Jun 01, 2020 Last Updated 1:05 AM, Jun 1, 2020
April

April (16)

Since a state of emergency was declared in PNG in late March, the demand for locally produced and fresh vegetables, fruits and milk has soared, according to Gallit Tamir, Business Development Manager, with Innovative Agro Industries (IAI). A shortage of imported fresh cream has brought forward IAI’s plans for a new assembly line to make up the shortfall.

Israeli-based IAI has been operating in PNG for nearly 10 years as a joint venture company with private sector and local level governments, developing modern and innovative vegetable and poultry product centres, a frozen vegetable processing unit in Southern Highlands and a dairy production farm at Ilimo in Central province.

The Covid-19 pandemic has impacted on IAI’s operations.

“Our activities in these times require more effort, social distancing in the work place requires us to limit the number of staff in each shift, at any time our farms keep industry best practices on food safety and quality under our food safety standards certification and protocols,” Tamir tells Islands Business.

“The safety and health of our staff is paramount, hygiene is closely monitored, body temperatures are taken regularly and close attention is made to monitoring symptoms of which none have been exhibited by members of our staff.”

What COVID-19 has proved is the value of the policy of import substitution and self-sufficiency.

In early April, Ilimo Farm received a call out from retailers, bakeries and caterers, saying that there is a shortage of imported fresh cream resulting from disruption of overseas supply chains due to the global lock downs.

“Though fresh cream was on the “drawing table” as a future product we did not plan to launch it just yet, however the call out from the market is that it is needed now,” says Tamir.

Working round the clock, staff built the assembly line within 10 days, ‘in incredible speed’.

The product has received excellent reviews from chefs around town, she says, and was made available firstly in limited quantities to institutional clients and major retailers.

Inter-provincial travel along the Highlands Highway was disrupted for a few days in March, but IAI’s farms and processing units around the country are back operating, and products are being moved with proper authorisations, she says. 

Tamir regards the dairy production farm at Ilimo as a bench mark achievement, the first commercial dairy farm in PNG.

The farm has 175 hectares of cultivated land producing stock feed for 800 milking cows and a dairy processing plant, capable of producing 12,000 litres of milk per day, and aims to produce five million litres of milk, replacing about one-third of the country’s 14-million litres of imported dairy.

The K128 million farm just outside Port Moresby sells milk in Port Moresby and Lae for half the cost of imported milk. It now also produces ice-cream, yoghurt and dairy snacks and is building a second commercial dairy at Yalu in the Huon Gulf District at Morobe Province.

“This Project presents a holistic approach to a “Grass to Glass” enterprise,” she says.

“The farm represents the vanguard of a viable local dairy industry that will ultimately replace the need for imported fresh dairy products in PNG.

The farm has created 200 new jobs for PNG workers, as well as new cash cropping opportunities for Central Province Farmers to grow feed, such as maize, for our livestock, she says.

“Our farm has a solar farm onsite to supply additional energy requirements, we utilise a state of the art waste management system to decrease our environmental footprint as much as possible, and we use the latest in monitoring technology to ensure our herd is comfortable, stress free, happy and constantly monitored.”

A crucial benefit of this project is to enlarge the dairy consumption within locals, particularly children many of whom suffer from protein malnutrition, she points out.

IAI began its activities in PNG's agricultural sector in 2011.

The company’s projects have generated over 1,000 new direct job opportunities employing Papua New Guineans of all walks of life, from university graduates, professionals to general staff.

“Our projects also engage hundreds of small-scale farmers that supply naturally grown vegetables, potatoes and stock feed, turning subsistence farmers into cash cropping farmers.” 

Last December, the Pacific’s first frozen vegetable plant opened last year in Southern Highlands province, producing Kuk Chips, with the aim of replacing 4,000 tonnes of the French fries imported annually.

“Potatoes come from farmers in the district as well as the wider region, changing the livelihood of thousands of farmers in Southern Highlands, Enga, and Western Highlands.

KUK chips are sold to retailers and small shops and kai bars across the country, and to other institutional buyers including caterers, hotels and restaurants.

“The primary reason to engage in agriculture in PNG,” says Tamir, “are the Papua New Guineans.

