Public Disclosure Authorized - World Bankdocuments.worldbank.org/curated/en/854641468144279331/pdf/multi0... · Guenter H. Reif, OS. Kamanu (Economists), and Joa Jose Vieira (Agricultural

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EAP8Vol. 2

This report was prepared for use within the Bank and its affiliated organizations.

They do not accept responsibility for its accuracy or completeness. The report may

not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

CURRENT ECONOMIC POSITION

AND PROSPECTS

OF THE

TERRITORY OF PAPUA AND NEW GUINEA

(in three volumes)

VOLUME II

AGRICULTURE, LIVESTOCK, FORESTRY AND FISHERIES

TRANSPORT

POPULATION, MANPOWER AND EDUCATION

September 3, 1969

East Asia and Pacific Department

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CURRENCY EQUIVALENTS

US$1. 00 0. 89Z9 Australian dollar$A 1.0 US$1.12$A 1,000,000 = US$1, 120, 000

This report was written by aMission which visited the Territoryof Papua and New Guinea in Marchof 1969. The Mission was composedof Messrs. Shu-Chin Yang (Chief),Guenter H. Reif, OS. Kamanu(Economists), and Joa Jose Vieira(Agricultural Economist).Mr. Orville J. McDiarmid was alsowith the Mission for part of thetime.

TAELE OF CONTENTS

Volume II

Annex I - Agriculture, Livestock, Forestry and Fisheries

Page No.

AGRICULTURE

Copra .,.* ...................... .......ase 2

Rubber ....... . .... *........* 5

Coffee .................................... 6

Cocoa ..................................... 7

Tea ... is * * is is ......... .s...* ....... * 7

Other Commercial Crops ................. 8

Subsistence Agriculture ............... 9

LDTESTOCK @*7@******X*@ @v * 10

FOLESTKY ......... .. 12

FISHERIES .... 13

THE DEVELOPMENT PROGRAM

Agriculture ....................... 1

Beef Cattle ............. s .............. . .. 18

Timber .*..*...* .... ........ * .... *... * . 18

CONCLUSIONS ...................... 19

ANNEX I

AGRICULTURE, LIVESTOCK, FORESTRY AND FISIHERIES

1. The Territory's economy is based essentially on primary pro-duction. Agriculture, including livestock and, to a much lesser extentforestry and fisheries, supply the bulk of the needs of the indigenouspopulation and earn the lion's share of the country's foreign exchange.The sector engages nearly all self-employed indigenes, and more thanhalf of the local people employed in the monetary sector. With quiteample supply of land, the sector offers large scope for development.

AGRICULTURE

2. Information on subsistence agriculture, on which the greatmajority of the local people's livelihood depends, is very scanty. Pro-duction in the subsistence economy, mainly food, has grown more or lessat the same rate as population. In recent years, increasing interesthas been shown by the indigenes in such crops as peanuts, rice, sugarcane, bananas, etc., to broaden their diet as well as to sell surplusesfor cash.

3. Value of production of commercial crops, as indicated by theirexport value, appeared somewhat stagnant for two or three years but in-creased considerably in 1967/68 (29 percent increase over 1966/67 in ex-port earnings from agricultural crops), partly because of the improvementof world market prices for the Territory's major exports, such as copraand cocoa, and partly because of the increases in quantities of mostcrops. Production of commercial crops has generally continued its risingtrend in recent years, with a particularly sharp rise in coffee produc-tion, but a somewhat slower increase in copra output.

4. In general, the increase in production has been due mainlyto the expansion of areas under planting, as average yield for most cropshas remained more or less stagnant in recent years. From mid-1963 tomid-1967 total gross acreage (including multi-planting) under four prin-cipal commercial crcps (coconut, cocoa, rubber and coffee) increased by23 percent to 840,000 acres, representing an average annual increase of5.3 percent. Most of the acreage increase occured during 1963 - 1965,when the annual rate of increase was 7 percent as compared with3.6 percent during 1965 - 1967. It took place largely in thearea under indigenous control, and consequently the indigenous share inthe combined acreage under these four crops increased from 40 percent inmid-1963 to 47 percent in mid-1967. Increase in acreage during 1963 -1967 was particularly rapid for areas under coffee, followed by cocoa;but for coconut, the most important crop, it was rather slow. Althoughreliable statistics are not available, the area under tea seems to haveincreased also fairly rapidly.

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Copra

5. Copra - the most important commercial crop of the Territory -accounts for approximately one-half of the total value of production ofall commercial crops, and more than one-third of total export earnings.Its production occupies more than two-thirds of the total area undercommercial crops, and coconut plantations provide employment for morethan half of rural wage labor. In recent years, new plantings by theindigenes have increased far more rapidly than those by non-indigenes.While indigenous new plantings averaged annually at 14,500 acres duringthe last two years, new plantings by non-indigenes were only 4,500 acresper annum. As a result, the share of indigenous production has increasedto one-third of total copra production from one-fourth five years ago.

6. Copra production recovered in 1967/68 from a setback in 1966/67,when it was affected by unfavorable weather. However, the average yieldof copra per acre in the Territory at 0.4 long ton for plantations is lowas compared, for instance, with 0.5 long ton per acre estimated for thePhilippines and 0.8 long ton for Malaysia (in both cases, including small-holder production), the two major world copra producers. Average yieldof indigenous producers is even lower. One possible reason for the re-latively low yield of indigenous coconut was that the palms were too denselyand too haphazardly planted, resulting in insufficient soil nutrients andinadbquate soil aeration. Also, the Mission was told that there were areasin which as much as two-fifths of new indigenous coconut plantings never reachmaturity because of inadequate care. On both indigenous and non-indigenouscoconut fields, tlhe use of fertilizer is loT. Even on the non-indigenoUscoconut planting, only 7 percent of the total area received an,,r fertilizer. Inthe fertilizer trials conducted by the Department of Agriculture, Stock andFi3heries (DASF) under controlled conditions, good results have already beenobtained in increasing yield several fold, and also in tree rejuvenation. Butit is understood that suc4 good -results cannot be, expected from many areas.Another aspect worth investigating is that in every crop year a certain amountof coconuts - believed to be substantial in certain areas - is not harvestedbut left to rot on the ground.

7. The small increase in replanting and new planting in the plan-tations is said to be attributable to rising costs of labor, which re-presents half of the prime cost of production. According to the latestsample survey of the Department of Agriculture, Stock and Fisheries, theaverage prime operating costs of copra produced in the plantations hadincreased from $A 66 per ton in 1962/63 to slightly over $A 85 in 1966/67,or 29 percent. In 1967/68, because of the sharp increase in the worldcopra price and the more than 10 percent increase in production, theTerritory's coconut producers should have had a substantial improvementin their profit margins. However, in the long run the coconut industryhas to improve its efficiency to supply its products at competitive pricesin relation to other copra as well as other fats and oil exporters.

Table I.1

Acreage, Production and Exports of

Principal Commercial Crops

1962/63 1964/65 1966/67

Acreage (in thousand acres)

Coconuts 495 550 575Cocoa 129 150 164Rubber 3- 34 hoCoffee 26 47 61

Total 682 782 8 40

Production (in thousand tons)

Copra 14.0 118.6 115.7Cocoa 13.3 19.4 20.1Rubber 4.8 5-° 5-5Coffee b.8 7.3 15.5

Export Value (in $A million)

Copra & Copra Products 11.8 19.8 15.8Cocoa 5.9 7.1 9.6Rubber 2.b 2.6 2.5Coffee 4.O 7.3 10.2

Total 27.1 36.8 38.1

Source: The Agriculture Section of the Statistical Appendix

Table I.2

Percentage Distribution of Crop Acreage

Principal Commercial Crops

1962/63 1964/65 1966/67

Coconuts 72.5 70.3 68.4Indigenous 47.0 52-3 53.2Non-Indigenous 53-0 47.7 46.8

Cocoa 18.9 19.2 19.5Indigenous 18.0 22.2 23.2Non-Indigenous 82.0 77.8 76.8

Rubber 4.7 4.4 4.7Indigenous 1.2 3.1 6.6Non-Indigenous 98.8 96.9 93.14

Coffee 3.9 6.0 7-3Indigenous 60.8 71.1 7;Non-Indigenous 39.2 25.9 23.6

Total 100.0 100.0 100.0Indigenous 39.9 77;7 46.8Non-Indigenous 60.1 51h.3 53.?

Source: The Agricultural Section of the Statistical Appendix

8. The copra industry has a Stabilization Fund, *fith its originalsource of finance coming from the export tax which existed prior to 1959,and is controlled by the Administration's Treasury. The Fund providessupport to any severe fall in prices. The subsidies are paid out of theearnings from, the funds invested. In 1967/68, a bounty of $A 3 per tonwas paid to producers.

Rubber

9. Rubber is largely produced by non-indigenous owned plantationsin the Central District in Papua. The rubber area under indigenous gro-wers is still very small, less than one-tenth of the area of plantations,but it is expanding rapidly, having increased nearly ten times in five years*to 3,404 acres in1967/68. Although, owing to the unfavorable world rubbertrend., the Administration has not been encouraging rubber production generall_y-as with other crops, in certain areas rubber is the most suitable crorp toprovide the indigenes with an opportunity for cash cropping in addition totheir subsistence agriculture. Indigenous rubber acreage is now evenly di-vided between new land settlements and land around existing villages. Newplantings in non-indigenous rubber plantations have been increasing atabout 1,500 acres per year for the last five years, by using high-yieldvariety. As rubber trees begin to be tapped about five years after plan-ting, and reach full maturity by the tenth year, both indigenous and non-indigenous output will increase at higher rates during the next severalyears as trees now planted reach tapping age.

10. Rubber has shown a comparatively high gross return per unitof acre among the major crops, and rubber acreage has increased steadily.However, owing to the falling trend of world rubber price since the begin-ning of the 1960's, export earnings from rubber have become stagnant.

