Profitability of Smallholder Rice Production in Selected Agro-ecoclogical Zones of Papua New Guinea

Abstract

Agricultural policy of Papua New Guinea focuses on the national food security and the debate on how to attain it. Rice, although not an important food crop in the diverse farming systems practices, it has firmly emerged as a staple food in PNG. Its importance is reflected in the amount of rice imported,150,000 metric tons, and amount of PNG Kina spent on rice imports, PNG K216 million, per annum. Due to the weaker PNG Kina, the retail price of rice has increased to 120 percent, between 1994 and 2003,. Because of the increased burden of financing rice imports, the government has encouraged rice self-sufficiency since 1998. The strategy was to promote domestic rice production as a smallholder industry. This study, which was conducted in the highlands, wet lowlands and dry lowlands agro zones, aimed at evaluating financial profitability of rice production systems in these agro zones. The data were generated from multi location rice varietal performance trials conducted in these agro zones. The analysis was modeled on smallholder rice farming with low input- low output situation. The results indicate that smallholder farmers make minimal fixed capital investments and cash cost inputs. Family labor was found to be the single most important input in smallholder rice production. All rice production systems were found to be financially profitable with net returns per man-days of labor greater than the rural minimum wages rate. Furthermore, milled rice was found to be more profitable than paddy rice.