Labour costs are an issue in agriculture in a developing country

Labour cost for smallholder farm producers in Papua New Guinea (PNG) is an important factor but is usually ignored by farmers in calculating production costs. Typically, farm labour is provided by family members but is normally unpaid, and therefore is erroneously not included as a cost. A production cost survey was conducted for 20 smallholder vegetable growers in Rigo, Central Province, to determine labour and other costs of production. Farmers were supplied with cost- and time-recording sheets and were trained to record costs. The study, which was conducted over three cropping seasons, identified that the labour costs are very significant. Unit production cost of vegetables was between PGK0.38 and PGK3.24 before labour costs were included and between PGK1.72 and PGK5.92 inclusive of labour. Variable and fixed costs were also determined, and farm-gate price and margins determined. The challenge is to make labour more efficient while at the same time appropriately accounting for it. Farming will inevitably become increasingly competitive, and therefore knowing the cost of production is an important tool in planning, forecasting and decision-making and should be a routine practice for smallholder producers in PNG.