Technical Efficiency for Tea Smallholder Farmers under UTZ Certification System in Sri Lanka: A Stochastic Frontier Approach

  • Hunuwala Malawarage Suranjan Priyanath
      Professor, Department of Economics and Statistics, Sabaragamuwa University of Sri Lanka
    • S.P. Premaratne
        Department of Economics, University of Colombo, Sri Lanka.
      • Amina Yoosuf
          Nucleus Foundation, Kandy.
        • D. Maurice
            Nucleus Foundation, Kandy.

          Abstract

          The study aimed to identify the determinants of the technical efficiency of Smallholder Tea Farmers (STFs) under UTZ certification system in Sri Lanka by employing stochastic production frontier using a sample survey of 75 STFs supported by the UTZ programme conducted between January and March in 2016. The results showed that a small number of STFs (11.8 percent) were over 90 percent efficient and the level of efficiency was found to be negatively related to coefficients of UTZ certified STFs and positively related to number of years with the same plants. The results further showed the labor and fertilizer were the significant factors that determine the tea production of STFs.

          Keywords:
          Smallholder Tea Farmers Stochastic Production Frontier Technical Efficiency UTZ Certification

          Metrics

          Metrics Loading ...

          References

          Aigner, D. J., and Chu, S. F. (1968). On Estimating the Industry Production Function. American Economic Review, 58, 826-839.

          Aigner, D. J., Lovell, C., and Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Models. Journal of Econometrics, 6, 21-37.

          Basnayake, B. M. J. K., and Gunaratne, L. H. P. (2002). Estimation of Technical Efficiency and Its Determinants 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. and T.J. Coelli (1995), A Model for Technical Inefficiency Effeect in a Stochastic Frontier Production Function for Panel Data”. Empirical Economics, 20, 325-332.

          Baruwa1, O. I., and Oke, J. T. O. (2012). Analysis of the Technical Efficiency of Small-holder Cocoyam Farms in Ondo State, Nigeria, Tropicultura, 30(1), 36-40.

          Bogahawatte, C. and Herath, M. A. L. B. (1964). Pricing and technical efficiencies of smallholder green tea production: evidence from Kotmale area in the Nuwara Eliya district, Sri Lanka Journal of Agrarian Studies, 5 (2), 37 -51.

          Central Bank of Sri Lanka, (2016), Annual Report – 2015, Central Bank of Sri Lanka, Colombo.

          Dube, L. and Emmanuel, G. (2014). Technical efficiency of smallholder tea farming in Chipinge District of Zimbabwe, Greener Journal of Agricultural Sciences, 4(8), 368-377.

          Dissanayake, D., Udugama, J. and J. Mudalige, U. (2013), ‘Development of an Alternative Microfinance Scheme to Finance Entrepreneurship in Tea Smallholding Sector: A Success Story’, Journal of Food and Agriculture, 3(2), 31- 40.

          Esham, M. (2014). Technical efficiency and determinants of maize production by smallholder farmers in the Moneragala District of Sri Lanka, Mediterranean Journal of Social Sciences, 5(27), 416 – 422.

          Farrell, M. J. (1957). The Measurement of Productive Efficiency. Journal of the Royal Statistical Society, 120(3), 253-281.

          Fernando, C. J. I. T. (2016), Tea Smallholdings Sector in Sri Lanka, Tea Small Holdings Development Authority, Sri Lanka.

          Greene, W.H., (2008). The econometric approach to efficiency analysis. In: H.O. Fried, C.A.K. Lovell and S.S. Schmidt, eds., the Measurement of Productive Efficiency and Productivity Growth. Oxford University Press, Oxford, 92–250.

          Haagsma, B., Vredeveld, T., Yoosuf, A. and Maurice, D. (2016). External Evaluation of the UTZ Tea Programme in Sri Lanka, Fair and Sustainable Advisory Services, the Netherlands and Nucleus Foundation, Sri Lanka.

          Hong, N. B., and Mitsuyasu, Y. (2015). Resource Use Efficiency of Tea Production in Vietnam: Using Translog SFA Model, Journal of Agricultural Science, 7(9), 160 – 172.

          Kalimang, N. N., Kihombo, A., and Kalimang, N. (2014). Technical Efficiency of Cocoa Production through Contract Farming: Empirical Evidence from Kilombero and Kyela Districts, International Journal of Scientific and Research Publications, 4(10), 1 -9.

          Kalirajan, K. P. (1981). The economic efficiency of farmers growing irrigated rice in India, American Journal of Agricultural Economics, 3, 566-570.

          Kipesha, E. F. (2016). Technical efficiency and productivity changes in tea manufacturing companies: A Case Study of Mufindi Tea and Coffee Limited in Tanzania, Case Studies Journal 5(3), 19 – 24.

          Kiprop, N. I. S., Hillary, B. K., Mshenga, P., and Nyairo, N. (2015). Analysis of technical efficiency among smallholder farmers in Kisii County, Kenya, IOSR Journal of Agriculture and Veterinary Science, 8(3), 50-56.

          Kumbhakar, S. C, Ghosh, S & McGuckin, J. T. (1991). A generalized production frontier approach for estimating determinants of inefficiency in US dairy farms, Journal of Business and Economic Statistics, 9(3), 279-286.

          Malinga, N. G., Masuku, M. B. and Raufu, M. O. (2015). Comparative analysis of technical efficiencies of smallholder vegetable farmers with and without credit access in swazil and the case of the Hhohho region, International Journal of Sustainable Agricultural Research, 2(4), 133-145.

          Mohamed, M. T. Z, and Zoysa, A. K. N. (2006). Current status and future research focus of tea in Sri Lanka, The Journal of Agricultural Sciences, 2(2), 32 – 42.

          Meeusen, W., and Van de Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error. International Economics Review, 18(2), 435 -44.

          Perera, D. (2016), Industry Capability Report - Tea, Export Agriculture Division, The Sri Lanka Export Development Board, Sri Lanka.

          Perera, P. (2014) Tea Smallholders in Sri Lanka: Issues and Challenges in Remote Areas, International Journal of Business and Social Science, 5(12), 107 – 117.

          Samaraweera G. C., Qing Ping and Li Yanjun, (2013), ‘Promoting tea business in the tea smallholding sector in developing countries through efficient technology transfer system: Special reference to Sri Lanka’, African Journal of Business Management, 7(22), 2186-2194.

          Simwaka, K., Ferrer, S., and Harris, G. (2013). Analysis of factors affecting technical efficiency of smallholder farmers: Comparing time-varying and time invariant inefficiency models, African Journal of Agricultural Research, 8(29), 3983-3993.

          Article History
          Received: 2018-04-08
          Published: 2018-04-17
          How to Cite
          Priyanath, H. M. S., Premaratne, S., Yoosuf, A., & Maurice, D. (2018). Technical Efficiency for Tea Smallholder Farmers under UTZ Certification System in Sri Lanka: A Stochastic Frontier Approach. SEISENSE Journal of Management, 1(2), 1-19. https://doi.org/10.5281/zenodo.1218820