NAEP - BACKGROUND INFORMATION

The NAEP is jointly funded through a Technical Assistance Loan from the Asian Development Bank, together with counterpart funding support from the Government of Papua New Guinea and the private sector. The Project is targeting income-earning opportunities in the agricultural sector throughout the country. The Project has been designed to expand the nucleus enterprise concept, which has operated successfully in Papa New Guinea as already demonstrated in the case of oil palm, into other sub-sectors of the agricultural industry.

The Nucleus Enterprise model integrates the operations of commercial agribusiness with local smallholders. Under this model, the agribusiness may own and operate a commercial plantation, or manage a processing or other facility and have access to both domestic and export markets for the final product which would not be accessible to smallholders alone. The smallholder producers supply additional agricultural-produce and the labour required to expand the agribusiness operations. In turn, the agribusiness supports the smallholders by providing extension services, production inputs, credit, Infrastructure and other basic services as well as secure markets for their produce.

A strong interest is being shown by the private sector, smallholders and Government agencies concerned in using this nucleus enterprise partnership to achieve mutually beneficial results. Several potential ventures combining a private sector nucleus enterprise, smallholder development and associated infrastructure have already been identified and more are expected to be identified in future. Those that have been identified include rubber rehabilitation and expansion in Western, Gulf, Central, Oro, New Ireland and East Sepik provinces, tea rehabilitation in Morobe, coffee in Morobe, Eastern Highlands, Western Highlands, Central and Gulf hinterlands, pyrethrum in higher altitude areas of the Highlands, spices in Simbu, Madang, East New Britain and Milne Bay, cocoa and coconuts in East Sepik, Sandaun, North Solomons and Madang and cocoa in Oro, Sandaun, Bouganville and East Sepik.

Other prospects include commercial cultivation of cassava, livestock farming in poultry, piggery and cattle with associated processing facilities, aquaculture in Madang, mariculture, especially pearl farming in Milne Bay and New Ireland and plantation forestry, particularly balsa.

Even though a large number of these potential projects have been identified, it has been established that a more detailed feasibility or sub study needs to be carried out to prove the bankability of these potential projects before they are promoted both locally as well as internationally to attract adequate investment funding. In addition to carrying out these a careful up front analysis of the enabling environment, detailed feasibility studies identifying, market outlets, social and environmental issues and risks need to be assessed. Also there will be a need to prove the viability of the proposal so that all such proposals are “bankable propositions”, making them serious contenders for outside funding. In addition there is a need, in some cases, to field test some of the technology or institutional arrangements being proposed. In short, prior to considering any direct project financing for nucleus enterprise focused development, it is desirable to help develop agribusiness nucleus enterprise concepts and to assess their viability thoroughly.

A large portion of the TA loan funds will be used for the conduct of feasibility studies for selected sub-projects that have been initially screened by the Technical Screening and Management Unit (TASMU) which has been established as an independent project management unit. The TASMU has its own technical advisers who will perform this initial screening of potential sub-projects and, after the approval of the potential sub-project feasibility studies by a Screening Committee that has been established by the Department of National Planning & Rural Development, will hire external consultants for the conduct of the selected feasibility studies. The TASMU does not provide funding for the implementation of nucleus enterprise based concepts but instead assist in assessing these and packaging them into attractive investment opportunities.

Under the Project it is intended that the nucleus enterprise model will be extended to a range of agricultural sub-sectors particularly traditional tree crops, horticulture, aquaculture and minor crops. The Project is seeking proposals that exhibit the features of a nucleus enterprise concept that can then be considered for possible funding for a feasibility study. The Project will attempt to give emphasis to previously neglected rural areas of the country that have received less investment in the past, so that all provinces equally benefit from this funding.. To this end the awareness raising of the Project will target all provinces, with higher priority given to provinces that have had very little investments in the past such as Manus, Sandaun, Madang, Western, Gulf, Central, Simbu, Enga and East Sepik, initially in order to attract more proposals from these areas, as well as assisting local entrepreneurs in these areas to identify potential investment opportunities that can be the subject of more detailed feasibility studies.

The Project is seeking to gain a greater awareness throughout the private sector to secure their interest and support in the identification of potential projects and also in sourcing investment funding for identified feasible and viable projects. Proposals that may be considered for potential further study as nucleus enterprise models are always welcome for assessment.