An analysis of labour supply and productivity in the oil palm industry : a case study of the Cape Hoskins Settlement Scheme, Papua New Guinea

Abstract

Since World War II, efforts to promote growth of commercial agriculture in the economy of Papua New Guinea have included a strategy of encouraging both estate and smallholder production of agricultural export crops. One recent facet of this has been the establishment of 'nucleus estate' schemes that involve an interdependent relationship between large scale estates and processing facilities and land settlement schemes for smallholders. One such scheme was the Cape Hoskins Oil Palm Land Settlement Scheme. Commencing in 1968 this was the first large scale 'nucleus estate' in the country and had as its objectives the introduction of oil palm on a commercial basis, the integration of people of different ethnic backgrounds into a single settlement scheme and the utilisation of some of the unexploited land resources of the country. In this study, analysis is made of data from a comprehensive labour availability and utilisation study of a sample of 23 settlers^ from Kapore, the first sub-division established in Hoskins. The objectives of the study are: (i)to examine the settlers actual labour utilisation patterns; (ii) to test the explicit and implicit assumptions made by the Project Planning Team regarding the availability and utilisation of labour of an average household; (iii) to relate labour inputs in oil palm to the performance of settlers in terms of their output levels via the estimation of a production function and a technical efficiency index of settlers. The most notable findings of the labour input analysis are that an average settler household utilised more labour than was originally assumed by the Project and was able to overcome its family labour shortages during times of peak labour demand, e.g., harvesting, by utilising outside assistance obtained through a system of mutual labour exchange amongst households. Examination of differences in labour inputs of settlers reveals that significant variations exist in labour inputs in oil palm activities among the three ethnic groups and three household categories studied. Multiple Regression Analysis on a cross-sectional time-series data matrix indicates that a statistically significant percentage of intersettler variations in output of fresh fruit bunches of oil palm is explained by the number of trees, the age of these trees and the managerial ability of the settler. Regression analysis of an index of technical efficiency, derived from the farm effect coefficients of the production function, reveals that a significant portion of the variations in technical efficiency of settlers could be attributed to the level of labour inputs in maintenance of oil palm holdings in the development phase and to the ethnic grouping of the settlers. Hence, differences in labour input in maintenance of holdings during the development phase explains a significant percentage of the inter-settler variations in output of oil palm. Labour inputs in harvesting was shown to be a function of fresh fruit output while labour input in hand pollination is postulated to determine output levels. A comparison of actual with predicted yields in Kapore and with actual yields in Nigeria and Malaysia seemed to suggest the inappropriateness of interior 'bliss point' theoretical models in a situation such as the Hoskins Land Settlement Scheme where farmers are plunged into a fully commercial venture. In conclusion, this study stresses the need for further investigation of the differences in labour inputs in oil palm and hence in management levels. It is suggested that they be studied in the light of two possibilities: (i) that labour input is varied according to settlers' own choice; and (ii) that variations in labour inputs are due to settlers' lack of knowledge of appropriate management practices for oil palm. If difference in management levels is attributed to (ii) above, this thesis suggests the intensification of the extension services while taking cognizance of inter-settler differences in management ability. But if it is due to (i), inter-settler output variation would no longer be a problem of extension but of work-leisure preference and future studies should be directed at the determination of work-leisure preferences and the ultimate estimation of the subjective equilibrium point of settlers. Show more