ISSN 1562-8655

COFFEE INDUSTRY CORPORATION LTD PAPUA NEW GUINEA

INDUSTRY OPERATIONS DIVISION

COFFEE REPORT NO.72

MARCH 2008

“LUKAUTIM KOPI NA KOPI BAI LUKAUTIM YU” “LOOK AFTER COFFEE AND COFFEE WILL LOOK AFTER YOU”

Price:

K11.00 (PNG) US$20.00(Overseas)

Single copies to PNG growers

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TABLE OF CONTENTS

CHIEF EXECUTIVE’S FORWARD.............................................................................................................3 1.1 ICO NEWS ...............................................................................................................................................4 1.2 World Supply, Demand & Prices..............................................................................................................4 1.3 Domestic Trends & Developments ...........................................................................................................4

2.0 INTERNATIONAL COFFEE ORGANISATION.............. ....................................................................4 3.0 WORLD SUPPLY & DEMAND...............................................................................................................7

3.1 Production.................................................................................................................................................7 3.2 Exports ......................................................................................................................................................9 3.3 Consumption.............................................................................................................................................9 3.4 STOCKS .................................................................................................................................................11 3.5 PRICES...................................................................................................................................................11

3.5.1 Futures Prices ............................................................................................................................................... 11 3.5.2 ICO Indicator Prices ..................................................................................................................................... 14 3.5.3 Retail Prices.................................................................................................................................................. 15

4.0 DOMESTIC TRENDS AND DEVELOPMENT. ..................................................................................16 4.1 PRODUCTION.......................................................................................................................................16 4.2 EXPORTS BY VOLUME AND VALUE..............................................................................................17

4.2.1 Volume ......................................................................................................................................................... 17 4.2.2 Export value ................................................................................................................................................. 18

4.3 GREEN BEAN EXPORTS BY DESTINATION ..................................................................................19 4.4 GREEN BEAN EXPORTS BY GRADE. ..............................................................................................20 4.5 GREEN BEAN EXPORTS BY GRADE AND DESTINATION. .........................................................20 4.6 EXPORTER MARKET SHARE............................................................................................................21 4.7 GREEN BEAN EXPORT PRICES BY EXPORTER AND GRADE....................................................22 4.8 EXPORTS OF ORGANIC AND FAIR TRADE ...................................................................................22 4.9 ROAST AND GROUND COFFEE........................................................................................................23 4.10 DOMESTIC PRICES AND MARKETING MARGINS......................................................................24

5.0 QUALITY .................................................................................................................................................24 5.1. Cup Quality and Moisture Content ........................................................................................................24 5.3 Defects ....................................................................................................................................................25

5.3.1 Defective flavours ........................................................................................................................................ 25 5.3.2 Physical Defects ........................................................................................................................................... 25

6.0 AVERAGE DIFFERENTIALS...............................................................................................................26 6.1 Differentials ............................................................................................................................................26

2008 PROCESSORS & EXPORTERS DIRECTORY ...............................................................................27

TABLES TABLE 1: WORLD SUPPLY, DEMAND, STOCKS AND PRICES...............................................................7 TABLE 2: PRODUCTION ESTIMATES FOR THE 2007/08 .........................................................................8 TABLE 3: ICO MEMBER EXPORTS BY GROUP .........................................................................................9 TABLE 4: COFFEE DISAPPEARANCE 2002/03– 2006/07 .........................................................................11 TABLE 5: INVENTORIES OF GREEN COFFEE IN IMPORTING COUNTRIES .....................................11 TABLE 6: ICO INDICATOR PRICES JANUARY 2006 TO MARCH 2007 ................................................14 TABLE 7: RETAIL PRICES FOR ROAST & GROUND COFFEE...............................................................15 TABLE 8: PNG COFFEE BALANCE 2002-2007 CALENDAR YEARS .....................................................16 TABLE 9: AGRICULTURAL EXPORT EARNINGS BY COMMODITY,..................................................19 TABLE 10:GREEN BEAN EXPORTS BY GRADE AND DESTINATION.................................................21 TABLE 11:WEIGHTED AVERAGE F.O.B PRICES.....................................................................................22 TABLE 12: EXPORTS OF ORGANIC AND FAIR TRADE COFFEE.........................................................23 TABLE 13: MONTHLY AVERAGE DOMESTIC PRICES ..........................................................................24 TABLE 14: SUMMARY OF CUP AND DEFECT INDICATOR POINTS ...................................................25 TABLE 15: COMMON DEFECTS IN GREEN BEAN SHIPMENTS...........................................................25

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TABLE 16: AVERAGE DIFFERENTIAL. .....................................................................................................26 CHARTS CHART 1: COFFEE PRODUCTION BY CALENDAR YEAR, 2002 -2007.......................................................17 CHART 2: COFFEE EXPORTS 2002-2007 .....................................................................................................17 CHART 3: COFFEE EXPORTS BY QUARTER: 2003-2007............................................................................18 CHART 4: MONTHLY EXPORTS BY CALENDAR YEAR: 2003-2007............................................................18 CHART 5: QUARTERLY EXPORT VALUE BY CALENDAR YEAR, 2003-2007.............................................19 CHART 6: COFFEE EXPORTS BY DESTINATION IN 2007...........................................................................20 CHART 7: GREEN BEAN EXPORTS BY GRADE IN 2007 .............................................................................20 CHART 8: EXPORTER MARKET SHARE IN 2007 .........................................................................................21 CHART 9. COMMON GREEN BEAN DEFECTS IN 2007 SHIPMENTS .........................................................26

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CHIEF EXECUTIVE’S FORWARD

Papua New Guinea Coffee production increased from 802,880 bags in 2006 to 987,229 bags in 2007. The increase was not only attributed to the biennial ‘on-year’ production cycle but also was encouraged by higher prices and favourable weather conditions.

Exports for the 2007 totaled 908,745 bags (54,725 tonnes), representing an increase of 7% from 848,801 bags in the previous year reflecting a 23% increase in production. Export earnings totaled K409 million, 21% higher than the export earnings of 2006 calendar year. This is due to higher average F.O.B prices for the main export grades including Organic, Fairtrade-organic and Fairtrade coffee exported in 2007 calendar year. According to Bank of PNG statistics (Quarterly Economics Bulletin, December 2007), coffee accounted for 27% of total agricultural export earnings (excluding Refined petroleum products, manufactured goods, Logs and Fisheries) while Oil palm contributed 44% followed by cocoa (17%), copra (8%), tea (1.3%) and rubber (1.5% each) in 2007 calendar year. In the speciality market, exports of organic, fairtrade-organic and fairtrade coffee totalled 28,108 bags valued at K15.2 million in 2007 as compared to K7.56 million in 2006 calendar year. Traditionally coffee prices are extremely volatile throughout the years, however, in 2007 it had been relatively quiet especially in the arabica market where prices have fluctuated within fairly well defined parameters. Robusta prices, however, have risen substantially, thereby narrowing the differential between arabica and robusta prices. Due to intensive speculative movements on the consequences of a prolonged absence of rain in Brazil the prices in the second half of 2007 climbed to new heights of 140 cents/lb on New York futures market. However, that was short-lived as a result of significant downfalls of rain in late October which ended the drought in Brazil. The market is certainly not as optimistic about prices and therefore further price falls in the market cannot be ruled out. Any comments or suggestions about this report are welcome and should be directed to the General Manager, Industry Operations Division or the Chief Economist.

RICKY MITIO, ML Chief Executive Officer

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1.0 SUMMARY

1.1 ICO NEWS

• The Council and Executive Board of the International Coffee Organization met in London on the 24th and 25th January 2008. This was a relatively short meeting, the main purpose of which was to approve the designation of the International Coffee Organisation as the depositary for the International Coffee Agreement 2007.

• Things are now all set for the new Agreement to come into force on 01 October 2008. 1.2 World Supply, Demand & Prices

• The latest statistics from the ICO suggest that global availability for the crop year 2007/08 is around 174.9 million bags.

• The ICO suggest that production in 2007/08 will be lower than the last year at around 118.1 million bags some 9.0 million bags (or 7.0%) lower than in 2006/07. F. O. Licht put world production at 123.4 million bags; the Neumann Group put it at 121.4 million bags, while the USDA put it at 122.9 million bags.

• Exports by ICO member countries to all destinations during calendar year 2007 totalled 95.52 million bags. This is 3.41 million bags or 3.7% higher than was recorded in 2006.

• The ICO have again raised their estimate of world consumption in 2007 putting it 1.6 million bags higher than they did just 4 months ago at 120.9 million bags. This is 2.7 million bags more than the estimated consumption in 2006 and represents a growth rate of around 2.3% per annum.

• Throughout the past four and half months both markets have witnessed a real roller coaster ride with prices initially languishing in the last part of 2007 before exploding upwards throughout the first three months of 2008 only to suddenly collapse in late March.

1.3 Domestic Trends & Developments • Coffee production in the 2007 calendar year totalled 988,096 bags, 23% higher than 2006

production. • Exports likewise, rose by 7% from 848,801 bags in 2006 to 908,745 bags in 2007. • Export earnings totalled K409.1 million, 21% higher than the export earnings of 2006 calendar

year. • The main export destinations for PNG coffee in 2007 were Germany (43.7%), USA (19.5%),

Australia (19%) and Japan (7%). • The main export grades comprised Y1 (52.5%), PSC (16%), X (12.3%), A/AA (8%), Y3 (3.5%)

and Robusta (0.7%) • Exports of organic, fairtrade-organic and fairtrade coffee totalled 28,108 bags valued at K15.2

million in 2007. • The average proportion of F.O.B Y-grade price being realised by PNG coffee growers increased

from 70% in 2006 to 73% in 2007.

2.0 INTERNATIONAL COFFEE ORGANISATION The Council and Executive Board of the International Coffee Organisation met in London on the 24th and 25th January 2008. This was a relatively short meeting, the main purpose of which was to approve the designation of the International Coffee Organisation as the depositary for the International Coffee Agreement 2007. This was necessary as the United Nations were no longer prepared to accept copies of the Agreement in Portuguese as official texts and given the importance of Brazil in the Organisation, the only solution was to find another institution or body to act as the depositary. The Government of Brazil had offered to fulfill this function but it was agreed that the ICO would be a better, more neutral, body for this function.

