The social Influences on the economic decision-making of smallholder cocoa producers in Papua New Guinea: The case of processing, transport and marketing

Abstract

In Papua New Guinea, the cocoa industry has long been concerned with low smallholder productivity and the low adoption rate of research-induced technology (Proceedings of the National Cocoa Consultative Workshop 2003; Omuru et al. 2001). Recent production efficiency studies (Fleming and Lummani 2001) in smallholder cocoa production in the East New Britain province, have ascertained that many farmers are not performing to their full potential given existing technology levels. While uncovering some important findings regarding 'efficiency', these studies have given scant attention to the social context in which smallholder production is carried out. In particular, these studies ignored the fact that farmers' economic practices are greatly influenced by their society and culture. There is thus a need for supplementary studies regarding smallholder economic behaviour. This study fills this gap by investigating how social factors influence smallholders' decisions concerning the production, transportation and marketing of their cocoa. Prior to commencing this thesis, my preliminary investigations in East New Britain province suggested that transport costs bear little relationship to supply and demand market principles. For example, in 2004, a tonne load of copra cost K70 to transport to buyers in town, while a one tonne load of cocoa cost K320 over the same route. Transport costs and, similarly, marketing appear to be influenced greatly by non-market factors, such as kinship and perceptions about the relative value of the goods to be transported. Because PNG village economies exhibit a high degree of "social embeddedness", this study combines several theoretical and methodological approaches, to bring the social dimension into the analysis of cocoa economic practices.The thesis argues that socio-cultural factors greatly influence the economic behaviour and the entrepreneurial success of farmers. The results have important industry policy implications for designing agricultural extension strategies more appropriate to the socioeconomic situations of farmers.