Determinants of income diversification of flue cured tobacco barn owners in Sri Lanka

Abstract

Except tobacco farming, tobacco barn owners move to different income sources such as other crop cultivation and non-Agricultural activities due to clear differences in the living status. Therefore, this study aims to analyze the determinants of flue cured barn owner’s income diversification and share of income sources to total household income at Galewela, Polonnaruwa and Mahiyanganaya in Sri Lanka. The study drew a sample of 302 flue cured barn owners through random sampling technique from the three different regions and the data obtained were analyzed using descriptive statistics, Herfindhal diversification index and Censored Tobit regression. The results indicate that the level of income diversification among the flue cured tobacco barn owners in Sri Lanka depicted by the inverse of Herfindhal index is 3.02. According to Herfindhal index, the highest income diversification is observed in Mahiyangana area while the lowest income diversification is observed in Galewela area. The age of the barn owner, experience in tobacco cultivation, land ownership of the barn owner, total land availability (leased and tenure), capital goods ownership (tractors), tobacco specific resource endowment (number of barns), and distance to the nearest town were the major determinants of income shares from different sources of activities.