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Agricultural R&D in many developing countries plays an important economic role. However, to sustain successful agricultural R&D requires adequate, reliable funding and sound management and governance. In many developing countries, generating reliable flows of R&D funds and ensuring their proper management are major challenges. This paper uses a case study in Papua New Guinea to illustrate these problems in agricultural R&D and outlines possible solutions. The main solution of fund diversification and commercial activity by the R&D provider, a practical success in the Papua New Guinea case study, could have wider applicability to other industries and other developing countries. The structural solutions provide more security of funding, lessen impacts of possible corruption and provide commercial incentives for R&D effort.

Adequate and reliable funding of agricultural R&D is critical for sustaining research activities. A breakdown in funding arrangements can be detrimental to the long-term existence of R&D organisation/systems. This paper first, reviews the trends in funding arrangements for agricultural R&D in Papua New Guinea (PNG) in recent years. Second, the paper explores the extent to which political influence affects funding arrangements for agricultural R&D in PNG in terms of a case study. Third, with insights from the case study, which are alleged to reflect the general nature of the way agricultural R&D has been funded in PNG, implications are assessed and suggestions are made about the need to diversify funding sources away from avenues that are dependent directly on political influence. The paper concludes with a brief summary.

Agricultural research priority-setting at best promotes the effective and efficient use of scarce research resources. This paper reviews firstly the priority-setting methods used in Papua New Guinea for agricultural R&D and examines the practicalities of implementing these and other methods. Secondly, this paper reports on key factors affecting the strategic directions for agricultural R&D in Papua New Guinea. These factors include:(i) the long term trends in international crop prices; (ii) long-term trends in crop production by sector (plantations or smallholders); (iii) the cost of production by sector and its effects on the long-term economic sectoral sustainability; and (iv) the potential impact of pests and diseases. Related issues of research capacity, remuneration, funding and administration are also explored. Conclusions are drawn about desirable research directions and the capacity of PNG to deliver appropriate R&D products.

This paper assesses the welfare effects of a combination of policy changes affecting PNG cocoa producers during the 1990's. These policy changes are the introduction (in 1992) and intended removal (in 1997) of a price support policy plus an intervening devaluation and subsequent floating of the domestic currency (kina). Using a model for analysing the effects of these policy changes on a producer's price distribution and for converting these price effects into welfare effects, combined with price, cost and yield data from the PNG cocoa industry, it is shown that both the price support policy and the devaluation have been of benefit to producers. However, the devaluation has also diminished the effectiveness of the price support policy so that the negative consequences of its intended removal have been lessened.