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Plantation sector and foreign exchange crisis

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by Dr. C. S. Weeraratna

csweera@sltnet.lk

It is common knowledge that there is a massive dollar crisis in Sri Lanka, causing a scarcity of many essentials such as fuel, LP gas etc. Governments, instead of implementing any effective plans, obtained loans from foreign sources to solve the foreign exchange crisis. As a result, we have a massive foreign debt burden of about US$ 52 Billion. The cost of debt servicing alone is about US $ 6 billion per year. Our foreign reserve which was around US $ 7 to 8 Billion is now down to well below US $ 1 Billion, If there are no dollars available in the banks in the country, it could result in an acute shortage of medicines and other essential items. Galle Face “Gota go home” and other such protests become the inevitable outcome.

According to Central Bank Annual reports the Trade Deficit ( TD), in Sri Lanka, during 2016-2021 as indicated in Table 1, has remained at high levels, The country has been taking loans to overcome TD but we cannot continue to do so. No country will continue to provide loans to a bankrupt economy. It is necessary that at least now we have an effective plan to reduce the trade deficit by increasing exports and reducing imports as much as possible. If Sri Lanka maintained a sound trade balance, which the present and previous governments should have done, the present exchange rate would not have gone down as we experience at present. If not for the factors such as remittances of migrant workers, tourists’ earnings etc. the exchange rate would be worse. See table 1.

The dire need to increase our export earnings to meet the severe financial crisis we are facing today has been emphasized by many. As indicated in Table 1, export income since 2016 has not increased by any substantial amount in spite of an Export Development Board and numerous other authorities. Increasing export income is of paramount importance to improve our economy. But what are we going to export? .

The contribution of the Plantation sector to export income is substantial. Around 800,000 ha are cultivated with plantation crops tea, rubber, coconut etc. and this sector, in the last few years earned nearly US$ 2.2 billion annually. However, as indicated in table 2, production of these major export crops do not show any substantial increase during the last five years and the contribution from this sector has remained at nearly 20% of the export income. Hence, strategies need to be implemented to increase the productivity of the plantation sector and hence FE earnings. There are many state sector organizations to implement such strategies. See table 2

As shown in Table 2 tea production has been fluctuating around 300 million kg per year during the last six years, in spite of several institutions such as Tea Board, Tea Research Institute and Tea Smallholders Development Authority assigned to the tea sector. The average tea yields are considerably lower than the potential yields. In the smallholder tea sector the average yield is around 1800 kg/ha and in the estate sector it is about 1200 kg/ha. The tea industry, which supports hundreds of thousands of people, also suffered from the controversial utterly foolish decision to ban agrochemicals as a health measure. Though later reversed, the ban has affected the tea sector to a great extent. In 2017 the export income from tea sector was 1.5 billion US$. During the following years it has decreased and in 2020 the corresponding value was 1.2 billion. Lengthy power cuts, fuel shortages too caused the industry to “near total breakdown”, Better management practices in the short term would increase the quantity and quality of the tea produced making it possible to increase FE earnings substantially from the current value.

Rubber is another important export crop. In 2017, it earned nearly US$ 39 million in foreign exchange but has decreased during the following three years. Based on Central Bank annual reports, the total Rubber production in 2017 was 152.9 million kg and by 2019 it has plummeted to 74.8 million kg. The corresponding average yields are 1561 kg/ha and 665 kg/ha respectively. These data related to rubber production by the Regional Plantation Companies and Small holder sector indicate that the productivity of the SH sector has decreased substantially compared to the RPC sector during the period 2010-2017, which may be attributed to poor management in this sector compared to that of the RPC sector. The recently-established Sri Lanka Rubber Secretariat of the Ministry of Plantation Industries came out with the Sri Lanka Rubber Industry Master Plan 2017 – 2026, A National Agenda for Rubber Industry Development of Sri Lanka. This master plan has 24 unrealistic projects which would require investments of approximately U$ 500 million (nearly Rs. 100 billion).

