Sri Lankan Journal of Agricultural Economics 7(1) 2005

This study assesses the impact of a number of characteristics pertaining to fruit processing firms in the Western Province in Sri Lanka to adopt the Sri Lankan Standards (SLS). It hypothesized that in the presence of a “mandatory” government regulation to adopt the SLS on the firm, the decision of the management to “invest” on it without removing any of their major products in the product mix or to exercise a “product exit” (i.e. removing a major product) will depend on factors such as the type of ownership, recent modifications made to the facility by introducing modern processing technologies, other enhanced food safety controls in place, whether the firm is involved with international markets, availability of skilled labour, and annual returns of the firm (adjusted to the number of employees and major products). The primary data collected through a series of in-depth personnel interviews with quality assurance managers and site visits to 36 firms during May to July 2005 were analyzed using Logit Regression technique. The results suggest that firms that modify their facilities, hire skilled labour, promote exports, and possess other advanced food safety controls have a tendency to adopt the SLS without a partial exit. The outcome of the analysis elaborates that policy makers must take into account the business environment of the firm implicitly and explicitly in their attempts to adopt the mandate for the implementation of enhanced food safety controls like the SLS on agri-food processing enterprises.

* The authors are, respectively graduate student and senior lecturer, Department of Agribusiness Management Wayamba University of Sri Lanka Makandura Gonawila-NWP Sri Lanka.
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