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Opinion

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

Our long-forgotten friend can help mitigate impact of fuel shortage

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The importance of the bicycle as a mode of transportation is seemingly re-emerging in Sri Lanka. This sudden drive is mainly attributable to the ongoing economic crisis the country is faced with. The forex crisis, together with ever increasing fuel prices, has made the Sri Lankans remember their long-forgotten friend––the bicycle.

We see more and more people taking to cycling today for their daily activities out of desperation more than anything else. However, this trend needs to be encouraged not only for its economic benefits but also for its health, environmental, social (and many other) advantages.

The benefits of promoting cycling

Economic

– The economics of transportation has become a major woe. The main energy source used today in transportation in Sri Lanka is fossil fuel. This amounts to 2,081 Mn USD (or 64 % of the total fuel cost of the country) a year. In terms of percentage spending of the total foreign imports, this amounts to a whopping 10.3 %. (Source: Kumarage AS, Repositioning Sri Lanka’s Transport and Logistics Sector to lead the Economic Recovery in Sri Lanka, Organization of Professionals’ Association Journal, April 2022). By promoting the use of bicycles, we can expect to reduce a sizable amount of this colossal expenditure.

Cycling is also known to be conducive to the small-scale trader, as he comes in contact with the cyclists more often than the motorists. Thus, cycling will positively influence the small-scale economy of the country as well.

Health

– A number of studies have shown that cycling reduces the risk of non-communicable diseases (NCDs) such as Acute Myocardial Infarction, Coronary Heart Disease, Cerebro Vascular Disease, Type 2 Diabetes, stress and many psychological diseases. Cycling, while improving the overall health of the people, will also reduce the healthcare costs, appreciably in the long term.

Environmental

– Increased use of fossil fuels for transportation has in turn become one of the leading causes of environmental pollution, global warming and climate change, the world over, three of the major calamities the world has come to be plagued with today. By cycling we can reduce air pollution by reducing the noxious gases, such as carbon oxides, nitrogen oxides, sulphur dioxide, benzene and particulate matter. It also reduces noise pollution, and helps in mitigating global warming and climate change.

Social

– Cycling is also known to promote social interactions among people by encouraging networking and collaborations between them. This will influence the social health of the community positively.

The activities proposed

– The programme to promote cycling should be implemented, as a pilot project, with the participation of the state sector employees in some selected districts. Depending on the success thereof, it could be extended to the other sectors and districts.

1. As the first step towards promoting cycling nationwide, we propose that it be promoted among the state employees as their main mode of travel (to work). In this regard, we propose that they be paid an incentive in keeping with the distance they cover.

2. Bicycles could also be used by those who live far away from their workplace; they can cycle to the main bus or railway station. In both these situations, the cyclists should be paid accordingly.

3. Cyclists should be provided with facilities for bathing and changing at workplaces.

4. The government should take all measures aimed at making travel, safe and hassle free for cyclists. New laws should be made for this purpose, if necessary.

5. To lessen traffic congestion and increase safety of the cyclists, one-way traffic for the motorists in parallel roads should be encouraged wherever possible.

6. Cyclists should be provided with facilities to purchase bicycles, spare parts and accessories at discount rates.

7. Encourage production of bicycles, spare parts and accessories in Sri Lanka. Promote bicycle repair services countrywide.

8. Plant and maintain trees on the roadside for the benefit of cyclists. This will also help reduce air pollution and ambient temperature.

9. Liaise with major cycling associations in the world like the World Cycling Association, the Dutch Cycling Embassy, etc, in order to update knowledge and skills relating to promoting cycling in the country.

10. In keeping with the principle of “polluter pays” a dedicated tax could be imposed on motor vehicles, and the revenue therefrom used to promote cycling.

Dr. PRASANNA COORAY

President

Consumers & Customers Union

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Opinion

Catastrophe that has hit Ukraine

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The coup, or revolution, in Ukraine in 2014, as a result of the Maidan Square uprising, enabled extremist forces to take control of Ukraine. Many of them have Fascist ideology even to this day. In 1945, Russia had chased the German Nazis back to Berlin at a terrible cost in Russian lives. Now, people with this same mentality have taken power in Kiev with the devilish help of the American CIA – and they are hostile to Russians in Russia and even Russian-speaking Ukrainians, who number about a third of the total population of 60 million Ukrainians.

This minority of Russian-speaking people are mostly located towards the East of the country, with many centred in the towns and cities known as the Donbas. These people did not want to be subjected to Nazi, Fascist unpleasant treatment, so they agitated to be independent. They formed their own militias, men from the army defected and brought weapons from the army! The army and the militias fought each other to a standstill. In response, the Ukrainian army-built lines of trenches and other defences along the Donbas, especially near towns with important or vital industries.

Over time, relations deteriorated and the army started indiscriminately shelling the Donbas – they were killing their own people! This tragedy occurred for a period of eight years. About 14,000 civilians were killed by illegal random fire. No reporting on this in the “morally correct” west, and this story was ignored. Fascist thugs made Mariupol steelworks their headquarters in the Donbas. Early this year, 2022, the Ukrainian army was seen massing nearby for a full-scale attack on the rebels of the Donbas. Around 200, 000 of the best fighting men of all the Ukrainian army were to be used to finally crush the Russian-speaking rebels of the Donbas.

At the same time, the US was gearing up to take some land in the Donbas area – possibly in Crimea. The US considered Ukraine as their backyard, and they wanted to control the Black Sea and pin down Russian access to the sea – more devilish ideas to undermine and weaken Russia!

