North Fly Rubber is the Western Province’s leading exporting agribusiness. With further investment occurring, the sector has potential to grow further.

The development of sectors such as commercial agriculture and eco-tourism can provide a sustainable income for even Western Province’s most remote communities. In this context, the progress being registered by the smallholder rubber sector is nothing short of remarkable.

Cooperative structure

The industry is arranged on a cooperative model with North Fly Rubber owned by around 3,000 rubber growing families from the Lake Murray, Balimo, Suki and Fly River areas. Growers deliver their cup rubber to a designated collection point in their area where it is transported to the river port of Kiunga. There, it is processed in North Fly Rubber’s factory and converted into a form in which it can be exported to markets such as Europe, China and Australia.

Between 1995 and 2010 North Fly Rubber exported 10,606 tonnes of processed rubber, earning 34 million kina (US$15.3 million) in foreign exchange and providing 15.8 million kina (US$7.15 million) in income to its smallholders.

Ensuring viability

North Fly Rubber’s Chairman Warren Dutton, an experienced businessman and former PNG Government Cabinet Minister, notes with pride how clients in Germany specifically request the company’s signature PNGCR10 product over that of the competition.

Yet he is quick to point out that, regardless of quality, the industry would not be viable if it had not been for a long-term partnership between the company and Ok Tedi Mining Limited (OTML). Since 1992, North Fly Rubber has benefited from a freight subsidy arrangement with OTML (through its Ok Tedi Development Foundation) that enables it to overcome the tyranny of distance posed by its remote location. Under this agreement, OTML both subsidises the fuel for the vessels that bring the cup rubber to Kiunga, as well as providing transport on its own vessels from there to a convenient trans-shipment port (Port Moresby or Queensland, Australia).

Expanding the grower base

In 2003, PNG Sustainable Development Program (PNGSDP) formed a partnership with North Fly Rubber to help expand the scheme in the particularly remote Lake Murray area. Funding of around 15 million kina (US$7 million) was divided between a development grant and sustenance loans provided by PNG Microfinance. By the end of 2010, the Lake Murray Village Rubber project had seen 1,646 growers from 21 villages planting a total of 1,960 hectares of rubber trees.

The challenge is to see this success replicated in other designated ‘least developed’ areas of Western Province. As a result, it is on the verge of signing an agreement with North Fly Rubber to implement a major expansion of the smallholder rubber industry in the areas including Suki and Bituri in South Fly District, Balimo/Kawito in Middle Fly District and Agrim in North Fly District.

Under the Western Province Rubber Development Project, approximately 40 million kina (US$18.1 million) has been committed up to 2020 to facilitate the planting of 2,800 hectares of high-yielding rubber at the above sites, along with financing the associated rubber tree nurseries, processing infrastructure, extension effort and sustenance loan program to assist growers to establish one hectare blocks on their customary land.

Although this project will take some years to come to fruition, it will signal a major expansion of the province’s rubber sector.

Rubber: the perfect fit for the Western Province’s remote communities

Small-holder rubber is ideally suited to both the environment, the remoteness of the communities and the lifestyle of the people living in Western Province. Once mature, it provides a source of income all year round (provided the farmer is located near a buying depot).

Cup lump rubber requires no special post-harvest treatment. It can be stored under rudimentary conditions and sold months and even years later to a buyer for processing.

The industry is not reliant upon the establishment of high cost infrastructure as in the case of oil palm.

Rubber planting across Western Province

Kiunga (North Fly District) 4,267 hectares

Lake Murray (Middle Fly District) 2,261 hectares

Balimo (Middle Fly District) 1,510 hectares

Suki (South Fly District) 501 hectares

Oriomo Bituri (South Fly District) 183 hectares

Total rubber planted 8,721 hectares

NB• There are currently 9,482 growers in the province, with the average block size ranging from 0.2 to 4.0 hectare per grower. In future years, these growers will be assisted to develop a further two hectares each in order to achieve a viable family income from their rubber.

Source: Stephen Chartaris, Consultant

This article first published in PNG’s Western Province Business and Investment Guide 2012