The Manufacturers’ Council of Papua New Guinea has described the ban on some uncooked poultry products from Australia as ‘premature’, and has called for the ban to be lifted.
The Manufacturers’ Council’s Chey Scovell
PNG’s trade minister imposed the ban last month citing ‘the danger of campylobacter’, a bacteria which can cause food poisoning, but one which is killed through cooking.
The ban applies to lean chicken meat, known as mechanically deboned meat (MDM) and mechanically separated meat (MSM), ‘which have become a staple and important source of protein’ for consumers, according to PNGMC CEO, Chey Scovell.
‘There are no biosecurity, economic or socio-economic considerations to justify the inclusion of chicken MDM/MSM in the import ban and it should be lifted on these products,’ he told Business Advantage PNG.
Scovell says PNG’s smallgoods industry contends there is no biosecurity risk as MDM products are handled when frozen and cooked when they make their products.
‘Given the presence of campylobacter in our own flocks and the controls in place for the handling of MDM/MSM, there should be an immediate distinction drawn between chicken MDM/MSM and other uncooked poultry products.’
Job losses
PNG chickens. Credit: Tablebirds
If it stands, the current ban could lead to the loss of 100 jobs within weeks, he says.
He adds the bans are ‘premature’, given the Agriculture Minister is awaiting two reports on the industry, due at the end of the year.
As we reported last month, poultry producers in Papua New Guinea have welcomed the ban, saying it will strengthen PNG’s biosecurity regime.
Meanwhile, Mainland Holdings Chairman William Lamur says the company is ready to export uncooked poultry products as the company’s plants are now meeting international standards in food safety and hazard analysis assessment.
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Free market competition is an economic theory that has not worked well in practice but only in theory as not all players in the market are better off. PNG has a growing and thriving market for poultry products which has the potential to be met by PNG local suppliers if they are given the opportunity through better training, farm management techniques and other valuable coaching required to operate a successful poultry farm. Currently, the market for chicken is an oligopoly market where you have three major chicken producers (Niugini Table Birds, Zenag and Australian Chicken Producers). In such market, there is no real competition and any new entrant (local PNG chicken producers) into the market will encounter stiff challenges as market information including price, quantity of poultry products demanded etc..remains the preserve of the oligopolies. Furthermore, the above oligopolies are more profitable because of economies of scale and would want to remain as the market leader. A shift in Government policy, such as the current ban will be bad for business and will certainly meet stiff resistance from them. As reported by ABC http://www.abc.net.au/news/2015-04-28/poultry-ban-png/6427952# dated 28 April 2015, The Australian Department of Agriculture said poultry exports to PNG in 2013-14 were worth $20.5 million, making it the highest value export market for Australian chicken products. It is apparent that there is very slim competition in the poultry market in PNG. For the poultry consumers in the country, they take the price as given because it is not determined by free market competition but by the oligopolies who set the price and quantity produced to meet the demand. If PNG wants its citizens to participate in economic development (poultry), it should keep the ban and encourage all interested chicken farmers to compete through the SME policies. The government through the PNG Department of Agriculture and PNG Manufacturers Council together with NAQIA and relevant stakeholders should come up with a framework to regulate the industry to international standards so PNG poultry producers can meet those standards. Other emerging economies such as South Korea, Malaysia, Singapore, were able to develop because they were able to fully explore their potential in the areas that they have comparative advantage. I think PNG has comparative advantage in producing poultry products to supply her demand. Let this ban be an opportunity where the country explore its potential to produce and supply poultry products. Yes, consumers will be affected in the short run by this ban, but the long run benefits and economic gains are high.
Competition has been proven in recent years to have major economic benefits for PNG. Australia’s food production is a proven quality product recognised as being amongst the safest in the World. There is no doubt that importing food from around the World is an impediment on PNG foreign exchange and the economy. PNG should and can in time produce nearly all its own food but this is not really happening and needs training, support and development plus hard work. Mainland Holdings and the Israeli agro farm at 9 Mile have shown that they can achieve the International Standards and are able to export food. Training and management are the key ingredients that have been lacking in the past, again together with hard work. This does not exclude the smaller farmers who should also be encouraged to meet quality standards and increase production together with the improvement of infrastructure. Import substitution by producing food within PNG will not be helped by protectionist laws. Competition has been shown in PNG to be the way forward. In time PNG can be the food bowl for Australia for many products because it has plenty of rich soil and willing overseas aid assistance in agricultural training.
I think this statement by the PNG Manufactures Council is not convincing as it does not provide a holistic picture of the industry and why MDM/MSM should not be produced in PNG using international best practice? Firstly, it did not provide citizens with the information on the market size (statistics on the demand) for MDM/MSM in PNG. It just say MDM/MSM have become a staple and important source of protein’ for consumers in PNG. How was that conclusion reached in comparison with the many other traditional and existing source of protein in the country? What is the yearly revenue generation from this industry to PNG economy compared to other chicken products? How much PNG Kina is spend on a monthly basis to import MDM and MSM from Australia and what will be the estimated cost of providing the same product if it were to be produced in PNG? I believe the PNG Manufacturers Council should do more by looking at the option of producing MDM/MSM in PNG as that will create additional employment for PNG chicken farmers and maintain production of MDM/MSM while adding value to the chicken industry and retaining monthly PNG Kina that is always spend on importing MDM and MSM from Australia. I am sure the PNG Manufacturing Council can work out a strategy to deal with this issue by consulting with all relevant stakeholders including Zenag, Niugini Table Birds and the Department of Agriculture. Yes consumers will be affected in the short run but in the long run, PNG will reap the benefits. I challenge the PNG Manufacturing Council to come out of your comfort zones and support this government initiative.