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There had been some doubts as to whether the ICO could act as the depositary for its own Agreement but this appears to be acceptable under International Law. Consequently Resolution 436 was adopted and this now completes the negotiations for the 2007 International Coffee Agreement, which is due to come into force on the 1st October 2008, providing a sufficient number of countries ratify their membership. The Executive Board also approved Terms of Reference for a seminar to be held by the ICO in May this year on Geographical Indications. This should have been a straightforward issue but given the fact that Geographical Indications are a subject of negotiations at the World Trade Organisation, a number of delegations were keen to ensure that this seminar should be seen purely as an information seminar, rather than implying any sort of negotiation over the subject. Consequently the wording of the Terms of Reference were closely scrutinised and revised to ensure complete clarity over the purpose of the event. It was interesting to note that consumers attempted to introduce the concept of sustainability into the Terms of Reference, but most producer delegations agreed that this was pushing the association between the two subjects too far and after some debate all such references were removed. A presentation was given in the Executive Board on the Coffee Promotion Network website which is being funded by producers. This is a Brazilian initiative which aims to create a social and business network that will spontaneously generate initiatives aimed at promoting consumption. The website has now been created and the organisers are going through a testing phase with the aim of officially launching the site in a couple of months time. Papua New Guinea has always been rather suspicious of this initiative and not really convinced that it will do the things that it claims, but the internet is a medium through which new concepts can take off in unexpected ways and it is possible that this initiative might eventually produce results. However those behind the concept were not able to explain what targets had been set for the network or describe any criteria which could be used to determine in the future whether this idea was a success or not. Consequently the Papua New Guinea remains sceptical. Earlier in the week the Steering Group on the Health Care Professionals Coffee information Programme met to review the progress made in the 5 original countries involved in the programme and to approve the involvement of an additional three countries. This programme aims at changing the perception of those in the medical profession towards coffee. Fairly spectacular results have been achieved in all five countries but each has adopted a slightly different approach and as a result some have done better than others, although all have done well. It is recognised that in order to change the opinions of Doctors, the information on the positive benefits of coffee needs to be presented in a different way than the information can be presented to the general public. Doctors need to see the information is scientifically sound and correct and that it comes from a reliable source. In many cases this means that the information should not be seen as originating from the industry itself, but from a neutral third party, i.e. a university or health related institute. But this also means that the information has to be beyond reproach and to be based on independent, peer-reviewed, scientific studies. This has been difficult, but in all countries this has been achieved to a greater or lesser extent and all countries centred on similar topics, such as the beneficial role that coffee plays in preventing type-2 diabetes, in fluid retention and the fact that coffee is a great source of antioxidants. The five countries involved in the programme are Finland, France, the Netherlands, Russia and the UK. The new countries joining the programme this year are Spain, Portugal and Germany. The whole programme is financed by the major coffee companies through ISIC and by the National Coffee Associations. The Executive Board also went through some routine issues such as Finance and Votes, but all of these were dealt with without any real controversy. As said, this was a relatively short meeting the main purpose of which was to agree to the designation of the ICO as the depositary for the Agreement. This was agreed relatively quickly. The meeting also dealt with a number of routine issues which were, likewise, dealt with in a very efficient and timely manner.

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MAIN FEATURES OF THE NEW INTERNATIONAL COFFEE AGREEMENT

• Reformulated Objectives

The new Agreement incorporates a number of important new objectives but possibly the most significant change is the fact there is now an over-riding mission statement, namely:

“The objective of this Agreement is to strengthen the global coffee sector and promote its sustainable expansion in a market-based environment for the betterment of all participants in the sector.”

This is important as it gives a clear focus to the whole Organisation both members and staff on why there is an International Coffee Agreement and what it is meant to achieve. A sustainable coffee sector is defined as referring to the three main pillars of sustainability, i.e. economic, social and environmental, which is important as many automatically assume that sustainability only relates to environmental concerns. The new Agreement also lists some new objectives, such as:

� the facilitation of the development of projects; � the promotion of quality with a view to enhancing consumer satisfaction; � encouraging food safety procedures; � capacity building for small farmers; and � the facilitation of access to information on financial tools and services.

• Decision-Making Structure of the ICO

Under the new Agreement, the ICO will operate under a new structure. The whole decision making structure has been, to an extent, streamlined with the abolition of the Executive Board and the restructuring of a number of other existing committees. The Council will remain the central decision making institution and highest authority in the organisation. In the past many of these powers were delegated to the Executive Board and this led to the duplication of efforts whereby issues discussed in the Executive Board ended up being discussed all over again in the Council. Three new standing or permanent committees have been created, these are the Finance and Administration Committee, the Promotion and Market Development Committee, and the Projects Committee and they will report directly to the Council. The composition of these committees is still to be determined but they are likely to have an open membership. It is hoped that this should prevent the duplication that occurred under the current structure, but it has to be said that this new structure may not achieve this.

• The consultative forum on coffee sector finance This is a completely new initiative which is seen by many, especially producers, as one of the more useful innovations within the new Agreement. It is envisaged that this forum will act as an information source for producers on coffee finance and also act as a vehicle for potential projects or developing means of access to finance for coffee producers. However no provision has yet been made for how often the forum should be held although it is anticipated that the forum will probably meet at the same time as the World Coffee Congress.

• Statistical Information, Studies, Surveys and Reports The range and scope of statistical information, studies, surveys and reports which is to be provided by the ICO in future has been expanded considerably. This should greatly improve the usefulness of the information provided, although it should be pointed out that there might be a problem in identifying the sources of the statistical information and it could well be that additional information may be required from the Certificates of Origin. However the aim of the revisions is to make the ICO the centre of excellence when it comes to information services and to provide services which are more relevant to the trade.

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3.0 WORLD SUPPLY & DEMAND The latest statistics from the ICO suggest that global availability for the crop year 2007/08 is around 174.9 million bags; this is theoretically more than 15 million bags higher than last year but in fact this is very misleading as the ICO have adjusted Brazilian stock figures for 2006/07 upwards by just under 10 million bags, so in fact the true position appears to show that global availability is still higher than last year but only by 5.2 million bags. Stocks or inventories held in consuming countries including free ports in 2007 are however over 2 million bags higher at 22.6 million bags, while the adjusted stock total for producing countries is 25.3 million bags, down 3.3 million bags from 25.8 million bags. Domestic consumption in producing countries has been estimated at 34.3 million bags, up an incredible 5.5% from the 32.5 million bags estimated for 2006/06, but consumption in importing countries during calendar year 2006 is estimated by the ICO to have remained virtually static rising just 200,000 bags to 84.6 million bags. TABLE 1: WORLD SUPPLY, DEMAND, STOCKS AND PRICES 2001/02 – 2006/07 (COFFEE YEARS) Mn Bags 01/02 02/03 03/04 04/05 05/06 06/07 Production* 108.3 123.2 105.1 116.6 109.9 127.0 World Consumption 109.9 113.1 117 .2 118.5 122.0 123.0 - Producers (27.8) (28.9) (30.0) (31.0) (32.5) (34.3) - Importers (65.9) (68.2) (69.2) (69.1) (70.8) (71.3) - Non-members (16.2) (16.0) (18.0) (18.4) (18.7) (17.4) Producer stocks 48.3 52.9 41.6 37.7 28.6 25.3 Consumer stocks** 19.6 21.4 21.9 23.6 20.3 22.6 Prices (cents/lb.) 45.46 52.17 57.77 85.29 91.55 104.14 * crop years ** includes the USA Source: ICO 3.1 Production The ICO are constantly revising their estimates of global production both for the future and the past. There are many reasons for this but practically all ICO data are derived from Certificates of Origin and returns submitted by producing member countries, as well as information from consuming countries. Information from other sources such as government institutions often contains estimates that are subject to revision. Also, occasionally there are problems with some of the import data published elsewhere when, for example, quantities of soluble/roasted coffee are not converted but simply reported as green bean, there is double reporting and so on. As a result ICO data, both current and historical, is constantly being revised, a large and in fact never-ending task. But an important one because, in the end, the ICO’s database whilst not perfect certainly is the most detailed of all. At the moment the ICO are estimating that production in 2007/08 will be lower than last year at around 118.1 million bags, some 9.0 million bags (or 7.0%) lower than in 2006/07. Arabica production, excluding that produced in small non member countries is put at 71.24 million bags, down by around 8.2 million bags from 79.44 million bags last year, a fall of 10.3% reflecting the 21% fall in Brazilian output. Robusta production is only down marginally from 46.54 million bags last year to total 45.67 million bags this year. As a result the arabica share of world production has shrunk and now accounts for 60.9% of world production, as against 63.1% last year, while robustas share has swollen from 36.9% to 39.1%. In their latest estimate of world coffee production for 2007/08, F. O. Licht continue to put world production higher than the ICO and USDA at 123.4 million bags, but this is down from their first estimate

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of 124.1 million bags. Interesting they have raised their estimate Brazilian output putting it at 37.1 as against 36.5 million bags previously. Colombia’s production estimate remains at 12.4 million bags, as does Peru’s at 3.2 million bags. Production in Central America is also unchanged at around 18.6 million bags, up from 17.4 million bags last year. Africa’s production is put at 16.1 million bags, up from 15.4 in 2006/07, while their production estimate for Asia and the Pacific has been lowered to 33.9 million bags,. Overall Licht, have lowered their estimate of robusta production in 2007/08 from 50.5 million bags, to 50.1 million bags, and arabica production from 73.5 million bags to 73.3 million bags. The USDA have also revised their estimate for 2007/08 raising the figure from 118.9 to 122.9 million bags. Brazil’s coffee production in 2007/08 is now estimated at 37.6 million bags, up 1.4 million bags from the June 2007 forecast but down 9.1 million bags from 2006/07. The decrease in production between 2006/07 and 2007/08 is due primarily to the off-year biennial arabica cycle. Vietnam’s coffee crop for 2007/08 is now estimated at 18.1 million bags, up 2 percent from the June forecast. Colombia’s coffee production in 2007/08 was unchanged from the June forecast of 12.4 million bags. Indonesia’s coffee production for 2007/08 was lowered to 6.7 million bags, down 200,000 bags from the June forecast. The latest estimate from the Neumann Group’s forecast for 2007/08 is very similar to the USDA’s at 124.43 million bags. They put Brazil’s production at 36.36 million bags and Colombia’s at 12.4 million bags. However, their forecast of Vietnamese output is higher than the USDA, ICO or Licht at 20.7 million bags. TABLE 2: PRODUCTION ESTIMATES FOR THE 2006/07 AND FORECASTS FOR THE 2007/08 CROP

YEAR (‘000 bags) 2007/08 ICO USDA NKG North America 18,741 18,771 18,070 Costa Rica 1,882 1,850 2,000 El Salvador 1,476 1,500 1,400 Guatemala 4,000 4,100 4,180 Honduras 3,883 3,600 3,470 Mexico 4,500 4,500 3,900 Nicaragua 1,750 1,700 1,530 Others 1,300 1,521 1,590 South America 51,320 54,943 53,090 Brazil 33,740 37,600 36,360 Colombia 12,400 12,400 12,380 Ecuador 950 680 820 Peru 3,190 3,190 2,560 Venezuela 870 900 790 Others 170 173 180 Africa 14,872 15,626 14,810 Burundi 167 175 150 Cameroon 795 795 870 Cote d’Ivoire 1,500 2,100 1,400 Ethiopia 5,733 6,000 5,540 Kenya 725 800 810

