Is there a future for paddy farming?

By the Economist

We would have a plate of home-grown rice for some years to come. Despite the inability of the government to assist farmers to sell their produce and the increasing costs of production, shortages of labour and several other critical problems they would survive. These are the thoughts with which we left the seminar on The Future of Paddy Farming organised by the Sri Lanka Economists’ Association on February 28.

Paddy farmers: Finding their own ways and means to fulfil our hunger

The bottom line of the long discussion replete with statistics was that all’s not well with paddy farming though no serious danger of paddy cultivation was foreseeable as farmers had found their own ways of surviving in a harsh environment. The sobering thought that farmers had not done too badly despite the bungling of the government was reassuring. Farmers had found their own innovative means of surviving which ensured that paddy farming too would survive. The failure of the government to pay the farmer the remunerative price that was offered came out strongly in the discussion both from the speakers and the audience. Maybe there is an underlying lesson for other economic activities in the farmer response to their problems.

Several speakers mentioned that the country had attained self sufficiency in rice and at current yield trends the country would continue to be self sufficient. If the current yield levels of about 3.8 metric tons per hectare could be increased to about 4 metric tons per hectare then the country could be self-reliant for its needs of rice and may even have a surplus. The economists asserted that it would be possible to increase yields to around 5 metric tons per hectare and if this were to be achieved then the country would have a surplus of rice. However it was pointed out that yield levels had been declining, not only in Sri Lanka, but in other rice producing countries of Asia as well. There had been no path-breaking achievement in the development of higher yielding strains in the last few decades after the big push of the green revolution.

A somewhat contrarian view was expressed by a panellist who argued that we cannot consider the country as self-sufficient as about a fourth of the population was malnourished and the country did not have adequate stocks to face the inevitable years of crop failure. It was also pointed out that the population would be increasing in the next twenty-five years by about 3 million and that many mouths would require to be fed in the next quarter century. Currently each year the number of mouths to be fed increases by about 200,000, despite the fall in the rate of population growth to around 1 per cent per year. For these reasons any complacency that the country had achieved a surplus of rice was inappropriate. Further it was pointed out that there were industrial uses for rice as many high value added products such as alcohol could be produced.

The main interest in the seminar was the issue of viability of paddy farming. This is a critical issue despite the fact that paddy yields have risen and are higher than those of other countries in the region. It also appears that many paddy farmers, especially in the wet zone, are part-time farmers. This, it was argued was not necessarily a negative feature. In the context of small-sized holdings, the realisable prices for paddy, the excess of household labour at most times of the paddy cycle while there are shortages of labour at peak periods of farm activity and the increasing costs of inputs, part-time paddy farming was the means by which farmers survive.

In addition farmers in the wet zone have found it profitable to cultivate other crops on paddy lands when not in paddy cultivation. It was by the evolution of part-time farming and mixed cropping that paddy cultivation has been sustainable in many areas of the wet zone. The most serious problem faced by paddy farmers in today’s context of higher national production was the difficulties of disposing their crop at remunerative prices. Paddy farmers have faced fluctuating prices and the government’s programme to buy paddy at a fixed price does not appear to have benefited the farmers. It has even failed to stabilise prices at reasonable levels. Government funds to purchase paddy seem to go to unintended beneficiaries. The Seminar stressed that the resolution of this problem was vital.

The construction of storage facilities for paddy, improvement of milling capacity, improved transport and inducing more competition in the purchasing of paddy were the solutions to this problem. A reasonable and fairly stable farm gate price was vital for the viability of paddy farming. Additionally it was pointed out that there should be a clear policy on the import of rice and not ad hoc changes in it that gives no proper signals to farmers. The sustainability of paddy farming requires the improvement of marketing conditions that ensures that farmers get a reasonable price that ensures its cultivation on a profitable basis.

A more competitive system could ensure greater degree of price stability at both the consumer retail level and at the farm gate. Today consumers pay between Rs.30-35 per kilogram of rice. What is the reasonable price for a kilogram of paddy at the farm gate? This is an issue that economists must address as emotional views on the exploitation of the farmer and the consumer must not cloud thinking on reasonable marketing margins that are needed and rational solutions to the problem. No doubt paddy farming is a complex issue that requires serious attention rather than emotional responses. The discussions at this seminar could be a starting point for further research and policy recommendations. There is a potential for a big push in paddy production if the problems facing farmers could be addressed as the gap between realisable yields and actual yields is exceedingly high.