Inevitable choice: rice imports
The government has decided to import rice. This was inevitable. The drop in the yield last Maha and a sharp decline in the Yala made it imperative that the country imports a significant amount of rice.

The government's initial reluctance to import rice was mainly due to a matter of pride and prestige of the government’s claim to self-sufficiency in rice. The record paddy harvest in 2003 was owing to both good weather conditions and an expansion in area cultivated due to the relatively secure conditions in the North and East. These conditions enabled the production of over 3 million metric tonnes of paddy, the highest ever. This was more or less adequate for the country's needs. Hence there was a claim that the country had achieved self-sufficiency in rice. The new government wanted to maintain this against all odds.

Last year's euphoria of attaining self-sufficiency in rice is best forgotten. The non-importation of rice in a single year is not the attainment of self-sufficiency. The fact is that, the country is still to reach the level of self-sufficiency in rice. This year's experience vindicates this position. Self-sufficiency means the ability to have adequate domestic production to meet the year-in-year-out needs of consumption.

Agricultural production, so dependent on weather factors will have swings in production. The lean years' needs must be provided through accumulated stocks. It is only when the good years can even out the bad that we could say that we have achieved self-sufficiency. This column has pointed this out several times in the last two years. Paddy production last year did not result in the country carrying large stocks. In fact it exposed the incapacity of the country to hold stocks too.

The bumper harvest last year of over 3 million metric tons led to the notion of the country having reached self-sufficiency in rice. Good weather and an increase in the cultivated extent in the North and East were mostly responsible for this record harvest.

This year's paddy production is different. The cyclic nature of rainfall has resulted in a reduction of cropped area and crop failure. It is likely to be about 25 per cent less than last year's record harvest. Several factors account for the decline in paddy production.

The most significant one was the drought in some parts of the country. Low prices as a consequence of the larger harvest last year and marketing deficiencies have been disincentives to cultivation of paddy with optimum inputs of fertiliser. In some areas farmers have not cultivated lands as a protestation of the low paddy prices last year. The much-advertised reduction in fertiliser prices that were generated by the Budget Speech and further enhanced by the new government did not materialise fully. The increase in the subsidy on fertiliser has been negated by increases in other taxes and costs. The only consolation to the farmer may be the higher purchase price for paddy this year owing to the reduction in paddy production. Yet that is of no use to farmers who have nothing to sell.

Although the attainment of self-sufficiency is not necessarily an important economic goal, it is very much an objective of all governments. However the achievement of self- sufficiency requires an increase in the yields in paddy. Although paddy yield levels in the country are high in comparison to those of many paddy-producing countries in Asia, yet they are much below the potential levels. What this gap indicates is a lack of institutional support to raise yields closer to the potential. Extension, credit and marketing are the weak links.

Institutional credit serves only a small fraction of paddy farmers. Despite some new innovations, the politicisation of rural credit has prevented sustainable credit provision to the majority farmers. Monopolistic paddy marketing and inadequate storage facilities have resulted in large marketing margins. In addition, labour shortages, high wage rates and low productivity plague paddy farming.

These are the issues that must be addressed if self-sufficiency in rice is to be achieved. Yet this strategy remains unexplored in the country owing to shortages of resources. If productivity is increased, it may be possible to reduce paddy prices, while farmers' income rise. There is another side to the coin -- that is the welfare of consumers. The fact is that Sri Lanka is a high cost rice producer. The attainment of self-sufficiency in rice could mean that the consumer would have to pay more than for imported rice.

Unless the costs of production are reduced and yields increased Sri Lanka would continue to produce rice at a higher cost than other countries. There may be economic and non-economic arguments for still pursuing the goal of self-sufficiency, but there is a need to recognise that the consumer would have to pay more for domestically produced rice. And this is a reason for the county's higher cost of food.

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