11. Ihe Territory's rubber is entirely exported to Australia, whichprovides both a guaranteedpreference in the Australian market untilall the Territory's rubber .has been purchased, and a price support agreement.

Under the current arrangem6nt with the Pool, all thesales of crude rubber from the Territory to Australian manufacturersare tied to the equivalent of the world price of No. 1 ribbed, smokedsheet grade. But when the world market price is Australian 15 centsor less per pound, 2.5 Australian cents per pound will be paid in ad-dition. When the world price is increasing above Australian 15 centsper pound, the additional payments will be reduced step by step untilthe world Drice reaches 25 Australian cents, at -ehich level the premiumpayments will be terminated.

1/ Commonwealth of Australia, Territory of New Guniea report for 1967-68

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Coffee

12. Coffee planting gained impetus from the high world market pricewhich prevailed during 1949-57, and its annual production increased from an in-significant amount of less than 300 tons to more than 15,000 tons in thelast ten years. Total area under coffee eipanded by 123 percent during1962/63 - 1966/67, most of which occured in the indigenous sector whichincreased by 192 percent. New plantings in the plantations expanded at afairly constant rate of almost 1,200 acres per year, while indigenousnrew plantings increased irregularly. In 1966/67, of the total acreageunder coffee, 76 percent were indigenous. At the end of 1967/68, one-fourth of the total area under indigenous coffee, and one-third of thearea under plantation coffee, were immature. Thus, even with the recentslowing down in new plantings, coffee production will continue to in-crease appreciably for the next several years as an increasing number oftrees will become mature and bear beans.

13. Coffee is mainly produced in the highland district and the MorobeDistrict of the New Guinea mainland. After processing, coffee is largelyairlifted to the ports of Madang and Lae for shipment overseas, althoughsome is carried by truck to Lae. A substantial part of coffee is proces-sed at the Kundiawa (Chimbu District) processing plant, owned and opera-ted by an indigenous cooperative. However, the cooperative lately experien-

ced some difficulties due to shortage of funds to purchase enough coffeebeans f'or processing. 1-

ih. About one-third of the coffee produced in the Territory is ex-ported to Australia. HowJever, under the International Coffee Agreement,Australia and Papua and New Guinea are treated as a single member and, assuch, the member country was still a net importer because Australian coffeeconsumption exceeded the Territory's production. But 1966/67 Territoryproduction (15,500 tons) was close to Australian consumption (16,4oo tons),so that a point is approaching where the Territory will be assigned an ex-port quota under the Agreement. This will mean that the expansion in theTerritory's coffee production will have to slow down, unless it can selllarger quantities to a number of countries which are considered "new" mar-kets under the Agreement; exports to these countries are not subject toquotas. Among the 29 such countries, Japan is the only one where theTerritory is exporting a modest amount and where per capita coffee consump-tion is increasing rapidly. To penetrate further into the Japanese andother new markets, the Territory has to reduce its costs of production andmarketing, particularly the transportation costs.

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Cocoa

15. Within a decade, cocoa has becone a major commercial crop ofthe Territory. It is produced mainly in New Britain, New Ireland and

Bougainville. Total area under cocoa increased almost by 30 percent

during 1962/63 - 1966/67, with the indigenous share of the total acreage

of 165,700 increasing from 18 percent to 24 percent. Because cocoa isa shade culture and has roughly similar soil and climate requirements,

it is particularly suited for interplanting with coconut palms, which

provide the shade. This is widely done in the Territory, and thereforedoes not make much demand on land. The volume of cocoa production in-creased at an annual average of 6.2 percent in the past five years, in

spite of the setback suffered in 1965/66-1966/67 because of plant disease.

16. Yields per acre of indigenous cocoa declined about 28 percentduring 1963/64 - 1967/68, although there have been extension programs to

ensure that planting and maintenance are rational and adequate. Cocoatrees are subject to more diseases and pests than most other tropical crcps,and the Territory suffered, in 1964/65 - 1965/66, a severe recurrence ofdieback, a disease which attacks most of the parts of the trees. For

bringing the disease under control, the Research Division of the D.A.S.F.has been working on the development of immune or resistant types. The

dieback situation is reported to have improved considerably, but the pestsituation has not. Yields per acre of plantations declinod slightly

during 1962/63 - 1966/67.

Tea

17. After successful experiments, production of tea in the Highlandsand in the Morobe District proved to be satisfactory both in quality andyield (about 1,000 lbs of made tea per acre), and commercial prospectswere promising. Following the endorsement of the first Bank Economic Mission,the Administration, in 196h, started offering leases for the development ofa tea industry in the Western Highlands, under a policy establishing"nucleus estates" on land suitable for tea planting, in blocks of 800 -1,000 acres - the minimum economical size. B- mid-1967, 16,000 acres hadbeen made available for the development of tea plantations and indigenous

smallholder blocks, and by mid-1968, 2,400 acres had been planted by plan-tations and about 360 acres by indigenous smallholders. Tea propagationin the Territory is by seeds which are supplied by the Administration'sstation in Garaina.

18. As good quality tealeaf must be processed only a few hours afterbeing plucked, it is important that the indigenous planting area should not

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be far away from the processing plant. A processing plant requiresquite a large investment which the indigenous growers cannot afford, atleast at the initial stage, but all processing plants now operating bythe estates take smallholder leaf. The plants also provide employmentfor indigenous laborers. In one tea project in the Mount Hagen areawhich the Mission visited, the estate had 1,000 acres and a teaprocessing plant. Its prime costs were at 25-26 Australian cents,realization on the estate 35-36 Australian cents, as compared with thepresent price for this grade of tea in London at 42-43 Australian cents.In the same area, in addition to the land at present suitable for teaproduction, there are 18,000 acres in the Wahigi swamp which might bedrained for tea planting. The utilization of this land is, of course,first a matter of engineering feasibility and then of economic viability.The Administration is now planning to engage consultants to advise themon the reclamation of this area. This should be followed by an enginderingand economic study of the costs and benefits before making the final de-cision on investment.

Other Commercial Crops

19. Pyethrum is grown only by indigenous cultivators in theHighlands above 6,000 feet, which is beyond the altitudinal range ofcoffee and tea. Total area planted by mid-1968 was 2,867 acres, andtotal production in 1967/68 was 456 tons, which was appreciably belowthe expectation of the last Economic Mission. All pyrethrum producedis sold to the processing plant established at Mount Hagen in November1965 for the extraction of the insecticide. Up to January 1969, theprice to the growers was 15 cents per pound of dried flowers. Tostimulate production, after January the processing plant increased theprice to 17 cents, and since then it was reported that plantings havebeen increasing.

20. Passionfruit is also grown entirely by indigenous cultivatorsin the Eastern and Western Highlands Districts. It is grown togetherwith coffee but does not interfere with coffe3 because of the - -different tiues of harvesting. ALl passionfruit procluced is soldto a factory at Goroko whfch processes the fruit in order to extractthe juice and pulp for exports. Proatction of passionfruit has beensubject to considerable fluctuations from year to year, with correspondingfluctuations in the volume and value of exports of juice and pulp. Thehighest level of exports reached was in 1967/68 amounting to 242 tons.

21. In order to diversify export crops and at the same time topromote crops suitable for land settlement schemes, the Administrationbegan to encourage private capital for the development of the oil palmindustry, and in 1967 commercial planting began in the Cape Hoskinsarea of the West New Britain district. The project has had a good startand all indications are that it is proceeding well. The overall manage-ment of the smallholder settlement program, as well as its field

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supervision, seem to be very satisfactory. Plantings in the i4osa estatestarted in 1968, and 3,000 acres will be completed by 1971. On small-holder settlement blocks about 4,000 acres should be planted by 1971,involving 580 settlers. In March 1969, when members of the Missionvisited the project area, 283 settlers were in residence and 1,132acres had already been planted. Plantings so far have been ahead ofschedule, as 3 acres per settler should have been planted by the end of1968 and actually 4 acres per settler had been planted. The requiredinfrastructure was also being built. Aid post, market area, and officestore had been completed; a smallholder house factory was in operation;405 children were enrolled in school.

22. Establishment of the first processing mill in Mosa plantation,in which the Administration will have a 50 percent equity, is welladvanced and should start operation in mid-1971, according to the plan.It will process the fruit from the estate plantings and also from theadjacent smallholder blocks.

23. The Administration has reached an advanced stage of planningwith Harrison and Crossfield's (Mosa) to enlarge the scale of theoperation by doubling the original nucleus estate smallholder project,and with the addition of some village oil palm plantings, to bring thetotal up to about 20,000 acres.

23. Some peanut is growm almost everywhere in the Territory, butgrowing is concentrated on New Guinea. Peanuts are grown in expatriateholdings as an export crop, where both production and area underplanting fluctuated from year to year. In 1966/67, expatriate acreagewas 5,100 and kernel output 1,300 tons - a relatively low level. In theMarkham Valley, where expatriate peanut growing was largely concentrated,growers have been moving into cattle ranching, because of the reducedreturns from peanuts as a result of declining yields.

24. For the indigenes, peanut is grown for both domestic consumptionand exports. It not only improves their diet but also provides them withsome cash from the sales of surpluses. Indigenous production in 1967/68is estimated at 600 tons of kernels. The Administration is encouragingindigenous production of peanuts, in carrying out the Atzera PeanutProject in the upper Markham Valley, by providing guidance to growersthrough rural development officers and assisting them with mechanicalequipment in the preparation of the land. Plantings are increasing andpotential production in the area being developed is estimated at 500 tonsof kernels per year.

