Technical efficiency of Mirahawatte organic tea smallholders: a stochastic frontier approach
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Date
2015
Journal Title
Journal ISSN
Volume Title
Publisher
Uva Wellassa University of Sri Lanka
Abstract
Organic agriculture is now becoming very famous among Sri Lankan farmers as it is able to catch more foreign exchange to the country. World public is more concerning on sustainable agro-product consumption to secure the economic, environmental and social benefits. Tea is one of the most prominent organic export crops in Sri Lanka. The relevant actions need to take to develop the organic tea production in the country. Before moving to that, most effective solution to upgrade the production is increasing the technical efficiency; ability to produce maximum output using existence inputs and technology. Measuring the technical efficiency will prove the actual sustainability of tea industry in economics terms.
Sri Lanka tea industry consists with estate sector and tea smallholdings. Contribution from the tea smallholders to the national tea production was 72% in 2013 (Ministry of Plantation Industries, 2013).As tea smallholders play a major role in Sri Lankan economy, analyzing technical efficiency is imperative. Main objectives targeted to measure the value of technical efficiency of tea smallholders in Mirahawatte and to find out the determinants of technical efficiency of organic tea smallholders in Mirahawatte.
Methodology
Technical efficiency of Mirahawatte organic tea smallholders were measuredin this study with 71 organic tea small holders registered under Marginalized Organic Producer’s Association. Stochastic frontier model was used to estimate the technical efficiency. Primary and secondary panel data were collected during the period of 2011/2012 to 2013/2014. Technical efficiency was estimated by a stochastic frontier function using a Cobb-Douglas model, incorporating technical inefficiency effect model. In Cobb-Douglas model effect of eight inputs against output was measured. In technical inefficiency function, sixteen variables were identified as efficiency components oftechnical inefficiency. Data ware analyzed using STATA version 11 and frontier 4.1c computer programme.
Description
Keywords
Agriculture, Export Agriculture, Tea Technology, Tea Industrials, Organic Agriculture