Rice growers face loss of $80m PNG market

SYDNEY, Australia --- Australia's rice growers are facing the threatened loss of their biggest overseas market, in Papua New Guinea -- worth about AUD$80 million a year, almost a quarter of the entire industry's earnings.

The government will be quizzing PNG's ministers at the annual Joint Ministerial Forum, in Canberra on Wednesday, about the prospect of Indonesia supplanting Australia as the country's core rice supplier.

For decades, debate has raged within PNG about whether the country should invest in its own rice industry to replace imports.

Although rice has become a staple of the diet, it remains far behind traditional carbohydrates such as sweet potato and taro, and pilot projects and village plots have not yet expanded domestic production beyond a small fraction of imports.

The PNG government, however, decided to ramp up import-substitution plans, inviting in June expressions of interest in a AUD$2 billion, 100,000ha project in Central province, the area around Port Moresby.

The winner -- against competitors including Trukai, the company through which Australian rice growers market and also produce, on a small scale, in PNG -- was Naima Agroindustry.

This company is seeking a 20-year tax holiday, and the imposition of an 80 per cent duty on all rice that it does not import -- boosting consumer prices by an estimated 60 per cent and effectively locking Trukai and the other major suppliers, two Thai brands and a Vietnamese brand, out of the PNG market.

Naima is a subsidiary of Indonesia-based Mulia, a company whose principal is Djoko Tjandra.

Tjandra, 62, was last year given citizenship in PNG, where he is now known as Joe Chan, at a secret ceremony, after fleeing by private jet from Jakarta when he had been ordered to appear before a court there in a corruption case for which he was jailed in absentia for two years.

His project is supported by Agriculture Minister Puka Temu and Transport Minister Ano Pala, both of whose constituencies are in Central province.

But influential National Planning Minister Charles Abel said last week that while the government encouraged locally produced rice, "arrangements should never undermine genuine competition".

He said that PNG had learned from past monopoly deals involving cement, fuel, canned tuna and sugar that "the proposed benefits from such arrangements failed to materialise, or the costs far outweighed the benefits".

The PNG National Research Institute has said that the proposed creation of a semi-monopoly would cause a price hike for rice products and put most existing market players out of business.

Trukai, which is the foremost of such players, employs about 1000 people, and has invested about $87m in PNG.