ECONOMYNEXT – Poorly designed regulations in Sri Lanka that allow companies effective monopolies in seed imports are hurting farmers and producers, according to a new study of difficulties faced by Sri Lankan agriculture exporters.
“The guidelines issued severely undermine competition in the seed market,” said the study on ‘Sri Lanka’s Domestic Barriers to Trade: Case Studies of Agricultural Exports’ by Verité Research, a private think-tank.
“They restrict the right to import a particular seed variety to a single company.”
In Sri Lanka, the procedure for the import of new vegetable seed varieties is governed by the ‘Guidelines for The Testing of Vegetable Varieties Imported by The Private Seed Companies (2015)’.
These are published by the government’s Horticultural Crops Research and Development Institute of the Department of Agriculture (HORDI).
If a private company intends to import new vegetable seed varieties for commercial purposes, it must undergo a trial testing period carried out by the HORDI of about one and a half years, according to Verité Research.
The guidelines specify that a variety which is tested earlier by a company will not be given permits to import by another company even for trial purposes.
“This regulation effectively provides monopoly rights in seed varieties to companies that were the first to apply for registration,” Verité Research said.
“Interviews with HORDI revealed that this restriction was introduced at the request of seed importers to safeguard their business interests.”
However, Verité Research said, economically, this has a negative impact on seed users who are compelled to purchase these seeds under the terms and conditions of a monopoly supplier.
According to seed importers, this system creates an unfair advantage for older, more established seed companies which number around 25 in Sri Lanka.
They also create “insurmountable entry barriers” for new players in the market, Verité Research said.
Other rules even restrict imports off new seed varieties, with each importer only allowed to import a maximum of three new varieties per crop per season.
“In addition to prohibiting a new company from importing currently approved registered seed varieties, the guidelines also restrict their ability to gain approval for new unregistered varieties,” the Verité Research study said.
“Hence, these guidelines both undermine market competition and limit the availability of seed varieties in the country, thereby imposing a two-fold restriction on farmers and producers.”
(COLOMBO, June 15, 2017)