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Madagascar 708 500 730 Rwanda 712 283 250 Tanzania 833 875 880 Uganda 2,750 2,800 3,000 Zaire 400 400 290 Others 549 898 890 Asia & Pacific 33,140 33,214 35,460 India 4,850 4,650 4,570 Indonesia 7,000 6,650 7,270 Papua New Guinea 1,043 1,255 950 Philippines 712 712 580 Thailand 935 1,000 790 Vietnam 17,500 18,062 20,700 Others 1,100 885 600 TOTAL 118,074 122,884 121,430 Source: ICO/USDA/F. O. Licht 3.2 Exports Exports by ICO member countries to all destinations during calendar year 2007 totalled 95.52 million bags. This is 3.41 million bags or 3.7% higher than was recorded in 2006, when the total was 92.11 million bags. There was a noticeable increase in the exports of robustas from Vietnam from 14.0 million bags last year to 17.94 million bags in 2007, an increase of over 28%. Similarly exports of robusta from Uganda showed a marked increase from 2.17 million bags to 2.69 million bags. Elsewhere the situation was mixed with Kenya witnessing a 23.0% increase in its exports, Cote d’Ivoire (+16.0%), Mexico (+13.3%), and Papua New Guinea (+ 7.6%), Exports from Brazil were very similar to last year while Indonesia witnessed a fall of 19.15 and Nicaraguan exports fell by 13.3%. On a coffee group basis, exports of the Robusta group increased by over 3.2 million bags, the Brazilian Arabicas group stayed unmoved, the Other Milds group fell by 0.41 million bags while exports from the Colombian Milds group rose by 0.60 million bags. TABLE 3: ICO MEMBER EXPORTS BY GROUP (COFFEE YEARS 2006/07) (million bags) 2006 2007 % Change Colombian Milds 11.96 12.56 + 5.09 Other Milds 21.31 20.90 - 1.90 Brazilian Arabicas 28.39 28.45 + 0.22 Robustas 30.46 33.61 + 10.34 Total 92.11 96.74 + 3.71 Source: ICO

3.3 Consumption The ICO have again raised their estimate of world consumption in 2007 putting it 1.6 million bags higher than they did just 4 months ago at 120.9 million bags. This is 2.7 million bags more than the estimated consumption in 2006 and represents a growth rate of around 2.3% per annum. The bulk of this increase

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can be attributed to the continuing rise in consumption in producing countries where domestic consumption is thought to have increased by 1.7 million bags which represents a 4.3% rate of growth. Consumption within the European Union is estimated to have grown by just 0.5 million bags with the Netherlands, France and Italy all witnessing a resurgence in demand, with consumption increasing by 13.0%, 7.7% and 6.2% respectively. Elsewhere in Europe the statistics make worrying reading with large falls being recorded in Belgium down by 21.7%, Poland down by 20.3% and the UK down 10.6%,. As mentioned in our last report the figures for Belgium always need to be treated with caution, as the latest figures suggest that consumption has fallen by 21.7% after having grown by around 21% in 2005/06. This is because Belgium has a massive re-export business and the fluctuations in disappearance from year to year have more to do with unreported changes in inventories than with actual increases in consumption. Reports from Germany suggest that the specialty coffee sector has done much to revive the coffee drinking habit among the young. In particular there has been a significant increase in the consumption of espresso although much of this appears to be down to the increase in the sales of espresso pod machines. This is a mixed blessing in that these pod machine why encouraging more people to drink coffee they only brew one coffee at a time unlike filter coffee where more coffee is used in the brewing process. Coca-Cola and Italian roaster Illycaffe reported recently that they intend launching three new products in April for the ready-to-drink (RTD) coffee market, said to be worth over $16 billion worldwide. They said their recently created joint venture, Ilko Coffee International, would sell three premium RTD coffee products (espresso-based coffee, cappuccino and latte macchiato) in the 10 European countries covered by Coca-Cola Hellenic operations. More countries in Europe, Asia, North America, Eurasia and the Pacific are slated for expansion throughout 2008 and 2009 and with the drinks being distributed through the existing Coca-Cola system. The RTD coffee category has, reportedly grown at an average rate of 10.1 % over the past five years. Consumption in Japan is stable but is down ever so slightly in the USA by 0.6%. The consumption statistics for the USA certainly tallies with the latest results from the NCA winter drinking survey. This survey showed that fewer consumers are drinking coffee, but the percentage of gourmet coffee continues to rise. The full results of the survey—conducted since 1950—are to be released in May, but the NCA revealed some of the key findings at its Annual Convention in Aventura, Florida in March. Daily coffee consumption, among the 6,000 consumers contacted by phone or online, was down to 55% of adults, from last year’s 57%, although the decline appears to be in traditional coffee. Gourmet types went from 14% to 17% penetration with increases seen in all consumers aged 25 and above. The report blames the downturn on the current difficult economic conditions and resulting unemployment as well as on reduced discretionary spending on daily coffee consumption by 18- to 24-year-olds from 37% in 2007 to 26% this year. The survey also found that more people agreed that coffee was good for health, which is a positive result for the various health campaigns run by the ICO and the NCA. Consumption in producing countries increased by just over 1.7 million bags or 24.3%, although a large part of the increase in can be attributed to the continued increase in domestic consumption in Brazil, where consumption is estimated to have grown from 16.3 million bags in 2006 to 17.4 million bags in 2007. However significant increases were also recorded in Mexico where demand is up by 10% to 2.2 million bags. In India disappearance is up by 7% to 1.43 million bags and the Philippine consumption is reported to be almost 16% higher at 1.06 million bags. Consumption in non member countries continues to be steady despite the higher prices with the increase in 2006/07 amounting to 400,000 bags or 2.1% to 19.0 million bags, however there is always a significant delay in gathering statistics from these countries and the figures remain very provisional.

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TABLE 4: COFFEE DISAPPEARANCE 2002/03– 2006/07 (JULY - JUNE)

(million bags) 2002/03 2003/04 2004/05 2005/06 2006/07 E.U. 39.8 39.9 39.6 40.6 41.1 USA 20.1 20.7 20.6 21.3 21.2 Japan 6.7 7.2 7.0 7.3 7.3 Other members 1.6 1.4 1.8 1.6 1.7 Non-members 16.1 17.4 18.3 18.6 19.0 Total 82.2 84.1 87.9 87.4 89.1 % Change +1.0 +2.4 +4.5 -0.6 +2.0 Source: ICO 3.4 STOCKS According to ICO statistics at the beginning of crop year 2007/08, the volume of gross stocks held in producing countries had shrunk by 3.4 million bags from 28.7 million bags to 25.3 million bags. Brazil continues to account for the bulk of this volume with 19.4 million bags in stock down 1.9 million bags from last year. Colombia is said to hold 1.4 million bags while India holds 1.2 million bags. All other producing countries hold very minor amounts. Inventories held in consuming countries at the end of the coffee year 2006/07 have increased over the year rising by an impressive 2.3 million bags to 22.6 million bags. With the enlargement of the EU, the recorded location of stocks has now been refined although is probably now a little more complex. Some of stocks formerly recorded as being in Free Ports in the EU are now recorded as unspecified EU stocks, while the remainder appears to have been allocated to individual countries within the EU, most notably Germany where stocks are put at 4.4 million bags. Stocks held by individual countries within the EU totalled 7.0 million bags, up 800,000 bags since last year, while unspecified stocks amounted to 7.3 million bags, up 1.2 million bags. Other data sources suggest that the volume of inventories in consuming countries and in particular the USA are relatively stable, with U.S. Green coffee stocks at the end of March 2008 amounting to 5.6 million bags, just 100,000 bags lower than at the same time last year. TABLE 5: INVENTORIES OF GREEN COFFEE IN IMPORTING C OUNTRIES (SEPT-2007) (million bags) 2002 2003 2004 2005 2006 2007 E.U. 6.2 6.3 6.6 6.5 6.2 7.0 U.S.A 5.5 6.0 5.6 5.7 5.2 5.7 Japan 1.9 2.0 2.0 2.5 2.5 2.3 Other Members 0.3 0.3 0.3 0.3 0.3 0.3 Unspecified EU Stocks

5.7 6.7 7.4 8.7 6.2 7.3

Total* 19.6 21.4 21.9 23.6 20.3 22.6 * May not add due to rounding Source: ICO 3.5 PRICES 3.5.1 Futures Prices

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Throughout the past four and half months both markets have witnessed a real roller coaster ride with prices initially languishing in the last part of 2007 before exploding upwards throughout the first three months of 2008 only to suddenly collapse in late March. Throughout April they have stabilised although are now edging downwards again. Both markets were rather jittery during the last week of November, although they moved in opposite directions. In London all eyes were on the close of the November position, which was the target of a massive squeeze with over 6,000 lots remaining open on the last day before the November position went off the board. The long holder, who remains anonymous, eventually accepted a $500 premium for the remaining unsettled lots, even though the premium had been larger at various times. In New York, all it took was a rather premature low forecast of next year’s production in Brazil of 42.5 million bags to push prices sharply higher. Interestingly this report was quickly withdrawn and indeed probably should never have been published but there was no taking back the reaction it caused. This was all the more surprising as the rain continued to fall in Brazil further enhancing the prospects of a bumper crop next year. The start of December saw robusta coffee looking seriously over valued and as a result robusta prices dropped throughout the first half of December. In the arabica market there was still some concern that the lack of rain in September and early October would have damaged next year’s crop in Brazil and traders were therefore, eagerly awaiting a key production forecast from local Brazilian consultants Safras e Mercado, but the figure of 47.6 to 49.9 million bags was deemed a "non-event” as it was in line with market expectations and consequently moved the market very little. Of greater significance was the change in the estimate by the USDA which raised their forecast for world 2007/08 coffee output to 122.9 million bags, a 4 million-bag increase from their previous forecast in June of 118.9 million bags. Brazil's coffee production in 2007/08 was put at 37.6 million bags, up 1.4 million bags from the June 2007 forecast but down 9.1 million bags from 2006/07. The overall new forecast was still 11.4 million bags below 2006/07 production. Vietnam's production was seen at 18.1 million bags in 2007/08, up from USDA's June forecast of 17.7 million bags. Colombia's output was unchanged from the June report, remaining at 12.4 million bags. World coffee stocks were also predicted to be stronger than the 16.8 million bags predicted in June. But what really impressed the market was the increase in the estimate for global consumption in 2006/07, which the USDA raised by a whopping 9% or 11.8 million bags to 131.1 million bags. Prices stabilised throughout the latter half of December although received a boost from a larger fall in the US green coffee stock figure than the market had been expecting. The start of the New Year saw robusta coffee prices rising strongly while arabica coffee prices were jittery in the face of a number of forecasts which put the upcoming Brazilian crop higher than previous estimates. The squeeze on the November position in London meant that most roasters had reduced their stock levels to a minimum in some cases to less than six weeks cover and they now had to buy to replenish those stocks. Towards the middle of the month a lower than anticipated forecast by CONAB, the Government Agricultural Census Bureau, of 44 million bags for the 08 crop in Brazil, rather surprisingly, forced prices sharply upwards. No one believed the figure, but the estimate was still significantly lower than the market was expecting. Coffee prices also benefited from an overall surge in all commodity prices reflecting a general inflow of funds from other financial markets where returns were beginning to look less attractive. However it did not last and the rally wavered in the later part of the month. Robusta coffee prices however continued to rally which initially was put down to continuing tightness caused by growers in Vietnam refusing to sell their coffee at these prices. However this also led to speculation that maybe someone was trying to squeeze the March position, although this did not really ring true at the time and indeed subsequently turned out just to be another rumour. Both markets started February off on a strong note with particularly impressive gains being achieved on the robusta market resulting from the tightness in supplies coming out of Vietnam. Arabica coffee prices also rose strong despite various crop forecasts which put the upcoming Brazilian harvest at between 47

