High Production Costs in Agriculture - an urgent remedy is essential

According to the data in Table 1, obtained from the Annual Reports of the Central Bank of Sri Lanka, the extents cultivated under major food crops have decreased during the last few years. This shows that the agriculture sector in Sri Lanka has deteriorated to a considerable extent and is continuing to decline. The contribution of the agriculture sector to the GDP has gradually decreased from 19.9 % in 1993 to 17.3% in 1997. The production of most crops, except tea and minor export crops (eg. pepper, coffee, cinnamon etc.) have decreased. A plethora of institutions in Sri Lanka, related to agricultural production, spend a colossal amount of money every year to raise the level of productivity of the agricultural sector. For example, in 1998 public funds of Rs. 5 billion have been allocated for the implementation of the program of the Ministry of Agriculture. However, all these spending appear to have not made any significant impact. As a result of deterioration in the agricultural sector we are forced to import essential food, and in 1997 the import food bill was around Rs 40 billion which will continue to increase unless appropriate measures are taken to boost local food production.

Extents Cultivated in Hectares (in 1000's)

Note: Under rice the total extents cultivated during Maha and Yala are indicated. Under sugar and ME crops, the total production in 1000 m.t. is indicated.

The declining productivity of the agriculture sector is indeed a cause for alarm, as this sector provides livelihood for nearly 60% of the population. By the turn of the century, the population is expected to be around 20 million with a corresponding increase in food requirement. The number of people looking for employment will continue to increase. They will have to be self-employed, mostly in the agricultural sector. Hence, there is an urgent need for formulation and effective implementation of a financially sound integrated agricultural development programme for the next decade, to increase the level of crop production in the country.

Unprofitability
A major factor to be reckoned in agricultural production is to keep costs per unit of the produce as low as possible. This will enable the majority of people to purchase food at a cheaper price, and also to compete with cheaper imported food commodities, or in the world market in the case of export crops.

One of the main reason for declining in the agricultural sector is its unprofitability. As a result of the unprofitable nature in the agricultural sector, the effective income of farmers have decreased considerably, thus affecting the rural economy to a significant extent. For example, an average rice farmer spends around Rs. 24,000 to produce 3,600 kg of paddy (the average yield/ha) for which he would get a maximum of around Rs. 30,000. Thus, his net profit is only Rs 6,000 for all the trouble taken over a 4-month period. The situation is same in the case of other crops. Hence, the net incomes of most farmers are very often even below poverty level, and they continue to live at subsistence level. Low profitability forces them to get away from farming causing the extents cultivated to reduce and increasing the % unemployment.

According to newspaper reports chieli, onion, potato and rice cultivators in many areas, the small poultry and cattle farmers, and the rubber and coconut smallholders are seriously affected and forced to withdraw from their enterprises, due to low profitability mainly because of high cost of production (COP). President Chandrika Bandaranaike Kumaratunga at a meeting held recently in Badulla indicated that the high cost of production in potato is detrimental to the local potato industry. It is so in the case of other crops too.

Low yields, high cost of inputs such as fertilizers, pesticides and seeds, high fuel cost, and high post-harvest losses are the main reasons for the high COP. In view of the increasing losses to farmers, and high cost of living to consumers, it is extremely important that appropriate actions are taken by the relevant authorities to reduce COP. Development and cultivation of high-yielding varieties, better land use with efficient use of inputs, increasing the availability of cheaper local inputs, reducing fuel cost and reduction of post-harvest losses are the basic requirements in reducing cost of production.

High Costs
High cost of agricultural inputs is one of the main reasons for the high COP. The present day farmer, to obtain satisfactory yields, has to spend a large sum of money on costly inputs, most of which are imported. Among these costly inputs are seeds( in some crop varieties), pesticides and fertilizers. For example, the cost of seed potato necessary to cultivate an acre is about 80,000.00. A cabbage farmer has to spend around Rs. 10,000 per acre on fertilizers and pesticides alone.

Local inputs:
Although a number of alterative methods are available to control pests and diseases, we are continuing to use imported pesticides which are costly. Among the alternatives are use of pesticides developed from plant species which contain compounds of fungicidal or insecticidal properties, and application of biological control. In fact in some countries, biological pest control is widely used in crop protection. Preliminary research studies conducted in Sri Lanka indicate that a number of locally available plants are good sources of compounds which have pesticidal properties. But, there appears to be no research programme to study the feasibility of extracting these compounds and developing an industry based on them, utilizing the capabilities of our local scientists to develop alternate pest control methods.

In 1997, around Rs. 4,000 million worth of inorganic fertilizer have been imported to Sri Lanka. Replacing inorganic fertilizers, partly with locally produced organic fertilizers such as compost, and effective use of Biological Nitrogen Fixation (BNF) would considerably reduce the cost of fertilizers used in crop production. Research studies on BNF conducted in Sri Lanka for almost three decades involving a considerable sum of money indicate that BNF has considerable potential in reducing our expenditure on N fertilizers. However, no action appear to have been taken by the authorities concerned to promote the use of BNF by farmers in Sri Lanka.

