ECONOMYNEXT – Sri Lanka will grow more food under an import substitution drive to reach self-sufficiency in pulses and turmeric to save 500 million dollars in forex exchange, a senior official said while excess liquidity in money markets spike to the equivalent of 1.2 billion US dollars.
Sri Lanka will follow systematic production of pulses and other crops while bringing structural changes and modernization, Sumedha Perera, Secretary Ministry of Agriculture said.
“The manifesto of His Excellency the President ‘Vistas of Prosperity and Splendour’ stated we will develop systems to promote cultivation and production of dried chillies, maize, soya, green, grams and cowpea, onions and potatoes,” Perera told an economic forum hosted by Sri Lanka’s Ceylon Chamber of Commerce.
“Every tier of government should align more the activities in agriculture so that it will be able to sustain self-sufficiency.”
Import Substitution Controls and Subsidies
The government had placed an import ban on 16 crops including Rice, Maize, Big onion, Cowpea, Green gram, Groundnut, Chilli, Soya, Red Onion, Potato, Finger Millet and Gingerly, Turmeric and Ginger.
He said by growing domestically the substitutes of imports, the country could save about 500 million US dollars a year.
Even as he was speaking 50 billion rupees (the equivalent of about 260 million dollars) had been printed and released to the banking system driving excess liquidity to 235 billion rupees or about 1.2 billion US dollar equivalent at current exchange rates.
A subsidy of 50 to 100 per cent seeds and planting material is given as a subsidy to the growers.
“Complying with that, importation of 16 crops is restricted and 50 per cent to 100 per cent seeds and planting materials subsidy was given in Yala 2020,” he said.
“This encouraged farmers to produce those crops and by the end of 2020/21 Maha season, it is expected to be self-sufficient with Maize (500,000 MT), 30 per cent extra green gram, 32 per cent extra green chillies which can cater to the dry chillies demand and 24 per cent of extra gingerly. ”
“The 50 per cent seed subsidy is proposed for 20/21 Maha Season for six crops.”
The mid-season green gram and cowpea cultivation with seed subsidy has produced 8000 metric tons of green gram or 40 per cent of the total (26,000 metric tonnes) requirement of Sri Lanka, Perera said.
The government will invest in key areas such as cold storage facilities and improving agricultural extension services and use a cloud-based Agricultural Information Management System (AIMS).
“To make the markets competitive, market information system based on government agencies should be widely available,” Perera said.
“In this regard, the Ministry is currently developing a cloud-based Agricultural Information Management System (AIMS) with many progressive objectives.”
The ministry is also looking at exploring dried fruits and vegetables to avoid production losses as farmers cannot sell their produce due to travel restrictions and market closures due to the virus.
Likewise, they are looking at churning milk in to butter, ghee, cheese and other by-products.
“Dried fruits and vegetables could be one of the options during the crisis to avoid loss produce in the field due to excess supply or lack of marketing opportunities,” Perera said.
“In livestock, milk can be converted into milk products such as butter, ghee and cheese.”
However, it is not clear how much investment in technology and expertise is required to produce, brand and sell dairy or fruit.
There will be a demand for high-value agricultural products such as fruits, vegetables, and dairy, is to increase in the post-COVID-19 era, he said.
“The focus on production, therefore, should ideally cater to this growing need of a health-conscious population,” Perera said. “We have planned to replace milk powder with fresh milk as stated in “Vistas of Prosperity and Splendor.”
It is not clear whether poor people, in particular, will have to drink the whole milk bottle in a day, or whether they will be given a fridge to keep a milk bottle overnight, or whether they will have to go shopping every day and bring a small amount.
Some of the poorest people in cities buy powdered milk b the spoonful.
Ministry of Agriculture is building a new dairy processing plant at Badalgama in the Gampaha District and is developing small-scale dairy processing centre in Gampaha, Colombo, Kurunegala, Polonnaruwa, Puttalam and Batticaloa districts with foreign funding.
Perera said the Coronavirus pandemic should also be used to lift controls, expanding farmer freedoms to cultivate new crops other than rice and also invest in new technology.
“COVID-19 also offers a great opportunity to foster some long-overdue structural changes in the agriculture sector, such as relaxing restrictions on the cultivation of crops other than paddy in lowlands,” Perera said.
“COVID-19 teaches us that we need to do more and develop the tools and approaches to ensure the recovery from the pandemic that leads to greater long-term resilience,” Perera said.
“Agriculture can be seen as a silver lining on the way forward to meet the challenges during the post-pandemic era.”
Foreign Funding for Tech and Know How
Sri Lanka’s agriculture sector has protection which does not boost competitiveness according to some observers.
The World Bank, European Union and the International Fund for Agricultural Development (IFAD) is providing around 50 billion rupees to upgrade Sri Lanka’s agriculture sector.
Under a World Bank assisted Agriculture Sector Modernization Project, 10.8 billion rupees have been allocated for projects in twelve districts and 48 farmer clusters have been set up.
Another 461 million has been allocated from a European Union grant for projects in give more districts.
Climate Smart Irrigated Agriculture Project funded by the World Bank is expected to implement projects worth 23.5 billion rupees in the next five years.
IFAD funded Smallholder Agricultural Partnership Program is working with a budget of 17 billion rupees on a program where farmer clusters, private organizations will come up with programs to develop the sector. (Colombo/Dec03/2020)