Subsistence Agriculture

25. No significant changes have yet occurred in the traditionalproduction for subsistence under a system of bush and grasslandcultivation in fallow and shifts, in which the vast majority of theindigenous farmers are engaged. But there is evidence that indigenous

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cultivators are gradually developing new skills as they increasinglyundertake the specialized production of commercial crops and gain agreater understanding of the relationship between the increasedproduction and increases in their income. In the traditional forms ofsubsistence agriculture they produce root crops as a staple food andsupplementary minor crops such as corn, beans, and various types offruits and vegetables. In addition, they are producing some sraallanounts of certain double-purpose crops such as peanuts and rice, forboth food and sale. The surpluses of other important subsistence cropssuch as bananas, taro, yams, and sweet potatoes, are also sold for cashin local markets.

26. The major staple food crop of the indigenes is sweet potato,which is largely produced and consuaed in the farms. It has the dis-advantage of short storage life and bulkiness. The Territory producespractically no foodgrains, but substantial quantities of rice areimported and used as staple food for plantation labor and urban workers.Rice imports increased particularly rapidly since 1963/64 which, in fiveyears, rose by two-thirds and reached 38,000 tons in 1967/68 - costabout $A6 million.

27. The possibilities for domestic production of rice have beenstudied for several years at the Epo Agricultural Experiment Station atBereina Central District, to determine the most suitable methods ofcultivation and brcoding, as well as the selection of the varietieswhich would be best adaptable to local conditions. Mechanized ricegrowing in the Markham Valley based on the I.R.R.I. varieties is also apossibility which is under investigation. Production in the field hasbeen relatively small so far, only 1,360 tons of paddy rice in 1966/67.The Maprik area, in the East Sepik District, is the main rice growingcenter.

28. Sugar cane is grown for chewing by the natives in many partsof the Territory but there is no local sugar production. Current sugarconsumption of approximately 15,000 tons per year is about half thelevel at which it would be economic to install a modern sugar mill.The Administration does not intend to proceed with sugar until theindustry can be based on local consumption in a volume large enough tojustify a viable sugar mill. In the meantime agronomic research is proceeding.

LIVESTOCK

29. The 1964 Economic Mission observed that the beef cattleindustry in the Territory was very promising and recommended a programof development for a tenfold increase in the cattle population in tenyears. However, the actual development of the industry has so far beenmuch slower. The number of cattle increased fran mid-1964 by 15,500to 42,800 in mid-1967, and the increase was only a little more than one-half of the target in the program. One of the main reasons for thisshortfall is the difficulties in obtaining imports of breeders to expand

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the nucleus breeding herd which is essential in the initial years forraising cattle population. To achieve the program's target, breedersfrom Australia have to be imported at a rate of 2-3,000 per year.However, in the three year period ending mid-1967, only 2,500 wereimported. For 1967/68, it is estimated that only 600 were imported bycommercial cattle raisers. The Territory's agricultural authoritiesprefer imports of commercial Brahman Crossbreeds from Queensland, forthey give the best performance in terms of adaptability to Territoryconditions and weight gain. However, this type of cattle is verypopular and in great demand in Australia too.

30. To encourage imports of breeders by cattle raisers, theAdministration subsidizes some of the import costs. It pays at presentup to $A70 per head for the shipping expenses, including disease inspectionand control at the port of origin, freight to the port of destination,agent's fees, etc. The buyer pays only the transport costs fram theport to the ranch.

31. Another reason for the slow progress in cattle raising is thedifficulties in obtaining suitable land for expansion of existingcattle ranches and establishment of new ones. Such land has to bereleased by the indigenous owners, who are increasingly reluctant to doso. The development in the Jimmi River valley, for example, has beenunder consideration for the past two years and only recently has theGovernment succeeded in purchasing the land which will be offered forcattle leases. But the project is still not underway because of thelack of an access road of 8-9 miles which has not been built.

32. The availability of credit, particularly for the purchase ofbreeders, appears to be another limiting factor. However, as thePapua and New Guinea Development Bank is making livestock loans andaccepting cattle as collateral, it is expected that future availabilityof credit for the cattle industry will be improved.

33. In recent years, the indigenous herds have increased at afaster rate than the non-indigenous, partly because of the smaller baseof the former. In 1968, the indigenes' herds were only about 10 percentof the total stock, but it is encouraging to see more and more indigenesbecoming interested in cattle industry. The indigenes obtain most oftheir stock from expatriate cattle operations, whose rate of expansiontherefore sets a limit to the indigenes' herds. The indigenes alsoobtain some of their stock from government cattle auctions, and stocksin the government stations seem to have gone ahead at the expected rate.

34. Other livestock raised in the Territory, in addition to beefcattle, include dairy cattle, pigs, sheep and goats, horses and poultry.With the exception of poultry which, on the basis of numbers slaughtered,doubled between 1962/63 and 1966/67, the rest of the livestockpopulation (excluding beef cattle) showed no clear trends, except somerecent increases in dairy cattle and pigs in 1966/67.

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35. The Administration conducts a pig breeding program, both forexperimental purposes and for distribution to village people, in aneffort to improve the quality of the local stock estimated to exceedone million. Native pigs are also used in crossbreeding with importedpigs, to determine the type best suited to village husbandry.

FORESTRY

36. Forests cover more than 70 percent of the Territory's area.They include many varieties, from swamp and lowland forests in thecoastal lowlands up to alpine and moss forests in the highland areas.Up to June 1968, 8.4 million acres of forestry resources had beensurveyed, and on the basis of the inventory recently completed by theDepartment of Forests, it is estimated that marketable timber in log formamounts to about 25 billion super feet.

37. Production in 1967/68 increased to 174 million super feet I'oflogs, a 90 percent increase over a five-year period. Volume of exportsof timber more than doubled, and of plywood and veneer increased by60 percent in the same period. With the expansion of building andconstruction, local consumption also increased.

38. Lack of specie-s uniformity %nd inaccessibility have so farposcd sarious problems for large-scale exploitation of forest resources.Generally, the easily accessible coastal forests are very complex instructure, although there are some better accessible foothill forestsalong the coast of Northern New Guinea. On the other hand, the largeareas of good forests in mid-mountain regions (1,500-7,000 feet altitude)are difficult to reach. An exception is the Bulolo Valley (lN1orobe District)linked by road with the port of Lae. Problems of utilization created by themultiplicity of species in coastal forests appear to be considerably reducedsince the problems- asociated ;vith the prpd.uction of pulp from mixed hardwoodspa-c*es have been resolved, thus opening the way for large-sc2le exploitationof forest rosources by using wood chips as base.

39. These problems and the rG-emergence of Indonesia av secure and eco-nomical supplier have so 'far kept disappointingly low the interest of poten-tial buyers of concessimns for Territory timber.40. Following the recommendation of the 1964 Survey Mission, theAdministration has offered new concessions and hired consultants to ad-vise on the development of the timber industry. Also, an advisory groupconsisting of representatives of the timber industry, and of AustralianGovernment and Territory Departments was set up to advise theAdministration on promoting the use of Territory timber locally andabroad.

41. The consultants investigated and reported on the feasibilityof timber development in various forest areas in the Territory,particularly in New Britain and at Vanimo on the northwest coast of theNew Guinea Mainland. In the Vanimo area, which has moderate to low

1/ One super foot is equivalent of 144 cubic inches.

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agricultural potential, the indigenous owners of forest have leased oversome 721,500 acres to the Administration for 40 years for development andsale of the timber resource. The harbor at Vanimo offers an excellentnatural outlet. Several inquiries have been received and representativesof a number of companies have made field inspections. Another promisingarea is the Gogol timber area, similar in topography and species structureto the Vanimo stand. The Government has received two firm applicationsto undertake feasibility studies preparatory to submitting proposals fordevelopment of the Gogol and adjoining timber areas. Both applicants haveproposed development in two phases. The initial phase will consist oftesting techniques in logging, sawing and other forms of conversion, withthe export of wood chips to Japan. If the results of this phase proveto be satisfactory, the second phase envisages large-scale development ofthe Gogol and Ramu forests, with the establishment of sawmills, plymillsand a chipping plant, as well as furniture making in Madang. ForestDepartment officials expressed great confidence in the outcome of thisproject and they feel that it will be the forerunner of a similar large-scale timber industry in Vanimo. However, the provision of roads, bridgesand other basic infrastructure by the Administration is another major con-sideration of the potential investors.

42. The Department of Forestry has set up a laboratory in PortMoresby to study the characteristics and use of the extremely wide rangeof timbers found in the Territory. The Department's activities in re-afforestation are continuing, and planting is proceeding at the rate of3,000 acres per year.

FISHERIES

43. There has been some progress in developing the three majorknown fish resources - cray fish in the vicinity of Yule Island, barra-mundi in the Western District, and prawn in Orangerie Bay. A biologisthas been working in close association with Yule Lobster Enterprises forthe past two years, keeping detailed records of the catch and makingother observations, for the purpose of determining the potential fordevelopment. The marketing of barramundi is done by the operation offactory ships by two companies which buy the fish for cash from theindigenous fishermen, process and pack it on the spot. The OrangerieBay prawn fishery (Central District) has been opened up. A companyfrom Australia, incorporated in the Territory, has a modern factoryship capable of preparing high grade prawns for exports. The companybuys the fish from Territory trawlers operating under contract in thearea. Two other companies, one of which uses 19 boats, have been givensurvey permits to study fish and prawn resources on the south coast ofPapua. Their large-scale surveys will substantially increase the know-ledge about the area, especially in the Gulf of Papua. If adequateresources are discovered, the companies will have to establish processingfacilities in order to retain the fishing licenses.

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THE DEVELOPMENT PROGRAM

44. In general, the agricultural development plan contained inthe Five-.year Economic Development Program, 1968/69 - 1972/93, has rightlyemphasized increase in production and exports with as much diversificationas possible, and the expansion of indigenous participation. These priol-rities are consistent with the key overall objectives of the DevelopmentProgram.

