Impact of Quality and System Certifications on Profitability of Tea Estates in Up Country Region

Abstract

Ceylon tea is popular over the world due to the high quality and the distinct flavor. At the moment, many tea importing countries from Sri Lanka have applied different quality and system certifications to confirm that the imported tea is a healthy and produced according to the hygienic conditions. Therefore, this study is an attempt to find the impact of quality and system certifications for the profitability of tea estates and to identify the most important certification to be implemented in tea estates in upcountry region in Sri Lanka. Data were collected from 40 tea estates that managed under Regional Plantation Companies (RPC). Data were collected using a structured questionnaire and analyzed using a multiple linear regression model. Friedman test was performed to identify the best quality certification affecting the profitability. The results indicate that a number of variables notably, tea manufacturing type (Orthodox or Rotovene), tea bearing land extent and experience of the manger in tea cultivation and processing affects profitability positively. Overall, the analysis confirms that profitability increases if tea estates possess many quality certifications. Among the quality certifications, ISO 22000 and FLO (Labeling Organization Certification) are the most important certifications affecting the profitability.