These figures indicate that the Sri Lankan rubber sector is ailing in spite of Rubber Development Dept and Rubber Research Institute assigned to promote rubber production in the country. With the current higher rubber prices it would be possible to earn more FE by increasing rubber production by implementing better management practices which would produce results in the short term. During the last few years the rubber sector has been affected by many factors one of which may be ineffective management.

Coconut production too has declined during the last five years as shown in Table 2. The total extent under coconut in Sri Lanka is around 400,000 ha and about 325,000 ha are small holdings. Annual production of coconut has been fluctuating around 3,000 million nuts, (app. 6000 nuts/ha. If the production of the existing coconut lands is increased by 1000 nuts/ha/year by better management, and applying organic and inorganic fertilizers the total production can be increased by a substantial number within a year which will increase the export income from coconut.

This appalling situation in the plantation sector can be attributed to many factors. If the productivity of this sector is raised, by implementing better management practices it would be possible to increase foreign exchange earnings from this sector. Most of these practices would produce results in the short term.

There are 24 agro ecological zones, each characterised by specific climate and soils. This makes it possible the cultivation of different types of exportable crops such as spice crops, tuberous crops, horticultural (fruit crops) and floricultural crops, medicinal herbs.

Sri Lanka is famous for spices. The most sought-after spice crops are cinnamon, pepper, cloves, cardamoms, nutmeg mace and vanilla which grow in abundance mainly in the wet and intermediate zone. In 2020, the county earned nearly US$ 200 million by exporting spice crops.

Cinnamon is the most important spice. In 2019, it earned around 160 million US$ in FE. The production of cinnamon has been fluctuating around 20,000 t per year during the last few years. Sri Lanka received its first ever Geographical Indication (GI) certification when the European Union (EU) Commission on 02 February,2022 granted GI status to Ceylon Cinnamon and this would make a higher demand for Sri Lanka cinnamon.

Pepper is the second important commodity among spices. It is grown in the wet and intermediate zones mostly as a mixed crop. The Sri Lankan Pepper has higher piperine content which gives it a superior quality and pungency. Annual Production of pepper too has remained stagnant at around 20,000 kg.

Other spices such as cloves, cardamom, nutmeg and mace have the potential to earn a substantial amount of FE. With the increase of international demand for natural products, and the island’s focus on enhancing and evolving its value added range, spices and the essential oils extracted from these crops will continue to earn more FE.

Dehydrated food is another agricultural product which has a potential to earn much wanted FE. During some months there is a glut of fruits and exporting dehydrated/canned fruits would bring in an appreciable amount of FE.

In any programme/plan to increase foreign exchange earnings from the agricultural sector, agro-industries have to be given much emphasis. A large number of crops cultivated in Sri Lanka have considerable potential in various agro-industries. However only rubber, coconut and a few fruit crops are used in industries. Crops such as cassava, horticultural and floricultural crops, medicinal herbs, cane, bamboo, sunflower, castor , Ayurvedic herbs, etc., have a considerable industrial/export potential but are not cultivated to any appreciable extent. Development of agro-industries will also increase export income and will have a tremendous impact on the economy of the country and also provide employment opportunities among rural people. Private sector can be involved in such projects for which appropriate technical assistance need to be given by the relevant public organizations. Although there are many organisations such as the Ministry of Industry and Commerce, Export Development Board, Industrial Development Board, etc., there appears to be no proper long-term plan to develop agro-industries. There are only some ad-hoc projects. The Ministry of Industry and Agriculture should implement an effective Agro-Industrial Development Programme, which undoubtedly would help increase our exports, improve employment opportunities and incomes in the rural areas.



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Opinion

Panadura debate: special exhibition most welcome

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The special exhibition displaying original manuscripts relating to the Panadura Debate at Rankoth Vihara is welcome and, as Nishantha Peiris mentions (News, 30 Aug), the debate gained international interest following the publication of a book containing the speeches made in the debate. The credit for this must be given to John Capper, the then editor of the Ceylon Times. He published an account of each day’s proceedings in his paper and the full text of the speeches in a book entitled ‘Full Account of the Buddhist Controversy Held at Pantura in August 1873.

