Browsing by Author "Edirisinghe, J.C."

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    Climate, Technology and Variations in Profit in Tea Production: A Study on Nuwara Eliya Tea Estates
    (Uva Wellassa University of Sri Lanka, 2019) Somarathna, A.D.K.S.S.; Edirisinghe, J.C.
    Tea is the major foreign income earning crop in Sri Lanka and its GDP contribution is 2% while the 65% of export agriculture revenue and 15% of foreign exchange earnings is also obtained through the tea industry. Also, about 20% of population depends directly or indirectly on the tea sector. The sustainability of this industry depends on its profitability and if not sufficiently profitable, these tea lands maybe converted to other uses in time to come. As predicted by climatologists, future weather is expected to be different from the present. Therefore, the main purposes of this study were to investigate the variability in profits among tea estates and to see weather, climate and technology influence this variation [risk]. This study was carried out in Nuwara-Eliya district because, it is the largest tea producing district in Sri Lanka as well as Nuwara-Eliya teas have high foreign demand. Nuwara-Eliya district consists with two tea growing regions which are Dimbula and Nuwara-Eliya; therefore, when selecting the sample variation of the agro ecology was considered. Data collection followed a stratified random sampling procedure. Twenty-three year’s production and climatic data were collected from thirtyfive estates were used in the analysis. Variance of the error term of the estimated profit function was assumed to be related to risk. Annual total rainfall, annual maximum and minimum average temperature were taken as the climatic variable while technology change was represented by a time trend variable. According to the result of this study, all weather variables showed ‘U’ shaped relationship with the variance. According the results the minimum variability in profit is obtained when the optimum annual rainfall is around 2000 mm, the annual maximum average temperature was 21 °C and the annual minimum temperature was 12.25 °C. Therefore, estate sector needs adaptation strategies for weather as well as possible changes in the climate that is bound to happen.
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    Economic Efficiency in the Tea Estate Sector: A Case Study from Dimbula Tea Region
    (Uva Wellassa University of Sri Lanka, 2020) Ranadewa, D.P.N.; Ranjan, K.R.H.M.; Somarathna, A.D.K.S.S.; Edirisinghe, J.C.
    Being the main agricultural export crop for around 150 years, tea contributes to the Sri Lankan economy in a significant manner. In the recent past, Sri Lanka’s tea production and exports show a declining trend. Making matters worse, the average price has fallen below the average cost of production causing low profits. Amidst these, the tea estate sector faces many additional challenges in the form of the high cost of production, scarcity of labor, and maintenance issues. However, despite having the aforementioned constraints, some estates perform well while others are not. Hence, this study aims to analyse variability in the economic efficiency and determinants of revenue using a stochastic revenue frontier. To estimate the revenue function, panel data were collected from seven tea estates in the Dimbula region, which were selected by the purposively based on the availability of data and the access for the required data. Green leaf amount, Net Sale Average (NSA), labor days, chemical cost, and fertilizer cost were extracted from estate monthly accounts from 2005 to 2018. To estimate the stochastic revenue frontier, Battese, and Coelli model (1988) was used to capture the firm specific time invariant inefficiency. Results showed a mature area extent, NSA and labor days has a positive significant impact on revenue. The largest impact on revenue is given by the increase in extent as expected. A 1% increase in extent increases revenue by 1.4%. Similarly, a 1% increase in NSA can increase the revenue by 0.76% and a similar increase in labor can increase the revenue by 0.07%. Selected tea estates in the Dimbula region have a mean efficiency of 84%, which implies that still efficiency can be improved by 16% on average. Even though the mean is 84%, the maximum is 96.92% and the minimum is 68% showing that the inefficiency range is 31.97% to 3.08%. Therefore, it is clear that some estates have not achieved even the mean level of efficiency and a considerable amount of potential revenue is lost due to inefficiency. Keywords: Economic efficiency, Revenue function, Stochastic frontier, Tea estate sector
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    Effect of Non-Tariff Measures on Sri Lankan Tea Trade: A Bayesian Inference
    (Uva Wellassa University of Sri Lanka, 2020) Ranjan, K.R.H.M.; Edirisinghe, J.C.
    Non-tariff measures such as food safety standards on agricultural trade have become an emerging barrier throughout the world. The objective of this paper is to assess the impact of Sanitary and Phytosanitary measures for Sri Lankan tea exports by stipulating Maximum Residual Levels (MRLs) for the pesticide Endosulfan that is mostly used for tea production all over the world. Bayesian analysis was used in this study to estimate the gravity equation for the tea exports from Sri Lanka using a Multilevel Mixed Model. Panel data from 2003 to 2017 for fourteen prime destinations of Ceylon tea were considered for this study. The results show that the MRL of pesticide imposed by importing countries has significantly affected Sri Lanka′s tea exports. One percent decrease in the MRL on Endosulfan can result in a 0.67% (approximately USD 10,138,488.77 in 2017) decrease in Sri Lanka's tea exports and one percent increase in the tariff rate leads to a 0.03% percent decrease in the value of Sri Lankan tea exports. By comparison with the tariff effect, the MRL is associated with a bit higher trade effect for Sri Lankan tea exports. Policy implication such as large variations among countries and increasingly tighter restrictions from developed countries on food safety standards leads to great challenges in exporting food products like tea. Thus, these outcomes recommend that the negative impact of MRLs is found to outweigh the impact of import tariffs, highlighting the greater role that non-tariff measures play on Sri Lankan tea exports. Therefore, there is an urgent need for regulatory policies to uplift Sri Lankan tea exports. Keywords: Bayesian analysis, Gravity model, Maximum residual level, Non-tariff measures, Tea exports
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    Production Relationship of Shrimp Cultivation in North Western Sri Lanka Using Farm Level Data
    (Uva Wellassa University of Sri Lanka, 2019-02) Perera, W.K.G.; Edirisinghe, J.C.; De Croos, M.D.S.T.
