Author

  • Sandunika Jayakody

    • Department of Business Economics, University of Colombo, Sri Lanka
    • Sri Lanka

  • Sajitha Dishanka

    • Department of Business Economics, University of Colombo, Sri Lanka
    • Sri Lanka

Abstract

While accepting the fact that the tea smallholdings sector of Sri Lanka immensely contribute to the annual tea output of the economy, the sector still faces various deficiencies due to problems pertaining to input related issues. Measuring the level of efficiency and identifying the factors which are attributed to inefficiency are in utmost importance in introducing remedies for that. A cross sectional survey was conducted on a sample of tea smallholders in Ratnapura district where highest contribution to the total tea production of the country is made. In this study, the Cobb-Douglas Stochastic production frontier model was used by incorporating the technical inefficiency effect model to estimate the level of technical efficiency in tea smallholdings sector. The study revealed that average technical efficiency of tea smallholdings sector in the study area was 87.36 percent that keeps a margin of 12.64 percent for further improvements through better use of available resources and technology. The results of the Cobb-Douglas model revealed that the estimated coefficients of land, labor and fertilizer are positively and significantly affect the green leaves production of the sector. The findings of the inefficiency model disclosed that age, farming experience, level of education, occupation, age of tea plants, farming group membership and credit access have significant negative impact on technical inefficiency.

Keywords

References

  • Afriat, S. (1972). Efficiency Estimation of Production Functions. International Economic Review, 13(3), 568598.
  • Ahmad, M., Chaudhry, G. M. & Iqbal, M. (2002). Wheat Productivity, Efficiency and Sustainability: A Stochastic Production Frontier Analysis. The Pakistan Development Review, 41(4), 643-663.
  • Aigner, D., Lovell, C. & Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Function Models. Journal of Econometrics, 6(1), 21-37.
  • Amos, T. T. (2007). An Analysis of Productivity and Technical Efficiency of Small Holder Cocoa Farmers in Nigeria. Journal of Social Science, 15(2), 127-133.
  • Basnayaka, B. M. & Gunaratne, L. H. (2002). Estimation of Technical efficiency and It’s Detrminants in the Tea Small Holding Sector in the Mid Country Wet Zone of Sri Lanka. Sri Lanka Journal of Agricultural Economics, 4, 137-150.
  • Battese, G. E. (1992). Frontier Production Functions and Technical Efficiency: A Survey of Empirical Applications in Agricultural Economics. Agricultural Economics, 7(3-4), 185-208.
  • Battese, G. E. & Coelli, T. J. (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data. Empirical Economics, 20(2), 325-332.
  • Battese, G. & Corra, G. (1977). Estimation of a Production Frontier Model: With Application to the Pastoral Zone of Eastern Australia. Australian Journal of Agricultural Economics, 21(3), 169-179.
  • Central Bank of Sri Lanka. (2013). Annual Report. Colombo: Sri Lanka.
  • Chirwa, E. W. (2007). Sources of Technical Efficiency among Smallholder Maize Farmers in Southern Malawi. The African Economic Research Consortium. Nairobi: AERC Research Paper 172.
  • Coelli, T. (1995). Recent Developments in Frontier Modeling and Efficiency Measurement. Australian Journal of Agricultural Economics, 39(3), 219-245.
  • Coelli, T. J., Rao, D. S. & Battese, G. E. (1998). An Introduction to Efficiency and Productivity Analysis (1st ed.). New York: Springer.
  • Ellis, F. (1993). Peasant Economics: Farm Households in Agrarian Development (2nd ed.). Cambridge: Cambridge University Press.
  • Farrell, M. J. (1957). The Measurement of Productive Efficiency. Journal of The Royal Statistical Society. Series A (General), 120(3), 253-290.
  • Førsund, F., Lovell, C. & Schmidt, P. (1980). A Survey of Frontier Production Functions and of Their Relationship to Efficiency Measurement. Journal of Econometrics, 13(1), 5-25.
  • Hong, N. B. & Yabe, M. (2015). Technical Efficiency Analysis of Tea Production in the Northern Mountainous Region of Vietnam. Global Journal of Science Frontier Research, 15(1), 30-42.
  • Kibaara, B. W. (2005). Technical Efficiency in Kenyan’s Maize Production: An Application of the Stochastic Frontier Approach. Thesis: Master of Science, Colorado State University, Colorado.
  • Kumbhakar, S. & Lovell, C. (2004). Stochastic Frontier Analysis (1st ed.). Cambridge: Cambridge University Press.
  • Meeusen, W. & van Den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error. International Economic Review, 18(2), 435-444.
  • Ministry of Plantation Industries of Sri Lanka. (2013). Annual Performance Report. Colombo: Sri Lanka.
  • Msuya, E. E. & Ashimogo, G. C. (2006). An Estimation of Technical Efficiency in Tanzania Sugarcane Production: A Case study of Mtibwa Sugar Company Otugrower's Scheme. Journal of Economic Development, 1.
  • Nguyen-Van, P. & To-The, N. (2016). Technical Efficiency and Agricultural Policy: Evidence from the Tea Production in Vietnam. Review of Agricultural, Food and Environmental Studies, 97(3), 173-184.
  • Parikh, A., Ali, F. & Shah, M. (1995). Measurement of Economic Efficiency in Pakistani Agriculture. American Journal of Agricultural Economics, 77(3), 675-685.
  • Tea Small Holders' Development Authority of Sri Lanka. (2012). Annual Report. Colombo: Sri Lanka.
  • Wadud, M. (2003). Technical, Allocative, and Economic Efficiency of Farms in Bangladesh: A Stochastic Frontier and DEA Approach. The Journal of Developing Areas, 37(1), 109-126.

Downloads

No downloads have been recorded for this article yet. Figures appear here once readers begin downloading the full text.

How to Cite

Jayakody, S., & Dishanka, S. (2020). An Estimation of Technical Efficiency of Tea Smallholdings in Ratnapura District of Sri Lanka. Journal of Social and Development Sciences, 10(4(S), 1-11. https://doi.org/10.22610/jsds.v10i4(S).2839

Share this article

License

Copyright (c) 2020 Sandunika Jayakody, Sajitha Dishanka (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team  edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.

Keywords

Section

Research Paper

Published in

Vol. 10 No. 4(S) (2019) Leadership, Governance & Productivity View issue contents

Published

2020-08-22

Submissions

Have research to publish? Journal of Social and Development Sciences welcomes submissions.

Make a Submission