The preface of the book stated: ‘In the belief that an authentic account of the Controversy which took place at Pantura in August last, between a Buddhist Priest and two Ministers of the Protestant religion, will be read with interest by a large number of persons here and in Europe. I have produced the proceedings in the present form. The report has been revised by the respective disputants, so that it may be taken as a correct account of what passed’.

Capper’s book was picked up by J M Peebles who was in India, who then published an extended version in the United States. If an original copy of Capper’s book is available in Sri Lanka, it should be exhibited in the Rankoth exhibition.

Yours faithfully,

Dr R P Fernando,

19 Danetree Close,
Epsom UK

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Opinion

In Memory of Dr Upatissa Pethiyagoda

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Dr. Pethiyagoda

It is with a deep sense of sadness that I record the passing of Dr Upatissa Pethiyagoda, who died on 27 August 2026 at the age of 94. To many, he was a distinguished scientist, accomplished administrator, diplomat and public intellectual. To me, he was much more than that.

Dr Pethiyagoda was a proud product of Trinity College, Kandy. At a time when a first class in Botany was a rarity, he obtained one and subsequently pursued postgraduate studies in London. His scientific career reflected not only his knowledge but, more importantly, an enquiring and restless mind that was never satisfied with simply accepting what was known.

In the 1970s, he headed the Plant Physiology Department of the Tea Research Institute of Sri Lanka. He was part of a formidable team of scientists that included Drs R L de Silva, R L Wickramasinghe, P Sivapalan, Tilak Wettasinghe and W Danthanarayana. They were scientists who contributed enormously to the development of the tea industry in Sri Lanka, and Dr Pethiyagoda stood comfortably among them.

In 1978, he moved to the Coconut Research Institute as its Director. It was there that I had the privilege of working with him. Those years left a lasting impression on me.

Dr Pethiyagoda was, in every sense, a complete scientist. Although his formal specialisation was plant physiology, he was remarkably comfortable discussing almost anything scientific. What distinguished him was his curiosity. He questioned the science behind the ordinary things that most of us simply accepted. I remember his asking questions such as, why is an orange green in Sri Lanka? It was typical of him: an apparently simple observation would lead him to ask what lay behind it.

That curiosity never left him.

After his tenure at the CRI, he undertook an FAO assignment in the Middle East, working on the improvement of date palms. There he was exposed to agriculture under conditions of severe water scarcity. He pursued this further during a visit to Israel, learning about agronomic practices suited to such environments. Later, when he worked with the Mahaweli Authority, he was able to translate that knowledge into practice, introducing high-value horticultural crops to Systems B and C.

What impressed me was not merely that he acquired knowledge, but that he connected knowledge from one context to another and turned it into practical solutions. His enquiring mind and analytical ability enabled him to do this with remarkable effectiveness.

He was equally impressive as a communicator. Dr Pethiyagoda was an eloquent speaker, whether he was talking about science, agriculture, public policy or the everyday affairs of our country. His speeches were often laced with wit, humour and the occasional tongue-in-cheek remark. But beneath the humour was a very serious mind. He was forthright in his opinions and, importantly, he was not afraid to express them, whatever the possible repercussions.

His contributions to the media demonstrated this courage.

Writing about the travel to London by a former President, he observed:

“Where a person enjoys immunity by virtue of his position, this carries a reciprocal obligation to exercise an abundance of exemplary behaviour. In effect, immunity is best exercised, when the need to invoke it, is never allowed to arise.”

[Immunity Does Not Confer Impunity – Colombo Telegraph]

That was quintessential Pethiyagoda—precise, pointed and impossible to misunderstand.

He was equally outspoken about the government’s decision to ban inorganic fertiliser with ‘immediate effect’. He was deeply distressed by what he believed would be the consequences for farmers, particularly the poorer farming community. He would speak about it almost every day, driven not by political considerations but by his conviction that science and evidence had been disregarded.

