Willingness to Pay for a Fee-Based Extension Service by Tea Smallholders in Galle District

The agricultural extension service in Sri Lanka is generally considered as supply driven, and limitedly focused on farmers’ aspirations and needs. The state services are also said to be inefficient and operating at a high cost. From the farmers’ point of view it is an incomplete service provider. This has increased attention towards the potential for privatization of agricultural extension services. Therefore, this study was conducted with the objectives of analyzing the tea smallholders’ willingness to pay (WTP) for a fee-based extension service and the factors affecting their WTP. A sample of 100 tea smallholders was randomly selected from four sub office areas under the Tea Small Holdings Development Authority, Galle. Primary data were collected through a pre-tested questionnaire. Open ended elicitation method was used to obtain the WTP and a probit regression model was used to analyze the factors affecting their WTP. Although 66% of the tea small holders have received extension services from the Tea Small Holdings Development Authority, only 42% of them have had services at the right time. A majority of the tea smallholders rely more on their own experience. Although 42% of the tea smallholders have indicated that they would like to have some other extension service, only 24% were willing to pay for such a service. The average WTP was Rs. 85.62 per month by a tea smallholder. According to the probit analysis, proportion of income had a significant positive influence and farming experience had a significant negative influence on the WTP. Based on the analysis it could be concluded that the tea small holders’ in Galle district have a minimal interest towards a fee-based extension service and hence implementation of a private advisory service in the tea smallholding sector is not viable. * The authors are, respectively, Final Year Undergraduate Student at the time the study was conducted and Senior Lecturer in Agricultural Economics and Business Management, University of Peradeniya.