Agricultural Transformation

× From May to December 2023, IFPRI implemented the 2023 PNG Rural Household Survey which was designed to understand rural livelihoods and welfare across different areas of PNG (Schmidt et al., 2024). Given the rural nature of the survey sample, almost all surveyed households depend on their own-farm production (predominantly starchy roots and tubers) to meet daily caloric needs. On average, households reported utilizing about 1.6 hectares of land for agriculture cultivation at the time of the survey. The survey collected a detailed account of the quantity of food types consumed by the household in order to estimate the average caloric intake per adult equivalent. Comparing the estimated caloric intake reported by surveyed households, with a recommended calorie intake suggests that only 45 per cent of individuals in surveyed households meet the recommended daily caloric intake for a lightly active individual. The survey also collected anthropometry data for children under five years of age and found that 36 percent of surveyed children were stunted in their growth. The 2023 Rural Household Survey represents an important effort in collecting a wide breadth of information about rural livelihoods. However, greater investments of in-depth data collection and analysis should be undertaken to examine specific components of PNG household livelihood strategies.

× If smallholder farming households in Papua New Guinea achieve higher crop productivity levels, progress will be made along several dimensions of the development vision for PNG – increasing GDP for the agricultural sector and the overall economy; driving growth, diversification, and transformation of local rural economies; improving food consumption; and reducing poverty. In this paper, we examine recent data on yields for the most important crops grown in PNG, assess what yields might be achieved based on productivity data from areas of Indonesia with similar growing conditions, and sketch where policy reforms could provide incentives and access to technologies to achieve higher crop yields by all farmers across PNG.

× In a recent working paper, we examine staple and cash crop production yields in Papua New Guinea (PNG). In doing so, we assess the yield gap (difference between the crop yields farmers commonly obtain and what they might realize with optimal inputs and crop management) for the main staple food crops in PNG. The yield gap for sweet potato is the smallest (1/4 - 1/3 less than attainable yields), while banana shows the largest yield gap at about ¾ less than what might be achieved under intensive cultivation. In addition, we compare PNG agricultural output with areas of similar growing conditions in Indonesia to provide insight into potential investments to further spur agricultural productivity in PNG. Finally, we assess current sector policies in PNG that aim to support agricultural development as an engine for economic growth.

× Two years after the onset of the COVID-19 pandemic, the health, economic, and social disruptions caused by this global crisis continue to evolve. The impacts of the pandemic are likely to endure for years to come, with poor, marginalized, and vulnerable groups the most affected.
In COVID-19 & Global Food Security: Two Years Later, the editors bring together contributions from new IFPRI research, blogs, and the CGIAR COVID-19 Hub to examine the pandemic’s effects on poverty, food security, nutrition, and health around the world. This volume presents key lessons learned on food security and food system resilience in 2020 and 2021 and assesses the effectiveness of policy responses to the crisis. Looking forward, the authors consider how the pandemic experience can inform both recovery and longer-term efforts to build more resilient food systems.

× During the early months of the COVID-19 pandemic, several major rice exporting countries, grappling with rising economic uncertainties, suspended rice exports to ensure adequate domestic supply. Viet Nam, Cambodia, and Myanmar temporarily halted rice exports, contributing to spikes in rice prices on international markets. By April 2020, rice prices had increased by over 35 percent in Thailand and 20 percent in Viet Nam (important benchmark countries for international rice price monitoring). International rice prices rose an average of 25 percent during March–September 2020 and remained high (on average 36 percent higher in March 2021) compared to pre-COVID-19 levels, despite the loosening of rice export restrictions and quarantine measures in the second half of 2020.

× The Nexus Project is a collaboration between IFPRI and its partners, including national statistical agencies and research institutions. Our aim is to improve the quality of social accounting matrices (SAMs) used for computable general equilibrium (CGE) modeling. The Nexus Project develops toolkits and establishes common data standards, procedures, and classification systems for constructing and updating national SAMs. This addresses the need for greater transparency and consistency in SAM construction to strengthen model-based research and policy analysis in developing countries. Nexus SAMs allow for more robust cross-country comparisons of national economic structure, especially agriculture-food systems. The Nexus Project’s guiding principles are that all data should be traceable to original sources and/or assumptions, and that all SAMs should be freely available online. Greater transparency and accessibility should facilitate more data validation and participation of the modeling community. Statistics are continuously being revised and errors are often only identified when data is used for analysis, and so we welcome your suggestions on how the SAMs can be improved to reflect new and/or better information.