In one of his writings on the subject, he remarked:

“What the ‘Vipathmaga’ caper taught us was that advice of sundry ‘Experts’ can be disastrous. Professors of Surgery, clergymen and Pediatricians are not the best equipped to advise on fertilisers, as much as a Soil Scientist should not prescribe treatment for a sick child.’ [Some Lessons That Can Be Learned Even From Disasters – Colombo Telegraph]

And in another article, his frustration was summed up in the memorable words:

“Stupidity, like History, has a way of repeating itself.”

[Unscrambling eggs – Colombo Telegraph]

These were not simply provocative statements. They reflected a scientist who believed deeply that public decisions, particularly those affecting agriculture and the livelihoods of farmers, should be based on evidence and sound scientific advice.

Perhaps, what I will remember most about Dr Pethiyagoda is that his curiosity survived almost to the very end of his life.

Very recently, he was still asking questions and pursuing ideas. He was interested in the possible genetic differences between the waraka and wela varieties of jak, because he wondered whether the wela variety might have commercial potential for cellulose extraction. He was disappointed that he could not find relevant scientific literature in Sri Lanka. More than the particular subject, what struck me was that at 94 he was still thinking about a scientific question, looking for evidence and wondering whether an apparently ordinary resource could have an important national application. He lamented the lack of interest among scientists and academics in such questions of national importance. That concern, too, was very much part of who he was.

Dr Pethiyagoda also served as President of the National Academy of Sciences, Sri Lanka. Unfortunately, he was unable to complete his term because he was appointed Ambassador to Italy, with representation at the Food and Agriculture Organization in Rome. Even in that role, he remained very much the scientist. I understand that he made a significant contribution to FAO discussions. As Ambassador, he also had the unenviable task of entertaining Sri Lankan Ministers of Agriculture who attended FAO sessions. I know from my own conversations with him that those informal dinners were not merely social occasions. He would discuss agricultural issues with the Ministers, and I have little doubt that his views—and the force with which he expressed them—sometimes influenced their thinking.

Looking back, what I admired most about Dr Pethiyagoda was not any particular position he held or any particular achievement. It was the way he thought.

He questioned.
He analysed.
He connected ideas.
He challenged conventional wisdom.
And he was willing to say what he believed to be true.

He also demonstrated that science should not remain confined to laboratories, research papers or academic institutions. For him, science was a way of looking at the world and, ultimately, a means of improving the lives of people.

It is perhaps ironic that, only a few months ago, he wrote about “The Cost of Dying”, as distinct from the “Cost of Living”. In that article, he reflected on the manner in which our mortal remains should be disposed of, observing: “I am in two minds regarding the manner in which the mortal remains are disposed of, ‘according to the will of the deceased’. But with the cessation of the breath, ownership or tenancy ceases.” Even in contemplating death, he brought his characteristic questioning mind to the subject. What particularly caught my attention, however, was his explanation of the Buddhist practice of holding dânes (almsgivings) for monks of the local temple in the seventh day and third month following a death. I had never really thought about the significance of this practice before. That, too, was typical of Dr Pethiyagoda: he could take something that we had accepted as ordinary and familiar and make us stop, think and see it differently.

His passing has created a colossal vacuum in Sri Lanka’s scientific community. People of his intellectual breadth, curiosity, courage and independence are rare. We may not always have agreed with everything he said, but we could never doubt that he had thought deeply about it and that he had the courage of his convictions.

For those of us who had the privilege of knowing him, there is sadness in his passing. But there is also gratitude—for having known such an extraordinary mind, for having learnt from him, and for having witnessed at close quarters his unwavering commitment to science and to the development of our country.

I shall remember Dr Pethiyagoda with great affection and immense respect.

Ranjith Mahindapala
Past President, National Academy of Sciences of Sri Lanka.

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Opinion

A neighbour’s view of India’s strategic strengths

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What India chooses to do with the strategic freedom it has built over eight decades may be the defining question of its next phase

by Milinda Moragoda

In the emerging global economy, countries will increasingly seek multiple sources of energy, technology, capital, minerals and markets. India can contribute by helping create an open network rather than another exclusive bloc.

