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Trukai investing tens of millions to produce PNG grown rice

Last month, Agriculture Minister Tommy Tomscoll told rice companies to start investing and producing rice in country. But, as the CEO of the country’s dominant producer tells Business Advantage PNG, Trukai has already committed to invest tens of millions of kina in rice production.

The Papua New Guinea government’s new national rice policy focuses on local rice farming, reducing imports and enhancing food security, but the country’s dominant rice player has had similar plans for some time.

Rice is now a stronger competition against local food staples, says Trukai’s CEO Greg Worthington-Eyre, and as a result the company has plans for developing a huge 6,000 hectare rice plantation in Central Province.

‘If you’re in a coastal community, rice is competing with seafood. If you’re in the Highlands, rice is competing with a very high content of vegetables, particularly kau kau and taro.

‘As an alternative, it’s easier to cook. It’s good menu filler, and with our vitamin enrichment program, it also provides additional nutrition, beyond a vegetable diet with other proteins that locals grow.’

Lae-based Trukai is two thirds owned by Australia’s SunRice, and one-third PNG-owned.

It has operated in PNG for more than 40 years and employs more than 1,000 Papua New Guineans.

Its local assets include a 200,000 tonne-plus rice mill and packing plant; 12 national supply centres servicing more than 80 wholesale and retail distributors; a 2,300-hectare Erap cattle farm, where it carries out an artificial insemination program to improve cattle genetics for smallholder cattle producers (this has resulted in an elite nucleus cattle herd, providing a breeding ground for the PNG beef market). It also operates the Gabmatzum Rice Research Farm near Nadzab, outside Lae.

Growth

‘Trukai has a commanding market share, and although the market has been growing at about 5% to 5.5% per annum over the last few years, we are seeing current growth at about 3.8% and we see that contracting to closer to 3%,’ Worthington-Eyre tells Business Advantage PNG.

‘We see growth continuing between 3-3.5% in the immediate term,’ he says.

With the population growth at about 2.1%, consumption is a bright spot in the economy.

‘The market itself is expanding primarily because of access to rice that we provide through our distribution network,’ he says.

‘We have 12 sites across the country. As we provide access into new areas, we find consumption grows.

‘In PNG, rice becomes more a part of the daily meal, as people can afford it. Hence the market is growing ahead of population. We don’t see that really changing in the foreseeable future.’

Home-grown rice plans

Trukai imports all its rice from Australia and, at times, other countries and Worthington-Eyre estimates about 30,000 tons of rice is currently grown in-country for local consumption. But that’s about to change.

Well before the national government announced its new rice policy, Trukai had committed itself to investing millions of kina to establish a 6,000 hectare plantation in Central province within five years, along with supporting key plantation projects in West New Britain, Markham Valley and the Highlands.

‘We will start with about 1,500 hectares in the next three years in Central Province,’ says Worthingt0n-Eyre.

‘We believe that from our research on varietal testing that we will be able to achieve similar to south-east Asian yields, similar to smallholder networks in say Thailand or Vietnam, which is about three to four tonnes per hectare.’

The plan would see some 18,000 tons of locally-grown rice produced initially by Trukai and some of that rice may be available for export, although the focus is on food security for PNG first. As this expands, options on trading will come into play.

‘With other buying programs we are establishing with some of the other farmers, and our desire to set up a rice growing and development and purchasing agreement with all the Highland provincial governments, plus the Morobe government, we believe we can get to a significant proportion of local rice packaged and sold within the next five years,’ Worthingt0n-Eyre tells Business Advantage PNG.

‘Now the interesting thing is that level of production would be in addition to the 30,000 tonne of rice already locally produced. And, to enable small farmers to participate in the program, Trukai has a mobile rice mill on a semi-trailer to enable milling as close as possible to the point of harvest.

Economic barometer

Lae is home to a variety of food and other manufacturers and, as one of the province’s largest employers, Trukai is regarded as a barometer of the health of manufacturing.

‘Companies look to Trukai to give them a benchmark on how the market might be moving and that’s been reported to me through talks with other MDs and CEOs, not just our competitors,’ says Worthington-Eyre. ‘So, we’re in a fortunate situation where we are producing a staple product and a good barometer of how the economy is going.

‘Lae itself continues to do well, but other areas such as Port Moresby and outlying areas in Central Province, Gulf Province, Northern Province, there are some issues around consumption which indicate the economy is starting to slow, probably ahead of the rest of the country as well.’

This article was kindly provided by www.businessadvantagepng.com

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