Agriculture

45. The primary source of output growth in agriculture is to be amore extensive utilization of the land. The annual rate of increase ofthe value of agricultural output in the monetized sector during the Pro-gram period is estimet3d at 5.5 percent, and the annual rate of increaseof new planting areas is planned to be roughly 5 percent; the latter isalmost the same as in the previous five years or so.

46. For tree crops - the major part of the agricultural sector -the program calls for an all-out expansion of planting area, except cof-fee, and places considerable emphasis on the new, high value crops - teaand oil palm. Due to the nature of tree crops, the level of productionduring the program period will be determined largely by the plantingswhich took place several years before. On the basis of these plantingsand new plantings in the Program period, by 1974/75 the production ofcopra, cocoa and rubber will probably fall short of the Bank Survey Mis-sion's proposals, but that of tea, palm oil, pyrethrum and coffee shouldexceed the Survey Mission's proposals. This is mainly because of newdevelopments in market prospects and production possibilities that de-veloped after the Survey Mission's report and which affected plantingsin these different crops.

47. Compared with the planned average annual increase of 5 per-cent of new planting area under the five major tree crops, areas undertea and oil palm are expected to increase by more than 30 percent annually,while the area under coconuts is expected to increase only by less than4 percent annually; cocoa and rubber are in between, at 8 and 5 percentrespectively. Thus crop diversification is expected to proceed further,with particularly the reduction of the share of copra. The rate of in-crease of total acreage under cultivation of major tree crops is roughlythe same as achieved during 1962/63 - 1966/67. As far as this targetis concerned, the Program indicates that only the past trend will becontinued.

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Table I.3

Proposed Planting of Tree Crops

1968/69 - 1972/73 (Inclusive)(in thousand acres)

OilCoconuts Cocoa Rubber fea Palm Total

Indigenous New Plantings 108 22 19 7 11_ 167

Smallholder Development 8 4 8 3 10 33Concentrated Village Production 25 8 11 4 1 49Other Village Production 75 10 - - - 85

Non-Indigenous New Plantings 50 35 5 12 9 111

Total New Plantings 158 57 2.. 19 20 278

Total PlantinLJ Area:1967/68 estimate 592 174 42 5.6 0.5 8141972/73 target"./ 705 225 62 25 20

Annual Growth Rate (%) 3.6 5.3 8.1 34.8 32.0 5.0

Share of Indigenes inTotal Planting Area (%)s

1967/68 54 24 11 -5

1972/73 58 28 38 30 54 50

a/ Net of allowance for losses of old trees

Sources T.P.N.G., Programs and Policies for the Economic Development of Papua and NewGuinea, September, 1968

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48. The rather low planned rate of increase in coconut plantingsreflects mainly the lack of incentive for further expatriate investmentin new coconut estates, except as part of multi-crop ventures. Forcocoa, in the near future, the recent low plantings and depressed yieldsare expected to limit the growth in production. Adequate replanting andnew planting programs will hinge on the development of disease resistentstrains. For this development, the Mission suggests that authorities should*eplore further international cooperation wdth institutions in other coun-tries carrying on similar research projects. Discouraged by the decliningworld price, the program indicates that new estate rubber plantings willperhaps show only small expansion, after allowing for the retirement ofthe old trees. Indigenous plantings, which are now very small, will, how-ever, be carried out in certain areas and account for most of the plannedincrease. Owing to the possible restrictions in the future of exportsunder the International Coffee Agreement, the Program does not providefor any expansion of coffee plantings. However, coffee production willcontinue to rise from earlier plantings. Unofficial estimates indicatea possible increase in coffee producing acreage of more than 50 percentduring 1966/67 - 1972/73, mostly from the indigenes.

49. The recent good performance of tea production and exports ledto much more optimistic projections than envisaged five years ago. Totaltea planting area is expected to increase four times during the Programperiod. Nucleus estates with processing facilities will be emphasizedin the initial stage, but smallholder block plantings and village plan-tings are also envisaged, although the extent of these will be influen-ced by the decision yet to be made concerning drainage of the WahgiSwamp (Western Highlands District). For oil palm, the Program expectsthat by 1972/73, 20,000 acres will be planted, shared almost equally bynucleus ectates and smallholder blocks. The first processing plant willbe completed in time to take the first crop of oil palm.

50. The Program also stresses indigenous agricultural development.Apart from concentrated development in the vicinity of existing villages,special development projects involving smallholder blocks will also befostered where the chance of success seems greater. However, the largestexpansion of the indigenous tree crops is expected to come from normalincreases on plantings, and production in small and scattered plantingsassociated with subsistence agriculture throughout all districts, assis-ted by continuation of the existing agricultural training programs. Withall these efforts, the Program envisages that, of the total 278 thousandacres of new plantings of the five major tree crops over the five yearperiod, plantings by indigenes will account for 60 percent. The achieve-ment of this target will depend largely on how adequately the extensionservices will be provided by the Administration. If the target is reached,

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at the end of the period 50 percent of all planting areas under the Fivemajor tree crops will be in the hands of the indigenes, as compared with45 percent in 1967/68. The percentage would be higher if coffee is in-cluded. However, as yields per acre of the crops are substantiallylower under indigenous cultivation, for a given level of output muchmore land is required by indigenous agriculture than by plantationagriculture.

51. The key instrument of change in indigenous agriculture isthe permanent contact of the agricultural extension officers with thenative cultivator. As far as their numbers and quality are concerned,the situation in the next few years will tend to become worse beforeit gets better. Several hundred indigenes have been working as agri-cultural assistants, but only two at the officer level. The principalsource of higher level officers will be the Vudal Agricultural TrainingCollege in New Britain, which offers a full agricultural diploma course.A source for lower level officers is the Popondetta Agricultural Institutein the Northern District of Papua, which offers a two-year sub-diplomacertificate course. Other training courses of 9 to 12 months durationare given at various agricultural extension stations. The rather slowprocess of educating agricultural field wiorkers, and the time needed forthem to acquire experience, result in a gap in the staffing of the agri-cultural extension services, which may continue throughout the Programperiod.

52. For the non-indigenous plantings, the Program provides for asubstantial increase in overseas investment in tea and oil palm indus-tries. Regarding pyrethrum, the price paid at factory door by theexisting plant, at 20.8 cents per lb., is rather low. A simple selec-tion work to increase the pyrethrin content to levels approaching 2percent may be adopted. Growers should be paid on pyrethrin content,and not solely on weight.

53. Regarding other crops, there are no details of targets and con-crete programs of development. Efforts are being made for the introduc-tion of new varieties for rice, for some sugar cane growing in the Mark-ham Valley, and for tobacco cultivation in the Highland Districts. TheProgram also indicates that attempts will be made to increase the produc-tion of fresh fruit and vegetables in the vicinity of urban centers.Research has advanced on a variety of high-value spices and essentialoils such as vanilla, pepper, mint, and others for which the Territoryoffers suitable ecological conditions. For passionfruit, expansion inexport markets has been singled out as a crucial factor in any furtherincrease in production. For peanuts, a decline in the yield was noted.

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5b. In general, the targets of the agricultural program appear tobe within reach, particularly because they more or less follow the pasttrends. However, the Mission feels that greater efforts could be madeand the targets could be surpassed. In particular, measures to increaseyields of indigenous agriculture by adopting sound agricultural practi-ces and using current inputs suitable to the local conditions should becarefully studied. For instance, higher yields of tea - up to 2,000 lbs.per acre - can be achieved even with stumps grown from seeds. Betterspacing of coconut trees should be taught. Reasons for not harvestingfully the coconut and for declining peanut yields should be identified,and the indigenes should be taught to give adequate care to the youngtrees, so as to raise the percentage of trees reaching maturity. Todisseminate information and skills, agricultural extension work shouldalso be expanded. A detailed agricultural research program should bedesigned, and well-concieved priorities established concerning improve-ment of existing crops, development of newq crops, plant disease and pestcontrols, etc. Concentration of efforts, with adequate phasing of theresearch projects, are particularly important in view of the shortage oftechnical personnel.

Beef Cattle

55. The development of the beef cattle industry under the Programwill be much slower than that recommended by the first Bank Mission. Thetarget for 1972/73 is a total herd of 138,000 head, and the target of300,000 is expected to be reached in 1980, five or six years later thanrecommended by the Bank Survey Mission. Successful implementation of thepresent program will require the importation of 10,600 breeders in thefive-year period. For achieving this target, adequate credit is impor-tant and, according to the Program, it will be provided through the bankingsystem, as well as from external sources. Application for Bank Group fi-nancing has also been made.

Timber

56. Although timber development has recently slowed down, the Pro-gram is optimistic regarding timber production and exports in the ensuingfive years. Proven timber resources are now much larger than a few yearsago, and timber production is expected to increase from 174 million superfeet in 1967/68 to 475 million super feet in 1972/73. In addition to sup-plying rising domestic needs, timber is also to beoome a major foreignexchange earner, with its contribution hopefully rising from $A 5 millionin 1967/68 to $A 18 million in 1972/73, next only to coconut products andcoffee. Emphasis will be given to large-scale development and the attrac-tion of expatriate timber operators with adequate financial backing andmarket contacts, following closely the Bank Survey Mission's recommenda-tions. It is estimated that the amount of private investment requiredwill be in the order of $A 35 million, including $A 2.5 million for accessroad construction.

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Conclusions

57. Despite some real gains in particular aspects of its activities,the Territory agriculture has not been moving as fast as it could towarda fuller and move effective utilization of its potential of land and labor.Also, on the whole this is mot likely to happen under the DevelopmentProgram as it does not call for substatially more effort than that whichresulted in the growth trends of the past several ye rs. The Governmentcan influence only indirectly the expansion of the private expatriatesector, but on the indigenous sector it is the principal agent of change,probably more so than in most other developing countries, considering theextremely primitive oonditions of the native farmers. Some improvementin indigenous farming practices can be expected as a result of the workof the rural extension officers which is already under way. But in viewof the modest results of the past, if this effort is not forthcoming ona much larger scale, improvement of indigenous productivity, which isvery low at present, will probably not be sufficient to make a significantcontribution to output for many years to come.

