SWEEPING REFORMS IN PNG COCONUT SECTOR

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· Scheme designed to improve livelihood of over 200,000 families

· Copra Marketing Board in Pom and oil mill in Madang up for sale

PORT MORESBY, Papua New Guinea (Oct. 16, 2002 – The National)---Agriculture Minister Moses Maladina yesterday announced revolutionary reforms for the nation's copra industry, including the planned sale of the former Copra Marketing Board's head office in Port Moresby and its Madang oil mill.

The policy changes involved an end to the government's historic marketing functions through CMB and its successor, Kokonas Indastri Koporesen (KIK).

The reforms are the most dramatic to be implemented by the Somare/Marat government since taking office in August and have the capacity to improve the livelihood of more than 200,000 families.

It will also signal an end to corrupt practices and mismanagement at a regulatory and marketing level. Continuing episodes of bounced checks provided to growers by the defunct CMB had been partly responsible for a plunge in copra output last year to 46,400 tons, one of the lowest levels on record. It dropped from a high of 83,500 tons in 1998.

Maladina said yesterday the copra board had completely ceased trading activities and that private sector groups have been given 12 export licenses, with 10 more under consideration.

KIK will continue to charge growers the existing levy of K60 per ton of copra till the end of this year, when the levy will be reviewed.

Among measures to place the sector on a sounder financial footing will be the sale of CMB's Port Moresby headquarters building and the sale of the Madang Oil Mill, for which expressions of interest have been sought.

Maladina made it clear proceeds from the sale of the headquarters building and the coconut oil mill in Madang will be crucial to plans to reduce KIK's current debt of about K10 million.

Other key decisions announced by the Minister include:

· By next week the National Executive Council will consider regulations to create a competitive buying and export regime, ensuring that producers receive the best possible price for copra.

· The board will end its practice of setting prices, which will be determined by market forces, as is the case with cocoa and coffee.

· The board's operations will be totally restructured and the number of employees reduced from around 100 to 12, all of whom will be located in Port Moresby;

The Copra and Cocoa Export Agency and the Copra and Cocoa Research Institute will be merged and become accountable to stakeholders through KIK.

Levy payments to the CCEA were being suspended until the agency is re-structured and begins to perform more effectively.

Maladina said most of KIK's debts were inherited from CMB, which had "kept the Madang Oil Mill alive by funding its operating losses for the last seven years.

"As a result, the mill owes KIK approximately K8 million, which it has no capacity to pay, nor any reasonable prospect of doing so."

Maladina said KIK had moved swiftly to implement his directions to address its financial problems and to restore confidence among stakeholders, especially the estimated 200,000 families reliant on the sector for incomes.

He said that since the appointment of Ken Fairweather as KIK's chairman less than two weeks ago, Fairweather had focused on the need to deregulate the industry, address the critical financial situation and to put an end to political and other differences.

He said the role of the KIK board would change completely under the deregulated system with its main role being "to ensure the integrity of the deregulated buying and export process so that producers, and the nation, achieve the maximum benefit."

The board would also focus very strongly on improving extension and research services for the benefit of the industry, he said.

Maladina said copra has been a vital contributor to the economy and to export income for generations and the government would work with the KIK board to maximize its contribution in line with the government's commitment to an export-driven economic recovery.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

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