“You can try and engage a Papua New Guinean on any subject on any matter and they may be interested or not, just like anyone else, but you mention agriculture to a Papua New Guinean and their eyes light up.

“Papua New Guineans have been doing agriculture for far longer than Europeans, it is something that is dear to their hearts. And even though they’ve have been farming for thousands of years, that hasn’t deterred them from accepting innovation.”

“I’ve been so fortunate that I’ve been able to chase a rugby ball around the world, so I’m hoping for the women’s competition it will follow the men’s and be equally successful,” says Mel Kawa, captain of the Melbourne Rebels team.

Kawa has now played her first season for the Rebels after playing in France, Fiji and elsewhere in Australia.

The 2020 season marked the Rebels’ first win in its three-year history.

“Our team is in its infancy,” she tells Islands Business. “Better results will come because the Victorian rugby fraternity is so supportive, and they want to achieve.

Born in Mendi, in the Southern Highlands, her father, John Kawa, is from Kendagl village in Ialibu. Her mother, Robyn, is Australian, from country New South Wales.

Read more in our April issue: subscribe now

 

 

The Pacific Islands Forum (PIF) Trade Ministers met in February in Suva. Their key outcome on the World Trade Organization (WTO) was: “there is support for the multilateral trading system and the opportunity therein to address global trade concerns including harmful fisheries subsidies.”

In the global context of the roles of WTO and the multilateral trading system, the support above is essentially general affirmation of globalisation. Such formulation of an outcome however is not new for PIF. Previous outcomes statements have reflected the same or similar support.

However, such an expression of support raises more questions than answers. Firstly, out of the eighteen PIF members, only eight are WTO members – six Pacific Island Countries (PICs) – Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu; and the two developed countries of Australia and New Zealand. Then why should the other ten PIF members, non-WTO members, be included in the decision, one may ask. Obviously, the Trade Ministers had decided by consensus. That could mean that the non-WTO PIF members did not object to the decision.

The non-objection by the other ten PIF members would have been political to allow a decision to prevail in the interest of group solidarity. But more so, the non-WTO members know very well that regardless of their non-membership, they still benefit from the provisions of the WTO. They know, for instance, that they have benefitted from the WTO initiative of Aid for Trade (AfT). AfT resources, have been re-committed by Australia and New Zealand under the PACER Plus, and a good share of that is being disbursed through the Pacific Horticultural and Agricultural Market Access (see Islands Business July 2019).

The second question is a more substantive one. Despite all the downsides of globalisation, despite the growing inequality globally resulting from capitalism that powers global economic growth, despite the inaction of the Doha Round of trade talks (Doha Development Agenda) that was aimed at elevating the  trade and economic interests of developing countries and the least developed countries—those underprivileged under international trade— why is there still support for WTO and the multilateral trading system (MTS)?

In retrospect, it has to be said that such support is an affirmation of the benefits that WTO and MTS have generated through international trade for the region, despite their shortcomings. And these benefits can potentially increase. Furthermore, the support emanates from the realisation that all other options apart from the existing MTS will render the global trading community worse off.

WTO and the MTS it champions is rules-based. Obviously, some rules are negative and some positive. Their respective applications also create mixed results for the global trading community. Under GATT 1947, incorporated into the WTO Agreement, PICs have been able to negotiate their Free Trade Agreements (FTAs), like PICTA and PACER Plus - the latter with Australia and New Zealand, despite the fact that the negotiating model offered by the WTO is ‘broken’ – according to Professor Jane Kelsey of Auckland University.  

PICs continue to use the model since it produces a rules-based regional trading system that is better than a trading framework with no, vague or draconian rules. Furthermore, they continue to place their hopes on the model believing that the same model can result in better regional FTAs – better concessions, more creative special and differential treatments, derogation from general provisions and waivers - if there is genuine political solidarity and commitment to configure/reconfigure Pacific regionalism to something that we can all be proud of.

Furthermore, the immense benefits that PICs/Pacific African Caribbean and Pacific States (PACPs) have accrued from their membership of the ACP-EU Agreements can also be attributed to the WTO Agreement. This is so since the ACP-EU Agreement has been notified under the WTO, and its preferential arrangements are granted exceptionality under the Organization. Over the years, such exceptionality has been extended. It may also have been preserved for posterity under the application of a ‘grandfather clause.’

