Prelude to a “Change” in agro-industry of Sri Lanka
Since independence, successive governments of Sri Lanka experimented with many models to make agriculture a viable venture to uplift the life standards of the “poor farmer” to a reasonably comfortable level. However, 71 years of experimentation has not brought about decent living standards to the farming community, which is more than a third of the total population and the farmer is yet called “poor farmer”. During this period of time, many countries in the world, including several Asian countries took giant and meaningful steps towards achieving self-sufficiency in their food crops. They also achieved an agricultural surplus to invest in industries, by establishing viable commercial agricultural industries aiming at exports to developed countries. This not only increased employment opportunities outside the field of agriculture, but also increased per capita income and living standards of those nations.
Greenhouse farming
Sri Lanka regrettably failed to learn from the British as to how commercially viable agricultural industries could be established by taking lessons from the British-established coffee, tea and rubber plantations and related processing industries on her own soil. Instead, the government relied on experiments suggested by numerous local authorities and also by some foreign donor agencies to improve the standards of subsistence level farming operations utilising traditional and conventional methods of agriculture. Ironically, the country still depends so much on tea and rubber, which were established by the British as commercial plantations and coconut for her foreign exchange needs.
While our neighbours were busy inventing and adopting new technologies to increase agricultural productivity of their countries, policy makers of Sri Lanka with the “blessings” of scientists in the country ignored new technologies and kept on praising the irrigation systems developed and agricultural prosperity achieved by King Parakramabahu during the Polonnaruwa era. Some of them not only praised those technologies, but also made attempts to adopt them in the present day context instead of using modern technologies. They failed to understand that the technology of the 11th century was not what is required today to feed a nation with a population of over 21 million and to compete in a competitive and open global marketplace.
Therefore, today’s need is to leave aside the strategies adopted during the post-independence era up to date and re-model the agriculture sector to face challenges of the 21st century. The only way to achieve this is to move away from subsidized, subsistence level agriculture to commercial scale agriculture and make it a thriving industry. This will not only generate additional employment outside the agriculture sector, but also increase per capita income and living standards of a population, which now depends on subsistence agriculture.
Crops
Other than the three main plantation crops, there are hardly any commercial scale agricultural ventures in Sri Lanka. But the country has an edge over her competitors in the neighbourhood due to: Geographical location; availability of quality water resources; abundance of good soil structures; easily trainable and educated labour force and reasonably well-organised shipping facilities.
However, what is seriously lacking in the country is a macro scale strategy to venture into commercially-oriented agricultural enterprises. Neither successive governments have promoted them nor has the private sector entered into such ventures. Therefore, non-traditional agricultural exports, such as fresh fruits and vegetables are confined to micro-scale operations. This too has a stiff competition from our neighbours who export similar products at low prices, mainly due to low cost of production in those countries. Low cost of production is due to higher productivity connected to adaptation of modern technologies. Sri Lanka at one stage unsuccessfully promoted micro-scale Export Promotion Villages (EPVs) without a clear vision as to how the low-quality produce coming from these villages with a high cost of production tag could compete in the sophisticated global market.
Absence of advance technologies, efficient fertilizer types and quality seeds and planting materials to increase the productivity has further reduced the comparative advantage the country has over other agricultural producers in the region. This is clearly visible in the horticulture sector (foliage industry) where the country had a leading edge three decades ago.
What should be done
The government should invite the local private sector and foreign investors to venture into an agricultural revolution in the country. To augment this it is proposed to establish several “Agro-Industrial Zones” in various parts of the country depending on the agro-climatic suitability of the area for proposed crops, but subject to a minimum extent of land for each zone and also for each single investment.
Objectives
The main objectives of the establishment of “Agro-Industrial Zones” are to;
- Generate investor confidence in investing in agriculture sector.
- Provide an opportunity for investors to venture into macro-scale commercial agricultural ventures utilizing modern technologies.
- Introduce modern processing facilities to enter the competitive global market.
- Enhance agricultural productivity and thereby obtain a surplus from the agricultural sector in the short and medium term.
- Reduce cost of production of fruits, vegetables and other horticultural crops to reduce their retail prices, thus reducing the cost of living at national level.
- Generate employment for several thousands of unemployed youth and also to unemployed graduates and diploma holders in agriculture.
- Use commercial ventures in the Agro-Industrial Zones as “nucleus farms” to the small-scale farms in the peripheral areas. Small-scale farmers could then work as “contract farmers” to “nucleus farms”.
- To make use of these zones as incubators for young agricultural entrepreneurs and utilizing the zones as training facilities for modern agriculture.
- Create ancillary industries connected to export agriculture ventures.
- Achieve a quantum leap in export earnings from the agriculture sector of the country.
Methodology -
A suitable formula for the proposed “Agro-Industrial Zones” is detailed below;
Tropical fruit crops: Low country dry zone, Low country wet zone, Low country Intermediate zone, Mid country wet zone, Mid country intermediate zone and minimum extent of a zone – 500 hectares. Minimum extent for a single investment – 100 hectares.
Vegetables: Low country dry zone, Low country wet zone, Low country intermediate zone, Mid country wet zone, Mid country intermediate zone. Minimum extent of a zone – 250 hectares. Minimum extent for a single investment – 50 hectares.
Fruits, vegetables, flowers, culinary herbs and foliage plants in greenhouses: Up country intermediate zone, Up country wet zone. Minimum extent of a zone – 25 hectares. Minimum extent for a single investment – 1 hectare.
As a first step, a zone for each category could be established in selected locations and lands could easily be found from under-utilised government farms belonging to the Departments of Agriculture, Animal Production and Health, Export Agriculture, Forest and National Livestock Development Board etc.
In addition to infrastructure, all other facilities will be provided through private investments and companies investing in the provision of such facilities too should be given the same incentives offered to direct investors in crop production. Facilities such provided inter alia would be:
Pre-cooling and cold storage facilities; Drip/sprinkler irrigation facilities; Farm machinery and equipment; Crop protection services; Agricultural inputs; Advanced technology as a fee based service (Extension); Laboratory facilities; Seeds and planting materials; Processing facilities; Packing and packaging services; Transport facilities; Marketing of produce, and Waste disposal and effluent treatment.
To harness the full potential of such a scheme, the government should facilitate the following: Land on long lease, preferably 33 years; Water; Road network; Electricity supply; Communication;
Credit at low rate of interest with suitable grace periods depending on the venture and the crop grown; Tax concessions to investors including above-mentioned service providers; Export rebates on freight until sea and air freight rates are brought down by shipping and airlines when the export volumes are substantial; Funds for feasibility studies to be conducted by qualified expatriate consultants/companies before the zones are established to obtain complete proposals for every zone including the suitability of each zone for selected crop/s, local and international markets for the same etc.
Implementation:
Establishment of “Agro-Industrial Zones” in the country could be undertaken by the Ministry of Agriculture and sufficient publicity could be given through the Sri Lankan Missions in other countries to attract investments. A special implementation and monitoring unit should be established with sufficient powers. The unit should be able to work as a “one-stop-shop” for prospective investors and work in tandem with the Board of Investment of Sri Lanka.
Conclusion:
Establishment of such zones could certainly increase productivity of crops grown in the zone, due to utilisation of advance technologies and reduce cost of production due to higher productivity and scale of operation, thereby making the final product/produce competitive in the local and overseas markets. This could bring about the “change” the government expects in the short and medium term to make agriculture one of the largest foreign exchange earning sectors in the country.
(The writer is Managing Director, Agri world (Pvt) Ltd and Honorary Consul of Israel. He can be reached at wicky123@sltnet.lk).