58. There seems to be abundant reasonably accessible land, both forindigenous and non-indigenous agriculture, to permit substantial increasesin output in the next decade or so without major improvements in techni-ques. However, in the case of the indigenous cultivators particularly,an alternative for a more rapid increase in production and income wouldbe a better and fuller utilization of the existing potential of the areasalready under crops, rather than depending entirely on new plantingswhich would take more than 5 years before fruition. In the longer term,the availability of suitable land with adequate ecological conditions foreach particular crop will, of cours9,, set limits to the expansion of ag-ricultural output. With a rate of population growth which means an in-crease by about one-third in 10 years, the time will come, in due course,when development efforts cannot continue to rely merely on extending theland base without material improvement of the level of productivity perunit of land and labor. Increased efficiency is also crucial for theagricultural production to maintain and improve the competitive positionin export markets.

59. Current and capital Administration expenditure in support ofagriculture, livestock and fisheries is to increase from $A 6.7 millionin 1967/68 to $A 7.9 million in 1968/69. But as a proportion of totalTerritory Administration expenditures, it increases only from 5 percentto 5.2 percent. Other expenditures, particularly in land surveys, health,education, as well as building up the economic infrastructure will, ofcourse, benefit agriculture too. Public expenditures on forestry is bud-geted at $A 2 million for 1967/68 but will be reduced to a level of $A 1.6million annually during the Program period, relying for development

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mainly on private investment from overseas.

60. The reorganization of the Department of Agriculture, which wasalready planned in 1964 and was endorsed by the first Bank Mission, wasfinally made official in December 1968. It provides, among otherthings, for the creation of a Rural Economics Research Branch, re-porting to the Director of Agriculture. It is to be hoped that this of-fice will be urgently and adequately staffed to define and carry out acomprehensive agricultural research program, which does not now exist.Although research is by no means absent, it is perhaps too dispersed andit is conducted on an ad-hoc basis and does not go in depth on a few im-portant problems which need investigation. Since it is impossible in anycountry to make the entire agricultural sector move at a fast pace all atonce, the Department of Agriculture should establish priorities for con-centrated action, which would also lead to a more effective use of itslimited manpower and technical resources. More vigirous measures needto be taken to overcome the staff recruitment problems which still existtoday, much the same as five or six years ago.

TABLE OF CONTENTS

Volume II

Annex II - Transport

Page No.

INTRODUCTION .. ............... ..... o o.ee.o...oo 1

RECENT TRENDS AND DEVELOPMENTS

General .. ...... 1

Water Transport ....................... 2

Air Transport ............ 3

Road Transport ................................... 5

PROGRAM FOR FUTURE DEVELOPMENT

General .............. *.9..*..99...99.**.999 6Road Transport .*.e..*..*.9...*..............*.. 7W.ater Transport ...... *,* 7

Air Transport -..*.*.*************............ 8

MAP

ANNEX II

TRANSPORT

A. Introduction

1. As the development of the Territory -has been concentrated

around foreign trading and European settlements in the coastal areas, mari-time links by coastal and ocean shipping have been of predominant impor-

*tance for freight traffic. The recent development of the interior ofGuinea since World War II has, however, been dependent on the develop-ment of air and road transport. Even the start made towards the developmentof the Highlands Districts, , where 40 percent of the total populationlives, would have been much slower without the help of the airplane.In the Territory as a whole, air transport is particularly important inpassenger traffic, in view of the inadequate surface transportfacilities and widely scattered population centers and rugged terrain.Road construction and the use of motor vehicles have been stepped uprapidly in recent years.

2. The basic characteristics and problems of the Territorytransport system have been analyzed in the two previous Bank reportsand recommendations for future development were made. A comprehensivetransport survey for the Territory financed by UNDP with the Bank as exe-cuting agency is nearing completion

reference to the Authorities in the determination of a detailed trans-port development program. Because of the availability of the surveyreport, this report will deal only briefly with the transportationsector in the Five-Year Development Program.

B. Recent Trends and Developments

General

3. Judging from the cargo handled by the major ports, passengersand freights moved by air and the number of registered road vehicles,the Territory's traffic has grown rapidly in recent years at a ratecomparable to, if not higher than, the GNP growth rate of the monetarysector but much higher than the growth rate of the total GNP. Thecombined public expenditure for the construction and maintenance ofvarious means of transport incurred by the Territory Administration andthe Australian Commonwealth Government increased at an annual averagerate of almost 20 percent during 1959/60-1964/65, slowed down to8 percent during 1964/65-1967/68, but is estimated to jump by 27 percentto $A23 million in 1968/69. A large and increasing share of thisexpenditure goes to road transport which has risen from 40 percent oftotal Administration and Australian Commonwealth transport expendituresincurred in the Territory in 1959/60 to 58 percent in 1968/69. Only asmall fraction of the total expenditures on transport facilities iscovered by revenues; a few major ports are the only transport facilitiesthat are capable of paying their way. The great bulk of expenditures onairports and aerodromes is covered by the Australian CommonwealthGovernment. (See Statistical AppendiyS.21)

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4. For 1968/69 to 1972/73, the Administration envisages a totalexpenditure of about $A 154 million for the transport sector out of-$A 1,000 million for the development of the economy as a whole. Butthis is provisional, pending consideration o! the transport surveyreport.

5. The survey is in two parts. The objective of the first partis to recommend a program of investments in the transport sector for1968/69-1972/73. The second part is expected to provide detailedrecommendations for the improvement of highway administration andmaintenance and advisory services in connection with specific high-priority highway projects. The first part was completed in February1969 and is at present under review by the IBRD, the TerritoryAdministration and the Commonwealth Department of External Territories;the second part is due to be completed before the end of 1969.

6. A Co-ordinator of Transport was appointed early in 1967 andin 1968 a Directorate of Transport was set up and given responsibilityfor policy, planning and advisory matters for all forms of land, seaand air transport excluding those aspects of air transport under thejurisdiction of the Commonwealth Department of Civil Aviation. Thiswas a step towards the creation of a Department of Transportrecommended by the IBRD mission in 1964. Previously, -thesSe.respon-

sibilities were divided among several departments and agencies ofthe Administration and the Commonwealth Government.

Water Transport

7. In ocean and coastal shipping, cargo volume handled by theeight major ports of the Territory increased at an annual rate of11.5 percent during the period of 1962/63-1967/68, which is slightlylower than the growth rate of real GNP in the monetary sector butsubstantially higher than that of the total GNP. Ocean cargo unloadedincreased at about 16 percent annually which is almost double the rateof increase of cargo loaded. In 1967/68, total cargo unloaded at theTerritory's major ports was 2.3 times the total cargo loaded, ascompared with 1.6 times in 1962/63. Such imbalance is particularlypronounced in the Territory's shipping traffic with Australia and, ofcourse, reflects the Territory's import surplus.

8. In addition to the overseas shipping services there arecomprehensive coastal and inter-island shipping services linking allthe ports of the Territory. These services are provided both bycoastal and overseas vessels. About 138 vessels are engaged in coastalshipping with an average size of 40 NRT (net registered tons) and anaverage age of 18 years. Many of these vessels are run down and requirereplacement. About 15 percent of the vessels are owned and operated bytrading companies and the rest by independent proprietors, mostlyplantation owners, many of whom also have trading interests. Theservices are primarily geared toward satisfying the needs of theirowners and provide public service only irregularly. In the last two orthree years, the tonnage handled by overseas vessels dropped while thetonnage handled by coastal vessels increased appreciably. in the inter-

main port trade.

9. The Territory has about 50 ports of variou.s sizes, with8 major ports handling overseas vesseIs.TIn addition, there arenumerous jetties and beach landing points handling coastal vessels.The Territory's ports, as pointed out in the two previous Bank reports,leave much to be desired. Some improvements in port faciliti.es havebeen made. A deep water berth has recently been completed at Kieta,and new transit sheds are unrer construction to remedy the shortage ofstorage space which has usually delayed copra exports. In June 1968,a new 450 foot wharf was open,-.d in Hadang and has gone into operationwith the expansion of shed faci'lities. At Rabaul, contract has beensigned for the construction of a new wharf to replace an existing Jetty.

10. To carry out the planning and implementation of futurecoordinated development of the ports, the Administration established aHarbors Board in 1967 as suggested by the 1964 Bank 1ission ,'

which took ov'er'osponsibility for six major ports - namely PortMoresby, Lae, Rabaul, Xadang, Samarai and Kavieng. The Board ownsand operatas thease -ports, and-it has p.Qwer to fixrates.-and portcharges.'. Other public ports are still under either the Controller ofCustoms or the District Commissioners. The Harbors Board has authorityto bring other public ports under its jurisdiction. ' with the es-tablishment of the Board and the.completion of the Transport Survey,more cono-rete steps' in port development are expected.

11. Shipping rates are very important to the Territory, becauseof its heavy reliance on f'oreign trade. The 1964 Bank mission concludedthat the shipping rates for traffic to and from the Territory wereconsistent with the rate structure in the South Pacific region, but therates to and from Australia might affect adversely the Territory'sdevelopment. The leading operator on the Australia/Territory route hasbeen Burns Philp & Co. Ltd., an Australian company which has enjoyedsome privileges and received a subsidy from the Commomnealth bu.dget.The subsidy was terminated at the end of 1968, but there is apparentlystill no control by the Administration over the rates and services asrecommended by the 1964 Bank IvLission. So far the removal of the subsidyhas not led to any increase in shipping rates.

12. Freight rates for cargo to and from Australia transhipped forv allports are generally substantially higher than if handled by the majorports because of the poor facilities and the small volume. Improvementsin the handling capacity of the ports will help to reduce the freightrates for cargo moved along the coast and between the islands.