13

and 50 million bags. The bull run in both markets continued strongly throughout February with London leading the way and New York following, although the increases were certainly larger in New York. In part, this surge can be attributed to the fact that growers in Vietnam were celebrating the New Year (Tet) while Brazilian growers were celebrating Carnival and thus very little selling was taking place, but the rises also reflected increasing concern over longer term tightness in supply generally. There is also no doubt that the general flight of capital away from stock markets into commodity markets added to the boom in all commodity prices and seemingly particularly coffee. And once the surge started, the large funds jumped on the bandwagon forcing prices even higher. Indeed many traders expected the long weekend in America to be the turning point but they were wrong, the funds and speculators carried on where they left off and carried on buying. Throughout the month of February prices moved relentlessly upwards reaching an 11 year high on the 28th February. The second position on the New Market hit 171.80 cents/lb while the second position in London hit $2,735/ton (1124.1 cents/lb). On the 3rd of March ICE Futures U.S moved nearly all its futures trading to the electronic screen, but decided to leave options on the pit floor for the time being. It also announced that from April 1 it would extend the coffee options pit session to 8 a.m. to 1:30 p.m. and would adopt a new closing-call period for coffee from 1:28 p.m. to 1:30 p.m. ET. However in a surprise announcement later in the week ICE announced that it was going to introduce options trading in coffee, sugar, cotton, cocoa and orange juice on its electronic platform on March 28. Given the rapid rise in prices throughout February, ICE raised the initial margins for Arabica futures to $ 2,500 for hedgers (+ $ 300) and $ 3,500 for speculators. This made the whole business of dealing in futures markets more expensive for everyone involved but was inevitable given the tremendous increase in the value of each contract being traded. However whether this was a factor in the subsequent sell off is hard to say, but this announcement coincided with a massive fall in the price of coffee especially on the ICE market in New York where values dropped more than 15 cents in a matter of 4 days. Robusta prices also fell by $228/ton (10.3 cents/lb) over the same week. It must be said however that the collapse was not confined to coffee alone as many other commodity prices witnessed similar falls. And to make things even worse the value of the US dollar experienced another massive dip at the same time. The delivery of Brazilian robustas against the London market as well as the need to raise capital for next year’s crop forced a number of Vietnamese growers to start selling at the same time and this certainly undermined confidence. Furthermore, Tristao, a leading Brazilian exporter issued its forecast at around this time suggesting that the up coming crop in Brazil might be as high as 53 million bags and this certainly started to worry a number of traders in New York. However this did not stop many roasters raising the price of their products. Procter and Gamble started the ball rolling with a hike in the prices of its Folgers ground coffee by 20 cents per 10.5- to 13-ounce can, effective and an increase in its instant coffee price by 24 cents per 8-ounce jar, or 5%. Kraft then followed suit by raising its list prices for Maxwell House and Yuban ground, roasted coffee and its instant coffee prices by the same amount. However this was not the end of the correction and two weeks later the markets suffered another terrible week with arabica coffee prices losing more than 21 cents/lb during the week and robusta 327/ton (14.8 cents/lb). The suddenness of the fall created a rather strange phenomenon in London when the collapse appeared to be affecting forward months more than the spot month May. This led to some speculation that maybe someone was attempting another squeeze on the May position. At one stage May was trading at a premium of $147/ton over July. This did not make a lot of sense as this would have been exceptionally early for any fund or speculator to attempt such a move. They would require very deep pockets and a strong nerve as the longer a squeeze is attempted the more time people have to deliver coffee against it. However it appears that this may have just been a quirk of the downward collapse whereby speculators were just concentrating on getting out of the forward months and had essentially ignored May. The situation was partially corrected the following week when May fell by $191/ton on

14

one day while July only fell by $95/ton and over the course of the week that followed, May eventually started to trade at a discount to July. Things calmed down during April, but understandably having lost almost 40 cents over the past three week both markets remained very jittery. Producers were and indeed continue to be naturally reluctant to sell; roasters are unsure whether any further falls are in the pipeline and are only therefore buying in snatches, while the funds are eyeing other commodity markets and trying to decide whether they offer better value than coffee. The weakness of the dollar has not particularly helped and some of the movements in prices can certainly be attributed to developments in other markets such as crude oil and gold where prices are also volatile. In the American retail market, Kraft Foods, despite only having raised their prices the month before, lowered its list prices for Maxwell House and Yuban ground coffee by 20 cents per 11 to 13 ounces this week following the cuts made the week before by Procter & Gamble's Folgers and by Massimo Zanetti Beverage USA, owner of Chock Full o' Nuts. The prices of their instant coffees were left unchanged. The Commodity Futures Trading Commission (CFTC) met in a public forum in late April to discuss the effect large funds are having on all commodity prices. The forum was broadcast over the web so attracted a fairly large audience. The commissioners are concerned that the increasing volatility in all commodity markets is having a major impact and undermining the basic premise for futures markets which is provide the facility for both producers and consumers to manage their price risk. A number of statements were made throughout the forum which suggested that maybe the commission is looking to place a limit on the number of contracts that speculators can hold, but it is also recognised that this might well cause problems with market liquidity. Furthermore there seems to have been a general acceptance that more research is required to find out what the actual impact is of the large buyers on markets. Even so the National Coffee Association of America (NCA) immediately called a meeting to discuss the comments but it appears that they did not reach any firm conclusions. Throughout the remainder of April prices on both markets appeared to be range bound albeit in both cases fairly broad bands. Various attempts were made to break through levels of resistance but without success and on April 25th, the second position in New York (Dec) closed at 131.30 cents/lb (up 4.7 cents/lb since November 21st), while the July position in London closed at $2240/ton (101.6 cents/lb) up $314/ton (14.2 cents/lb). 3.5.2 ICO Indicator Prices Movements in the average monthly Other Milds Arabica, Robusta and Composite ICO Indicator price as well as the arabica/robusta differential are displayed in table 6. As a result of the incredible boom in robusta prices, the differential between robusta and arabica coffee prices has dramatically narrowed during the first 3 months of the year. At the end of 2007 the differential stood at over 50% but by March this had narrowed just 23%, the lowest it has been since the late 1980’s. TABLE 6: ICO INDICATOR PRICES JANUARY 2006 TO MARCH 2007 (US Cents/lb.) Other Milds

Arabica Indicator Robusta Indicator

Composite Indicator

Differential

Jan 07 124.53 79.13 105.81 45.40 ( 57.4%) Feb 122.03 79.08 104.18 42.95 ( 54,3%) Mar 117.08 77.00 100.09 40.08 ( 52.1%) April 114.60 79.58 99.30 35.02 ( 44.0%) May 113.24 83.91 100.09 29.33 ( 35.0%) June 119.33 92.68 107.03 26.65 ( 28.8%)

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July 117.63 92.51 106.20 25.12 ( 27.2%) August 123.19 87.44 107.98 35.75 ( 40.9%) Sept 128.04 92.78 113.20 35.26 ( 38.0%) Oct 134.29 91.10 115.71 43.19 ( 47.4%) Nov 131.00 92.59 114.43 38.41 ( 41.5%) Dec 137.58 91.39 118.16 46.19 ( 50.6%)

Average 07 123.55 86.60 107.68 36.95 ( 42.7%) Jan 08 139.86 99.21 122.33 40.65 ( 41.0%) Feb 157.29 115.45 138.82 41.84 ( 36.2%) Mar 149.89 121.92 136.17 27.97 ( 22.9%) * Note: As from the 1st October 2001, the composite indicator price is calculated by taking a weighted average of the indicator prices for the four separate groups, (Colombian Milds, Other Milds, Brazilian Naturals and Robustas) weighted according to their relative shares in international trade. Prior to that the composite was a straight average of the Other Milds and Robusta group indicator prices. Source: ICO

3.5.3 Retail Prices Table 7 shows the retail prices in selected countries for the month of September from 2002 to 2007. Retail prices continue to climb, although the situation does vary from country to country, but on average retail prices were approximately 7.1% higher than the year before. Prices have increased in every consuming country except Japan where, against the trend, prices fell by 6.3%. Elsewhere the biggest increases were recorded in Norway 9+16.2%, France (+13.1%) and Italy (12.4%. TABLE 7: RETAIL PRICES FOR ROAST & GROUND COFFEE, ( SEPTEMBER ) 2002 2003 2004 2005 2006 2007 (US cents/lb.) USA 292 292 287 338 317 350 France 215 250 266 276 305 345 Germany 282 322 324 429 439 476 Japan 857 809 891 796 841 792 Italy 476 542 591 608 639 717 Norway 323 342 383 408 402 467 Spain 267 295 315 318 351 391 Source: ICO.

