This downward is due to lower production expected from major mines in the country and a lower production of cocoa, coconut oil and coffee, as growers anticipated loss in volumes due to the cocoa pod borer and a low yielding year expected for coffee.
A biggest concern over the past year had been dealing with prospects of increasing production amid the rise in the cost of production, the Mid-Year Economic and Fiscal Outlook Report for this year stated.
According to most major mines, cost of supplies, including food, machinery and spare parts, had increased significantly over the last 12 months.
That was attributed to the increase in costs exacerbated by the weak kina.
Despite commodity prices remaining at reasonable levels in the first half this year, returns had been eroded by growing costs.
This had triggered mines to review operations whereby some began to scale back labour over the past twelve months.
Recent data had suggested that the exercise has continued this year where mines had scaled back production targets for the year in order to control costs.
The downgrade in production had slowed down the growth in the mining sector to 6.0% from this year’s budget estimate of 13.8%.
Indications are that volumes of most commodities will be lower in 2014 and this has been attributed to the cocoa pod borer, expectations of a low yielding year for coffee and low coconut oil production due to the uncertainties surrounding the re-opening of coconut oil processing mills which ceased operations last year.
Meanwhile, overall, risks to downside remain high, therefore growth in agriculture, forestry and fisheries has been revised down to 3.0% from 4.8% estimated in this year’s budget.