Agriculture should transform from livelihood to business

Friday, 8 July 2011 03:21 -     - {{hitsCtrl.values.hits}}

Industry experts say the sector can reach its potential if challenges are met

By Uditha Jayasinghe

Sri Lanka’s perception and attitude needs to undergo a paradigm shift to see agriculture as not just a livelihood but as a business, say top industry officials.

Addressing the Ceylon Chamber Economic Summit breakout session on Agriculture, Plantations and Food Security on the final day, CIC Group Chief Operating Officer Samantha Ranatunga insisted that the entire mindset of the people needs to change if agriculture is to become a growth engine for Sri Lanka.

Sri Lanka Fruits and Vegetable Producers, Processors and Exporters Association Past President Dawn Austin (right), a panelist addresses the break out session on agriculture, plantations and food security on the second day of the Ceylon Chamber of Commerce Sri Lanka Economic Summit. Others from left are CIC Holdings Managing Director Samantha Ranatunga, Cabinet Sub Committee on Food security Advisor Janaki Kuruppu, UN World Food Programme Deputy Country Director Azeb Asrat, Watawala Plantations Group Managing Director Vish Govindasamy, moderator Hayleys Agro Products Ltd Managing Director Rizvi Zaheed, and Global Seafood Ltd Managing Director Prabash Subasinghe. Pix by Kushan Pathirajah

Making his statements at one of the four parallel sessions during the after lunch period, Ranatunga pointed out the importance of developing the agriculture sector. “There are several reasons as to why it makes sense to develop this sector. On the one hand 35% of Sri Lankans are employed in agriculture, this number increases to as many as 60% in rural areas. So it is clear that if other businesses want to flourish, then the buying power of these people need to be increased.”

Another point is that annually Sri Lanka spends billions of dollars importing food, which can easily be saved if those products are grown locally. Milk powder, sprats, Maldive fish, fruits and vegetables are all part of this import list.

Ranatunga pointed out that even though the sector’s contribution to the economy was at an underperforming 12%, it had grown 4% during the last year, showing much promise. In fact agriculture was one sector that managed to grow at 8% in parallel with the national economy growth.

“With the end of the war 100,000 acres were released for farming and two thirds of the coastline, which was previously not open for fishing, increased the earnings for this sector.

However, there are many challenges with increasing demands of quality from people and persisting issues of productivity.”

According to him Sri Lanka has consistently managed to maintain “glut and lean” periods where the harvest is seasonal but not kept so that prices remain stable. Instead year after year consumers see food prices decreasing at a low harvest time only to increase again when the lean season rolls around. As income of the population grows the demand for high quality food will grow with it, he cautioned adding that quality and productivity issues need to be addressed urgently.

“There are apparent and underlying reasons for the decreasing labour available to the agriculture sector, this is the biggest problem that we face,” he explained, observing that management and implementation of solutions is also important.

Agriculture is also closely linked with food security and Ranatunga revealed a disturbing

trend where rich countries are growing food in other countries for their consumption. “We have had queries from Arab countries to grow food in Sri Lanka to be exported exclusively to them. Outsourcing of agriculture has become like a BPO industry.

Even though we have refused there are places in Vietnam and other countries where food is grown but the people of that country can make no claim to it. In such a scenario there is the danger of rich countries getting more than their fair share of food.”

Sri Lanka also faces risks of its own with high child malnutrition and other insecurities. He went onto say that Sri Lanka currently has only half the productivity of the world average and this needs to change. “The industry must indentify quick win areas where profits can be achieved in a minimum amount of time. We have seen that this potential exists in dairy farming and CIC has taken steps to work in that branch. There are problems such as not having the right genetic material but given that Sri Lanka imports 70% of its milk the room for growth is massive.”

Giving information to farmers is essential to increase growth but Ranatunga insisted that there is no credible State organisation doing this in rural areas. CIC is plugging this gap by working extensively with 20,000 farmer families and dispense business knowledge to around 3,000 farmers every year. “For farming to be successful you need to invest in it – that is what makes it a business. It must be treated as such for it to become a growth industry.”

Taking his turn at the podium Watawala Plantations Group Managing Director V. Govindasamy backed many of the points made by Ranatunga and added that plantations have similar problems.

He insisted that Sri Lanka needed to have long-term credit for plantations to upgrade.

“When plantations were privatised in the 1990s, there was an Asian Development Bank programme to provide long-term loans to the sector. At the moment loans are only given for three to four years and that is inadequate. This needs to be addressed since investment for plantations is naturally long-term,” he said.

Unlike in farming, plantations depend on their strong workforce and Govindasamy insisted that this was one of their strengths and that the companies need to focus on technology infusion and concentrate on niche markets as well as product diversification. He emphasised on the potential of the industry to become a US$ 1 billion sector and called on the Government to support it to achieve its potential.