ECONOMYNEXT – Sri Lanka is heading for a sharp drop in rice production in the main cultivation season with only a third of the area sown so far amid the worst drought in at least 5 years, with import restrictions already pushing rice prices up.
By early December only 30 percent of the 830,000 hectares of paddy that can potentially be grown during main Maha main rice cultivation season has been sown, B V R Punyawardena, agro-climatologist at Sri Lanka’s Department of Agriculture said.
Bad Season
"During my career of 20 years, I have not experienced this kind of bad season," Punyawardena said.
"There was a drought in 2012 also. It was not so bad."
He was speaking at a forum organized by the United Nations Development Program which has started a program to improve the ability of over 700,000 people living in the Malwatu Oya, Yan Oya and Mi Oya river basins to overcome weather changes.
At 73 larger reservoirs operated by Sri Lanka’s irrigation department there was only enough water to maintain crops in about 30 percent of the usual extent.
At a network of about 14,500 minor tanks, water was enough for about 10 percent of the cultivation, Punyawardena said.
Sri Lanka’s Yala, minor irrigation season which has just ended, where about 500,000 hectares of crop can be grown, only around 394,000 hectares were sown this year, according to official data.
Due to a weak crop, carry over stores of rice had also diminished, Punyawardena said. After March there rice stocks will tighten.
Market Signals
Growing less rice – a water intensive crop grown in inundation conditions – is the correct market response to a drought by farmers, economists say.
Already rice prices have moved up, with the market responding quickly to tighter supply conditions and the expected future outlook.
In a country where citizens are free, are markets are allowed to work, spiking rice prices can conserve domestic stocks, prompt imports and also move more people into alternative cereals like wheat or potatoes, automatically nipping in the bud any ‘food crisis’.
In Sri Lanka, due to economic nationalism there is no free trade in rice.
Imports of close substitutes like wheat are also taxed to force people to eat rice in a vicious nationalist policy, undermining the food freedoms of the poorest, and making the hungry subservient to the farming and rice milling lobby, liberty advocates have pointed out.
Maize is also protected with taxes to increase profits of vested interests, pushing up chicken prices and worsening protein malnutrition among kids of poor families, critics say. Milk prices are also high due to a self-sufficiency drive. Cheese is a super luxury good.
There is also a land-owner lobby who rent land to growers, who are constantly pushing for higher potato import taxes.
Weather Signals
Punyawardena said agricultural officers warned farmers early in the season to sow short maturing varieties and to switch to alternative crops that require less water.
But farmers do not always listen. Farmers some rice to keep in their houses as ‘food security’. Due to long standing attitudes they do not trust modern weather warnings.
Punyawardena said farmers continue to believe that rains will come.
However at the moment authorities were grappling with supplying sufficient drinking water which was a priority, and there were even doubts whether water could be supplied to crops that were already sown.
Ravi Chandrapala, head of Sri Lanka’s Meteorological Department said, unless there was a cyclone near Sri Lanka in the next two weeks, dry weather would continue.
Statistically, about 85 percent of the time, rains came for the Maha season, Chandrapala said, showing why farmers may also have faith in the rains based on probability.
Weather conditions related to a weak ‘La Nina’ conditions have also hit rice production in Vietnam, where exports are down 26 percent in the first 11 months of the year.
Rainfall had become more erratic in recent years in Sri Lanka with large volumes coming in a short time leaving longer periods with little or no rain creating droughts through annual total rainfall has not diminished, Chandrapala said.
This has been linked to man-made ‘climate change’ earlier known as ‘global warming’ which has been linked to emission of carbon dioxide, a gas that makes plants grow and sustains life on earth. The label changed over the years an apparent ‘hiatus’ in global warming over the last decade or so.
Self-Sufficiency and Food Crisis
A crop failure which should only create a financial crisis for farmers in a free country. But in a country like Sri Lanka it can lead to a ‘food crisis’ unless rulers relax economic nationalism and allow the hungry to import food at reasonable prices.
"We have a serious problem in the agriculture," Punyawardena said. "We will have a food crisis, unless we import."
Sri Lanka’s government has said it will import some rice as domestic prices spiked. International prices could also move up, with variable La Nina conditions.
In a free country, the decision on whether to import a particular food is not made by the state and rulers but by citizens who signal to importers through higher prices.
In Sri Lanka with restrictions on rice imports, state agencies which are hit by regular corruption scandals like Lanka Sathosa (previously the Co-operative Wholesale Establishment) import rice with special privileges in some case, leaving room for irregularities.
Sri Lanka’s rice crop is failing after a bumper harvest in the 2015/2016 cropping season when some farmers found it difficult to sell rice at a good profit.
Due to long-running autarkic polices aimed at self-sufficiency, prices collapse in Sri Lanka when there is a bumper harvest leaving farmers in trouble, whereas in a country that had an internationalist outward looking farming community, it would boost foreign exchange earnings.
In countries like Vietnam, Pakistan or Thailand, export go up when there are bumper harvests giving extra or stable income for farmers, but in Sri Lanka farmers get into financial difficulties even when there is favourable or unfavourable weather, as a result of economic nationalism.
Years of autarky has resulted in farmers growing rice varieties which cannot be traded internationally and processing by millers is below par, and leaving a bad odour when cooked.
Due to years of protectionism, cost of rice production in many areas is also higher than in some rice producing countries where yields are higher. In the East of Sri Lanka, rice production is more efficient.
Similar problems exist with potato and large onion cultivation in Sri Lanka, which also cannot be exported during harvests due to high-cost coming from years of protection and pursuit of self-sufficiency. (Colombo/Dec17/2016)