Fair Trade in Papua New Guinea



A Fair Price for Organic, Wild Harvest Coconuts

Fairtrade announced a their schedule of pricing for coconuts in Oceana in November 2012. Prior to that Niugini Organics had been requested by Fairtrade International to be a consultative partner in determining what this should be. We are proud that the current schedule closely mirrors the structure that Niugini Organics submitted and that our pricing structure for the purchase of coconuts exceeds that set by Fairtrade.

 

Paying Farmers Direct


There appears to be some ambiguity within the Fair-Trade movement as to whom the fair-trade pricing actually gets paid to.  We can state categorically that Niugini Organics pays a price in local PNG Kina above the US Dollar Fairtrade schedule for both Organically grown coconuts  as well as the Fairtrade Premium.  We pay this amount DIRECTLY to FARMERS.

 

Mutual Respect

Niugini Organics relationship with our village farmers is one based on mutual respect and mutual needs. We can process coconuts into a high value end product and therefore can afford to share the returns with those farmers. We require high quality certified organic nuts that are harvested regularly to be delivered to the processing plant to meet processing demand. Paying (and receiving) a constant high price, isn’t just a feel good exercise, it actually makes good economic sense.

 

Co-ordination

Niugini Organics employs a Wild Harvest Farmer Coordinator. She takes on new farmers, inspects their land and plots their boundaries by GPS. She explains why farmers must abide by the Organic Wild Harvest Standard and helps them improve their yields by organic farming methods.

 

Local Company


Niugini Organics has been in business producing coconut oil and coconut soap since 1994. It is a 100% locally owned company that integrates the processing of coconuts from farm to finished products on its own premises and is highly respected as a major employer and major income provider to the local farmers.

 

Community


We take our corporate citizenship obligations seriously. Managing Director Dennis Hill has served on the board of management of the local Kerevat Rural Hospital for 5 years, and was Chairman for 3 years. Our workshop frequently helps out with repairs for the hospital.  

Decline and rebirth of the coconut industry

The Tolai peoples of the Gazelle Peninsula in East New Britain have embraced the cash economy even before the area became a German colony. White traders bought coconuts from villagers and dried the coconut meat on smoky fires to making what is known as copra. The villagers in turn purchased metal tools, fabrics and items such as fishing lines and hooks.

Coconut oil was in high demand in Europe for the production of soaps, lighting oils and later on the manufacture of oleochemicals such as surfactants used in detergents.

It wasn’t long before the Tolai built their own driers and made their own copra. In 1955 the Australian trading company WR Carpenter built what became the largest  vegetable oil mill in the southern hemisphere in the thriving town of Rabaul. This symbiosis of village farmers and foreign trading company made the Tolai the envy of village farmers throughout the Papua New Guina.

Since the heydays of the 1960’s the prices of not just coconut oil but most other tropical commodities, including those grown throughout Papua New Guinea such as cocoa, coffee and spices, have continued a downward spiral in real terms (US dollars adjusted for inflation).  

A constant round of speculation in the international futures markets results in wild swings in prices. Copra, which once funded a comfortable self-sufficient lifestyle is simply not worth producing these days except for those short windows of opportunity when the buyers get nervous about world stocks and briefly send the prices up. An international well funded and well orchestrated campaign by the producers and processors of alternative oil-seeds over 50 years successfully smeared the reputation of coconut oil and human health to the point where it was cast as a pariah. And while Virgin Coconut Oil has emerged successfully as the latest new thing, it is a highly competitive market and it will take many years before demand  will reach the levels where coconut farming can again be viable for all farmers not just the few fortunate now to be associated with successful processors and exporters and coconut can again be restored to it’s rightful position as the healthiest and tastiest of all plant oils.

Copra making is hard physical work. The nuts are chopped open with an axe, the flesh is cut out with a knife and firewood must be brought in to keep the fires going for a week. Most coconut owners these days have realised that by the time they hire a drier and then a vehicle so that they can sell the product, they are already out of pocket. That’s with no allowance for the hard physical work involved.

When the Rabaul Copra oil mill suffered a fire in 2012 and the owners since deemed it not worth re-opening a final blow to the copra industry was struck.

Most coconuts now simply fall to the ground and germinate or rot.  Niugini Organics has developed a new future for the coconut industry. As an export industry, that represents new money coming into the area which benefits the whole economy. All of our products are produced and packed into their final form in our factory in Kerevat, That means straight out of the carton and onto the Supermarket shelf in the destination country. And that represents the maximum value adding taking place here. We are Niugini Oganics, Papua New Guinean and proud of it.