Air Transport

13. Air transport is more important in passenger movement than freightmiovement and is the major mode for passenger travel ndt only within the Ter-ritory but also between the Territory _nd bther countries. Air transport is.also important'in moving high value exports to the ports, and of other

exports from areas that cannot be reached by road or sea transport atall or during the rainy season. In these places, air freights ofcritically needed medicine, fuel, tools, parts and machines and some-times essential food from the coasts or abroad are also important.

14. In recent years air transport has developed very rapidlythrough the expansion of facilities and services to meet the risingdemand. The number of airports and aerodromes had increased from256 in June 1963 to 395 in June 1968. Every town or administrativestation of any size now has a landing field. However, only the airportat Port Moresby can take large international aircraft, although a similarlarge airport in Lae or Madang if built can bring in more international traf-fic, particularly tzturists, as they are well situated in the centerof places of tourist interest and on the direct route from U.S. westcoasts to Bali and other parts of Indonesia. In the last two yearssome aerodromes have been downgraded with respect to the weight ofaircraft that they can take, thus closing them to DC.3 aircraft.

15. The Qantas-operated Sydney-Port TiYoresby-iManila/Hong Kongservice with Boeing 707 jets introduced in September 1967 has connectedan important international air route wcith the Territory. DuringSeptember 1967-June 1968, it brought in and took out 664 passengers.Air passenger and freight traffic between the Territory and Australia, hand-LAd lLrgcly by ANSETT ANA and TA)., has been increasing since 1962, wgith theformer growing at an average annual rate of over 17 percQnt and the latterat over 19 percent during 1962/63 - 1976/68.

16. There are three scheduled airlines operating within theTerritory. Charter services, limited to certain areas but very importantto the Territory's economy, are provided by scheduled airlines and 16 other-operators licensed for charter services only. They Account for three-quavters-as many passengers as the scheduled services and about six times-thefreight tonnage carried. Passenger traffic on the internal air serviceshas also been growing rapidly, but the freight traffic has fallendrastically since 1964/65, reflecting the improvement in road transportfacilities.

17. Air fares and rates per mile in the Territory are much higherthan in Australia. To meet the needs of the Administration and Common-wealth Departments in the Territory, regular air services are maintainedon routes that do not have enough commercial air traffic to be economic,and the same fares and rates are charged on these as on the moreeconomic routes with high volume of commercial traffic. In addition, re-strictions due to weather and terrain are among other factors accountingfor high fares and rates.

18. Means of reducing air costs, consistent with the preservationof satisfactory safety and operational standards, should be explored.

,Smaller strips which, because of good road ccnditions are no longer jus-tified, should be closed. Airstrips at points generating larger traffc;volumes shculd be brought up to higher standards to accommodate moremodern aircraft. with larger capacity.

Duplication of traffic-handling establishments should be eliminated.The training of indigenous personnel should be intensified to replacethe expatriates wherever it is possible consistent with safety.

Road Transport

19. The lack of adequate transport facilities in the Territoryis most glaring in road transport. The Territory has to cope with acombination of formidable topographical and climatic conditions and asmall scattered population of 2.2 million.

20. According to the latest statistics, the Territory has about7,434 miles of public road, out of which 295 miles are urban roads,1,031 miles are classified as primary and secondary non-urban roadscarrying heavy to medium traffic, and 6,108 miles as feeder and accessroads carrying light traffic._/ They do not constitute an inter-connected road system. With the exception of the Lae-Highlands Roadthe Territory does not have inter-regional roads linking productionareas in the interior to the coast. The Lae-Highlands Road itself isimpassable on several stretches 'at times during the rainy season.- Inmost parts of the Territory there are no reliable road networks eveenwithin the region.

21. Expansion of commercial agriculture and the exchange economyhave been hampered by lack of access to remote areas. Sometimes closedroads prevent the marketing of agricultural products and thus reduceproduction. For example, during the rainy season Mount Hagen's pyre-thrum factory at times has to shut down to await dry weather, becausepyrethrumi cannot reach the plant.

22. On New Britain a fairly good road network exists only around Rabaulcovering the rich copra and cocoa producing Gazelle Peninsula. 1VTew Irelandpossesses ? good all-weather road that runs through ths length of the is-land from Kavieng to Namatanai. -

23. Road haulage is still at a low level because most road net-works are limited to the immediate vicinity of coastal towns and haulageis over relatively short distances. The trucking industry is operatedmostly by the large trading companies and small traders, many of themindigenes. Trucks are used only incidentally for public transport. This prao-

tice accounts in part for high ioad' froigi2t-'rates_in the Territory. Alsocontributing to the high freight rates is the imbalance betveen outuard andinward bound traffic between the coast and the.interior. Shipment from thecoast is about- two a2nd a half times the size of shipment going in the oppo-site direction, causing an unfavorable load- factor on the return trip tothe coast. Freight rates arc also highly uneven, ranging from anywherearound 10 cents per ton/mile on the Bulolo-Lae road to.32 cents per ton/mileon the Lae-Mendi road, depending chiefly on the condition of the roads.

1/ Territory Bureau of Statistics, Transport and Communications Bulletin,No.6, 1966-67. The completion of a comprehensive roads inventory hasproved previous estimates for earlier years to have been inaccurate.

-6-2-4. A;J.,forts are be4ng made to improve road transport. lhe past to.resyears have seen the improvement and upgrading of the road from Laao to Gorc)kawhich provides the Highilndls with a inuch-needed outlet to thc coast. Workis -lsao 'in progress on a road from Pbpondetta to Kokoda in the NdctthwtsternDistrict, and in 1969/70 the roadf Prom Popondetta to Oro Bay wvill be up-gradbd, to be accompanied by the construction of a new deep-water port inOro BRy. ..The road from !Jewak to MSprik in the. Sepik District is being ex-tended to Muku through'Dreikikir to service the large populati.on in thisarea. Tkore arbalso trunk roads proposed for the southwest and north-iwest coasts of B:ougainville..

25. Road traffic statistics in terms of passenger-mile and ton-mile are not available, but the high rates of increase of road vehiclesindicate a rapid growth of road traffic. During 1962-1968, the numberof registered road vehicles increased at an annual rate of 17 percent.The number of motorcars and motorcyles increased even faster than theoverall rate, reflecting the more rapid growth in urban road traffic.

26. The contribution of road users to the construction andmaintenance costs of roads in the Territory is still insignificant.Decision on this matter is expected to be made after the TransportSurvey is completed and considered by the Authorities.

C. Program for Future Development

General

27. The transport sector program of the Five-year DevelopmentProgram proposed by the Territory Administration in September 1968 hasas its objectives the development of a minimum system of efficient andreliable inter-regional land and sea communications, to stimulatediversified rural development, to cope with planned and expected urbangrowth, and to service specific development schemes. It will alsoprovide for cost reduction and improvements in capital efficiency, andintegrate air transport in the overall transport system. Theseobjectives are stated in broad terms because the preparation of a finaland detailed program for the transport sector is awaiting considerationof the UNDP transport survey. The transport survey, now in its draftform, consists of a comprehensive study of the transport sector andvarious recommendations on priorities in transport development and fornecessary organizational and administrative changes.

28. Keeping close to the limits of available resources the teamrecommends several high priority transport projects totalling$A157 million for the five-year period, 1968/69 to 1972.73, as comparedwith $A154 million which is the preliminary allocation to the transportsector in the Five-year Development Program. The team recommends thatinvestment on further facilities for air services during the next fiveyears should not take priority over investment in facilities for surfacetransport, apart from expenditures already contemplated to improve theefficiency of existing services.

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Road Transport

29. At present in the Territory charges on road users for theconstruction and maintenance of roads are in the form of import dutieson vehicles, spare parts, fuels and lubricants, and registration fees.The survey team recommends that the present categories of road usercharges be retained, but that the import duties on fuels and lubricantsshould be raised to increase their relative contribution to revenues.

30. The team recommends a program of investment in highways forthe Five-year Development Program costing some $A108.7 million, of which333 miles of inter-regional roads, costing $A31 million, are as follows:

Inter-regional Roads illeage Cost(in miles) (in $A million)

(1) The South Waghi highway betweenKundiawa and Mount Hagen 60.5 6.3

(2) Completion of the Highlands highwaybetween Hount Hagen and Nendi 81.0 6.4

(3) Construction of the link between Lae andHadang joining Lower Gogol River andDonaru (Usino) 41.0 )

) 7.1(4) Other Improvements of the route under (3) 78.5 )

(5) A second route from the coast to theHighlands through Bundi to Chimbubypassing the Kassam and Daulo Passes 72.0 11.3

Total 333.6 31.1

31. The team also recommends the construction and upgrading of382 miles of District trunk roads at an estimated cost of $A22.millionover the five-year program period. Other high priority investmentsrecommended are $A8 million in development, agricultural and resourceroads, $A6 million in urban roads, and $A28.9 million for road maintenance,and $A9.8 million in rural development roads.

Water Transport

32. A major study of sea transport covering overseas and coastalshipping services, port development and cargo handling, has beencompleted and its findings were made available for the UNDP TransportSurvey team. More detailed program will be formulated followingconsideration of the Survey.

33. In the draft UNDP Transport Survey, the team recommends somespecific high priority port projects. Noting the need for a new portsite at Port M4oresby because of serious limitations regarding long-term

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development at the present site, it recommends detailed study of anothersite and deferment of the proposal for substantial reclamation at theexisting port. For the port of Rabaul it recommends the replacement ofthe existing wreck wharf by a modern coaster wharf wlhen the proposed newdeep water wharf is completed. It also gives high priority to theconstruction of a deep water wharf at Oro Bay, and the proposed new deepwater wharf at Wewak.

34. With the completion of the Transport Survey the Harbors Boardis expected to prepare a comprehensive and final port developmentprogram for the next five years, or even beyond.

