Flourshing Copra Industry Revives Co-Ops

Copra from the islands...shipped to Madang for processing.

Co-operative societies once flourished in Papua New Guinea during the colonial era. Set up by the Australian administration, the societies were seen as the best way for the indigenous Papua New Guineans to participate in the country's economic development.

However, the societies did not succeed as envisioned. The main reason for their failure was that the societies had relied upon the expertise of Australian government officers who had initially set up the organisations. As the country was preparing for independence, many of the officers left and the societies collapsed soon after.

However, the idea of co-operative societies has not been abandoned and the Papua New Guinea government has a policy in place to encourage their establishment. The attractive thing about cooperatives is that they work in much the same way as the traditional PNG communal system of cooperation in village activities and ownership through clan or kinship groups.

Early this year, senior officers from the Department of Trade and Industry in Port Moresby visited the provinces to talk to the people and encourage them to set up co-operative societies. While the response has generally been slow, the story has been different for the people of Bogia in Madang province.

Taking the initiative last year, the people established the Bogia Growers and Producers Cooperative Society without government support. It is the first co-operative society to be registered in Papua New Guinea and has grown from strength to strength in only a few months.

Bogia Co-operative Society is centred around the district's copra industry. The society's operation is simple‹to buy copra from its members and other growers and export them. Members benefit from export earnings and get paid annual dividends as well.

Most members of the society are subsistence farmers who own a small number of coconut trees usually in family or clan groups. The growers take turns to produce copra to raise money for school fees, hospital fees, or expenses such as bride price payments, etc. The copra produced is usually transported to the selling point on credit and debts are settled after growers receive their payment.

Village-based growers were badly hit about four years ago when the country's Copra Marketing Board (CMB), which regulated the industry, suffered financial crisis partly due to poor copra prices on the world market. The Kopra Indastri Koporesen (KIK) has since replaced CMB but little has improved in the industry.

KIK's money problems meant that there were delays in payment for small growers and many were paid valueless cheques. Commercial banks also punished the small growers by charging them fees to cash their cheques as many did not have savings accounts. Even those who attempted to open saving accounts were discouraged by stringent bank policies.

This situation had almost killed copra production in Madang province, especially amongst the small growers. From a province that used to produce 120 tonnes per day in the past, Madang struggles to produce 30 tonnes today. However, when the government stepped in and deregulated the industry, Bogia Co-operative took advantage of the situation to obtain an export licence. Its first export in January last year (2003) was a mere 50 tonnes to Europe. On November 28, the society was able to export 400 tonnes of copra, its biggest so far. The export has earned an equivalent of K260,000 which was paid out to society members and other small copra producers in parts of Madang and Morobe provinces.

The society has opened a second depot in Madang town and is buying copra as far as neighbouring Morobe province.

The society has opened a second depot in Madang town and is buying copra as far as neighbouring Morobe province. The society has now registered three separate co-operatives. They are:

• Bogia Growers & producers Co-operative Society to market copra, cocoa, etc,
• Bogia Wholesale & Retailers Co-operative Society to deal with consumer goods,
• Bogia Marine Harvesters Co-operative Society for fishing and marine resources.

A fourth society to be registered soon will be known as Bogia Rural Finance co-operative to deal with micro-finance and credit facilities to help its members.

Founder of the co-operative societies, Peter Muriki says the organisations are to provide the incentive and drive to get all the people in Bogia district to be part of an activity to help themselves financially.

The Bogia co-operative was scheduled to be officially launched last month by former deputy prime minister Dr Alan Marat. However, this did not eventuate because Marat was ousted as deputy prime minister.

While government policy is encouraging the establishment of co-operative societies, Bogia Co-operative has received no help from either the Madang provincial or the national government.