× Policymakers in Papua New Guinea face difficult choices as to how best to promote economic growth and reduce poverty in the context of vast differences in technology and infrastructure across the country. Fluctuations in world prices of petroleum, minerals, and export crops complicate the management of the economy because of their large impacts on export earnings and government revenues, as well as household welfare. Moreover, other shocks, such as the Covid-19 pandemic that shut down major parts of the economies of PNG and the rest of the world, have far-reaching effects on various economic sectors, as well as the health and welfare of the population.
This paper presents an analysis of investment options in the agricultural sector and the effects of major economic shocks to the PNG economy using an economy-wide computable general equilibrium (CGE) model that provides estimates of the economic linkages between production, household incomes, consumption, investment, and trade. The model’s base data, a Social Accounting Matrix (SAM) for 2019, and many of the parameters are derived from the national accounts, household surveys and other data for PNG. It is important to realize, however, that even though the SAM and model structure provide a framework that guarantees a consistency of many of the assumptions, there remain many uncertainties in the data. Thus, the results presented here should not be interpreted as exact estimates, but only approximations of potential effects of policies and external shocks.
The plan of this paper is as follows. Chapter 2 provides an overview of agriculture and economic growth in PNG over the last two decades, highlighting the declining share of agriculture in GDP despite positive agricultural GDP growth rates and changes in the real exchange rate that have major implications for incentives in the economy. Chapter 3 then presents a summary of the economy-wide model used in the analysis. Details of the model are found in the annexes and in the references included in the paper. Design of the model simulations and model results are discussed in Chapter 4. These simulations cover various investments in agriculture and transport infrastructure, increases in world prices of petroleum and natural gas, price increases for agricultural exports and hypothetical carbon credits tied to a reduction in exports of forestry products. Chapter 5 concludes with a summary of the main findings, policy implications and suggested areas for further work.

× Papua New Guinea continues to encourage a policy focus on food and nutrition security. The PNG National Nutrition Policy (2016-2026) and Nutrition Strategic Action Plan (2018-2022) (NSAP) set a path to improve coordination, secure sufficient funding, and improve technical capacity of nutrition-focused pro gram implementation. As policy prioritizes improved nutrition outcomes, it is important to understand the cost that households face of securing a higher level of nutrition. Ensuring a healthy diet that meets nutrition standards is relatively expensive in PNG. The analysis presented in this paper, which uses detailed household food and non-food consumption data suggests that 4/5 of households in the survey sample live below the healthy diet poverty line (which sets a calorie threshold and defines healthy diet nutrition targets). That is, these households do not have the income available (or do not consume sufficient food and non-food goods) to meet their basic needs which includes securing a nutritious diet that meets food based die tary guidelines.

× Policy simulations utilizing an economy-wide model based on PNG national accounts and survey data highlight the importance of linkages between the agricultural and non-agricultural sectors of the PNG economy.
There are potentially major benefits of increased agricultural productivity for national income and urban households. To reduce rural poverty, however, transport and processing costs must be lowered, as well.
Even if only half of the increase in foreign exchange earnings from the 2022 world energy price shock is absorbed into the PNG economy, the real exchange rate appreciates by 13 percent, reducing incomes from export crops. However, increased domestic demand for non-tradable crops contributes to a 10 percent income gain for the rural poor.
Using a portion of increased oil and natural gas revenues to finance new investments in crop agriculture, processing and transport, provides even greater benefits by spurring real GDP growth and raising real household incomes by an additional 2 to 4 percentage points.
A hypothetical carbon credit arrangement in which PNG reduces deforestation in exchange for funds used to finance cash transfers to the poorest 20 percent of both urban and rural households could raise the incomes of these groups by about 13 percent.