35. The survey team recommends the extension of the jurisdictionof the Harbors Board to cover eventually all the secondary and tertiaryports in the Territory, and that the Board receive a fee or subsidy forrunning the uneconomic ports. The team also recommends that the Boardshould consider raising charges, preferably on a differential basis, inorder not only to increase port revenue but also to encourage betterutilization of all facilities and encourage higher throughputs.

36. The total investment program for ports and shipping recommendedby the consultants for the next five years amounts to $A21.1 million,broken down as follows (in $A million):

M4ain ports 4.7Other ports 4.4Miscellaneous 2.1Maintenance 2.0Special Surveys and investigations 1.0Administrative fleet (capital) 2.0Administrative fleet (maintenance) 4.9

Total 21.1

Air Transport

37. The Development Program provides for major works on the Laeand Wewak aerodromes during 1968/69 and for the upgrading of theaerodromes at Port Moresby, Goroka, Buka, Rabaul, Lae and Madang insubsequent years. It also provides for the acquisition of land forfuture development of the runway at Madang.

38. The survey team endorses the Administration's works programfor aerodromes, and endorses in principle, subject to the results ofdetailed investigations, the expenditures of the Commonwealth Departmentof Civil Aviation on works directed at improving the efficiency ofexisting air services and aircraft utilization. It envisages totalinvestments of about $A21 million, of which about $A16 million will befor the construction and improvement of airports and $A6 million formaintenance and recurrent works.

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39. In view of the high cost of air services in the Territory theteam questions the theoretical economic benefit of competition implicitin the Two-Airline Policy, and recammends consideration of a single air-line in which the Administration has a controlling financial interest.Such an airline, it is suggested, would take over the main internalroutes leaving more room for the development of tertiary services bylocal operators.

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TABLE OF CONTENTS

Volume II

Annex III - Population, Manpower and Education

Page No.

Population ......... ***........... 1

Family Planning ......... 0* ....... 3

Manpower and Employment ....... *........... 4

Participation by Indigenes ................ 4

Education ...... .. ..... * ... * ... 7

ANNEX III

POPULATION, MANPOWER ANDEDUCATION

1. Ihe Territory's population, manpower and education have theirunique characteristics and problems. The fragmentation in the geogra-phical distribution of population, the great number of spoken languages,and the low level of education are among the many factors which contri-bute to the insufficient supply of suitable manpower for public admini-stration, the education system, and the monetized economy. On the otherhand, the rate of population growth tends to rise, creating a large pro-portion of young dependency in the population, and adding burdens to theeconomy. While land resources are, in general, still abundant to absorba larger number of population, a satisfactorily rapid rate of increasein indigenous employment outside indigenous farms will mainly depend,apart from an increase of capital investment, on how rapidly the indi-genes can be educated and trained. In the indigenous farms, as well asin other fields, a general increase in the educational and skill levelwill also help to raise productivity.

2. The availability of the results of the 1966 Population Censusand the 1967 Census of EmpLoyers has made it possible to present moreup-to-date and detailed information on population and manpower than thatcontained in the previous economic reports. Further progress in educa-tion since the last Mission's visit, which is imnressive, will also bedescribed below.

Population.1/

3. The 1966 Population Census recorded a total Territory popula-tion of 2.18 million, including around 35,000 non-indigenes, largelyAustralians or Europeans. According to the Administration's mid-yearestima-tes, the indigenous population increased between 1955 and 1966 atan average annual rate of 2.3 percent. Earlier population estimates may

1/ The 1966 Population Census was the first in the Territory coveringthe indigenous population. Previously only the non-indigenous popu-lation was counted as an adjunct to the Australian Census. Regularannual mid-year estimates of the indigenous population, however, 'have been carried out by the Administration based on village regis-ters. As registers are updated at various times, depending on pat-rol availability, the "mid-year estimates" do not apply to a specificdate but result from an aggregation of Village Registers at June 30of each year (see Population Tables in Statistical Appendix ). The1966 Census was a sample census, due to lack of transport facilitiesand skilled personnel. The enumeration of the rural village popu-lation was restricted to a representative sample of about 'O percentof the rural villages, i.e. around 1,200 villages. But it was pos-sible to completely count the entire non-v1llage populatiort-. .all ±rAigenes anc ncn-indignes. ir. urbans areas, Tr.ntat+ior.s and ot W;:-commerrcial establisrments, rissions, Gc5vernient pos-(s, etc.

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have been on the low side, since only gradually, as Administration con-trol was extended over the Territory, could population records be estab-lished. Since 1966 the population growth rate of the indigenes hasincreased to about 2.4 percent per annum, raising total indigenous popu-lation to an estimated 2.28 million by mid-1968.

4. The non-indigenous population has tripled since 1950 with in-creased immigration of Australians and Europeans into the Territory. Themajority of the Australians and Europeans consider the Territory only atemporary residence; they work in the Government, on plantations, inbusiness, for missions, or in the professions. Other Australians, however,owning plantations or businesses, regard the Territory as their home. Thesame is true for the small Asian - almost entirely Chinese - community, which

-. lived here for generations. They are mostly engaged in commerce,plantations, and coastal shipping.

5. The Territory's population density is low, with only 12 personsper square mile in 1966. However, density varies considerably from dis-trict to district. Almost 40 percent of the total population lives inthe four Highland districts on New Guinea, with densities ranging from 30persons per square mile in the Southern Highlands District to 60 in theChimbu District. By contrast, the vast Western District and the GulfDistrict have densities of only 1.5 and 3.7 persons per square mile res-pectively.

6. The degree of urbanization is still very low in the Territory.Largest tomns are Port Moresby, the capital, with above 0,000 residents,followed by Lae (17,000) and Rabaul (11,000). In 1966, 88 percent of theindigenes Xived in rural villages, another 7 percent in "rural non -villages".., only 5 percent lived in towns. By contrast, 70 percent of thenon-indigenes resided in towns.

7. The sex composition of the indigenous population, according tothe 1966 Census, is characterized by a preponderance of males. Ihis im-1Zlance permits the absence of male members from villages -. t-thcut vido-spread negative effects on the f-mnily structure in the labor supplyingareas. Workers employed under agreement account Tar opproximately 19percenrt 0o D.ll indigenous male employ6es; but they are seldom absent'or periods longer than t-xjo years.

1/ Missions, Government posts, plantations, and other commercial enter-p rises.

8. For the first time, data on age structure of the indigenouspopulation is made available from the Census. It shows that, in 1966O3 percent of the population was below 15 years Qf age, another 45 per-cent was in the 15-45 year age group, comprising the economicallyactive agerange in the Territory. Slig'itly under 13 pergent of the population wasover 45 years of age. Since chronological age still means very littleamong most indigenous groups, the information on which these data arebased contains, of course, a substantial margin of error. The figures,however, correctly reflect the rapid decline in infant mortality butalso a rather low life expectancy.

9. Correcting some of the inconsistencies of the censu ,,figureson the basis of other available information, Prof. van de Kaa- (Austra-lian National University) arrived, for 1966, at a birth rate of 45 perthousand, a death rate of' 23 per thousand, and a life expectancy rateat birth of around 40 years. Assuming no basic change in the fertilitypattern and an increase in general life expectancy to 50 years by 1971 -1976, van de Kaa projects a population growth of 2h.7 per thousand perannum during 1966 - 1971, rising to 27.9 per thousand during 1971 - 1976.Under these assumptions, the Territory's indigenous population in 1976would be nearly 2.8 million, or 30 percent larger than in 1966, and theproportion of the population in the younger age groups would be rising.This situation tends to increase substantially requirements of education,housing, etc., and therefore stretch the Territory's resources.

Family Planning

10. Family planning measures have been started by the Administra-tion on a small scale. Main concern at this stage is not acute popula-tion pressure, although some pressure is being felt especially in theGazelle Peninsula, the Chimbu and the East Sepik Districts, but ratherto ensure that population growth keeps in line with the provision ofschools, health services, employment and housing. IUD's are availablefreely, and other means of contraception can be purchased as required.By mid-1968, family planning advice was being given at 25 centers and2,625 women sought advice, of whom 90 percent was offered assistance(2,152 accepting IUD's and 243 oral contraceptives). The Administra-tion started in 1968/69 a program of inserting 6 - 7 thousand IUD's an-nually, involving expenditures of $A 7,500 in 1968/69 and around$A 10,000 per annum thereafter. In certain areas Troteih'def'icieniesar3 a problem which is aggrevated bv sh6rt' spacing of births. Sjpocial1famil: planning training courses for nurses and other health and socialwelfare workers commenced in Poort -Koresby in. arly 1969.

1/ D.J. van de Kaa, Projection of Papua and New Guinea's IndigenousPopulation, 1966 - 1976

M4anpower and Employment

11. According to the 1966 Population Census, the indigenous workforce totalled 1.26 million persons, of which only 18 percent were fullyintegrated in the money economy, while 46 percent were still entirely inthe subsistence sector. The rest was categorized as belonging to thetransitional sector, i.e. they work, in varying degrees, both in the sub-sistence and in the money economy.

12. In July 1967 a Census of Employers in the Territory was carriedout, which provides comprehensive statistics of employees for theTerritory classified by industries. Self-employed are, however, not in-cluded. Coverage of enterprises involving non-indigenous participationwas over 99 percent. Coverage of non-indigenous and indigenous non-villageemployment was equally high, except for the members of the Defense forcesand domestic servants, neither of whom were included in the Census. Also,a limited Manpower Survey was conducted in 1967, whose results will beavailable later in 1969.

13. According to the Census of Employers, employment in mid-1967totalled 144,000, of which 123,000 were indigenes. The importance of thepublic sector, predominantly the Administration, is reflected by the factthat 25 percent of the indigenes and over 40 percent of the non-indigeneswere working in this sector. The two other large groups of indigenousworkers were in private agriculture (35 percent) and in missions (13 per-cent). Indigenous employmenu in commerce, manufacturing, and building andconstruction was relatively small.

