The Technical Efficiency of Small-scale Tea Plantation in Sri Lanka

Abstract

The tea smallholding sector is the leader in national tea production in Sri Lanka. However, it is believed that increasing profit is very difficult without increasing costly inputs, considering the high cost of production. This paper investigates the technical efficiency of smallholder tea farmers (STFs) in Sri Lanka by employing stochastic production frontier using a sample of 120 STFs. The results showed that the average technical efficiency of selected STFs is 78.44 per cent. This indicates that output can be further increased by 21.56 per cent without increasing the level of input. Gender and access to quality extension services were identified as the variables that have the greatest impact on technical efficiency. The results further showed the labour is the most important factor for tea production.