The New Zealand aid programme is to provide up to six million US dollars to support an upgrade of Gordon's Market in the capital of Papua New Guinea, Port Moresby.
The New Zealand foreign minister, Murray McCully, says Gordon's Market is the largest produce market in the Pacific and a vital part of the fresh produce supply chain in PNG.
He says the market lacks facilities, has poor drainage, an unreliable water supply and inadequate security, which limit returns to stall holders and producers.
Mr McCully says New Zealand's funding will contribute to civil infrastructure works, a new drainage system, new retail market facilities and a dedicated wholesale site.
He says New Zealand is also working with leading agricultural distributors in PNG to develop and manage a system of cold storage facilities and to improve the transport of fresh produce.