It is unfortunate that not a single organization in Sri Lanka has still not implemented an effective plan to utilize locally available materials in crop protection and production.

Use of Science and Technology
Appropriate use of science and technology is an essential component in reducing COP. In a developing country such as Sri Lanka, a primary objective of scientific research must be to utilize locally available resources. Research priorities, need to be based on the needs and problems in the production sectors. However, in spite of organizations such as the Council for Agricultural Research Policy (CARP), the agricultural research efforts in Sri Lanka appear to have not being directed towards development of technologies to utilize local inputs in crop production.

A considerable amount of research projects conducted in Sri Lanka appear to be not demand driven. A very good example of a demand-driven research is the control of the coconut caterpillar Promotheca cumingi by the larval parasite Dimmockia javanica in 1970s. There appears to be no research priorities on a national basis. In early 1980s there was a sudden emphasis on Winged Bean (Psopohocarpus tetrgonolobus) and scientists started a large number of research projects on this crop. A large number of scientific papers on Winged Bean were presented at the annual sessions of the SLAAS. The sudden research emphasis on Winged Bean was mainly because one of the former Presidents of Sri Lanka, Mr. J. R. Jayewardene became interested in this crop. However, in the l990s, scientists lost interest on this crop and not a single research paper has been presented on Winged Bean at any of the recently annual sessions of the SLAAS.

Scientific research becomes worthwhile only if the end results can be ultimately made use. A large number of scientific research studies have been conducted in Sri Lanka, and many papers and reports are produced. Findings of numerous research studies are presented at occasions such as the annual sessions of the Sri Lanka Association for the Advancement of Science (SLAAS), and the annual congress meetings of the Postgraduate Institute of Agriculture (PGIA). These research findings are mostly limited to reports and research papers, and there appears to be no significant impact of these findings on crop production.

Natural Resources, Energy and Science Authority (presently the National Science Foundation) during its existence of almost three decades did not implement any long term plan to promote effective utilization of scientific research findings. It is essential that at-least now, the National Science Foundation, under the new Chairman, implements a programme to promote utilization of scientific research findings of practical value.

Liberalization of food imports
High COP is the main reason for the inability of local produce to compete with imported food items. Instead of examining the factors responsible for the unprofitableness of agriculture and taking appropriate measures, the extremely short-sighted policy of the Ministry of Trade to import those crops which are grown locally, merely to satisfy the consumers in the short-run is exacerbating the problems of the local farmers, and hence the country. The financial advantages to an average family as a result of the implementation of this preposterous liberalization policy is very marginal compared to the disastrous effects on the incomes of thousands of farmers and hence on the economy of the country.

As a result of importing of chielies, big onion, potato etc. the cultivation of these crops have been given up by most farmers. These crops may even become extinct and its revival will be extremely difficult. We are already experiencing this situation in the case of big onions. The Trade Ministry has to go round the world trying to find big onion suppliers after devastating the local big onion producers. In time to come a similar situation may occur in rice and then the people of the 'Granary of East' will have to die of starvation.

Therefore, it is necessary that a detail study is carried out to examine how liberalization of import of food affects local production. If the import of food items which can be grown locally are to be liberalized in the long run, the farmers need to be advised on the technology of alternate crops to cultivate, as farming is their only livelihood.

National Policy and Plans
One of the main contributory factor for the present parlous state of the agricultural sector in Sri Lanka is the inability of those at the top to plan and implement an integrated, long-term, viable national policy. A National Policy Framework (NPF) for Agriculture, Lands and Forestry with 98 policy recommendations and an implementation strategy was formulated in early 1995. According to the Ministry of Agriculture publication of 1995, the recommendations were aimed ' towards a marked transformation of the subsistence agriculture into a profitable commercial venture with the ultimate objective of creating a prosperous rural peasantry as an effective partner in the overall process of national development'.

However, some of these recommendations have been completely reversed (eg. recommendations on Paddy Marketing Board) while some have not been implemented at all. After four years of implementing the so called NPF for Agriculture, production has decreased and thousands of farmers in many parts of the country have given up farming or in the process of giving it up as shown in Table 1.

The agriculture sector, including livestock, will continue to be the cornerstone in economic and social development of the country in the foreseeable future. Hence, it is essential that the actual limiting factors are identified and appropriate measures taken to overcome them, without resorting to ad hoc measures advocated mostly by those who have no commitment towards the wellbeing of the farmers who are very often spoken as the backbone of the country. If the farmers face ruination, the country too will fall into the same plight.

The author of this article is a former Professor of Agronomy and a United Nations Consultant