PNG GOVERNMENT WRITES OFF $7.8 MILLION COCOA LOAN

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PORT MORESBY, Papua New Guinea (The National, April 5) - The Papua New Guinea government has agreed to write off an outstanding loan of K25.4 million (US$7.8 million) paid as price support to the cocoa industry during the mid-1980s when cocoa prices hit rock bottom.

But it set a condition that the loan would only be written off if the cocoa industry — through the price stabilization levy — could repay at least K 8 million. 

Industry sources said this may not be possible since levies were suspended last week after cocoa prices plummeted to just over K4, 000 a ton, making most plantation operations unprofitable.

The industry only has K4m in its stabilization account with the Bank of PNG after having paid K2 million to the government in January.

A total of K93 million was paid to the industry between 1980 and early 1990s when the price was very low. Of the K93m, the European Union’s Stabex Fund paid in K52m while the government paid up K41m.

The cocoa market report released last week by the Cocoa Board of PNG said the amount outstanding to government at present was K25.4m but the industry had reached an understanding with the government so that modest efforts can be made to offset the loan.

An economist with the Cocoa Board of PNG, Boto Gaupu, said the government loan had been necessary at a time when the industry was on the verge of collapse.

The government provided funds to maintain prices at reasonable levels so that growers were paid a little more than the world prices when it dropped to a very low level, said Mr. Gaupu.

April 6, 2004

The National: www.thenational.com.pg/

 

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