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4.0 DOMESTIC TRENDS AND DEVELOPMENT. Table 8 shows PNG's coffee balance between 2002 and 2007 calendar years. TABLE 8: PNG COFFEE BALANCE 2002-2007 CALENDAR YEARS 2002 2003 2004 2005 2006 2007 '000 Bags GBE-Calendar Years Production 1,064 1,143 1,025 1,250 803 988 Largeholder1

159 182 171 136 128 185 Smallholder 905 961 854 1114 675 803 Closing Stock 87 81 58 107 59 137 Stock Change 6 - 6 - 24 - 61 -447 - 24 Exports: Volume 1,057 1,157 1,047 1,199 849 908 Kina Million Value 248 276 283 491 338 409 Kina per tonne Average FOB Price (GB) 3,768 4,358 4,513 6,823 6,636 7,504 Source: Levy Certificates and Exporter Stock Returns Notes: 1 Plantation and Block sectors

Domestic consumption (estimated at 1,544 bags) is the difference between Production, Exports + Stock Change 4.1 PRODUCTION Papua New Guinea Coffee production increased from 802,880 bags in 2006 to 988,096 bags in 2007. The increase was not only attributed to the biennial ‘on-year’ production cycle but also was encouraged by higher prices and favourable weather conditions. The last Coffee Report # 71 covered analysis of production by producing provinces and sectors. Chart 1 shows total coffee production over the last six calendar years. The Corporation currently projects 2008 production to be between 1.00 – 1.03 million bags (60,000 -63,000 tonnes). At this stage field reports suggest that the season will be earlier than usual, and that the crop is looking good on the tress.

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Chart 1: Coffee Production by Calendar Year, 2002 -2007

-

200

400

600

800

1,000

1,200

1,400

2002 2003 2004 2005 2006 2007

60-k

g ba

gs (00

0's)

Source: CIC Processors & Exporters Returns 4.2 EXPORTS BY VOLUME AND VALUE 4.2.1 Volume Exports for the 2007 totaled 908,745 bags (54,725 tonnes), representing an increase of 7% from 848,801 bags in the previous year reflecting a 23% increase in production. Chart 2 shows total exports by calendar year since 2002.

Chart 2: Coffee Exports 2002-2007 (‘000 60kg bags GB)

-

200

400

600

800

1,000

1,200

1,400

2002 2003 2004 2005 2006 2007

60-k

g ba

gs (00

0's)

Chart 3 & 4 show quarterly and monthly exports respectively for the last 5 calendar years, 2003-2007. The chart 3 shows that for the 2007 calendar year, exports in third and fourth quarters were higher by 10% and 80%, respectively, as compared to corresponding quarters of 2006. The higher exports in these two quarters were due to high carry-over stock by exporters in first and second quarters of 2007.

Source: CIC Export Records

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Chart 3: Coffee Exports by Quarter: 2003-2007 (‘000 60kg bags GB).

-

100

200

300

400

500

600

60-

kg B

ags

('000

)

Qrt 1 131 136 99 153 116

Qrt 2 242 288 282 240 179

Qrt 3 472 394 510 293 321

Qrt 4 302 229 308 163 293

2003 2004 2005 2006 2007

Chart 4: Monthly Exports by Calendar Year: 2003-2007(‘000 60kg bags GB).

-

20

40

60

80

100

120

140

160

180

200

' 000

BA

GS

GB

E

2003 56 43 32 42 93 106 144 141 187 156 77 69

2004 37 48 51 69 103 116 134 145 116 92 83 54

2005 32 31 36 60 95 126 136 197 178 152 91 65

2006 51 50 53 52 89 99 101 124 68 63 57 44

2007 24 53 39 34 74 72 103 91 128 109 112 72

J F M A M J J A S O N D

4.2.2 Export value Chart 5 shows the quarterly export value by coffee year since 2003. Export earnings for the 2007 calendar year totalled K409.1 million (based on declared F.O.B prices during the time of export at the prevailing exchange rate), approximately 21% higher than the export

Source: CIC Export Records

19

earnings of 2006 calendar year. The higher export earnings is attributed to the favourable increase FOB prices recorded in the third and fourth quarters of 2007.

Chart 5: Quarterly Export Value by Calendar Year, 2003-2007 (Million kina)

0

50

100

150

200

250

Kin

a (m

iillio

ns)

2003 36.29 65.85 122.21 74.19

2004 31.23 73.89 109.77 68.96

2005 36.41 121.89 200.97 112.75

2006 60.09 95.38 115.17 67.34

2007 53.60 77.72 142.63 135.19

Qrt 1 Qrt 2 Qrt 3 Qrt 4

Table 9 shows total agricultural export earnings by commodities1 in 2007. Coffee contributed 27% of agricultural commodity export revenue, while Palm Oil contributed 44%, Cocoa (17%), Copra (8%), Rubber (1.5%) and Tea (1.3%). TABLE 9: AGRICULTURAL EXPORT EARNINGS BY COMMODITY, 2007 Commodity Cocoa Coffee Copra/Copra OilPalm Oil Rubber Tea Total Export Earnings (K million, f.o.b) 260.8 408.4 128.1 672.2 22.9 20 1,512.4 Source: Bank of Papua New Guinea

4.3 GREEN BEAN EXPORTS BY DESTINATION Chart 6 shows export to various destinations in percentage terms in 2007 calendar year. Over 43.7% (397,472 bags GBE or 23,848 tonnes) of 2007 calendar-year exports went to Germany representing an increase of 18% on 2006 exports in actual volume terms. Exports to United States increased by 4% to 177,037 bags GBE (10,622 tonnes) accounting for 19.5% of total exports. Exports to Australia totalled 173,058 bags (10,383 tonnes) representing a 0.9% increase on 2006 exports and comprised 19% of 2007 total exports. Exports to Japan dropped by 16% to 62,670 bags GBE (3,760 tonnes) accounting for 7% of total exports. In the ‘Others’ category, Belgium, New Zealand and Sweden came very strongly taking 1.9% (1,043 tonnes), 1.6% (897 tonnes) and 1.3% (684 tonnes) of total exports respectively.

1 Tree crops (exclude refined petroleum products, manufactured goods, Logs and Fisheries exports)

Source: CIC Export Records

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Chart 6: Coffee Exports by Destination in 2007

Germany43.7%

Australia19.0%

United States19.5%

Japan6.9%

Others10.8%

Source: CIC Export Records

4.4 GREEN BEAN EXPORTS BY GRADE. Chart 7 shows export by grade in percent terms in 2007. In 2007 calendar year, 52.5 % (470,909 bags GBE or 28,254 tonnes) of the total exports comprised Y1 grade coffee, an increase of 7% on 2006 calendar year exports. Exports of Premium Smallholder Coffee (PSC) dropped by 0.7% from 149,287 bags (8,957 tonnes) in 2006 to 148,175 bags (8,890 tonnes) in 2007, representing 16% of total exports. Y3-grade accounted for 3.5% (31,698 bags or 1,902 tonnes) of total green bean exports as compared to 5.2% (44,502 bags or 2,670 tonnes) in 2006. A-grade exports constitute 8% share (71,825 bags or 4,309 tonnes) of total exports, an increase of 23% on 2006 exports, while X-grade represents 12.3% (110,053 bags or 6,603 tonnes) of total exports, an increase of 14% on 2006 exports. Robusta exports increased from 4,042 bags (243 tonnes) in 2006 to 6,201 bags (372 tonnes) in 2007. Its’ share of total exports increased from 0.5% in 2005 to 0.7% in 2006.

Chart 7: Green Bean Exports by Grade in 2007

Y1 51.9%

PSC 16.3%

X 12.1%

A/AA 7.9%

Y33.5%

Others 7.5%Robusta

0.7%

Source: CIC Export Records

4.5 GREEN BEAN EXPORTS BY GRADE AND DESTINATION. Table 10 shows exports to the main export destinations in 2007 calendar year.

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United States was the main buyer of premium coffee taking over 49% and 60% of A/AA and X-grades respectively. Germany took most of Y1-grade (67%) while Australia picked up most of the PSC (53%), Y3-grade (62%) and Robusta coffee (22%). TABLE 10:GREEN BEAN EXPORTS BY GRADE AND DESTINATIO N IN 2007 (%) `Destination A/AA X PSC Y1 Y3 Rob *Others Germany 10 13 16 67 13 15 51 Australia 16 6 53 11 62 22 10 United States 49 60 3 9 19 - 38 Japan 6 0 21 6 - - 0 Others 19 21 8 7 6 64 2

Total 100 100 100 100 100 100 100 Source: CIC Export Returns *Org, FT, Y2, R&G, PB, C, B 4.6 EXPORTER MARKET SHARE Chart 8 shows exporter market share in 2007 calendar year. PNG Coffee Exports (PNGCE) accounted for 21% of total exports in 2006 calendar year, followed by New Guinea Highlands Coffee Exports (NGHCE) on 20%, Niugini Coffee Tea & Spice (NCT&S) 17%, Monpi 14%, Kongo Coffee Exports 8% and Pacific Trading Company (PTC) on 7%. Together these six (7) exporters (those that export more than 50,000 bags or 3,000 tonnes) accounted for 86% of total exports in 2007. The 14 smaller exporters including roasters exported the remaining 14%. In terms of export by grade in 2007 calendar year, PTC exported the most AA/A-grades (40.4%), Monpi Coffee Exports shipped most of X-grade (30.2%) while NGHCE exported most of the PSC-grade (50.2% and Y3-grade (37.8%). Most of Y1-grade (28%) was shipped by NCT&S followed by PNGCE (26%), while most of the Robusta coffee (33.9%) was exported by PNG Coffee Growers Federation.

Chart 8: Exporter Market Share in 2007

PNGCE21%

NGHCE20%

NGCT & S17%

MONPI14%

KONGO8%

PTC6%

KUNDU5%

C CONNECTIONS3%

MARO COFFEE1%

Other Exporters4%

HIGHLANDS ARABICAS

1%

Source: CIC Export Records

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4.7 GREEN BEAN EXPORT PRICES BY EXPORTER AND GRADE Table 11 shows the weighted average F.O.B price received by exporters for the major export grades of coffee exported in 2007 calendar year. (Note that prices received by exporters are entirely dependent on volume, discount or premium, financial arrangement with overseas buyers, exchange rate and timing of exports). Kundu received the highest prices for A-grade, Y3-grade and Robusta coffee while Monpi fetched the highest price for X and PSC grades. HCE obtained the highest price for Y1-grades (K7.88/kg), followed by Rotep (K7.34/kg), Nama (K7.18/kg) and Monpi (K7.04/kg). The weighted average A/AA-grade price for all exporters was 6% and 29% more than X-grade and PSC-grade prices, respectively. On average, PSC-grade obtained a 9% price premium over Y1-grade price while Robusta coffee price was 43% better than price of Y3-grade in same the period. TABLE 11:WEIGHTED AVERAGE F.O.B PRICES (KINA/KG) PE R GRADE RECEIVED BY PNG

