Lae, Monday 7 April 2025 —Papua New Guinea’s coffee industry is entering a new phase of transformation driven by the PNG Agriculture Commercialisation and Diversification (PACD) Project, which is prioritising strong governance, grassroots empowerment, and structural reform. These were the key themes shared by PACD Coffee Manager Potaisa Hombunaka during his presentation at the National Agriculture Industry Public-Private Sector Partnership Conference in Lae.
In a bold and candid address, Mr Hombunaka called for an industry-wide culture shift—moving away from mismanagement, dependency, and outdated systems toward accountability, transparency, and long-term sustainability. He emphasised that the PACD Project, funded by the World Bank, is enforcing some of the strictest procurement and governance frameworks ever seen in PNG’s agriculture sector. Th. PACD Project is the successor to the Productive Partnerships in Agriculture Project (PPAP),
“In the past, under PPAP, we had partners who misused coffee growers’ funds. One is already in jail, and I’m still waiting for others to be prosecuted,” he revealed. “We’ve made it clear—either repay the funds or face the consequences. You go to Bihute unless you put the money back into the project account so coffee growers benefit.”
Building Trust Through Governance
According to Mr Hombunaka, the PACD Project was designed with robust financial controls to restore integrity and accountability to the industry. Unlike the earlier PPAP model, which involved multiple financing sources, PACD is now solely funded by the World Bank, placing greater emphasis on international standards of financial discipline.
“This is a success story built on strong governance. We must replicate it across the agriculture sector. Unless we embed accountability from the top and cascade it down, donor and government funding will never truly reach the people it is meant for.”
He challenged leaders in the sector to reflect on their own roles and take collective responsibility to ensure project funds have real impact on smallholder livelihoods.
Reforming the Coffee Value Chain
Highlighting the sector’s production structure, Mr Hombunaka said over 500,000 smallholder households currently produce 80% of PNG’s coffee, while plantations now account for less than 5%. Despite this, the industry remains skewed in favour of multinational exporters, who control around 80% of wet coffee exports, leaving PNG-owned companies with only a 30% share, even though they make up 90% of exporters.
“Do we really need rocket science to know where we should be investing? The answer is right there—our smallholder growers. That’s where the value is, and that’s where the future of our industry lies,” he said.
He stressed the importance of moving smallholders away from selling parchment coffee and toward processing and exporting green bean coffee, which adds value and increases income.
“It’s been 50 years since independence—we can’t keep doing the same things. Our farmers must graduate from parchment to green bean exports. That shift has already started under PPAP, and we’re scaling it up under PACD.”
Cooperative Model at the Centre
Mr Hombunaka described the revitalisation of coffee cooperatives as the cornerstone of the PACD Project’s strategy. Since 2024, 22 cooperatives have been formally registered, with another 42 in progress. He expects over 100 cooperatives to be operational by the end of 2025, creating structured platforms for coordinated training, marketing, finance, and service delivery.
“We’re rebuilding what once worked. Many of our successful entities—like Mainland Holdings and other pioneers—came out of farmer cooperatives. We’re bringing that model back with better governance and stronger support systems.”
He emphasised that formalisation is critical for channeling both government and donor-funded interventions. Cooperatives will serve as the delivery mechanism for tools, training, equipment, and ultimately export licensing.
Rethinking Plantations
Addressing the long-standing issue of plantation rehabilitation, Mr Hombunaka warned that direct investment in rundown coffee estates without addressing systemic issues would fail.
“I’m a son of a plantation worker. But I don’t expect my child—or yours—to become one. The world has changed. Landowner disputes, poor management, and security issues make direct plantation funding unsustainable.”
Instead, he proposed a new model: working with landowners willing to enter into subdivision, block farming, or contract farming arrangements, which allows funding to be linked to performance, ownership, and proper oversight.
“You can’t throw K10 million at a plantation and expect it to work. It’s a waste. But if you empower committed landowners and blockholders with proper systems, insurance, and compliance, you’ll see results.”
Empowering Local Exporters
A major focus of PACD is supporting the ‘missing middle’—PNG-owned processors and exporters currently supplying multinational firms.
“They have the capacity to do more. If we provide equipment, upgrade their facilities to meet CIC export standards, and support their licensing, they can become direct exporters and bring in 100% of the foreign exchange earnings.”
By empowering local players and removing unnecessary intermediaries, Mr Hombunaka said the coffee sector could grow both value and volume while ensuring greater benefits remain in-country.
The Path Forward
Mr Hombunaka concluded with a powerful call to action:
“This is the time to get it right. Let’s stop accepting the status quo. Let’s not talk about impact—let’s see it. The next kina that comes in must go directly to the farmer. That’s how we grow this industry.”
The PACD Project is viewed as a model for how international loan financing can deliver real results when paired with local ownership, strong systems, and bold leadership. As Papua New Guinea celebrates its 50th year of independence, the coffee industry—one of its oldest and most important exports—is poised for a new chapter.
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