Fiji, for example, has benefitted immensely from the Sugar Protocol - an arrangement that offers supply quotas and preferential pricing. The Sugar Protocol, like all the other protocols offered by the EU, are formulated and implemented under the EU’s Common Agricultural Policy (CAP).

The CAP offers other preferential arrangements that have benefitted other PACPs. Fiji and others have benefitted also from EU’s Generalized System of Preferences (GSP) and may even so  from its more liberal version of GSP+. PACPS that are least developed countries (LDCs) and that export to the EU benefit under another preferential arrangement known as ‘Everything But Arms.’ The term denotes exactly what it can do and what LDCs can export preferentially to the EU.

The Americans have their own version as well. Under the African Growth and Opportunity Act (AGOA), 2000, the US offers enhanced market access to qualifying Sub-Saharan African countries. This has been extended to 2025. Fiji, in the early 2000s, was contemplating negotiating a similar arrangement that could be extended to other PICs.

As stated above, these benefits can potentially increase. Developing countries and LDCs still hold on to the hope that developed country members of the WTO will find sufficient unity and determination in their ranks to progress the provisions of the Doha Development Agenda thus creating new levels in LDCs’ respective integration into the global economy. Under that framework, it is hoped, that new creative concepts to improve the lot of developing countries and the LDCs will become more palatable.

Two concepts in this respect have entered the lexicon of the WTO recently. Emily Jones wrote in 2013: “The Right to Trade: A Mechanism for Revitalizing Pro-Development WTO Negotiations?” She later introduced in the same article: ‘right to development’. She added: “Having raised deep concerns about the failure of ‘aid for trade’ (Joseph) Stiglitz and (Andrew) Charlton make ambitious proposals for rebalancing the global trading system. The first pillar of their proposal is to enshrine and enforce a ‘right to trade’ and a ‘right to development’ through the WTO’s dispute settlement mechanism (DSM).”  

For the PIC members of the WTO, that will be most welcome. Wilfred Golman of the University of the South Pacific wrote in 2017: “The WTO DSM and the South Pacific Island Nations’ (SPIN) Participation.” Golman concluded from his research that SPIN countries were notably absent from the WTO’s DSM. He discussed a number of reasons why this was so, including: the continuing debate as to whether the DSM accommodated the interests of the developing countries or LDCs; the issue of fairness in DSM’s decisions (that the process favours richer countries as they were able to argue more effectively and settle their cases), and that the poorer countries were disadvantaged by constraints on their ability to pursue any trade infringements at the WTO level.

As tools for globalisation, there is a sense of inevitability around supporting the WTO and the MTS, regardless of their respective downsides.  This essentially evolves from the understanding that global traders, large or small, lack a better trading framework option than that presented by the existing MTS.  With the benefit of history, it can be concluded that any setback to the MTS and a reversion to excessive and uncontrolled trade protectionism will inevitably return the global trading system to one of ‘Beggar Thy Neighbour’ situation, or much worse. When that happens, international traders will essentially be engaged in a kind of zero-sum game. The end result is likely to be unprecedented global inequality.

The author is a former Fijian Ambassador and Foreign Minister and runs his own consultancy company in Suva, Fiji.

 

Around the region, Pacific governments are introducing border controls and health regulations to limit the spread of the Covid-19 coronavirus. But regional organisations are also responding: a virtual meeting of Foreign Ministers has established a Pacific Humanitarian Pathway (PHP) to increase medical support to Forum island nations.

Dame Meg Taylor, Secretary General of the Pacific Islands Forum, spoke to Islands Business about the regional response to the coronavirus pandemic. Excerpts from the interview:

Dame Meg Taylor: We’re focussing very much on the health aspect and there’s a lot of bilateral negotiations going on with donors. But the Pacific Humanitarian Pathway (PHP) is a regional response, driven by the countries to say ‘This is the way we want it done.’

