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15. VCA4D Papua New Guinea Cocoa March 2019 V.3.Pdf 6.16 MB Value Chain Analysis for Development (VCA4D) is a tool funded by the European Commission / DEVCO and is implemented in partnership with Agrinatura. Agrinatura (http://agrinatura-eu.eu) is the European Alliance of Universities and Research Centers involved in agricultural research and capacity building for development. The information and knowledge produced through the value chain studies are intended to support the Delegations of the European Union and their partners in improving policy dialogue, investing in value chains and better understanding the changes linked to their actions VCA4D uses a systematic methodological framework for analysing value chains in agriculture, livestock, fishery, aquaculture and agroforestry. More information including reports and communication material can be found at: https://europa.eu/capacity4dev/value-chain-analysis- for-development-vca4d- Team Composition Economist: Guillaume Lescuyer Social expert: Ivo Syndicus Environmental expert: Roel Helmes National expert: William Kerua The report was produced through the financial support of the European Union. Its content is the sole responsibility of its authors and does not necessarily reflect the views of the European Union. The report has been realised within a project financed by the European Union (VCA4D CTR 2016/375-804). Citation of this report: Lescuyer, G., Helmes, R., Kerua, W., Syndicus, I., 2018. Cocoa Value Chain Analysis in Papua New Guinea. Report for the European Union, DG-DEVCO. Value Chain Analysis for Development Project (VCA4D CTR 2016/375-804), 144p + annexes. TABLE OF CONTENTS TABLE OF CONTENTS ...................................................................................................................... 3 ACKNOWLEDGMENTS ..................................................................................................................... 8 ACRONYMS ..................................................................................................................................... 9 EXECUTIVE SUMMARY ................................................................................................................... 10 1.1 IS THE PNG COCOA CHAIN SUSTAINABLE? .............................................................................................. 13 1.1.1 FQ1. What is the contribution of the Value Chain to economic growth? .......................................... 13 1.1.2 FQ2. Is this economic growth inclusive? ....................................................................................... 15 1.1.3 FQ3. Is the PNG cocoa value chain socially sustainable? ................................................................ 17 1.1.4 FQ4. Is the PNG cocoa value chain environmentally sustainable? ................................................. 19 1.2 WHAT AVENUES FOR SUSTAINABLE DEVELOPMENT OF THE COCOA INDUSTRY IN PNG? ................................ 21 2. THE FUNCTIONAL ANALYSIS - INTRODUCTION – OBJECTIVES AND APPROACH OF THE COCOA VALUE CHAIN ANALYSIS IN PAPUA NEW GUINEA ........................................................................... 23 2.1 THE VCA4D APPROACH .................................................................................................................... 23 2.2 STANDARD ANALYTICAL METHODS ...................................................................................................... 25 2.2.1 Economic analysis ...................................................................................................................... 25 2.2.2 Social analysis ............................................................................................................................ 25 2.2.3 Environmental analysis .............................................................................................................. 26 2.3 DATA COLLECTION ............................................................................................................................ 27 2.4 DATA GAPS AND UNCERTAINTIES ......................................................................................................... 30 3. THE IMPORTANCE OF THE AGRICULTURAL SECTOR IN PNG .................................................... 32 3.1 THE MAIN OCCUPATION OF PNG POPULATION ....................................................................................... 32 3.2 A REVENUE-GENERATING SECTOR ........................................................................................................ 32 3.3 MEDIUM AND LONG TERM EXPECTATIONS ............................................................................................. 34 4. POLICIES AND DYNAMICS FOR COCOA PRODUCTION IN PNG .................................................. 35 4.1 STATE OF THE COCOA INDUSTRY IN THE 2000S ...................................................................................... 35 4.2 DECLINING (QUANTITY AND QUALITY) TRENDS ....................................................................................... 36 4.3 EVERLASTING HIGH EXPECTATIONS FOR THE COCOA INDUSTRY .................................................................. 37 5. FUNCTIONAL ANALYSIS ......................................................................................................... 39 5.1 THE NECESSARY SIMPLIFICATION OF THE COCOA VALUE CHAIN IN PNG ...................................................... 39 5.2 UPSTREAM SUPPLIERS ....................................................................................................................... 41 5.3 DIFFERENTIATED PRODUCTION STRATEGIES ........................................................................................... 41 5.3.1 Low-input versus high intensity farming strategies ...................................................................... 41 5.3.2 Dry beans versus wet beans production ....................................................................................... 44 5.3.3 Certified versus not certified cocoa .............................................................................................. 44 5.3.4 Categories of dry and wet beans producers in PNG ...................................................................... 45 5.4 PRODUCTION OF DRY BEANS BY THE BUSINESS-ORIENTED SMALLHOLDERS ................................................. 46 5.5 PRODUCTION OF DRY BEANS BY THE SUBSISTENCE-ORIENTED PRODUCERS ................................................. 48 5.6 PRIMARY PRODUCTION OF WET BEANS BY THE SUBSISTENCE-ORIENTED PRODUCERS .................................... 50 5.7 FERMENTARIES (WITH AND WITHOUT CERTIFICATION COMMITMENTS) ........................................................ 51 5.8 EXPORTERS ...................................................................................................................................... 52 5.9 GOVERNANCE OF THE COCOA CHAIN IN PNG ......................................................................................... 54 6. ECONOMIC ANALYSIS OF THE COCOA VALUE CHAIN ............................................................... 57 6.1 MICRO-ECONOMIC ANALYSIS OF THE STAKEHOLDERS’ OPERATING ACCOUNTS ............................................. 57 3 6.1.1 Primary production of wet beans by subsistence-oriented producers .............................................. 57 6.1.2 Production of dry beans by subsistence-oriented producers .......................................................... 61 6.1.3 Production of dry beans by business-oriented smallholders .......................................................... 63 6.1.4 Fermentaries (with or without certification commitments) ........................................................... 66 6.1.5 Exporters (with or without certification commitments) ................................................................. 69 6.2 MACRO-ECONOMIC ANALYSIS OF THE COCOA VALUE CHAIN ...................................................................... 73 6.2.1 Contribution to the PNG economy ................................................................................................ 73 6.2.2 Impacts on macro-economic aggregates ...................................................................................... 79 7. SOCIAL ANALYSIS .................................................................................................................. 82 7.1 SOCIAL SUSTAINABILITY OF THE VALUE CHAIN ........................................................................................ 82 7.1.1 Working conditions & labour ....................................................................................................... 82 7.1.2 Labour rights .............................................................................................................................. 82 7.1.3 Child Labour ............................................................................................................................... 83 7.1.4 Job safety ................................................................................................................................... 83 7.1.5 Attractiveness ............................................................................................................................ 84 7.1.6 Land and water rights................................................................................................................. 88 7.1.7 Gender equality .......................................................................................................................... 92 7.1.8 Food and nutrition security ........................................................................................................
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