EXPORTERS IN 2007 (KINA/KG) Major Export Grades Exporter A & AA X PSC Y1 Y3 Robusta Average Big Bean - 8.54 7.03 - 3.57 - 7.03 C Connections 9.18 8.81 6.74 5.50 4.00 - 7.76 H Arabicas 9.27 9.27 7.82 - - - 9.22 HCE - - - 7.88 3.83 - 7.53 Kongo 9.48 9.26 7.46 6.94 4.19 4.72 6.97 Kosem - 9.00 - 6.90 4.07 - 6.91 Kundu 10.61 9.56 7.91 - 4.87 6.19 9.04 Maro 8.81 9.16 - 7.01 - - 8.92 Monpi 9.77 9.89 8.02 7.04 4.22 - 8.04 Nama - - - 7.18 - - 7.18 NGCTS 9.64 8.24 7.41 6.88 4.41 5.36 6.93 NGHCE 9.29 8.33 7.46 6.91 3.71 - 7.08 PNG Coffee Fed - - 7.53 - - 5.92 6.72 PNGCE 7.82 8.73 7.33 6.68 3.85 - 6.91 PTC 9.83 7.57 - - - - 8.85 Rotep Coffee 8.24 7.62 - 7.34 - - 7.91 Yondu Coffee - - - 6.70 - - 6.70 Average 9.72 9.18 7.52 6.87 4.01 5.73 7.44 Source: CIC Export Records 4.8 EXPORTS OF ORGANIC AND FAIR TRADE Table 12 shows exports of Organic, Fairtrade-organic and Fair Trade coffee by exporter in 2007 calendar year. Exports of Organic, Fairtrade-organic and Fairtrade coffee totalled 28,108 bags (1,686 tonnes) and constitute 3% of the total exports in the period. In 2007 calendar year exports of organic coffee totalled 3,205 bags (192 tonnes) valued at K3.83 million, a remarkable increase of 127% and 134% on 2006 export volumes and earnings,

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respectively. Exports of Fair Trade-organic coffee increased from 8,508 bags (510 tonnes) to 15,939 bags (956 tonnes) in the same period valued at K8.79 million as compared to K4.53 million in 2006. Fairtrade coffee exports totalled 4,900 bags (294 tonnes) valued at K2.58 million in the same period. Germany was the main importer of Organic and Fairtrade-organic coffee taking in over 40% and 49%, respectively. United States is another major buyer taking in over 23% and 27% of Organic and Fairtrade-Organic, while Belgium imported over 55% of the Fairtrade coffee making it the biggest buyer of PNG Fairtrade coffee. Coffee Connections is a leading exporter of Organic and Fairtrade-organic coffee accounting for 51% and 83%, respectively. Niugini Coffee Tea & Spice accounts for 55% of Fair Trade exports. They were the only two exporters of Fair Trade coffee in 2007 calendar year. The weighted average F.O.B price (kina/kg) for Organic coffee received by all exporters in 2007 was K8.79/kg, 1% higher than the price received in 2006. The weighted average F.O.B prices received by Coffee Connections and NCT&S for Fairtrade–organic and Fairtrade coffee increased by 7.6% and 3.5%, respectively, compared to 2006. TABLE 12: EXPORTS OF ORGANIC AND FAIR TRADE COFFEE IN 2007 CALENDAR YEAR. Organic Fairtrade-Organic Fair Trade Exporter Vol (Bags) Kina/kg Vol (Bags) Kina/kg Vol (Bags) Kina/kg Kundu 321 9.72 - - - - Big Bean 1,600 8.67 - - - - Nama - - - - - - PNGCE 920 9.03 - - - - NGHCE 100 9.88 - - - - NGCTS 640 9.18 2,700 9.14 2,700 9.11 C/Connections 3,688 8.61 13,239 9.20 2,200 8.39 Total 7,269 8.79* 15,939 9.19* 4,900 8.79* Source: CIC Export Records *Weighted average F.O B price

4.9 ROAST AND GROUND COFFEE Roast and Ground (R&G) exports in 2007 calendar year totalled 1,299 bags (78 tonnes), an increase of 58% on previous year exports and constitutes 0.14% of total exports during the year. Arabicas accounted for 69% of total exports of R & G coffee followed by Goroka Coffee Roasters (28%) and Kongo (3%). The weighted average F.O.B price received for R & G coffee was K19.48/kg, compared to K17.64/kg in 2006 calendar year. Australia was the main buyer of R&G coffee taking in 39% of total exports followed by New Zealand (24%), South Korea (21%), Netherlands (10%), Fiji (5%), Solomon Islands (1.07%) and US (0.53%). Local consumption (disappearance of production reported as roasted, but not exported) was estimated at 1,653 bags green bean equivalent or 99 tonnes.

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4.10 DOMESTIC PRICES AND MARKETING MARGINS Table 13 shows average monthly F.O.B, D.I.S and Factory Door prices. TABLE 13: MONTHLY AVERAGE DOMESTIC PRICES, JANUARY 2006-DECEMBER 2007

F.O.B Green Bean D.I.S Green Bean Factory Door GBE (toea per kg) (toea per kg) (toea per kg) Month[1] [2] [3] [4] [5] [6] [7] [8] Y-grade Robusta Y-grade Robusta Arabica Robusta Levy [5] as% of [1]2006Jan 646 454 596 149 451 112 10 69.8

Feb 624 407 601 160 484 120 10 77.6

Mar 664 342 558 147 459 110 10 69.1

Apr 620 243 557 160 467 120 10 75.3

May 644 na 516 na 473 na 10 73.5

Jun 606 na 513 na 473 na 10 78.1

Jul 598 na 526 na 445 na 10 74.5

Aug 576 404 554 na 460 na 10 79.9

Sep 585 415 554 na 468 na 10 80.0

Oct 597 444 589 na 475 na 10 79.5

Nov 616 423 632 na 509 na 10 82.7

Dec 655 403 679 na 533 na 10 81.4

2007Jan 684 548 668 na 537 na 10 78.6

Feb 705 489 641 na 520 na 10 73.8

Mar 698 427 602 na 511 na 10 73.2

Apr 661 603 588 na 496 na 10 75.0

May 651 586 567 na 479 na 10 73.5

Jun 651 na 599 247 492 185 10 75.6

Jul 663 423 582 247 497 185 10 75.0

Aug 674 568 604 196 488 147 10 72.4

Sep 685 553 613 184 483 138 10 70.5

Oct 720 573 633 191 495 143 10 68.7

Nov 736 632 618 188 496 141 10 67.4

Dec 693 622 635 187 519 140 10 74.8 Source: Export Entries and Weekly Quotations by Factories. na: not available

In 2007 calendar year, the average export price (F.O.B) for Y1-grade increased by 10.6% compared to 2006 calendar year. As a result the average D.I.S and Factory Door prices on the local market increased by 7% and 6% respectively. Reflecting the movement in the overall margin, the proportion of the FOB prices received by growers increased from 70% in 2006 to 73% in 2007. 5.0 QUALITY 5.1. Cup Quality and Moisture Content In 2007, the overall cup quality of coffee has been consistently good. It has improved in the second half of the year as compared to the first half. The quality indicator reduced from an average of 2.4 in 2006 to 2.3 in 2007, showing an improvement in overall quality. Robusta coffee continued to maintain its good cup quality as observed since September 2006.

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Defect levels significantly improved from composite average Quality Ratio (QR) value of –5.7 in 2006 to 27 in 2007. This was mainly due to improvement in Y1 quality apart from AX/X and PSC and a low number of shipments of Y2 in 2007. This means, that the number of defects in the above shipments were low compared to that of 2006. This was clearly indicated in the average composite QR values for each quarter. TABLE 14: SUMMARY OF CUP AND DEFECT INDICATOR POINT S AND MOISTURE CONTENT –

2007 CALENDER YEAR Jan/Mar 07 Apr/Jun 07 Jul/Sept 07 Oct/Dec 07 Average Liquor Points 2.4 2.2 2.2 2.3 2.3 Defect QR Value -2.3 6.1 8.1 15.1 27.0 Moisture Content (%) 10.5 10.7 10.1 9.0 10.1 All average moisture contents for each quarter fell between 9.0 and 10.7 giving a composite average of 10.1 % for the 2007 calendar year. This was within the required range of 8-11%. During the same period a total of 832 special certificates were issued to the exporters, processors and the growers. 5.3 Defects 5.3.1 Defective flavours Table 15 shows common defective flavors found in Green Bean shipments in 2007 Most common defects found in shipments are sours, brokens, whites/old, immatures, blacks and water damaged. TABLE 15: COMMON DEFECTS IN GREEN BEAN SHIPMENTS IN 2007. DEFECTS JAN-MAR APR-JUN JUL-SEP OCT-DEC TOTAL SOURS 3,651 3,253 5,907 5,725 18,536

BLACKS 531 871 788 639 2,829

BROKENS 2,106 2,986 4,177 3,082 12,351

WHITES/OLD 1,190 2,354 2,842 986 7,372

IMMATURES 669 743 1,682 1,471 4,565

WATER DAMAGED 488 481 819 446 2,234 Note: Other defects include floaters, parchment, shells, husks, sticks and stones. 5.3.2 Physical Defects In terms of flavours, most off-flavours detected were, musty, woody, bitter and fruity which occurred manly in Y3, Y2 and very few in Y1, PSC and AX/X grades in 2007.

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Chart 9. Common Green Bean Defects in 2007 Shipments

CHART 1: COMMON DEFECTS IN 2007 GB SHIPMENTS

0

1000

2000

3000

4000

5000

6000

7000

SOURS BLACKS BROKENS WHITES/OLD IMMATURES WATERDAMAGED

DEFECTS

NO

. O

F D

EFE

CTS

JAN-MAR

APR-JUN

JUL-SEP

OCT-DEC

6.0 AVERAGE DIFFERENTIALS 6.1 Differentials Table 16 shows the average differentials and FOB prices of various grades and specialty coffee labels shipped in 2007 calendar year. Fair trade coffee fetched the highest premium and FOB price followed by plantation A/AA-grade and Organic coffee. Y1 and PSC grades were discounted on minus 12.50 cents/lb and 3.07cents/lb, respectively. The fair trade labels are Straight–Fixes and the differentials are only indicator figures calculated from the difference between FOB value in kina and the NY ‘C’ price (US cents/lb). TABLE 16: AVERAGE DIFFERENTIAL FOR MAJOR GRADES, 2 007 CALENDAR YEAR. Grade Average Differentials

(US cents/lb) Y3 -68.93 Y1 -12.50 PSC -3.07 Organic 19.28 Fair Trade OR* X 11.64 A/AA 26.03 Please note: Organic and Fairtrade are always Straight Fixes.*Out Right

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2008 DIRECTORY- PROCESSORS, EXPORTERS & ROASTERS GROUP 1. REGISTERED EXPORTERS

