Technical Efficiency Analysis of the Cinnamon Cultivation Sector in Galle District of Sri Lanka

Abstract

Ceylon Cinnamon, a globally acclaimed spice crucial to Sri Lanka’s economy, has encountered the persistent challenge of low productivity in cultivation over the past decade. This study aimed to evaluate the technical efficiency and its determinants in the cinnamon cultivation sector of the Galle District in Sri Lanka. The study employed Cobb-Douglas stochastic frontier production function model along with the technical inefficiency effect model. Primary data were collected from 80 cinnamon farmers in the Galle District relevant to the 2021 production year. The results of the estimated production function model revealed a positive and significant impact of labor and fertilizer on cinnamon output, with decreasing return to scale in production. The results of the inefficiency model showed a negative and significant effect of farming experience, family size, occupation, membership, and access to credit on technical inefficiency while farmer’s age, level of education, and age of cinnamon plants demonstrated a positive influence on technical inefficiency. The mean technical efficiency of farmers in the study area was 74.8%, implying the possibility of enhancing output by 25.2% through better utilization of the existing inputs and technology. Key policy implications, including establishing sufficient advisory and extension services, increased youth involvement, incentivizing cinnamon replanting, and improving credit access, will lead to elevate farmers’ technical efficiency, thereby boosting the production and productivity of the cinnamon cultivation sector in Sri Lanka.