Everybody’s gone into an isolationist position because you’ve got to look after yourself first. Thinking of how we can all work together is not your natural instinct. But the Secretary General of the United Nations has really been driving this home: you have to work with the collective. That’s the job all Secretary Generals have – and the job I have. I’m really pleased that Pacific leaders have seen the merit of doing this.

IB:Did the Foreign Ministers Meeting discuss the economic as well as health effects of the pandemic?

Dame Meg: We’ve been instructed by the leaders to keep this focussed on health at the moment, but questions were asked around trade and economic issues. The Forum has already started work on that. Other institutions like the ADB and World Bank have done their work, while UNDP is looking at broader social impact issues.  Fiji would like to see a virtual trade ministers meeting, but this will happen under the Forum rather than the Pacific Humanitarian Pathway. Our PHP focus is to get medical assistance to the countries and we will do that.

The big concern on the economic front is what sort of debt we incur, and how that will impact countries and the delivery of services in the longer term.

There’s an understanding in the region that the impact of this virus and global economic impacts will filter down to the Pacific. However, the feeling amongst leaders in the Pacific is that we’re going to take control in our countries and our region. If we don’t, we’re going to be left at the whim and interests of others. For the leaders, as well as looking at domestic issues, they’re also looking at how the geo-politics will play out.

IB:Is the response complicated by international geo-politics?

I’ve seen media reports in Australia with people worried, saying: “China is coming in and giving you people all this aid.” But China already has strong diplomatic relations in the region. Taiwan has relationships with some of our member states. China was quick off the mark – they’ve moved lots of supplies into the region. The Jack Ma Foundation is sending a shipment and they’ve designated that they want it to go to countries that have already been impacted, so we’ve said we’d get it to the countries through SPC and WHO.

Other countries are also helping. Australia and New Zealand are helping. [Australian Prime Minister] Scott Morrison has always raised the Pacific in his public statements, but Australia is launching its own Pacific corridor. We’ve had discussions that whatever they do and we do, we have to find complementarity.

I think our island countries want to help themselves. It’s like the climate issue – the voice of the Pacific needs to be heard.  

The countries are saying that they want donors working closely with them, as they may be concerned that money coming in to the region is going to be captured by a third party.

If you don’t have co-ordination, you’re going to get every donor ringing every government saying ‘we can put together a charter for you.’ Countries are saying, if you want to bring in an aircraft, you have to abide by our protocols.

It’s not about sending people in to the countries to help – that what our countries are most fearful of. It’s a challenge for organisations like the WHO. Their personnel will have to quarantine before they travel. It’s very clear – island leaders are very concerned about any outside people coming in to their country at all.

IB: Is there a danger that the Covid-19 crisis will draw away international attention from other core key regional concerns?

Dame Meg: I think that is a concern and particularly on the climate issue. The greatest security threat now and into the future – with or without coronavirus – is the climate issue. Maybe Cyclone Harold is a reminder that climate change is always a vulnerability around the corner for us. Always. Coronavirus is the focus now, because if it spreads through the islands it could decimate our populations. Many countries have a strong memory of what happened with pandemics in times past, and that’s why they’ve sealed down their borders completely.

With the recession in major countries, you can see changes in the environment. There’s a reprieve for a short time. The fear is that China might triple its coal production to get back into business again.

IB: The islands with the highest confirmed rates of infections are often the US and French territories like Guam, New Caledonia and French Polynesia…

Dame Meg: Yes, the territories that are linked to metropolitan states were the ones that were impacted first – the numbers in French Polynesia are of concern.

IB:Will the scheduled Forum leaders meeting in Vanuatu proceed?

We haven’t made a decision, though we had discussions prior to the elections in Vanuatu. We’re waiting for the new government of Vanuatu before we can take this forward. The people of Vanuatu will be concerned about outsiders coming in. When we would have those meetings is still to be decided. It may only be a meeting of the leaders - the question is whether it will be face to face or whether it will be virtual. It’s all going to depend on what happens with the health and security of all our countries.

IB:How will this pandemic affect the regional debate about security into the future?

