Potential efficiency gains in the Fiji sugar industry: the performance payment system
|Collections||Pacific Economic Bulletin (1991-2010)|
|Title:||Potential efficiency gains in the Fiji sugar industry: the performance payment system|
|Publisher:||Crawford School of Public Policy, The Australian National University|
Asia Pacific Press
This article assesses the magnitude of expected financial gains and the nature of incentives that a performance payment based contractual system may offer in a segmented sugar industry such as Fiji?s. A performance payment system (PPS), such as the Atherton system, could give all industry stakeholders incentives to improve performance. However, in the light of operational issues, a grower-miller based PPS may be more practical. Some loss of static efficiency may occur in this second-best option but, given the gravity of industry inefficiency in Fiji, a contractual agreement to improve the performance of all parties is urgently needed.
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