Australia has expressed concern about a new quota system in Papua New Guinea's national rice policy.
PNG's Department of Agriculture and Livestock this month laid out plans to provide an 80% quota of the local rice market to rice importer Naima Agro-Industry Ltd.
Australia's Trade Minister Steven Ciobo however said a quota system was inconsistent with PNG's obligations under the World Trade Organisation.
In a letter to his PNG counterpart Richard Maru, Mr Siobo warned that Australia would be authorised under WTO rules to take retaliatory action against PNG exports to Australia.
Mr Maru said he would consult with the national executive council before the government formulated its response to Australia's serious concerns.
Rice field Photo: Supplied
The PNG government's announcement of the quota for Naima, which it says has no previous rice experience, had sparked concern with a major player in the local rice sector.
Trukai, two-thirds of which is owned by Australian rice farmers and the rest by a PNG super fund, said it had concerns the new policy could jeopardise its business in PNG.
With a packaging plant in Lae, Trukai employs about 1,000 people in PNG and said it had been working with local farmers to develop a domestic industry.
Recently, PNG's prime minister Peter O'Neill said that the policy had central aims of boosting rice production and fostering investment in the local industry.
He said PNG's increasing food needs meant it would be best to ease its reliance on food imports from Asia and Australia.
World Trade Organisation Photo: 123RF