Ailing economy and agriculture sector

ECONOMICS



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By Dr.  C.S. Weeraratna


csweera@sltnet.lk


A number of factors indicate the state of the economy of a country. Among these are growth rate, trade deficit (TD), exchange rate (Rs/US $) and debts. During the period 2011-2018, as shown in the table indicated below, the growth rate of Sri Lanka has declined after 2015 . It dwindled from 5.0 % In 2015 to 3.2% in the year 2018. The Trade Deficit ( the difference between exports and imports- TD) has increased from US$ 9710 million in 2011 to US$ 10,343 million in 2018. Exchange rate (Rs/US$) continued to increase from Rs. 110 in 2011 to Rs, 162 in 2018. At the end of 2011, the total outstanding external debt was Rs. 3411 billion. By the end of 2018 this had increased to Rs. 9559 billion , an increase of Rs 6148 billion. All these data indicate that Sri Lanka’s economy is ailing .


Agriculture sector is the cornerstone in the economic and social development of the country. Around 1.6 million ha of the country is cultivated with annual and perennial crops and the agricultural sector contributes around 8% of the GDP . Around 25 percent of Sri Lankans are employed in the agricultural sector


A subsistence form of agriculture prevailed in Sri Lanka before the 16th century. But, with the arrival of the Portuguese in the early part of this century, plantation agriculture began to develop. As at present, agricultural land use in Sri Lanka can be divided to two broad categories, namely the plantation sector and the peasant or the domestic agriculture sector .


The plantation sector which includes tea, rubber, coconut, cashew, sugarcane and minor export crops such as cinnamon, cardamom, cocoa ,plays a very important role in the economy of the country. Since the implementation of the Land Reform Law in 1972, the large estates of tea, rubber and coconut were nationalized and their management was given over to the State Plantations Corporation (SPC) and the Janatha Estates Development Board (JEDB). In the year 1992, a large number of these estates, nearly 300 were given on lease to Regional Plantation Companies (RPCs).


The performance of the


plantation sector


The extents under plantation crops is around 870 ,000 ha. Around 30% of the labour force is involved in this sector, which earns about 20% of export earnings. . Thus, plantation sector plays a very important role in the economy of the country, but according to Central Bank reports, as shown in Table 1 , the production of these crops does not show any significant increase during the present decade.


A number of issues can be attributed to this unsatisfactory state in the plantation sector. Among these are (a) Increasing cost of production ( b) Old machinery (c) Land degradation (d) Old age of crops (e) Low value addition (f) Inadequate diversification and intercropping and (g) Insufficient marketing strategies


Land Degradation: One of the important contributory factors for the decline in the productivity of the plantation sector is Land Degradation. Soil erosion, soil compaction, and nutrition depletion, cause productivity of land to decline, making crop production less profitable. In view of the importance of land degradation, the Ministry of Environment, in 2005, established an expert committee on Land Degradation and mitigating the effects of drought in SL. This committee comprised a number of experts in the field of land management and the main role of the committee was to advice the Ministry of Environment, on issues related to controlling land degradation. This committee has not met since Feb. 2013.


At the first national symposium on Land Degradation held in 2010 , organized by the Ministry of Environment and the expert committee on Land Degradation, the participants, who were representing many land-related institutions in the country, revealed that a substantial amount of soil/ha/year is lost due to soil erosion. They were of the view that urgent action such as implementation of proper land use planning and the soil conservation and environment act etc. need to be taken by the relevant organizations to control land degradation.


During the last few decades attempts have been made by successive governments to control land degradation. There are many ministries, departments and other institutions which are expected to look in to land degradation and take appropriate control measures. During the last few decades a large number of seminars, workshops have been held on this topic. In spite of all these, land degradation continues to take place evident by the common occurrence of landslides, depleted top soil, siltation of tanks and reservoirs, decline in crop yields, eutrophication etc. The ministry of environment (ME) need to activate the already established Committee on Land Degradation which would make appropriate recommendations to reduce land degradation to be implemented by ME.


Diversification: Productivity of many estates under planation crops is at a low level. Diversification of such unproductive lands is essential . A survey need to be done to identify these unproductive lands which need to be diversified. Such lands may be put under pasture and have cattle which will reduce our expenditure on milk imports, It will also reduce degradation of the lands resulting in less silting of the reservoirs. There are many other crops such as spice crops, horticultural crops etc. which could be cultivated in the unproductive lands. These crops would give better returns to the cultivators. An in-depth study needs to be carried out as early as possible to determine appropriate land use in the unproductive holdings/estates giving due consideration to factors such as climate, topography, availability of labour etc. Those lands which are not going to be diversified need to be managed better. In this regard, infilling, cultivation of better cultivars and clones and their effective management including better fertilizer and pest management practices, , increased rate of replanting, reducing soil degradation and conservation practices are essential.


