Family agribusiness aims to play a big part in feed import reduction

A local agribusiness SME is working with a local feed manufacturer and supplier, has successfully completed a commercial trial growing over 50ha of maize in the Markham valley in the Morobe province supplying 100 tons of grains to the factory in Lae.

The local grains produced by Hore Agricultural Supplies have been used in the formulation of stock feeds and constitutes 15 % of the broiler starter feeds in Farmset stock feed brands.

This is in itself is a landmark for a local Papua New Guineans to beat all odds to prove that can grow quality grains and break into the markets that are tightly dominated by imports.

Co-founder owner, Humphrey Saese says the journey has just began and will take time, investment in equipment, technology and skilled manpower to reach the goal of growing grains locally.

Humphrey and Sandra Saese started work on maize farming after Humphrey left Trukai Industries Ltd. Prior to this venture, Humphrey led the Trukai Industries Ltd’s commercial rice project in establishing pilot sites across PNG.   

“Unlike cocoa and coffee or other tree crops, grain farming requires significant upfront costs in capital equipment, tractors, sheds, storage facilities and delivery capacity which costs potential farmers in the millions. Since most operations are mechanized, one would require trained and skilled operators who can drive, operate and services this equipment,” Humpfrey says.

The work involved accessing vast tracks of arable land around NADZAB through very flexible land lease deal giving landowner has opportunity to participate in the business and at the same time gives access to a secure local markets. Our model of land engagement is to give greater participation to landowners and ownership.

The owners say, the markets for local production is estimated in the millions, and has huge potential for growth engaging local farmers and fulfilling the government’s call for import replacement and creating jobs locally.

With current situation in the short falls in foreign currency, Papua New Guineans can tap into this opportunity by growing grains like maize to supply to major feed manufacturers. This is also mutually beneficial for importers who are struggling to import due to foreign currency shortage and demonstrated successfully, these big companies are likely to open the markets for local grains and raw materials.

“The government needs take notice of this expand its price subsidy support to include growers who are making efforts to grow grains and supply the local markets.

“Unlike cocoa and coffee or other tree crops, grain farming requires significant upfront costs in capital equipment, tractors, sheds, storage facilities and delivery capacity which costs potential farmers in the millions. Since most operations are mechanized, one would require trained and skilled operators who can drive, operate and services this equipment,” Humpfrey says.

Unlike rice, which has struggled to take off as commercial crop, maize, or corn has long history of success in the country. Companies like Rumion Agri Limited have being grown this crop for over 20 years getting crop yields that are comparably higher than the world average of 3tons/ha. It’s routine for yields around 6-7tons to be delivered here in the country as demonstrated by this large scale operation in the Markham valley.

Challenges

“Our biggest downside is not our technical capability to grow, nor the passion and commitment to make this happen, but accessing capital financing to enable us to increase scale and efficiency. At the moment we are operating at almost 60 % efficiency with bulk of our operations undertaken manually.

“These capacities require millions of kinas of investment and we tried our best to talk to NDB and BSP who have received the government’s SME stimulus package as secondary collateral but are still insisting that we put up 30 % equity for funding or provide securities. As a new startup venture we are unable to provide them.

“Although we have confirmed markets valued in millions and commitment from our partners to support us, banks are still adamant that we need to provide cash equity or security in terms of existing assets. The government must step in assist in this requirement on a case-by-case basis fund them.”

Humphrey says the government needs to start investing in large scale agribusiness owned by Papua New Guineans because the danger of an agriculture sector in total control of foreign hands is real.

“We have seen a massive takeover of small businesses earmarked for locals rapidly taken over by foreigners who are financially backed by their governments. It will not be long when we start to see this expanding to agribusiness opportunities where foreigners will buy land off locals and farmland.

“This simply cannot happen and it’s on the government to ensure grain farmers are given an early support to venture into these agribusiness opportunities.

“We are calling on the government to make direct allocations under its price subsidy and other incentive support to help us grow grains to supply feed manufacturers in the country. Unlike other, commodities, grains do not have a national body or authority to support the growth of the local grain industry. It must now set up that body who can tailor direct support for grain farming operations like ours. Sanction it have the powers for licensing grain imports, routinely subsidize prices on fertilizers.”

“Finally we are grateful to Farmset Ltd who had come on board to support the venture by providing some equipment and start up chemicals for the commercial trials and also believing that Papua New Guineans can grow crops that meet their quality specifications for manufacturing stock-feeds.”