Does Land Lease Tenure Insecurity Cause Decreased Productivity and Investment in the Sugar Industry? Evidence from Fiji

16 Pages Posted: 6 Jul 2016

See all articles by Reshmi Kumari

Reshmi Kumari

Government of India - Ministry of Agriculture

Yuko Nakano

University of Tsukuba - Graduate School of Humanities and Social Sciences

Date Written: July 2016

Abstract

Does land lease tenure insecurity cause decreased productivity and investment in the sugar industry? To answer this question, this study examined the impact of weak formal tenure lease arrangements on tenants’ investment and the productivity of sugarcane in Ba province, Fiji. After controlling for potential endogeneity in the choice of lease tenure using instrumental variables (IV), it was shown that tenants under insecure lease tenure (expiring in 0–5 years) achieve significantly lower yields of sugarcane, by 6.5–11 tonnes per hectare, and plant smaller areas of new sugarcane, by 0.14–0.25 hectares on average, than do tenants under secure lease tenure. Insecure lease tenure also negatively affects chemical fertiliser use, although this impact is not statistically significant. An intervention to improve tenure security would likely enhance the production efficiency of and investment in the Fijian sugarcane industry.

Keywords: Fiji, investment, land, sugarcane, tenure insecurity

Suggested Citation

Kumari, Reshmi and Nakano, Yuko, Does Land Lease Tenure Insecurity Cause Decreased Productivity and Investment in the Sugar Industry? Evidence from Fiji (July 2016). Australian Journal of Agricultural and Resource Economics, Vol. 60, Issue 3, pp. 406-421, 2016, Available at SSRN: https://ssrn.com/abstract=2804802 or http://dx.doi.org/10.1111/1467-8489.12133

Reshmi Kumari (Contact Author)

Government of India - Ministry of Agriculture

Chennai
India

Yuko Nakano

University of Tsukuba - Graduate School of Humanities and Social Sciences ( email )

Japan

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