Non-Mining Revenue Sources for Bougainville
Patrick Nomos | 1/2/2020
(Photo: Unlodading tuna from a purse seine fishing vessel, Majuro, Marshall Islands)
Most of the mainstream assessments of the economic future of a post-referendum Bougainville focus almost exclusively on the proposed restarting of the Panguna copper and gold mine that exploited non-renewable mineral resources. This is despite this mining project's central role in precipitating the Bougainville Crisis and its ongoing divisive effect among Panguna land-owners. Alternative revenue sources, such as expertly managed tuna fisheries and cash-crop projects based on renewable resources, hardly rate a mention.
Bougainville Copper Limited (BCL), a former subsidiary of the global mining giant Rio Tinto, that developed the Panguna mine, recently estimated that it would cost USD6 billion in infrastructure spending to restart the mine. This massive expenditure will be required before any profit may be generated, possibly six years or more after the restart commences. This is hardly a sound basis for generating income and underwriting Bougainville's independence.
In August, 2019, Nelson Atip Nema, an economist based at The University of Papua New Guinea (UPNG), estimated that at least 30 per cent of Papua New Guinea's (PNG) annual tuna catch is taken in maritime waters associated with Bougainville, which would value the catch at over USD333 million/year. This revenue could be obtained without any investment by Bougainville in sea or land-based infrastructure, because the tuna fishing is carried out by Distant Water Fishing Nation (DWFN) fleets, including those from Japan, Taiwan, China, USA, The Philippines and the European Union.
Since 1992 the Pacific Island countries of Solomon Islands, Tuvalu, Kiribati, Marshall Islands, Papua New Guinea, Nauru, Federated States of Micronesia and Palau, commonly referred to as the Parties to the Nauru Agreement (PNA), have worked collaboratively to manage the tuna stocks within their respective national waters. Papua New Guinea is a leading member of the PNA.
The collaborative arrangement under which these countries have worked is the "Palau Arrangement for the Management of the Western and Central Pacific Purse Seine Fishery", or Palau Arrangement. The Palau Arrangement is a multilateral treaty governing the operation of purse seine fishing vessels in the national waters of the PNA. Its primary purpose is to place a limit on the number of vessels operating in PNA waters.
This limit is achieved through a measure known as the Vessel Day Scheme (VDS), under which tuna vessel owners can purchase and trade days fishing at sea in places subject to the PNA. The purpose of the VDS is to constrain and reduce catches of target tuna species, and increase the rate of return from tuna fishing activities through access fees paid by DWFNs. The total allocation of fishing days is set and apportioned between Pacific island members for one-year periods up to three years in advance .
For Bougainville to enjoy the benefits of becoming a PNA member, it must first meet the membership requirements, one of which may be that Bougainville is an independent or semi-autonomous State. If Bougainville's leaders haven't already investigated the possibility of applying for membership of the PNA, and the Pacific Islands Forum Fisheries Agency (FFA), they should do so as soon as possible.
(Photo: Young cocoa tree, Buka Island, Autonomous Region of Bougainville)
A Bougainvillean writer, Leonard Fong Roka, has made a compelling case that Bougainville's future economic success must start with focused development of an agricultural base. He states, "The Bougainville government and people should invest in(to) any cash crop that the land of Bougainville can support.....two such crops....are cocoa and copra" .
In the 1980s, Bougainville produced more cocoa than any other PNG province. An annual average of about 15,600 tonnes/year was produced in Bougainville during the ten years prior to the Bougainville Crisis (1979-1989) . Alongside copra (production in excess of 20,000 tonnes/year for the same period), this was the backbone of a thriving rural economy, providing critical income for thousands of people. However, the onset of Bougainville Crisis in 1989 resulted in the production of cocoa and copra grinding to a halt.
After a limited revival following the signing of the Bougainville Peace Agreement in 2001, the cocoa industry has stagnated. Aging cocoa trees have produced poor yields and an insect pest known as cocoa pod borer (CPB) has ravaged the remaining crops. Cocoa production in Bougainville fell by more than 41 percent from 2009, to reach its lowest level since the Bougainville Crisis, driven by the loss of valuable skills and knowledge. Many young villagers didn't know how to plant and cultivate cocoa crops, so it was done by those who had already learned how to tend cocoa, the elder community members.
From 2011-2016 the Productive Partnerships in Agriculture Project (PPAP), supported by the World Bank, International Fund for Agricultural Development and the European Union, engaged farmer groups and the cocoa industry to help rejuvenate growers' cocoa plantations. This project restored skills, tackled the CPB and helped to revive interest in cocoa production.
In 2014, Bougainvillean cocoa farmers began to see the project's full impact. As of May 2014, almost a million cocoa trees had been rehabilitated or planted, benefiting thousands of smallholder cocoa farmers and their families .
According to the Pacific Horticultural and Agricultural Market Access (PHAMA) Program , the traditional coconut industry in PNG, comprising copra, copra oil and copra meal, has been contracting since 1980. The decline of the industry can be attributed to five factors: (1) The decline of the coconut plantation sector (largely expatriate owned) after the introduction of the Plantation Redistribution Scheme in 1974; (2) The unsustainability of the Copra Price Stabilisation Scheme in the mid to late 1980s; (3) Increasing awareness and price sensitivity of smallholder farmers from the 1980s onwards whose return on investment has declined since then; (4) The emergence of substitute oils on the market together with some adverse publicity that copra oil received about its effect on human health and; (5) The problems of the Copra Marketing Board (CMB) after PNG gained political independence in 1975.
Bougainville's coconut industry has largely followed this trend, though reliable data is difficult to obtain since much of Bougainville's copra is shipped to Rabaul, the nearest export port. According to the Kokonas Indastri Korporesen (KIK), Bougainville produced 30,953 tonnes of copra in 2017.
The production of Virgin Coconut Oil (VCO) and related products (such as soap, body oils, desiccated coconut, stock feed, bio-fuel etc.) has emerged as a viable alternative to copra production in some areas, including Bougainville. PNG's VCO production more than doubled from about 56 tonnes in 2011 to 113 tonnes in 2015, and the same trend can be observed for other related coconut oil products.
The Pristine 101 Coconut Mill at Buka Town, Bougainville started producing VCO in 2015 and exporting packaged products in the same year. It is based at the Buka wharf in premises previously occupied by the CMB. The KIK has predicted a promising future for Bougainville's coconut industry with a focus on downstream processing. There is a small-to-medium sized enterprise based at Loloho, Bougainville, supported by the KIK, producing VCO, body lotions and cosmetics for local and international markets .
In the period between the recent referendum and whatever is agreed about Bougainville's future during forthcoming negotiations with PNG, it is logical to recognise that Bougainville's financial revenue will depend on a variety of sources, possibly including Panguna mine revenue. To remain fixated on the idea that Bougainville's economy will be exclusively dependent on Panguna mine revenue is short-sighted and problematic.
Photo: Mature coconut trees, Buka Island