Abstract In Papua New Guinea about 50% of the citizen population is economically active, and of this portion, only about one-fifth have wage-earning jobs. Most of the people shift quite easily from formal to informal and/or subsistence economic activity. The first form of capitalist production came to Papua New Guinea in the 1870s with the recruitment of young men to work on plantations in the central Pacific area and in Queensland, Australia. The alienation of plantation land at that time and down to the present, along with increased production of cash crops on smallholdings, has increased burdens on subsistence production. However, subsistence agriculture is now, and will remain for some time to come, the dominant economic activity in the country, and the base upon which the rest of the economy stands. It is the purpose of this paper to examine subsistence agriculture, as simple commodity production, as it exists at present. This may assist us to understand the transformational processes and resultant problems which will ensue over the rest of this century. It is concluded that the examination of subsistence agriculture, with reference to policy and planning criteria, requires renewed attention to both theory and the collection of data at the micro-level by economists. The fundamental contradiction which faces policy-makers over the next decade is that subsistence producers are primarily responsible for feeding a majority of population. Yet they are being shoved and pulled into the cash economy and/or leaving subsistence production of their own accord. This will set the tone of 'rural development' over the. next decade.