From Plantations to Smallholder Production: The Role of Policy in the Reorganization of the Sri Lankan Tea Sector

Deepananda Herath and Alfons Weersink

World Development, 2009, vol. 37, issue 11, 1759-1772

Abstract: Summary The Sri Lankan tea sector has changed from one dominated by vertically integrated plantations to one where independent processors of black tea purchase their input (green leaf tea) from small, independent growers. This paper provides a unifying conceptual framework to characterize three major factors affecting the changes in vertical coordination arrangements (transaction, production, and management costs). Regulation and government policy have altered these determinants of organizational change. Transaction costs have been reduced by state intervention into the price for green leaf which subsequently lowered the risk of processors re-negotiating prices downward. Production costs, which continue to be dominated by labor expenses due to the lack of technological developments for harvesting, have increased more for plantations than independent producers due to union pressures.

Keywords: vertical; coordination; transaction; costs; price; intervention; Sri; Lankan; tea (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305-750X(09)00136-3
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:37:y:2009:i:11:p:1759-1772

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().