Dame Meg: There’s the health issue now, but some countries are already talking about the next phase of how we’re going to get through this. We’ve invoked the Biketawa Declaration, but the Boe Declaration underpins the next phase of the recovery. After health, there’s going to be recovery around food security, environmental security. The bigger countries have got problems, the smaller countries are extremely vulnerable. How the countries respond to this is going to be a sign of Pacific resilience.  

IB:In many countries, are you seeing positive examples of communities preparing and mobilising?

Dame Meg: I think in the bigger islands, one of the good things is that everybody is planting and going back to our natural resources to feed ourselves. My own family and community in the Highlands of Papua New Guinea are getting their gardens going, so if there’s a long period of isolation, they will survive.

I think the hardest hit of our Pacific family will be the smaller island states and particularly our atoll states. We have to ensure that greater assistance goes to them in the longer term.  

Pathway across the Pacific

For only the third time in the last 20 years, the Pacific Islands Forum has invoked the Biketawa Declaration to respond to the global coronavirus pandemic. Forum member governments have agreed to establish a Pacific Humanitarian Pathway, to co-ordinate the regional medical response to the Covid-19 coronavirus.

Prime Minister of Tuvalu Kausea Natano, chair of the Pacific Islands Forum, said: “The Covid-19 pandemic is a global health emergency of unprecedented scale. It poses a real and extreme danger to the health and security of Pacific peoples. Never before has the formal Forum membership simultaneously been in crisis.”

In a video hook-up on 7 April, Forum foreign ministers and officials responded to a call from the World Health Organisation (WHO) and agreed to establish a “Pacific Humanitarian Pathway on Covid-19.” Regional agencies want donors to use the humanitarian pathway to assist island governments with medical supplies and equipment as they respond to the Covid-19 pandemic.

This co-ordinated response will be overseen by a Ministerial Action Group (MAG), involving Australia, New Zealand, Fiji, Nauru, Vanuatu, Marshall Islands and Tuvalu. The MAG will be supported by a regional task force to ensure that medical supplies, technical assistance and essential equipment can be moved seamlessly through the region. This is especially important for some smaller island states that must tranship goods through regional transport hubs like Guam, Nadi or Brisbane. The humanitarian pathway aims to expedite customs clearance of medical supplies and fast-track diplomatic approval for chartered flights and commercial shipping.

This new pathway will complement existing regional meetings, as finance and trade ministers prepare to address the economic woes looming on the horizon. These include the loss of remittances, tourism and export opportunities; increased debt burden; and the double whammy of loss and damage from climate change and Cyclone Harold, which hit Vanuatu, Fiji and Tonga in April.

Read more in the April issue of Islands Business.

Another killer: dengue

The impact of the novel coronavirus has understandably absorbed all the energies and resources of health ministries across the region. But even as the Pacific grapples with the real and anticipated impact of COVID-19, several countries continue to face another public health crisis: dengue.

Late last year the Marshall Islands declared a state of emergency connected to an ongoing dengue outbreak first reported on Ebeye in July.  As of February 23 this year there have been 2,956 cases of dengue-like illness there. Three people have died, and the government has spent over US$2million treating the sick and trying to curb the outbreak.

Last September, Guam detected its first locally-acquired dengue case on Guam since 1944.

Meanwhile 101 dengue cases were recorded on Rarotonga, Cook Islands in March. Efforts there to bring down the numbers are being hampered by bad weather say local officials.

In all locations, traditional methods of combatting dengue such as mass spraying, clean ups and awareness campaigns are having little effect.

That’s not a situation unique to the Pacific, and it is the failure of these traditional methods which has prompted the World Mosquito Program (WMP) to launch an innovative program to control dengue through the release of Wolbachia -carrying mosquitoes. When Aedes aegypti mosquitoes carry Wolbachia, the bacteria compete with viruses like dengue, Zika, chikungunya and yellow fever. This makes it harder for viruses to reproduce inside the mosquitoes, and those mosquitoes are much less likely to spread viruses from person to person.

The WMP ran its Wolbachia program, releasing mosquitos by hand and by drone in four Pacific Island locations: Fiji, Vanuatu, New Caledonia and Kiribati. IN three of these the release is complete, and monitoring has been handed over to national governments. In Noumea, Wolbachia-infected mosquito releases were scheduled to the end of April.

