Food for thought

Food inflation is a constant worry for governments, particularly in the mist of COVID-19, because uncontrolled price escalations can severely erode popularity. In Sri Lanka agriculture goes through multiple cycles of price fluctuations throughout the year because there are systemic and institutional weaknesses in supply chains, technology infusion, financial and marketing access as well as climate related challenges. 

Unfortunately the Government appears to have backed the temporary solution of getting the military to run multiple farms of thousands of acres, possibly circumventing existing market links, rather than supporting farmers to find solutions for their myriad problems. 

Over several decades Sri Lanka’s major milestone achievement was rice self-sufficiency but the country fell behind its fight to infuse technology and competitiveness into the industry. Agriculture is heavily dependent on Government hand-outs such as the fertiliser subsidy and price control that comes at significant cost to public finance and consumer affordability.   

The share of the population employed in agriculture has remained at about 27% over the past 10 years, even as the share of the sector in national GDP has continued to decline to 7%. As much as 70% of Sri Lanka’s entire workforce is directly or indirectly involved in agriculture and a huge section of it is informal, which means they do not get the protection of welfare systems such as pensions. 

This implied and persistent inequality adds to the urgency to rethink the strategic direction of future agricultural development – how to sustainably increase rural incomes and promote the development of a modern agriculture sector that meets the needs of an upper-middle-income country that Sri Lanka aspires to be. 

It is widely-known that smallholder farmers in developing countries use too few modern inputs and technologies, which often results in low yields and poor quality crops. There’s a myth that labour is abundant and cheap, but the constraining factor for agriculture growth and profitability is labour availability and efficiency, especially given Sri Lanka’s battle to increase labour to the industry and services sectors that have fewer employees but higher productivity. 

Mechanised technology, drought-resistant crops and other innovations are a huge need in the local agriculture sector. Products that can be exported, such as organic fruits and vegetables, need to evolve so smaller farmers can also benefit.  Market links are weak with refrigerated warehousing and other systems largely non-existent.  Post-harvest mechanisation can also make a major impact in product quantity and quality. More productive use of land, water, fertiliser and labour can increase productivity. Sri Lanka also has high levels of post-harvest losses, about 40% of all fruits and vegetables that are grown end up in garbage dumps because there are few competent storage systems and links to the market. Sri Lanka also lacks regulatory mechanisms and labs for research and development in agriculture including getting patents and meeting regulations for export to developed markets like the European Union (EU).   Traditionally, State involvement produces uneven benefits, favouring farmers with financial resources of their own, with access to more land and with some formal education. It is important to find ways to funnel resources to these overlooked segments as well. 

More than a decade after the war Sri Lanka continues to have defence as its largest budget allocation and is increasingly dependent on the military for everything, from growing vegetables to printing driving licenses. Militarisation of the economy is not just bad for business but it is often the root of other serious negative impacts for the entire democratic political system.