No Name & Postal address Executive Manager's names, Phone, Fax & E-mail 1 Big Bean Coffee Ltd Glen Winstenly - Managing Director P.O. Box 396 Port Moresby or PO Box 137 Ph: 474 6251 Fx: 4746303 (Wau Factory) Wau, Morobe Province Ph: 326 2597 Fx 3262591 Glen Winstanly (POM) 2 Coffee Connections Ltd - Airport Road Henry T. Ame - Managing Director P.O. Box 529, Goroka. E.H.P Ph: (675) 732 1677 Fax: (675) 732 2154 Papua New Guinea E-mail: coffeeconnections@global.net.pg 3 Highlands Arabicas Ltd Paul Pora - Managing Director P.O. Box 1841 Ph: 542 3194/3441 Fax: 542 3173 Mt. Hagen, WHP Email:paul@highlandsarabicas.com 4 Kongo Coffee Exporters Ltd. - Wawi, Chuave Jerry Kapka - Managing Director P.O. Box 338, KUNDIAWA, S.P Ph: (675) 735 1214 Fax: (675) 735 1130 Papua New Guinea E-mail: kongo@global.net.pg 5 Kosem Ltd John Munnull - Managing Director P.O. Box 103, Minj, WHP Ph: 546 2282/2210 Fx: 546 2282 6 Maro Coffee Limited - Kagamuga Max Kumbamong - Managing Director P.O. Box 319, MT.HAGEN 281, W.H.P Ph: (675) 545 1653 Fax: (675) 545 1254 E-mail: maxkum@online.net.pg 7 Monpi Coffee Limited - Kagamuga Peter Schatz - Managing Director P.O. Box 437, MT.HAGEN 281, W.H.P. Ph: (675) 545 1416 Fax: (675) 545 1392 E-mail: monpi@global.net.pg 8 Nama Coffee Exports Ltd - Warakum Saroj Sharma - General Manager P.O. Box 281, MT.HAGEN 281, W.H.P Ph: (675) 542 2693 Fax: (675) 542 1368 E-mail: namacoffee@datec.net.pg 9 Niugini Coffee Tea & Spice Co. Ltd - Lae Alyosha Reilly - Executive Manager P.O. Box 2531, LAE 411, M.P Ph: (675) 472 5633 Fax: (675) 472 5614 E-mail: niuginicoffee@global.net.pg

10 New Guinea Highlands Coffee Exports Ltd David R. Hannon - Managing Director Airport Road Ph: (675) 732 1883 Fax: (675) 732 1989 P.O. Box 354, GOROKA 441, E.H.P E-mail: admin@nghce.com.pg

11 OK Corporation Ltd Patricia Onol - Export Manageres Kundu Coffee Exports - Lae Ph: (675) 472 1116/1094 Fax: (675) 472 3030 P.O. Box 586, LAE 411, M.P E-mail:pat.kundu@global.net.pg

12 Pacific Trading Company Ltd Michael Jackson - General Manager P.O. Box 94, MT.HAGEN, W.H.P Ph: (675) 542 2700/2326 Fax: (675) 542 1616 E-mail: wrcarp@online.net.pg

13 PNG Coffee Exports Ltd Jon Edwards - General Manager Associate of Volcafe Group - Airport Road Ph: (675) 732 1326/1066 Fax: (675) 732 1913 P.O. Box 138, GOROKA 441, E.H.P E-mail: pngce@datec.com.pg

14 Roteps Ltd Rotep Wak - Managing Director Roteps Coffee Exports - Warakum Ph: 542 1914 Fax: 542 1936 P.O. Box 846, Mt. Hagen. W.H.P E-mail: rotepwak@online.net.pg 15 Yondu Coffee Producers Ltd Alex Kavie- Managing director

P.O. Box 806, GOROKA, E.H.P Ph: 732 2700 /1667 Fax: 732 2700 Email:yondu@daltron.com.pg

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Group 2. MANUFACTURERS Name and Postal address Executive Manager's name, Phone, Fax & E-mail 1 Arabicas Ltd - Airport Road Mr Eung Jo Bae - General Manager The Coffee Roasters of P.N,G Ph: (675) 732 2496/1272 Fax: (675) 732 2949 P.O. Box 680, GOROKA 441, E.H.P E-mail: arabicas@global.net.pg 2 Banz Kofi Fektori Ltd - Tega Patrick Killaron - Managing Director P.O. Box 43. Mt. Hagen, W.H.P Ph: (675) 545 1207 Fax: Nil E-mail: banzkofi@global.net.pg 3 Goroka Coffee Roasters Ltd - Airport Road Ian Mathews - Managing Director P.O. Box 335. GOROKA 441, E.H.P Ph: (675) 732 1765 Fax: (675) 732 2601 Papua New Guinea E-mail: gorokacoffee@global.net.pg 4 Kongo Coffee Ltd - Wawi, Chuave Jerry Kapka - Managing Director

P.O. Box 338, KUNDIAWA, S.P Ph: (675) 735 1214 Fax: (675) 735 1130 E-mail: kongo@global.net.pg

5 WR Carpenters & Co. Ltd Michael Jackson - General Manager Sigiri Coffee - Kindeng Ph: (675) 542 2700 Fax: (675) 542 1616 P.O. Box 94, MT.HAGEN 281, W.H.P E-mail: wrcarp@online.net.pg Papua New Guinea

GROUP 3. DRY FACTORIES Name & Postal address Executive Manager's name, phone, fax & email 1Airport Coffee Mill Ltd Michael Hannon - Factory Manager P.O. Box 354, GOROKA, E.H.P Ph: 732 2200 Fax: 732 2638 2Arabicas Ltd - Airport Road Mr Eung Jo Bae - General Manager P.O. Box 680, GOROKA, E.H,P Ph: 732 2496 Fax: 732 2638 3Arona Valley Development Authority Inc. Elias Mente - General Manager Yonki Coffee Factory Ph: 737 3066/2266 Fax: 640 4300 P.O. Box.43 Kainantu. E.H.P 4Awute Coffee Producers Ltd - 7 Mile (Notofana) Huke Awute - Managing Director P.O. Box 1107, GOROKA, E.H.P Ph: 732 3955 Fax: 5Benbose Coffee Ltd Ikapa Loko/Taylor P.O. Box 153, GOROKA, E.H.P Ph: Fax: 6Big Bean Coffee Ltd Glen Winstenly - Managing Director P.O. Box 137 Ph: 474 6251 Fx: 4746303 (Wau Factory) Wau, Morobe Province Ph: 326 2597 Fx 3262591 Glen Winstanly (POM)7Bilati Coffee Ltd - Bihute Road Patrick Kondo - Managing Director P.O. Box 1563,GOROKA, E.H.P Ph: 732 2206 Fax: 8Busu Coffee Lae Ltd Timothy Amos Jnr - Managing Director Lae 9 Mile Factory Ph: 475 1144 Fax: 475 1144 P.O. Box 3099, LAE, Morobe Province 9Coffee Industry Corporation Ltd Potaisa Hombunaka - General Manager Grower Service and Research Division - Aiyura Ph: 737 5311 Fax: 737 3524 P.O. Box 105, KAINANTU, E.H.P

10Colbrand Coffeelands Ltd Nichol Colbrand - Managing Director P.O. Box 226, KAINANTU, E.H.P Ph: 737 1322 Fax: 737 1322

11Davina Coffee Producers Ltd Jack Amos Jnr - Managing Director Bewapi Coffee Mill - Offman Ph: 732 1995 Fax: 732 2332 P.O. Box 171, GOROKA, E.H.P

12Fokaland Coffee Limited-Kami Lufa Jeremiah Bakuta-Managing Director P.O Box Ph: Fax:

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13Garamut Resources Ltd Michael Phil - Executive Manager P.O. Box 96 Ph: 8562106/2186 Fax: 8562324 WEWAK, ESP

14Gerame Coffee Ltd Apele Goso - Managing Director P.O. Box 925 Goroka, EHP Ph: 732 1044 Fx: 732 1044

15Goroka Coffee Processors Ltd - North Goroka Jeff Lewis - Executive Manager P.O. Box 555, GOROKA, E.H.P Ph: 732 1245 Fax: 732 2835

16Goldfield Coffee Limited Daniel Hargreaves P.O Box 60 Wau, Morobe Province Ph: 474 6368 Fax: 474 6395

17Highlands Arabicas Ltd Paul Pilimbo Pora - Managing Director Madan Plantation - Avi Ph: 542 3194 Fax: 542 3173 P.O. Box 1841, MT. HAAGEN, W.H.P

18Kainantu Development Corporation Ltd Ashim Kaula - General Manager P.O. Box 93, KAINANTU, E.H.P Ph / Fax: 737 1213 / 640 4119

19Kapal Kopi Ltd - Banz Philip Kapal Managing Director P.O. Box 10 BANZ, WHP

20Kigibah Estate Ltd - Aviamp Bill Gardner - Managing Director P.O. Box 870, MT.HAGEN, W.H.P Ph: 546 2444 Fax: 546 2443

21KK Trading Ltd Murphy Yasona - Managing Director Ramu Kopi Mill-Kainantu Ph: 737 1058 Fax: 737 1209 P.O. Box 212, KAINANTU, E.H.P

22Koiari Development Corporation Ltd Marisa Cibas - General Manager Port Moresby Coffee Mill Ph: 328 1818/1210 Fax: 328 1218/1819 P.O. Box 8228, Boroko. N.C.D

23Kongo Coffee Ltd - Wawi, Chuave Jerry Kapka - Managing Director P.O. Box 338, KUNDIAWA, Simbu Province Ph: 735 8304/1214 Fax: 735 1130

24Kuang Ltd - Kuligap John Kerua - Managing Director P.O. Box 1815, MT. HAGEN. W.H.P Ph: 545 1239 Mob: 6813012 Fax: 545 1239

25Mainland Holdings Ltd Ray Varle - Consultant, Tawazo Yagi - Manager Lae 5 Mile Coffee Mill Ph: 472 3499 Fax: 472 6172 P.O. Box 196, Lae. Morobe Province.