× The welfare of Papua New Guinea’s (PNG’s) population depends on domestic agriculture productivity and stability. As of 2019, value-added from the agriculture, forestry, and fishing sectors totaled approximately 17 percent of GDP. However, when considering the downstream value chain activities directly related to the agriculture sector (e.g., agriculture processing, domestic food trade and transportation, and domestic food commodity sales), the larger agri-food system in PNG contributes over 25 percent to the country’s overall GDP (Pradesha and Dorosh, 2022). Maximizing efficiency throughout the entire agri-food value chain is critical to fostering greater economic growth and poverty reduction within the country. Growing a globally competitive agriculture sector also demands investments and capacity strengthening in mid-stream value chain operations such as product aggregation, transport logistics, packaging and processing, and handling. It is important that these investments also promote inclusive development that benefits both men and women value chain actors. Previous research suggests that where women are economically empowered and have access to decent jobs in lucrative nodes (i.e., activities) of value chains, households have higher incomes and are less likely to be poor (FAO, 2011). In PNG, despite women’s greater share of employment in agriculture (60 and 52 percent of women and men work in agriculture, respectively), women participate less in higher-value agricultural production and trade activities (Chang et al., 2016; Omot, Chambers, and Spriggs, 2013; World Bank, 2022).

× Maximizing efficiency throughout the entire agri-food value chain is critical to fostering greater economic growth and poverty reduction in Papua New Guinea (PNG). Investments in midstream value chain infrastructure (e.g., improved storage facilities, rural feeder roads, electricity, and cold storage transport) are crucial to strengthen linkages between producers and consumers. These investments should also promote inclusive development that benefits both men and women value chain actors. In this study, we analyzed three key value chains in Papua New Guinea—poultry, sweet potato, and fresh vegetables—aiming to guide policymakers and stakeholders toward ways to improve productivity, increase revenue, and bolster competitiveness and inclusiveness within the agriculture and livestock sectors.

× Understanding how the Papua New Guinea (PNG) agricultural economy and associated household consumption is affected by climate, market and other shocks requires attention to linkages and substitution effects across various products and the markets in which they are traded. In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG.
In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG. We have built the model to be flexible in order to explore different potential scenarios and then identify where and how households are most affected by an unexpected shock. The model is designed using region and country-level data sources that inform the structure of the PNG food economy, allowing for a data-driven evaluation of potential impacts on agricultural production, food prices, and food consumption. Thus, as PNG confronts different unexpected challenges within its agricultural economy, the model presented in this paper can be adapted to evaluate the potential impact and necessary response by geographic region of an unexpected economic shock on the food economy of the country.
We present ten simulations modeling the effects of various shocks on PNG’s economy. The first group of scenarios consider the effects of shocks to production of specific agricultural commodities including: 1) a decrease on maize and sorghum output due to Fall Armyworm; 2) reduction in pig production due to a potential outbreak of African Swine Fever; 3) decline in sweet potato production similar to the 2015/16 El Niño Southern Oscillation (ENSO) climate shock; and 4) a decline in poultry production due to COVID-19 restrictions on domestic mobility and trade. A synopsis of this report, which focuses on the COVID-19 related shocks on the PNG economy is also available online (Diao et al., 2020).1
The second group of simulations focus on COVID-19-related changes in international prices, increased marketing costs in international and domestic trade, and reductions in urban incomes. We simulate a 1) 30 percent increase in the price of imported rice, 2) a 30 percent decrease in world prices for major PNG agricultural exports, 3) higher trade transaction costs due to restrictions on the movement of people (traders) and goods given social distancing measures of COVID-19, and 4) potential economic recession causing urban household income to fall by 10 percent. Finally, the last simulation considers the combined effect of all COVID-19 related shocks combining the above scenarios into a single simulation.
A key result of the analysis is that urban households, especially the urban poor, are particularly vulnerable to shocks related to the Covid-19 pandemic. Lower economic activity in urban areas (assumed to reduce urban non-agricultural incomes by 10 percent), increases in marketing costs due to domestic trade disruptions, and 30 percent higher imported rice prices combine to lower urban incomes by almost 15 percent for both poor and non-poor urban households. Urban poor households, however, suffer the largest drop in calorie consumption - 19.8 percent, compared to a 15.8 percent decline for urban non-poor households. Rural households are much less affected by the Covid-19 related shocks modeled in these simulations. Rural household incomes, affected mainly by reduced urban demand and market disruptions, fall by only about four percent. Nonetheless, calorie consumption for the rural poor and non-poor falls by 5.5 and 4.2 percent, respectively.