How successful have these pilot programs been? Are there plans to extend them to elsewhere in the Pacific? Get your copy of Islands Business to find out.

 

Papua New Guinea’s Treasurer, Ian Ling-Stuckey says his country has not had “an economic crisis of such complexity or magnitude since World War 2.” Samoa’s finance minister Sili Epa Tuioti calls it a “social and economic tsunami.” The language being employed by institutions and governments in responding to the economic impact of COVID-19 stresses the historic moment we are living through.

The response of international organisations and donor partners to assist Pacific island economies has been swift, although details are still to be ironed out given the pace with which the pandemic is developing and morphing, and the pervasiveness of its impacts across the globe.

Central to that detail will be the form of that assistance; and whether it’s concessional loans, grants, debt forgiveness or a complex combination of all three and more.

What does the crisis mean for tourism, remittances, digital transformation and more? Get your copy of Islands Business to find out more.

 

Growth forecasts

 

2019

2020

2021

Dependencies

Stimulus package

           

ADB Pacific member countries

 

0.3

2.7

Fiscal stimulus measures across the region of at least 10% of GDP

 

Cook Islands

5.3

-2.2

1

Fiscal stimulus measures of approx. 50% of GDP

US$34.7m

Federated States of Micronesia

3

1.6

-3 (WB)

3

0.5 (WB)

Pension fund reform

New capital projects

US$15m

Fiji

 

-4.9

-4.3 (WB)

3 (ADB)

1.9 (WB)

Improved business and investment climate

Limit debt exposure

Climate resilient infrastructure

US$500 million

French Polynesia

       

US$280m

Kiribati

2.4

1.6

1.8

Well managed, sustainable trust funds

 

Marshall Islands

3.8

2.5

-3 (WB)

3.7

1 (WB)

Pension fund reform

Easing of restrictions on travel and transport

 

Nauru

1

0.4

1.1

Well managed, sustainable trust funds

 

Palau

-3

-4.5

-6 (WB)

1.2

0 (WB)

Pension fund reform

Tourism recovery

 

PNG

4.8

0.8

0.2 (WB)

2.8

3.3 (WB)

Good management of public debt

US$1.6billion

Samoa

3.5

-3

-5 (WB)

0.8

0 (WB)

 

US$23.6milloon

Solomon Islands

2.6

1.5

-6.7 (WB)

2.7

-0.3 (WB)

Large infrastructure projects provide some buffer

Reform of tax system

 

Tonga

3

0

0.5 (WB)

2.5

3.2 (WB)

Tourism recovery

Accelerated rehabilitation and recovery post TC Gita

US$25m

Tuvalu

4.1

2.7

3.2

Well managed, sustainable trust funds

 

Vanuatu

2.8

-1

-8 (WB)

2.5

6 (WB)

Benefits of labour mobility schemes are widespread, sustainable

 

Source: ADB Outlook 2020, World Bank, national governments

The Pacific’s response to the COVID-19 outbreak is likely to lead to increased scrutiny of health budgets and investments in our region.

However first there are the very pressing questions of how to scale up response in individual countries and territories, best leverage regional expertise and cooperation, maintain public health messaging that is relevant to Pacific communities, and prepare for second and subsequent waves of infection.

When Islands Business first interviewed Sunia Soakai, the Deputy Director, Public Health Division, at the Pacific Community, only five countries had COVID-19 testing capabilities: Fiji, French Polynesia, New Caledonia, Guam and Papua New Guinea. Since then other Pacific locations have come online. Palau has begun random testing with equipment donated by Taiwan. American Samoa is doing limited local testing, while still sending samples to Hawaii. The Northern Marianas has taken delivery of kits from a South Korean manufacturer, and its government aims to test every resident.

The most efficient way of facilitating local testing in our region, says Soakai, is to use custom-made cartridges in machines already in place for TB testing. The joint Incident Management Team of which SPC is a member (see p13) has placed orders for the cartridges and the consumables that go with them.

“No firm date has been set by the manufacturer [for delivery]” Soakai says, “but given that the Pacific is a region that has limited capacity, WHO and UNICEF have provided their support and the manufacturer has agreed to provide priority for the Pacific.”

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