Total Factor Productivity Growth in the Food Crop Sector of Sri Lanka From 1990-2017

Abstract

The study estimated the Total Factor Productivity (TFP) growth in the Sri Lankan food crop sector from 1990- 2017 using the Tornqvist-Theil index assuming translog production technology and a competitive market. TFP growth of paddy, maize, potato, big onion, chilli and soybean has increased after 2000. The highest TFP growth is recorded for maize from 2011 -2015 that contributed to about 68% of the maize sector growth. The costless advances in applied technology, managerial efficiency, and industrial organization that brought TFP growth in the food crop sector in Sri Lanka are discussed. The diffusion of new technology to the food crop sector has considerably varied by crop. Although the maize sector benefited through technology spillovers, new technology in terms of new varieties with higher yields, adaptability was slow to diffuse to other food crop sectors. Mechanization has largely substituted labour in many crop sectors due to the rising wage rate. The contract grower system is a credible institutional innovation in the food crop sector. Technological capital is a prerequisite for TFP and cost reduction growth. Hence the long-term commitment to agricultural research and development investments from Sri Lankan governments and aid agencies is required.