14. Among the non-indigenes, apart from employment in the publicservice, about 20 percent worked in primary and secondary production, aswell as in transport. A relatively high percentage (14 percent) was em-ployed in commerce and banking, and about 15 percent in the missions.

15. Available statistics show that indigenous employment as a wholeincreased between 1962 and 1967 at an annual rate of 5.7 percent, only /slightly below the overall economic growth rate. Between 1962 and 1966-employment in agriculture (including forestry) rose by only 0.8 percentper annum, with no increase in the copra and cocoa plantations, some de-cline in rubber, but sharply rising employment in coffee and, more lately,in tea plantations. Employment was increasing rapidly from a low base inmanufacturing, construction and education, and less rapidly in transport.

Participation by Indigenes

16. The preceding statistics show that the Territory has a great po-tential supply of manpower for expanding the monetized sector of theeconomy, but that the realization of this potiential has been progressingrather slowly. Insufficient inducement for leaving the subsistence economy,

1/ The 1967 figures are not comparable with the preceding ones, sinceindustry classification is now based on Australian Commonwealth Classi-fications and Classified List of Industries.

lacking cash employment opportunities (especially in areas with limitedpotential for commercial crops), inadequate knowledge of employment pos-sibilities, and great difficulties in the mobility of labor due to pooror rather e:pensive transportation facilities, and lack of education andtraining are the major constraints.

17. Literacy in the Territory is still very low. According to the1966 Population Census, only 23 percent of the indigenes over ten yearsof age were literate - i.e. they could read and write simple sentences inEnglish, Pidgin, Police Motu, or in one of the local languages; not morethan 11 percent were literate in English. Only 30,000 of the indigenes(2 percent of the total over 10 years) had received a full primary orhigher education in schools teaching English, about 14,000 had receivedsecondary education, and only 33 tertiary education.

18. The low education level among the indigenes in the Territoryresults in an extremely heavy dependence on expatriates, not only in mana-gerial positions and top functions of the Administration, but even down tothe medium levels of skilled labor, (clerical staff, qualified artisans,trained technicians, etc.). In fact, over 30 percent of the non-indigenous:Labor force were employed at ser,iiskille-7 levela.a

19. The Administration has become increasingly aware of the slowprocess of indigenization in economic activities and in the public service.Expatriate labor is usually very expensive and, as evident from the re-cent difficulties of recruiting teachers, agricultural officers and otherpublic servants, it is sometimes not easily available, especially if re-cruitment is generally limited to Australia, Newi Zealand and the UnitedKingdom. In addition, local demands for a faster indigenization of eco-nomic and public life have been becoming stronger.

20. Indigenous participation in manufacturing industries o~-her than asE?riDIoyees up to-foramen or supervisors. is-still very Iiuited, . tI.ougb aji in-erLasi.ng number of inidigones have been' opening small trade stores. Ownershipand management of virtually all industrial undertakings are in the hands ofexpatriates. This situation is due mainly to the lack of basic education,inability to keep adequate financial records and to conduct sound businesspractices, limited opportunity to acquire skills, and finally competitionfrom experienced and established expatriate enterprises.

21. Recognizing the need to increase indigenous participation inbusiness, the Administration has instituted some pilot programs. A Busi-ness Advisory Service has been set up to advise and assist the indigenesin establishing and conducting businesses. Business Advisory Offices havebeen set up in six towns, but at present they are seriously understaffedand poorly equipped to handle the assigned tasks. The Mission feels that

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the staff of their Service should be greatly expanded and better supp-lied with the required equipment. To overcome difficulties in recrui-ting permanent advisory staff, the Administration might try to hireretired businessmen and even to engage foreign consultants from Australiaas well as other countries. Officers in the Business Advisory Servicemay be sent abroad to study similar programs which have been successfulin countries such as Malaysia, Singapore, and the Republic of China.

22. The function of the Business Advisory Service should also beexpanded beyond teaching such techniques as bookkeeping, accounting,invantory keeping, etc., to provido, in addition, training in basicindustrial skills. We recommend a continuing assessment o: the n-dustrial opportunities for indigenes, with tlle purpcse of indicatingindustrial opporturnitios and of proviA' ng a more concrete guidance tothe iniigehcs for entaring into suitl-he industries, especiall:r thosethat can be operated on a small scaei.e. Once these possibilities are

'Identified, industrial training in the relevant skills shculeV be of-fered to the indigenes.

23. Training of indigenous apprentices by expatriate employers haveso far been disappointing2. In addition to pure lack of interest, thereare also disincentives such as cost of training and the possibility oflosing trained personnel to non-training competitors. The Mission there-fore welcomes the initiation of the Indigenous Training Incentive Scheme,inwhich the Administration provides subsidies to employers of apprentices tomeet part of the costs of apprenticeships and permits subsidies to sponsorsof full-time students at educational institutions and participants of ap-proved short-term formal courses of vocational and industrial training.The program will start in 1969/70 on a small scale, with $A 60,000 appro-priated from the budget.

1/ The reports of the Study Group on Industrial Development and theStudy Group on Import Substituting Industries will provide a veryuseful background for this study.

2/ To date, the private sector has trained on an average only 40 per-cent of the apprentices, the rest being trained by the Administra-tion or Government institutions (e.g. Electricity Conmission).

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24. Progress in indigenization, or "localization" of the Territory'spublic service has also been made. Expatriate recruitment has lately beenonly on temporary contract, not on permanent civil service basis. As ofJuly 1968 there were about 6,700 expatriate civil servants in the Adminis-tration, as compared to 18,350 local public servants. About 1,700 ofthe expatriates were permanent Territorial public servants, the otherswere on contract, many of them on leave of absence from the Australiancivil service.

25. Secondly, a single salary scale for expatriate and indigenousemployees, a rather controversial issue in the past years, has been sub-stantially adopted. However, remunerations to the expatriates are broughtup to Australian standards by additional large allowances and fringebenefits.

26. Thirdly, another improvement is the replacement of the institu-tion of the Public Service Commissioner by a Public Service Board withindigenous participation. The Administrative College near Port i4oresby(present full-time enrollment 280, with resident capacity of 350), andthe other institutions of tertiary education in the Territory are playingan important role in educating local cadres for the Administration.

Education

27. The social and economic advancement of the indigenous populationhinges basically on their education. Wilith increasingly heavy expenditureson education, indigenous school enrollments have risen rapidly in recentyears. At the time the Population Census was taken - in mid-1966 - about46 percent of the school age children between 5-12 years were enrolledin primary schools. Only 7.4 percent of the relevant age groups, however,was enrolled in secondary, technical, and vocational schools.

28. The mission schools, the pioneers in education in the Territory,are an integral part of the education system under Government control.At present 65 percent of the primary pupils attend mission schools. Butthe number and enrollment of Administration primary schools has beenincreasing rapidly. On the secondary level, 60 percent of the studentsin 1968 went to Administration institutions, and only 40 percent to missionschools. The Administration subsidizes the mission schools in various ways,

29. At present, primary schools teach the pupil from a preparatoryclass to standard grade 6. Since the majority of the primary schoolpupils will not proceed to secondary schools, the Administration isattempting to orientate the curriculum more to the practical sides of lifeand work, particularly to the special conditions in the Territory'srural communities. The Development Program foresees increased localresponsibility for the management and upkeep of primary schools, includingself-construction schemes for teacher housing, classrooms, and boardingfacilities for pupils living far away from school. In this respect theresponsibility of the LocaL Government Council would be enhanced.

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30. Following the recommendations of the 1964 Bank Survey Mission theAdministration has recently put considerable emphasis on the expansionof secondary, vocational and technical education. During 1965 - 68,enrolment in the Administration's secondary schools increased at 26 per-cent annually, in contrast to less than 10 percent annual increase inthe enrolment in the Administration's primary Territory schools. Inaddition, the student population in the Administration's vocationaland technical schools about doubled during this period.

31. The I1'ission welcomes the expansion of technical and vocationalschools. The vocational schools offer short courses in particular skills(e.g. building, mechanical maintenance, plumbing, etc.), catering forsome of the standard gra.e 6 primary school leavers unable to find placesin secondary schools. Technical schools currently provide two-yearcourses of pre-apprenticeship training for students, following a similarprogram like secondary schools. It is planned for the future that thesecondary schools will take over the general technical courses of thetechnical schools. The technical schools will then be upgraded to"technical colleges", accepting Form 2 leavers of the secondary schoolsfor further specialized technical education.

32. The indigenization of elementary school teaching staff hasprogressed in recent years. Three government and 14 mission teachercolleges had an enrolment of about 1,500 in 1968. There were over1,700 indigenous teachers working at Administration primary schools,and ano$ er 2,900 certificated indigenous teachers at the missionschools.4 This compares with 516 and 673 expatriate staff respectively.

33. The Mfission was impressed with the recent developments intertiary education. With the inaugurationin 1967 of the University ofPapua and New Guinea in Port Moresby, and the Institute of HigherTechnical Education in Lae (Hitech), the Territory now has 8 tertiaryeducational institutions,j/ The University with an enrolment ofdbout 550 (including part-time students).at present, has a four-yearsystpi; but it offers also a preparatory rear before regular stud;es.Hitech has n current student population of 1h0 in 1969. There is apeed, which is being recognized, for a better coordination of tertiaryeducation in the Territory, in order to avoid duplication of coursesand to ensure morc economical use of resources.

1/ The missions currently employ about 550 "permit" staff.

2/ In addition to the above, an administrative college, a medicalschool and a dental school in Port Moresby, a forestry collegein Bulolo, an agricultural college in Vludal near Rabaul, andthe Goroka Teachers' College for secondary school teachers.