Abstract:
Sri Lanka is looking forward to maximize the contribution from exports to strengthen the economy. Tea is considered as a one major exporting crops and the Ceylon tea having the best recognition in the world market. But, it is gradually losing the market share due to high cost of production and continuous focus on bulk tea. Therefore country should focus on value added products. Earnings from value added forms are at least 2.5 times higher than that of bulk form and Sri Lanka exports only 42% of value added tea. The research was carried out with two objectives. Main objective is to analyze the factors affecting on exporters' perception on value added decision. In this research study, out of major 50 tea exporters, randomly selected 30 exporters were interviewed. Descriptive statistic techniques were used to summarize and describe the data in an abbreviated form and a multiple regression was used to determine the extent to which the identified variables affect to the dependent variable. All the variables like attitudes, market, support services, framework conditions like government policies and branding are significant at 5% significance level and only market and support services are significant at 1% significance level. This implies that above mentioned variables are heavily affecting the dependent variable, the production of value added tea. According to the calculations, R2 is 0.8114 and it indicates that 81% of the depende,nt variable is explained by the above variable combinations. Adjusted R2 was 0.7266 in the model. Accordingly the effect of attitudes towards the production of value added tea is significant and for value added decision, it is a must to have a positive attitude. Market also a main factor which pushes the exporters towards the value added decision and the support services are another important factor which encourages the exporters towards value addition. Framework conditions are also influential factors on value addition and the branding is the essence of the value addition. Quality of products and the inputs are not significantly affecting on value added decision and technology and the financial factors are also not significant to the value added decision.
Research findings show exporters having positive attitudes and updated knowledge on the value addition and the value added products. But the higher cost of production on value addition restricts them to certain extent and the verities of value added products. Newly establishing exporters find difficulties in accessing the market as they should
