Motivation and the response to economic incentive : a case study of the Seaqaqa Sugar Development Project, Fiji

Abstract

This study seeks to identify factors influencing the response of traditional farmers to economic incentive. The Seaqaqa Sugar Development Project is used as a case study. A stratified sample of 60 of the families participating in the project was selected, and data were collected in Seaqaqa from July 1977 to July 1978. However, difficulties with the responses of three families meant that only 57 were included in the subsequent analysis. The Seaqaqa Project Administration had introduced a system of incentives and disincentives designed to encourage family commitment to the cash crop - sugar cane. This was in accordance with the official view that the performance of settlers could be judged in terms of cane output. Families, however, appeared to judge their own performance in terms of a larger number of variables and had not always reacted to the official incentives in the manner that was expected. In this thesis the impact of these policies on family labour inputs to the cash crop is examined. The analysis is based on a neo-classical model adapted to include the impact of time on decision making. It revealed that some of the incentives would in fact have discouraged commitment to the commercial economy. In these cases, alternatives are suggested. In the discussion it emerged that the perceived marginal productivity of labour in cane production, and the subjective rate of time discount, were crucial determinants of household behaviour. Neither could be estimated because of data difficulties, but it is concluded that a multi-period production function study of cane production in Fiji should be undertaken. Suggestions are made for the type of data which needs to be collected for this study. Moreover, a method of deriving an indicator of time preference for each family from observed behaviour is developed. This could be calculated once a production function of the type described has been estimated, and is likely to prove useful in other situations where there is a choice in allocating inputs between a perennial and an annual crop, both in Fiji and elsewhere.