NRI: Forsake Rice Monopoly Plan

Tuesday 24th January, 2012

THE National Research Institute (NRI) in its spotlight commentary this week wants the government to abandon its plan to monopolise the rice industry, saying it’s devastating to people’s welfare.

The government’s leading think tank is calling on the government to learn from failed agreements like Interoil, claiming that aside from natural monopolies which can be justifiable, protectionist monopolies as in this case are generally considered to be detrimental to overall welfare.

“Current competitive markets in the rice industry in PNG have proven to be of public benefit as the proposed rice monopoly has the potential of undoing the benefits of competition including lower prices, variety of rice products and food security currently enjoyed by the general public.”

According to spotlight, terms and conditions of project proposals should be thoroughly screened by independent qualified experts apart from the government team through a detailed cost-benefit assessment to not only determine project viability but also the opportunity costs involved.

Spotlight also raised the issues of profiteering and transfer pricing if Naima Agro Industries, a foreign owned company is going to be involved, arguing that the proposal promotes anti-competition and contravenes the ICCC Act (2002) that propagates competition and fair trading.

“At one point in time Trukai Industries monoplised the rice industry in PNG and only through freeing up of the industry through competition that PNG has now a competitive rice industry with competitors, even though Trukai industries commands a larger market share.” the commentary argues.

NRI is calling for a free and competitive market and supports continued competition as it did for the Mobile phone industry and the Aviation industry. The NRI Spotlight on rice monopoly is co authored by Dr Modowa Gumoi and Logea Nao of NRI’s Economic Policy Program under its Wealth Creation Pillar

The National Research Institute - hosting the policy discussions that will shape Papua New Guinea’s future development.

ENDS