray into agriculture, establishing a joint venture in East Sepik Province with Israel’s L R Group.

East Sepik Province

East Sepik Province

The K55 million Sepik Chicken, Grain and Cocoa Innovation joint project will be known as Sepik Agricultural Enterprises (SAE). It will be a subsidiary of Kumul Agriculture Ltd, which will own all future KCH agricultural investments.

‘KCH owns 75 per cent of Sepik Agricultural Enterprises; LR Group 25 per cent.’

The investment is part of KCH’s strategy to be more proactive and broader in its investments, rather than just being the holding company of PNG’s state-owned enterprise.

Venture partners

KCH owns 75 per cent of Sepik Agricultural Enterprises; LR Group 25 per cent.

KCH's Lutz Heim

KCH’s Lutz Heim

‘We are putting the capital up in those ratios,’ Lutz Heim, General Manager, Portfolio Management at KCH, tells Business Advantage PNG.

‘We’ve spent a lot of time getting the joint venture agreement right. The clear understanding is LR Group gets its money by dividend, just like we do. So, no management fees.

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‘LR Group is keen on Papua New Guinea because there’s huge potential,’ he explains.

‘Agriculture is what they do. We’ve got products that are potentially valuable on the world stage—if you think of cocoa, when is chocolate ever going to run out of fashion?

Higher yields

‘The venture was originally conceived as a cocoa venture because LR formed the view that cocoa was not being cultivated according to state-of-the-art standards.

‘LR Group also proposed a chicken and egg production.’

‘As experts in hydroponics, they believe that they can get yield increases of 400 to 500 per cent by applying irrigation and ‘fertigation’, which is supplying the nutrients through the water.

‘Something like 10,000 tonnes of cocoa is produced in the Sepik area but the soil in this particular part of the Sepik region is poor quality. However, because of LR’s technology, you can productively use this low grade soil.’

Some of the land that will be developed for the Sepik Sepik Chicken, Grain and Cocoa Innovation joint project. Credit: Lutz Heim.

Some of the land that will be developed for the Sepik Chicken, Grain and Cocoa Innovation joint project. Credit: Lutz Heim.

More than just cocoa

LR Group also proposed a chicken and egg production. The aim is to grow animal-quality grain locally, removing the need for imported feed. This allows for an earlier generation of revenue, which will improve the economics of the venture. It also will provide a much needed source of protein for people in the area.

‘Heim expects the Sepik chicken production venture to be up and running in 12 to 18 months.’

‘We’ve had our own independent expert run over the venture and he’s concluded it’s viable,’ says Heim.

‘LR Group already have a track record in PNG, with their market gardens at Nine Mile, near Port Moresby. And they have a chicken and egg venture at Koroba in Hela Province, a vegetable production facility in Enga, and they plan to commence dairy production at Ilimo Farm outside Moresby.’

Heim expects the Sepik chicken production venture to be up and running in 12 to 18 months.

Other projects to come?

The venture with LR Group is likely to be just the start of KCH’s foray into agribusiness. A key factor is KCH’s access to land.

‘KCH’s agricultural investment team is looking at other projects.’

‘We’ve got something like 6700 hectares of land available for this project and there’s potentially up to 100,000 hectares available for other uses,’ explains Heim.

Investment team

KCH’s agricultural investment team is looking at other projects, one of which could use KCH land at Cape Rodney in Central Province, home to a rubber factory and adjacent to significant landholder plantations of rubber trees.

‘We have something like 6000 hectares down there, which is not committed to rubber trees, but is arable land and is just sitting there.’

KCH has also commissioned a report on the viability of a tropical fruit project, growing fruits such as mangosteen and durian for export to China, ‘because our season is inverse to the growing season in China’.


  1. Mathew Akimin says

    I am in great support to the idea of Agriculture Growth, but our land must be registered first.

  2. Leo Gage says

    Good to see that Agriculture is being recognised, would like to see the CapeRodney Rubber projects resurrected

  3. Mark Rami says

    Most importantly, proceeds from LNG and other non-renewable resources are diverted to the agriculture sector where many of our people live (almost 80%) and this is highly commendable. What requires is for us citizens to make this a reality by participating in this economic growth area (through agriculture) meaningfully. Not only in cocoa but other agriculture areas like coffee where organically grown stuff are highly sought after by the fully grown western (anglo-american) markets.

  4. Nick Thompson CBE says

    Wish KCH all the best and glad the State is at last investing in Agriculture

  5. Robin Bangin says

    Hopefully the Agricultural sector has its own Bank with the DAL and mobile phone technology to access the 6.2million registered commodities farmers all over PNG to buy and sell using the Telco USSD protocol for cashless transactions from the rural ground up to exporters while the end supply chain of restaurants and Shops monitor their orders from anywhere in the world using their smart phones ,this may accelerate process..

  6. Mark Rami says

    This is a very important project creating economic opportunities like jobs for our rural people. I am sure cocoa will make a good return. Similarly, the project must also promote and support small-holders (our rural villagers) in the cocoa growing areas to supply them with premium prices. Most importantly, the cocoas must be grown organically and sustainable with accepted labor practices for handsome foreign currency returns. Emerging trends are that the global community is after organically and sustainable grown agriculture products.


    These Initiatives and track record of LR Group in such a short time are evidence that co-operation between
    complimenting parties are the way forward to rapidly grow sustainable business . With the expertise and access to acreage . The opportunities are endless …. Great relationship and success will be evident very quickly !! …

  8. Stanis Hulahau says

    As a citizen, I am delighted that project of such magnitude can be negotiated and developed in our country especially in the Yangoru/Sausia Electorate. I am sure various feasibility studies have been conducted including the economic welfare and benefits that the local people with gain from such ventures. Cocoa is one of the main cash crop of the province and such project will further boost production yields and generate adequate revenue with further fringe benefits.

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