Deterioration of the plantation sector will result in financial and social problems. The trade balance which stands at around – Rs. 1200 billion and unemployment among the rural plantation community will get worse. In view of these critical issues faced by the Plantation Sector it is necessary that the relevant authorities develop an integrated plan to increase the productivity of planation crops.


Domestic Food sector-


Around 860,000 ha are under food crops such as cereals, legumes, oil crops, vegetables etc. The total production of most crops, except rice and maize, cultivated in Sri Lanka during the last decade does not show any upward trend as shown in Table 2. Due to shortage of food crops a colossal sum of money is spent annually to import food as indicated in Table 3. Most of these food can be produced locally.


In 2018 around Rs 320 billion worth of food including milk food has been imported. Sri Lanka has a wide variation in soil and climate with 24 agro-ecological zones, each characterized by specific climate and soils making it possible the cultivation of a number of different types of crops. With about 2.5 million hectares of hitherto uncultivated/partly cultivated land and nearly one million unemployed people, importing Rs. 320 billion worth of food annually is an anomalous situation.


Lack of integrated plans is a factor responsible for the low productivity in the agricultural sector. For example a land use policy has been formulated but is not effectively implemented to reduce land degradation which has serious repercussions on the productivity. The Land use policy need to be implemented as an integrated programme in which many ministries have to be involved.


Water shortage: An important issue responsible for the low productivity in the agricultural sector is water, which is a key limiting factor in food production and other livelihood improvement. With increase in pressures of population growth, development aspirations, water is increasingly playing a key factor in socio-economic development and it tends to be a limiting factor. An integrated plan needs to be implemented in collaboration with the relevant ministries to improve water supply.


In spite of the country receiving around 100 billion cubic meters of water annually, inhabitants of rural areas do not get a regular supply of water for their farming activities. One of the main reasons for water shortage in many parts of the country is high surface run-off. Rainwater that falls on to the ground infiltrates and the balance runs-off. Infiltration is promoted by organic matter levels in the soil. But, most of the soils, especially those in the high rainfall areas are eroded and cannot retain much water thus favouring run-off. Silt and clay carried by run-off water gets into tanks, reducing its capacity to hold water. It is because of this that most tanks spill after a few rains and dry up after a few weeks/months of dry weather. The amount of water available for irrigation, domestic use etc. can be increased considerably by implementing appropriate soil conservation measures which will reduce run-off and promoting infiltration. Collection of rainwater would also increase water availability. The former minister of Water Supply and Drainage, Dinesh Gunawardena took a keen interest in promoting rainwater harvesting but the present ministry of water supply appears to have not taken adequate measures to promote rain water harvesting.


Most farmers have to face droughts which seriously affect crop production. There are nearly 12,000 tanks in the dry zone which collect rainwater to be used for crop and animal production and various domestic activities. Water shortage which the farmers in the dry zone face can be partly attributed to the inability of the governments from 1977 to rehabilitate most of these tanks. Due to this, it is estimated that around 60% out of the 100 billion cubic meters of rain water received annually escape to the sea, although we often speak of the famous dictum of King Parakramabahu I, according to which "let not even one drop of water that falls on the earth in the form of rain be allowed to reach the sea without been used.


Local Food Production: Other than the farmers who are the real producers of food and actively involved in production of rice and other food crops, we have a battalion of people involved in crop production. In addition to the minister of agriculture and his staff at national level, there are nine Ministers of Agriculture, at provincial level. Each Minister has a Secretary, a few Additional Secretaries, Directors, Asst. Directors etc. At field level there are Agricultural Instructors around 2-3 in each DS Division. The Dept. of Agrarian Services, with its Commissioner and Asst. Commissioners, Divisional Officers and Agric. Research and Produc..Assistants.etc. are also involved in crop production. National Science Foundation (NSF), the Council of Agricultural Research Policy (CARP) and agricultural faculties promote research in agriculture . Numerous food production programmes such as "AMA', " Waga Sangramaya" and "Govi Sevana " were implemented during the last decade but these have not made any significant impact on the agricultural sector of the country, indicated by increase expenditure on importing food.


Development of the domestic agricultural sector is essential improve the economy of the country. Those responsible need look into the various issues that limit food production in the country and take appropriate action. Agric . sector is faced with many challenges. It is important that the respective ministers will address these critical issues which affect food production. It will contribute in a more meaningful way towards the socio-economic development of the country. Crop production is an integrated system where all the factors indicated above need to be given adequate consideration. Having "tamshas" and banners alone will not increase productivity of the agricultural sector in the country.


 
 
 
 
 
 
 
 
 
 
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