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Terrence Abeysekera

Reviving Sri Lanka's Food Sector Performance: Challenges and Policy Issues . Terrence Abeysekera. Presentation Prepared for SLEA Peradeniya University, Peradeniya October 3 2008 . Presentation Outline. Focuses on three main areas:

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Terrence Abeysekera

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  1. Reviving Sri Lanka's Food Sector Performance: Challenges and Policy Issues Terrence Abeysekera Presentation Prepared for SLEA Peradeniya University, Peradeniya October 3 2008

  2. Presentation Outline Focuses on three main areas: i. Setting the Context:(Background, conventional and counter views on the status of Sri Lanka’s food crop sector) ii. Past Trends & Emerging Issues:(Performance on the Ground: Evidence at the macro level, producer level & consumer levels) iii. Role of policy:Policy options and scope for innovation

  3. 1. Background in brief • 20.0 million people • Unemployment rate 6.9% • youth account for 16% • 70% live in rural areas • Annual GDP growth 7.4% • Annual Ag. GDP growth 4.7% • Share of Ag. in GDP 16.8% • Per capita income US $1350

  4. 2. Two Sets of Views on Sri Lanka Food Crop Sector, Long-run Outcomes: Two Sides of The Same Coin?

  5. 3. Sri Lanka: Long-Term Economic Growth Patterns by Major Sectors, 1980-2005 Source: Central Bank Annual Reports, various issues

  6. 4. Changes in the Composition of Agriculture Sector (GDP), 1980-2005 Source: Central Bank Annual Reports, various issues

  7. 5. Reduction in Labour Absorption Capacity in Ag. Sector 1990-2005 Source: Central Bank Annual Reports, various issues

  8. 6. Sri Lanka: Stagnation of Productivity in Agriculture Sector, 1990-2005 Source: Central Bank Annual Reports, various issues * Constant 1996 Prices

  9. 7. Outcomes in the Paddy Sector:Area Cultivated, Yield/ha & Production. 1985-2005 Source: Department of Census & Statistics

  10. 8. Changes in Extent Cultivated Under Non-Rice Food Crops, 1985-2005 Source: Department of Census & Statistics

  11. 9. Sri Lanka: Changes in Food Crop Yields, 1985-2005 Source: Department of Census & Statistics

  12. 10. Sri Lanka: Production Trends in Major Food Crops, 1985-2005 Source: Department of Census & Statistics

  13. 11. Comparison of Imports & Domestic Production of Selected Food Crops, 1995-2005 Sources : Department of Customs, Department of Census and Statistics

  14. 12. Total annual expenditure incurred for food imports, 1995-2005 Source : Department of Customs

  15. 39% 50% 73% 55% 13. Presence of significant yield gaps in the food crop sector: (The gap between achievable and actually achieved crop yields at the farm level) Sources: Paddy-Rice Research & Development Institute Batalagoda, Maize & Green gram- Field crop Research & Development Institute, Mahailluppallama, Ground nut-Grain Legumes & Oil Crops Research & Development Centre, Angunakolapalassa

  16. 14. Changes in Production Costs & Producer Incentives (profitablity) in Paddy Cultivation (Major Irrigation system, 1990-2005) Source: Department of Agriculture, Peradeniya, Polnnaruwa District Data

  17. Increased dependence on non-farm sector POOR AGRICULTURAL SECTOR OUTCOMES Increased demand for Off-farm labour MACRO -POLICY HIGH FISCAL DEFICITS Institutional Weaknesses Increasing wage cost Low Farm Profitability Reduces market/ demand for agric commodities Limits credit & raises interest rates to private sector Poor water service delivery UNCERTAIN WATER POLICY Low Agric Productivity Limited Incentive for Crop Diversification Reduces investments in value-addition/ storage/ agro-processing Limited Access to and Use of Improved Technologies Limited access to credit Controls on crops grown RESTRICTIVE LABOUR REGULATIONS Limited incentive for investments Lack of tenure security Increasing transaction costs in input & agric. marketing Weak Extension System (Public & Private) Increased price uncertainty RESTRICTIVE LAND POLICY Limited private sector participation in seeds and technology markets Weak Links between Public Research & Extension Collapse of Public Extension System Restrictive quarantine regulations / Restrictive seed policy Ineffective research & extension system WEAK AGRIC.TECHNOLOGY POLICY LACK OF CONSISTANT NATIONAL AGRIC. STRATEGY & POLICY POOR RURALINFRASTRUCTURE UNPREDICTABLE TRADE POLICY Distorted incentives towards some crops 15. Key Factors Impeding Sri Lanka’s Food Crop Sector Performance: Need to Focus on Policy

  18. 16. Why Food Crop Sector Shows Lack-luster Performance? Crop agricultureVs. Animal husbandry • RiceVs. Non-rice Crops • Production Vs. Marketing/Value addition • Producer welfareVs. Consumer welfare • Public sector Vs. Private sector • Projects Vs. Policy • Supply driven Vs. Demand driven The Sector development requires more innovative policies and shift in priorities The Sector Improvement is Undermined by an Inherent policy bias within the System:

  19. 17. Summing Up • 1. Sri Lanka’s food crop sector is moving too slowly. • 2. A number of initiatives are being taken to change the system. • 3. But, application of more of the same prescription” will not lead to a dynamic agriculture sector and expected results. • 4. Sector improvement calls for well considered, innovative, more dynamic approaches • 5. Emerging National and Global realities needs greater attention.

  20. Thank You

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