Determinants of technical efficiency in black pepper (Piper nigrum L.) production: Evidence from a stochastic frontier analysis in Polonnaruwa District, Sri Lanka

Abstract

Agriculture contributes about 8% to Sri Lanka’s GDP, with black pepper (Piper nigrum L.) being the second most important spice export. Recently, its cultivation has expanded into the Polonnaruwa District, an area with high agricultural potential but limited research. Despite its economic significance, little empirical evidence exists on farm-level technical efficiency or factors influencing productivity, as most studies emphasise agronomic aspects. This knowledge gap hinders resource optimisation and farmer support. Therefore, this study aims to assess the technical efficiency of black pepper farmers in Polonnaruwa, identify productivity determinants, and explore opportunities for efficiency gains without land expansion or new technology. The study used a 95% confidence level, 5% margin of error, 90% population proportion, and an infinite population assumption to determine sample size. Stratified random sampling across DSD divisions, aided by Grama Niladari officers, selected 250 farmers. After filtering, questionnaire data from 195 black pepper farmers (Jan–Jun 2025) were analysed using stochastic frontier analysis, maximum likelihood estimation, and Tobit regression. The production frontier demonstrated strong positive relationships between all inputs (vines, labour, organic fertiliser, and inorganic fertiliser) and output, with elasticities of 0.76, 0.14, 0.10, and 0.14, respectively. Production showed increasing returns to scale (1.13), demonstrating expansion advantages. Mean technical efficiency, however, was only 54.8%, implying farmers produce 45.2% less than potential output. The high gamma value (0.98) verified that 98% of deviations in yield arose from management inefficiencies rather than random factors. Vine height management proved the key driver of efficiency, with vines over 18 feet having the strongest effect (0.45). Biannual shade pruning (0.40) and fertiliser application (0.31) significantly improved efficiency relative to less frequent practices. There is considerable technical inefficiency in pepper production in Polonnaruwa, with about half of the potential output being lost through suboptimal managerial practices. The efficiency gap suggests significant room for productivity improvement through better farm management as opposed to resource expansion. Decision-makers must prioritise intensive extension services promoting vine height control, regular shade pruning timetables, and ideal fertiliser application timing. Such targeted interventions have the potential to raise regional output by 45% without requiring extra land or capital investments, enhancing Sri Lanka’s competitive standing in international pepper markets while improving smallholder farmer wellbeing.