As India marks eight decades of Independence, its strategic position has changed almost beyond recognition. Yet the central question of strategic autonomy remains. What India chooses to do with the strategic freedom it has built over eight decades may be the defining question of its next phase.

India has spent the past decade expanding its strategic choices — deepening ties with the US, Europe and Japan while maintaining important ties with Russia and strengthening engagement with the Gulf, Africa and Southeast Asia. Australia and New Zealand are also becoming increasingly important partners in the wider Indo-Pacific. At the same time, India has sought a larger voice for the developing world in international institutions. Strategic autonomy has traditionally been understood in diplomatic terms: the ability to maintain freedom of action without being drawn into competing power blocs. In an increasingly interconnected world, however, that freedom will depend just as much on economic choices.

The objective should be strategic interdependence — building sufficiently diverse relationships that dependence on any one country or economic system does not become a vulnerability. India is unusually well placed to pursue this. Its geography connects the Gulf and wider West Asia, the manufacturing economies of Asia, Africa across the Indian Ocean and the Eurasian space extending through Russia. The opportunity, therefore, is to become a connector between economies increasingly fragmented by geopolitical competition.

India’s relationship with Japan is extending into advanced manufacturing, technology, energy, semiconductors and critical minerals. Its engagement with the US is deepening across technology, investment, advanced manufacturing, energy and strategic cooperation, while its engagement with Europe is becoming increasingly economic and technological. Its relationships with the Gulf are expanding beyond energy into investment and connectivity. Australia and New Zealand add an important southern dimension to its wider Indo-Pacific engagement, while Southeast Asia provides pathways into wider Asian production networks.

Russia remains an important part of this equation. India’s continuing engagement with Moscow, alongside its deepening relationships with Washington, Tokyo, Europe and the Gulf, demonstrates that strategic autonomy gives India the flexibility to maintain important relationships across geopolitical divides.

China inevitably occupies a special place in this landscape. India’s answer cannot be either excessive dependence or complete separation. It will require strengthening domestic capabilities, diversifying supply chains and building partnerships elsewhere, while retaining space for engagement where interests permit.

India possesses another asset that few countries can match: a large, globally active and influential diaspora. Yet the diaspora can also present challenges, as political currents within these communities do not always align with India’s interests and can occasionally create sensitivities in its relations with host countries. The greater opportunity lies in nurturing the economic, intellectual and cultural connections the diaspora can create, while respecting its diversity and independence. In the emerging global economy, countries will increasingly seek multiple sources of energy, technology, capital, minerals and markets. India can contribute by helping create an open network rather than another exclusive bloc.

Ports, shipping routes, energy corridors, digital infrastructure, supply chains and trade agreements increasingly shape strategic influence. India’s challenge is to bring these strands together without turning them into a closed sphere of influence.

India’s economic rise will be more sustainable if other countries see themselves as participants in its growth rather than simply as markets for it. The value for India lies in making these relationships complementary rather than choosing among them. India’s leadership of the Global South can now move beyond representation in international forums towards creating an international economic environment in which developing countries have greater choices. India’s own experience is relevant here. It has moved from a relatively closed economic model towards deeper global integration while retaining a strong emphasis on domestic capability. The lesson is that openness and strategic autonomy need not be contradictory.

As the G20 meets again in Miami in December, India can continue to argue that the Global South should not merely seek greater representation within existing institutions, but a greater stake in shaping the economic networks and institutions of the future. An economically integrated Indian Ocean could allow countries such as Sri Lanka, Bangladesh and the Maldives to participate more deeply in regional supply chains, logistics, energy, tourism, technology and services. Influence based on shared prosperity is more durable influence based on dependence. India’s strategic opportunity, therefore, lies in becoming one of the principal connectors of a changing world.

(Milinda Moragoda is founder of the Pathfinder Foundation, strategic affairs think tank, and can be contacted via email @milinda.org.)

Courtesy Hindustan Times

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