× COVID-19 has impacted urban and rural households throughout Papua New Guinea (PNG). Looking ahead, policymakers and development practitioners must continue to mitigate COVID-19 impacts on PNG households, as well as monitor other potential agricultural production shocks (such as El Niño, African Swine Fever, etc.) that could substantially decrease household income and food consumption.

× Between May and July 2018, the International Food Policy Research Institute (IFPRI) implemented a household-level survey in four areas of PNG: the Autonomous Region of Bougainville (South Bougainville near Buin), Madang (Middle Ramu near Kwanga Station), East Sepik (near Maprik) and West Sepik (near Nuku). The survey investigated the food systems of rural households and how they assure sufficient food to meet the nutritional needs of their household members. The household questionnaire for the survey focused on agricultural production systems and health outcomes and included modules on: production; consumption and expenditure; labor activities (farm and non-farm); nutritional status; and the experience of the survey households with recent agricultural production or other shocks that impacted their livelihoods. This report provides descriptive results from the survey and discusses key indicators and actions to improve agricultural systems and nutrition in PNG.

× PNG’s agricultural research expenditure declined steadily during 2013–2017 as the combined result of reductions in both donor and government funding. In 2017, PNG invested just 0.31 percent of its AgGDP in agricultural research. In contrast to spending, agricultural researcher numbers rose progressively during 2013–2017 to reach 146 FTEs in total. The country’s research agencies lack the critical mass of highly qualified researchers and accompanying infrastructure needed to address the multidisciplinary challenges facing the agricultural sector. Many critical research areas remain overlooked.

× The commercialization of agricultur has, in many diverse circumstances, led both to an increase in household income and to changes in the way household resources are organized to earn that income, Have these changes meant that food intakes are more nutritions and that health and sanitation conditions are improved? This chapter addresses three central questions: (1) to what extent are increments in income spent on nonfood items, in particular, health-related items; (2) to what extent are increments in income spent on food, and (controlling income) dows the switch to commercial production alter the marginal propensities to spend on food; and (3) to what extent do increments in food expenditures lead to greater calorie intakes, both at the household level and at the individual preschooler level?

× The choice between subsistence food crops, on the one hand, and cash crops, especially nonfood cash crops predominantly meant for exports, on the other hand, is a subject of considerable debate among policy makers as well as development specialists. The debate raises issues not only at the level of farming households but also at the level of national and international policies, including macroeconomic policies such as trade and exchange rate policies. This chapter reviews and focuses on those aspects of principal relevance in the context of an overall agrcultural development strategy and food security.

× One of the most contentious issues in the cash crop/food crop debate revolves around the impact of commercialization of agriculture on the health and nutritional status of women and children/ This chaper examines the effects of commercialization of agriculture on preschoolers' health nad nutritional status. The chapter also assesses the effects on women along the lines of the conceptual ramework described in chapter 2.

× The three chapters in Part III report synthesis is findings from the microlevel IFPRI research in The Gambia, Guatemala, Kenya, the Philippines, and Rwanda, as well as from the other case studies presented in Part V. Any attempt to synthesize and generalize on the basis of the detailed case studies runs the risk of excessively extrapolating from special circumstances and of losing insights gained from these case studies, whose strengths are the detailed~assessments of the commercialization-production-income-consumption-nutrition chain and the important feedbacks from these elements. This chapter, on the first elements of the commercialization chain, is therefore to be seen in the context of the following two chapters, and all the three synthesis chapters together are to be seen in the context of the rich insights from the individual studies discussed later.

× In this chapter, the basic theoretical relationships and definitional issues related to the commercialization of agriculture and described. Simply speaking, cash crops can be defined as crops for sale. The listing of typical agricultural processing enterprises in chapter 9 gives a rough overview of cash crops (also, see von Braun and Kennedy 1986). Yet, commercialization of agriculture as a process and a characteristic of agricultural change is more than whether or not a cash crop is present to a certain extent in a production system. Commercialization of subsistence agriculture and take many different forms.