According to a press report, imports of poultry from Australia are threatening to undermine the viability of two of Papua New Guinea’s (PNG’s) major chicken producers, Tablebirds and Zenag, which together employ 4,000 people. The report suggests that ‘a total of 100,000 whole frozen chicken are imported into PNG from Australia each week.’ According to Stanley Leahy, General Manager of Zenag Chicken, the company ‘has been forced to cut production by 10 percent due to a reduction in orders for fresh chicken especially from their regular major buyers’, while Bob Hanson, CEO of Tablebirds, claims that the company ‘suffered a 20 percent reduction in chicken production as most of the companies which buy chicken from Tablebirds were increasing their imports of Australian chicken’. Tablebirds has now stopped supplying day-old-chicks ‘to about one-third of its village outgrower farms due to the reduction in chicken sales’. Indeed, it was reported that ‘one major supermarket chain has completely stopped buying local chicken and is selling only imported chicken from Australia.’
Increased imports are seen as a product of the dumping of surplus birds by Australian companies on the PNG market, with imported chickens being sold at much lower prices than local chickens. It is maintained that ‘the importation of uncooked chicken at cheaper prices started five to seven years ago and is continuing despite concerns raised by the industry and the PNG Poultry Industry Association about diseases and the threats to the local industry.’
According to the WTO Secretariat, the government of PNG has been pursuing an open trade policy since 2000, but at the same time, as a result of the application of high tariffs, ‘PNG is almost self-sufficient in sugar, pork, and chicken.’ In addition, ‘imports of cooked and processed poultry products face licensing restrictions.’ From the WTO perspective, agriculture in PNG is characterised by ‘low productivity, largely reflecting inadequate research and development, poor take-up of technological improvements, and lack of scale economies inherent in smallholder farming’.
These factors would appear to account for the growing competitive threat from Australian frozen chickens, despite the high levels of tariff protection enjoyed by local poultry producers. The fact that this trade is in frozen chickens rather than residual chicken parts (which is a major source of competition elsewhere in the ACP), suggests underlying challenges of competitiveness that need to be urgently addressed if current levels of production are to be sustained, particularly in an era of rising global grain prices.
At the recently concluded Trade Pasifika 2012 trade fair, however, private sector representatives expressed exasperation over the uncontrolled influx of cheap imported products resulting from the opening of domestic markets. The frequency with which allegations of dumping re-emerge in Pacific Island countries suggests a possible need to review the legislative framework for the management of the trade liberalisation process, including through a strengthening of competition rules and their effective application, if private investment in necessary modernisation processes is to be mobilised.