    Shrimp farming offers considerable potential for diversification and income security in Sri Lanka's rural area. However, shrimp production has declined significantly in recent years due to unsustainable practices, and devastating epidemics. In terms of production volume and technology, the Sri Lankan aquaculture sector is still in an infant stage compared to other Asian countries. International trade in aquaculture products is one way of promoting economic growth and reducing poverty in most developing countries. However, aquaculture is under constant pressure from environmentalists and government regulation. Hence, this paper uses cross sectional data collected from 81 shrimp farms in September to analyze the production relationships in shrimp using farm level input and output data and to assess the potential gains of farmers by increasing farm size. A CobbDouglas production function was estimated to obtain the relationship between inputs and output in shrimp production. Shrimp farming observed a positive relationship between output and the inputs considered. The output elasticities are low indicating inelastic relationship between inputs and output. The major finding of the study is that shrimp farming in the Northwestern Sri Lanka has a constant return to scale implying the sectors’ inability to obtain the benefits of economies of scale.
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    Spatial and Temporal Variation in Input Oriented Technical Efficiency of Paddy Cultivation in Sri Lanka
    (Uva Wellassa University of Sri Lanka, 2019-02) Dasanayaka, M.D.K.S.P.; Edirisinghe, J.C.
    Around 2.7 million tons of rice is produced in the country annually which is sufficient to fulfill 95 per cent of the domestic rice requirement. Demand for rice is projected to increase 1.1 per cent per year (Department of Agriculture, 2018). To meet this demand, rice production must grow at a rate of 2.9 per cent per year (Department of Agriculture, 2018). In order to achieve this production target, national average yield should increase. Introduction of inorganic fertilizer, pesticide and weedicide were useful to increase agricultural productivity. However, intensive use of these inputs causes severe environmental problems like pollution, biodiversity loss and changes in the ecosystem. Many claims that inputs in paddy cultivation are over used. Thus, the objective of this study is to disaggregate input over usage in Sri Lanka spatially and temporally. Panel data collected from costs of cultivation publications from 2000 Yala to 2016/2017 Maha were used. Input oriented technical inefficiency was calculated for 13 paddy cultivating districts in Sri Lanka using Stochastic Frontier approach. Cobb - Douglas functional form was selected to express the production relationship. According to the results, hypothesis about time varying nature of inefficiency was rejected. This shows that there’s no temporal variation in input oriented technical inefficiency. Estimated input orientated technical inefficiency values shows that, there’s a spatial variation in input over usage in paddy cultivation. Highest input over usage (72%) was in Batticoloa district while the lowest is (6%) in Mannar. Mean input oriented technical inefficiency of all 13 districts was 37 per cent relative to the most efficient paddy cultivating district in the data set. On average, input oriented technical efficiency of these areas should improve by 37 per cent to reach full efficiency. Curbing this overuse is important because, it not only increase cost of production but also damages environment as well. Field extension activities should develop to encourage farmers to use inputs in optimum amounts. How ever further research should be done to find out reasons for inefficiency in these areas.
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    Variability of Technical Efficiency in High Grown Tea Estates – A Bayesian Approach
    (Uva Wellassa University of Sri Lanka, 2020) Madushan, Y.W.C.; Ranjan, K.R.H.M.; Somarathna, A.D.K.S.S.; Edirisinghe, J.C.
    This study was carried out to identify the technical efficiency levels of the high grown tea estates in Sri Lanka. Data were collected from tea estates in the Nanuoya region in Dimbula planting District covering seven tea estates. Monthly data on green leaf production, revenue extent of the estate, labour costs, agrochemical costs, and fertilizer costs were extracted from monthly accounts and progress reports from the year 2005 to 2018 to form a panel data set. To estimate efficiency, stochastic frontier production functions of Cobb Douglas and Translog forms employed. Two distributional assumptions were made on the distribution of the firm specific inefficiency term as exponential and half-normal. Econometric estimation used a Bayesian framework with a non-informative Jeffrey’s before estimate the posterior distribution. Results indicated that the Cobb-Douglas stochastic frontier with an exponentially distributed inefficiency term with random effect was the best fit. Technical efficiency was estimated for each tea estate assuming the time variation of efficiency cannot be seen in the sample estates. Results further indicated that there is a positive and significant impact on the monthly green leaf production by the revenue extent, labour, agrochemical, and fertilizer costs. The average technical efficiency level estimated was 86.9% and the minimum level is 66.2%. This shows that on average, in the high grown tea estates, a 13.1% increase in the production can be obtained without increasing the cost of production. Further, the highest impact on the green leaf production comes from the extent and therefore, estates should consider utilizing the abandoned tea lands to increase the production. Besides, it is prudent for the estates to look into the reasons for inefficiency and correct them so that they can increase their profitability in these hard times that most estates are running at a loss. Keywords: Bayesian analysis, Stochastic frontier analysis, Tea estates, Technical efficiency