The Context

Papua New Guinea’s population of 7.5 million is young and growing. The country has an abundance of natural resources and geographic proximity to rapidly growing Asian markets. Its population is strikingly diverse, speaking over 800 languages.

The country's economy remains dominated by two sectors: the agricultural, forestry and fishing sector, which engages most of the labour force; and the minerals and energy extraction sector, which accounts for the majority of export earnings and GDP.

Despite recent strong economic growth, over 3 million people live below the national poverty line, mostly in rural areas. Young people in particular face limited opportunities in rural areas, where many have never acquired any formal education. Inequality remains high in Papua New Guinea; an estimated 20 per cent of the population earns 80 per cent of total income. A large majority of the population (87 per cent) is rural and dependent mainly on semi-subsistence agriculture.

Agriculture accounts for approximately a third of GDP and employs 80 per cent of the working population. The sector is dominated by smallholder farming systems.

Coffee and cocoa are the main cash crops, employing half of the total labour force. The cost and availability of modern inputs and technologies, lack of irrigation and poor access to support services all contribute to low yields. The World Bank has estimated that coffee yields are reduced by 30 to 50 per cent because of a lack of support services and efficient farming techniques. Logistical costs are high due to the poor transport network and lack of market organization and market information, discouraging small farmers.

Agricultural development is hampered by weather extremes and hazards related to climate change. Most recently, this has included frost brought by El Niño, affecting one third of the population. As a result, more than one million people face serious food insecurity in vulnerable parts of the highlands and lowlands.

The Strategy

IFAD's strategy is to improve the livelihoods of small-scale farmers by increasing production volumes and quality in value chains. We also work tro improve access to markets, technologies and services to increase farmers’ share of value added.

This is done by establishing productive partnerships between small producers and agribusinesses and policies and institutions that aid development of inclusive value chains. To this end, IFAD supports efforts to strengthen institutional capacity and coordination and build public-private partnerships in the coffee and cocoa sectors.

The target group for IFAD's work in the country is small-scale farmers and producers, with an emphasis on women and young people.

In Papua New Guinea, IFAD-funded projects support vulnerable groups through:

• development of market opportunities;
• income generation in rural areas;
• participation in partnerships across sectors.