Russian ‘Special Military Operation

’:

But Russia was watching, and on 24 February, it launched its ‘Special Military Operation’ to counter the hostile actions in the Donbas. The first thing they did was to destroy all the ground radars, rendering the Ukrainian air force incapable of targeting accurately. Then came a great parade of propaganda and lies about Russian failures and losses, all fictions and distortions which were untrue, but were misleading to those without access to the facts. President Putin had so many ailments he alone could fill a hospital! All fiction. The west’s propaganda war is a remarkable feature of this military excursion.

At the outset of the Special Military Operation there were many similarities between the Russian and Ukrainian forces, and their equipment. But there were some glaring differences, too.

Russian forces were full time, professional soldiers, well trained in the specific tasks they were responsible for: they were a fully professional, competent army operating advanced equipment. They had high-tech equipment and knew how to handle it and use it to its fullest, to its best.

Each aircraft, battle tank, drone or radar station carries electronic equipment. This creates a node forming part of a computer network which exchanges information. The information fed into this network is processed by powerful computers. The result is that the targeting of enemy positions is exact, resulting in highly efficient warfare. It is efficient, not least because the Russian army wants to avoid targeting civilians. In the Donbas, all the people were related kinsfolk, being Russian speakers.

This required much caution in targeting, as the Ukrainian army was hiding among the civilians. The Russian army was obliged to advance slowly, so as to do as little damage as possible. This targeting efficiency also had the benefit of using ammunition economically. It was a progressive, brutal de-militarization of the Ukrainian army in Donbas using the combined military forces of Russia.

No-body knows when peace will arrive in Ukraine. It seems likely that, after going to all this effort, Russia will continue on and conquer the port of Odessa, and may even continue onwards to link up with Transnistria.

Note that this death and destruction could all have been avoided if Ukraine had implemented the Minsk Accords. They acted in bad faith and now suffer the consequences of that dishonesty.

Wild speculations are made in the West about the dangers of nuclear war. But these generals, colonels and western elites should know, as a matter of personal professional pride, that the official “Russian Military Doctrine” spells out in sections 26 and 27 the criteria for the use of nuclear weapons. This will happen only when outside actions pose an existential (real) threat to Russia. Russia will react with Nukes either: if Russia is hit by a nuclear explosion or if an army invades and approaches the centre, say, Moscow.

A Professional Army using High–tech Equipment:

For this success, Russian soldiers had to be well educated in maths and physics, and because of the extreme complexity of modern war, they must have a serious attitude. They had to know all about military science: operational art and planning, informational nodes, and net centric warfare. The Russian army engages in reconnaissance, intelligence gathering, surveillance, and targeting. Radar can give targeting information in 23 seconds, requiring defence alertness and readiness.

It is unlikely the Ukrainian army is so well educated and trained. Firing indiscriminately on the Donbas and killing people and the use of prohibited cassette munitions as seen on world news sites, does indicate a lack of discipline. This unprofessionalism has cost them dearly.

The Ukrainian army gives losses at approximately: 20,000 killed, 64,000 missing in action, and perhaps 30,000 men wounded. Russians give about: 5,000 men in special Russian holding camps and 2,500 men in Donbas holding camps.

Legal experts in Russia, and Donbas experts, are, even now sifting through all the cases of the detained men. Normal soldiers will be given trials and sentencing for any wrongdoing, but those with a background of supporting Fascism will be shipped to Siberia for further investigation. One of the stated aims of the Russian establishment is to de-Nazify the Ukrainian army.

The Role of Education in Development of a Country

: Throughout their lives Russian children get much more science, physics and mathematics (STEM) than schools in the west. The standard set by the best Russian college entrance examinations is high, putting the American schools and colleges in the shade. There are no multiple-choice questions, answers are either right or wrong. These best Russian schools are attended by many bright, thirsty minds, each waiting to drink up the education offered.

This careful selection and development of bright scientific minds has enabled Russia to develop really advanced weapons and rockets, way ahead of the USA. For example, it launched the orbiting Sputnik into space well before the Americans. This act alone sent the US administration into a panic. They, in response, developed the high altitude U2 spy plane to go and see what the Russians were up to! Recently, because the US Shuttle was out of service, Russia was providing the Americans with a shuttle service to the international space station. A group of young engineers, all under 30 years, designed the SU 57, a highly successful fighter. Russia has designed and successfully tested hypersonic weapons – which the USA is struggling to catch up with.

In truth, the main war between East and West is being played out at the school desk, and Russia is winning!

See Larry Johnson’s film on YouTube – in English

PRIYANTHA HETTIGE

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Opinion

Save us from our govt.!

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When watching daily news bulletins, on several local TV channels, one could observe two significant matters.

One is how Gotabaya Rajapaksa shamelessly meets foreign diplomats and officers of international organizations, who are well aware of the grave situation of the country, and also the prime reason for it.

Remember, as kids, how we hide from our parents, or teachers, when some small mistake happens – that is because we were ashamed, and afraid of punishment. And ther, too, it would have been only our own mistake, not by the whole family of ours!

Next is how the Police and armed forces are let loose on the men, women and children who have been waiting in queues for hours or days. The authorities are not finding ways to stop queuing or at least maintain some order at those places, but chastise the people, for electing as Basil Rajapaksa had said, a stupid, clueless president and an incompetent government.

The greatest disasters we have faced since Independence are the JVP insurrection, the LTTE war and the tsunami in 2004, and during those times the people were protected by then governments; now Sri Lankans have to struggle against the government, which is steadily throttling them to death.

BUDDHI PERERA

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