26 Mainland holdings Ltd (JKM Kopi Ltd )- Banz Jim McLaughlin - Managing Director P.O. Box 171, BANZ, W.H.P Ph: 546 2214 Fax: 546 2288

27Maro Coffee Limited - Kagamuga Robin Gabori - Managing Director P.O. Box 319, MT. HAGEN, W.H.P Ph: 545 1653 Fax: 545 1254

28Mitega Coffee Growers Cooporative Society Ltd Jack Gasowo P.O. Box 1466, GOROKA, E.H.P Ph: Fax:

29Monpi Coffee Ltd - Kagamuga Peter Schatz - Managing Director P.O. Box 437, MT. HAGEN, W.H.P Ph: 545 1416 Fax: 545 1392

30Nama Coffee Ltd. Sharoj Sharma - Managing Director

P.O. Box 281, MT.HAGEN, W.H.P. Ph: 542 2693/3172 Fax:542 1368 Wara Kum Coffee Factory Saroj Sharma

31Namaro Coffee Limited - Bena Bridge Kefe Binene - Managing Director P.O. Box 558, GOROKA, E.H.P Ph: Fax:

32Niga Coffee Ltd Anton Areka - Managing Director P.O. Box 898,Wewak. E.S.P Ph: 856 1665 Fax: 856 1665

33Nowek Ltd - Kamaliki Terry Shelly - Managing Director

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P.O. Box 332, GOROKA, E.H.P Ph: 732 1319 Fax: 732 1839

34OK Corporation Ltd Pup Laki - Director Chairman P.O. Box 17 Mt. Hagen, WHP (HQ) Ph: 5422 677 Fx: 542 1958 (a) Kimil Plantation - Banz Michael Mondo - Factory Manager P.O. Box 10, BANZ, W.H.P Ph: 546 2316 Fax: 542 2179/5462256

35 (b) Kui Kopi Mill - Tega David Kombra - Factory Manager P.O. Box 1217, MT.HAGEN, W.H.P Ph: 545 1578 Fax: 545 1526

36Philpap Ltd Peter Nombe - Managing Director P.O. Box 1102 Goroka, EHP Ph: 732 3426 Fax: 732 3426

37PNG Coffee Exports Ltd John Edwards - General Manager P.O. Box 138, GOROKA, E.H.P Ph: 732 1066 Fax: 732 2180 (a) Kainantu Coffee Factory Dixon Vinord Ph: 7371044 Fx: 737 1029

38 (b) Lahamenegu Coffee Factory - Kamaliki John Leahy Ph: 732 2772 Fx: 732 2180 39Red Mountain Ltd - Banz Jack Williams - Managing Director

P.O. Box 411, MT.HAGEN, W.H.P Ph: 546 2384 Fax: 546 2394 40Rilke Limited - Brian Leahy - Managing Director

P.O. Box 50, MT.HAGEN, W.H.P Ph: 542 2635/1242 Fax: 542 2632 (a) Kuta Coffee Mill - Kagamuga Joe Schelttan

41 (b) Korgua Planttion Carl Hoella 42Roteps Ltd Rotep Wak - Managing Director

P. O. Box Mt. Hagen, WHP Ph: 542 1914 Mob: 6887115 Fx: 542 1936 43Sonowagi Ltd Timothy Kiagua - Managing Director

P.O. Box 97, BANZ, W.H.P Ph: 546 2360 Fax: 546 2360 44Vedimo Coffee Ltd - Oliguti Livai Lobu MD, James Kororame - Manager

P.O. Box 371, GOROKA, E.H.P Ph: 732 1033 Fax: 45Wapenamanda Coffee Factory Ltd Patrick Komba - Managing Director

P.O. Box 404, Wabag. Enga Province Ph: 547 4038 Fax: 547 4037 46Wanda Coffee Ltd-Banz Wanda Wal- Managing Director

P.O Box 102, Banz Ph: Fax: WHP

47WR Carpanters & Co. Estaes Ltd Mills Mike Jackson - General Manager P.O. Box 94, MT. HAGEN Ph: 542 2700 Fax: 542 1616 (a) Bunom wo Factory Ray Kapil - Manger

48 (b) Kalanga Coffee Factory - Ray Kapil - Manager 49 (c) Sigri Coffee Factory Joseph Nuno - Manager Ph: 542 1075 50Yagaria Development Corporation Dori Ottio

Kami Plantation Ph: Fax: P.O. Box 103, GOROKA, E.H.P

51Yha Hauka Kopi Ltd Finan Gaso - General Manager P.O. Box 2704, LAE, Morobe Province (a) Aseki Coffee Factory

52 (b) 14 mile Coffee Mill - Lae 53Yondu Coffee Producers Ltd Alex Kavie

P.O. Box 806, GOROKA, E.H.P Ph: 732 1667 Fax: 732 2700

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Group 4. Wet Factories Name & Postal Address Executive Manager's name, phone, fax & email 1 Arokara Coffee Ltd Ian Mathews - Managing Director Komiufa Wet Mill Ph: 732 1765 Fax: 732 2601 P.O. Box 335, Goroka. E.H.P 2 Arona Valley Development Authority Inc. Elias Mente - Managing Director Yonki Coffee Mill Ph: 737 3066/2266 Fax: 640 4300 P.O. Box.43 Kainantu. E.H.P 3 Awute Coffee Producers Ltd - 7 mile (Notofana) Huke Awute - Managing Director P.O. Box 1107, GOROKA, E.H.P Ph: 732 3955 Fax: 4 Banz Kofi Fektori Ltd - Tega Patrick Killaron - Managing Director P.O. Box 43. Mt. Hagen, W.H.P Ph: (675) 545 1207 Fax: Nil E-mail: banzkofi@global.net.pg 5 Big Bean Coffee Ltd Glen Winstenly - Managing Director P.O. Box 137 Ph: 474 6251 Fx: 4746303 (Wau Factory) Wau, Morobe Province Ph: 326 2597 Fx 3262591 Glen Winstanly (POM) 6 Bilati Coffee Ltd Patrick Kondo - Managing Director P.O. Box 1563, GOROKA, E.H.P Ph: 732 2066 Fax: 732 2066 (a) Bilati Bihute Rd 7 (b) Six Mile Wet Mill 8 Coffee Industry Corporation Ltd Potaisa Hombunaka - General Manager P.O. Box 105, KAINANTU, E.H.P Ph: 737 3511 Fax: 737 3524 (a) Aiyura Wet Factory Sam Menanga

9 (b) WHSS Wet Factory Sam Menanga (or Napu Ratumu) Ph: 545 1419 Fax: 545 1420

10Colbrand Coffeelands Ltd Nichol Colbrand - Managing Director P.O. Box 226, KAINANTU, E.H.P Ph: 737 1322 Fax: 737 1322

11Gerame Coffee Ltd Wally Goso/Apele Goso P.O. Box 925 Goroka, EHP Ph: 732 1044 Fx: 732 1044

12Highlands Arabicas Ltd Paul Pilimbo Pora - Managing Director Mandan Plantation - Avi Ph: 542 3194 Fax: 542 3173 P.O Box 1841, MT.HAGEN, W.H.P

13JK-Ahi Investments Limited John Keglam- Executive Director P.O Box 1250, Mt Hagen Ph: Fax: WHP

14Kapal Kopi Ltd - Banz Philip Kapal- Managing Director P.O. Box 10 BANZ, WHP

15Kigibah Estate Ltd - Aviamp Bill Gardner - Managing Director P.O. Box 870, MT.HAGEN, W.H.P Ph: 546 2444 Fax: 546 2443

16KK Trading Ltd Murphy Yasona - Managing Director Ramu Kopi Mill - Kainantu Ph: 737 1058 Fax: 737 1209 P.O. Box 212, KAINANTU, E.H.P

17Kin Ye Wandil Kopi Limited Sike Palme- Group Director c/ EBC Banz Circuit Ph: Fax: P.O Box 1311, Mt Hagen, WHP

18Koinol Coffee Ltd Anjip Mare - Managing Director C/- Niugini Coffee Tea & Spice Goroka Office Ph: 732 3145 P.O. Box 367 Goroka, EHP

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19Kongo Coffee Ltd - Wawi, Chuave Jerry Kapka - Managing Director P.O. Box 388, KUNDIAWA. Simbu Province Ph: 735 1214 Fax: 735 1130

20Kuang Ltd - Kuligap John Kerua - Managing Director P.O. Box 1815, MT. HAGEN. W.H.P Ph: 545 1239 Mob: 6813012 Fax: 545 1239

21Maips Limited Docta Maips-Managing Director P.O Box 973, Mt Hagen Ph: Fax: WHP

22Maro Coffee Ltd - Kagamuga Saint Max - Factory Manager P.O. Box 1280, MT.HAGEN, W.H.P Ph: 545 1467 Fax: 545 1364

23Mitega Coffee Growers Cooporative Society Ltd Jack Gasowo P.O. Box 1466, GOROKA, E.H.P Ph: Fax: 24Namaro Coffee Ltd - Bena Bridge Kefe Binene - Managing Director P.O. Box 558, GOROKA, E.H.P Ph: Fax:

25Nowek Limited - Kamaliki Terry Shelly - Managing Director P.O. Box 332, GOROKA, E.H.P Ph: 732 1735/1319 Fax: 732 2226/2649

26OK Corporation Ltd Pup Laki - Director Chairman P.O. Box 10, BANZ, W.H.P Ph: 546 2316 Fax: 546 2258 (a) Kimil Plantation - Banz Michael Mondo /Kamtai Benson Ph: 542 2179 Fax: 542 2179

27 (b) Ambra Wet Mill - Dei David Kombra P.O. Box 1217, MT.HAGEN, W.H.P Ph: 545 1578 Fax: 545 1526

28PNG Coffee Exports Ltd John Edwards - GM, John Leahy - Manager Lahamenegu Coffee Factory - Kamaliki Ph: 732 2772 Fax: 732 2180 P.O. Box 138, GOROKA, E.H.P

29Quilon Coffee Ltd - Kabiufa Enoch Asineha P.O. Box 980, GOROKA. E.H.P Mobile: 687 8636

30Red Mountain Ltd - Kawi Kami Jack Williams - MD, Brad Turner - Factory Manager P.O. Box 411, MT.HAGEN, W.H.P Ph: 546 2384 Fax: 546 2394

31Rilke Ltd Brian Leahy P.O. Box 50, MT.HAGEN, W.H.P Ph: 542 2635 Fax: 542 2632 (a) Kagamuga Wet Factory Nelson Naringa - Manager

32 (b) Kogua Plantation Wet Factory Carl Hoella - Manager 33Roim Roim Ltd Gabriel Timbi - Managing Director Dobel Wet Factory Ph: 545 1308 Fax: 545 1308 P.O. Box 1086, MT.HAGEN, W.H.P

34Sihereni Coffee Project Ltd David Oromarie - General Manager P.O. Box 1335 Goroka, EHP Ph: 732 2752 Mob: 688 8483 Fx: 732 1410

35Sonowagi Limited - Banz Timothy Kiagua - Managing Director P.O. Box 97, BANZ, W.H.P Ph: 546 2360 Fax: 546 2360

36Toiya Ltd Sero Bebes - Managing Director P.O. Box 371, KAINANTU, E.H.P Ph: 737 1476

37WR Carpenters & Co Estates Ltd Mike Jackson - General Manager P.O. Box 94, MT.HAGEN, W.H.P Ph: 542 2700 Fax: 542 1616 (a) Bunom wo Wet Factory Ray Kapil Ph: 542 1075

38 (b) Kalanga Wet Factory Karthik V. 39 (c) Kindeng Wet Factory Tim Neighbour 40 (d) Kigibah Wet Factory Konts Yengin 41 (e) Kunjip Wet Factory John Kunjil 42 (f) Sigri Wet Factory Joseph Nuno