Abstract:
Agricultural sector in Sri Lanka contributes nearly 12 percent to the country’s GDP and employs
33 percent of its labor force. Since the independence, there have been several attempts by
successive governments to improve the productivity of the small farm paddy sector. These include
the promotion of the use of high yielding varieties, subsidization of farm input supply, provision
of credit facilities, and liberalization of both producer and consumer prices. Against this
background, the objective of this study was to analyze regional differences in total factor
productivity in the paddy sector. Tornqvist and Malmquist productivity indices for the period 2002
-2008 were calculated using panel data on quantities and prices of outputs and inputs for seven
districts, obtained from seasonal reports on cost of cultivation published by the Department of
Agriculture. Paddy yield was considered as the output and fertilizer and labor were considered as
inputs. Due to the non-availability of all reliable input price data, this study used data envelopment
analysis to derive the Talmudist Productivity Index with area of cultivated land, fertilizer and labor
as inputs. According to the results, Tornqvist Index for most of the districts over the study period
is less than one, indicating that total factor productivity in paddy to be rather small. Based on the
results of Malmquist Index, it was found that over the period, total factor productivity growth was
positive and on average, technical efficiency change contributes by 0.6 percent to the total factor
productivity growth of 0.5 percent, while pure technical efficiency change did not contributes to
increase it.
