Concern over decreasing agricultural production and exports

Increasing agricultural production and productivity are vital for the country’s economic growth.

While the availability of fertiliser and agrochemicals would revive agriculture this year, there is a need to expand agricultural production to much higher levels to increase food production, decrease food imports, enhance export revenues, increase incomes, reduce poverty and diminish malnutrition.

Fertiliser

Reversal of the recent disastrous agricultural policies alone is inadequate for economic growth. Increasing the productivity of all crops and expanding the cultivation of some crops are vital for the nation’s economic development.

Exports

Most discussions have emphasised the need to increase the country’s exports to reduce the trade deficit and improve the balance of payments. The focus of these has been on manufactured exports which are the dominant merchandise exports. Industrial or manufactured exports constitute the larger share of exports. While industrial exports accounted for 70 percent of exports, agricultural exports were less than 25 percent of total exports.

However, the importance of agricultural exports for the Sri Lankan economy is underestimated by this statistic, as the domestic value addition in agriculture is much higher than in industrial exports. In other words, most manufactured export have a high import content. Furthermore, some of the industrial exports are based on agriculture, as is the case of rubber manufacturers, tyres, gloves, contraceptives and personal protective equipment. The use of rubber for value-added rubber exports is a positive development in an otherwise disappointing story.

Exportable surplus

Although there is a prospect of a global economic recovery later this year that may increase the country’s manufactured exports, the prospects of agricultural exports increasing is remote as we are not able to expand export volumes in the short run.

Tea, rubber and coconut were the mainstays of the country’s exports but their exports have not increased owing to supply constraints. The production of these crops has been on a declining trend.

Tea

Tea exports have not increased owing to the low productivity of the plantations. Rubber production has declined owing to a shrinkage in the area cultivated and low productivity. The area cultivated in coconut is diminishing owing to urbanisation, housing, road construction and other activities. In addition, the exportable surplus of coconut is decreasing owing to increasing domestic consumption.

Reasons

The reasons for the decreased production in the three crops vary somewhat, but the lack of implementation of a long-term strategy to increase their production is undeniable. Other export crops too lack strategies for their increased production and productivity. This is especially unfortunate as the country produces the world’s best cinnamon, cashew, pepper and several spices.

The tale of tea production on the plantations has been one of “killing the goose that laid the golden eggs”. At first high taxation and the threat of nationalisation deterred investments in the plantations.

Land reform

Then, the Land Reform Law of 1974 led to the mismanagement of nationalised estates under state organisations that rendered them huge lossmaking enterprises. Their huge losses even destabilised the country’s public finances. This necessitated the government to hand over the management to private plantation management companies during the 1994-99 SLFP regime.

Improvement

There was an improvement in tea production on estates, but inadequate long-term investment on tea lands, especially the filling of vacancies and replanting senile tea with higher productive vegetatively propagated plants (VPP) have been woefully inadequate.

Master Plan

The Tea Master Plan that analysed and proposed a development programme for tea was hardly implemented and tea production on the estates continued to be below potential.

Tea production declined from 330 metric tonnes in 1970 to 290 metric tonnes in 2000 and to 314 metric tonnes in 2020. Tea production fell below 300 metric tonnes owing to the ban on chemical fertiliser and pesticides.

The decline in tea production on the estates that began in the 1960s has continued. Many estates have senile tea and vacancies. Labour shortages and inadequate incentives prevent their replanting and filling vacancies with more productive vegetatively propagated (VPP) varieties.

Smallholdings

In contrast, there has been increased production of tea smallholdings. The story of the country’s tea production would have been grimmer, if not for the increased production by tea smallholdings that now account for over 70 percent of the country’s tea production.

Productivity

Tea productivity is about twice on smallholdings as on the plantations. The higher productivity on smallholdings is due to more favourable agronomic factors: virgin soils, more sunlight and VPP teas.

The neglect of the Tea Research Institute (TRI) is a critical factor in the decline of the industry. The TRI is inadequately funded, unable to recruit and retain quality research scientists, and inadequately responsive to the plantations and small holders.

On the other hand, Sri Lankan scientists have developed tea research institutes in other countries, especially in Kenya. While our tea exports have been declining, exports of others have been increasing.

Rubber and coconut

The story with respect to rubber and coconut is somewhat different. The extent cultivated with these crops has declined drastically. In 1960, 200,000 acres were cultivated with rubber, mostly on small holdings. Forty years later, in 2000, the extent cultivated shrunk to 130,000 acres. The extents of plantations as well as smallholdings decreased.

The main reasons for this drop in the area cultivated were the low incomes, more remunerative other uses and urbanisation. There is a need to resuscitate rubber production by expanding the area cultivated and the growing of higher-yielding clones of rubber.

The Rubber Master Plan 2015-20 detailed the required programme to increase rubber production. However, inadequate resources have stalled its implementation.

There is a need to expand the cultivation of rubber as the demand for natural rubber will be increasing and rubber manufacturers could contribute much to the country’s export earnings.

Admittedly, there has been an expansion of rubber cultivation in “non-traditional” areas, such as Moneragala.

Coconut production

The bulk of coconut production is in home gardens. In addition to the loss of production due to the lesser extent of coconut cultivation, the increase in population has resulted in a higher proportion of coconut being domestically consumed and consequently reducing the exportable surplus.

A planned programme of coconut cultivation, especially in the North, Eastern and Southern provinces and coastal areas is imperative to increase coconut production. At the same time, the availability of plants for home gardens is also vital.

Conclusion

The neglect of agriculture, especially export agriculture, has been a serious setback to the country’s economic growth. The medium and long-term development of agriculture is vital for strengthening the economy, increasing export income, enhancing food security and reducing rural poverty.