Despite the significant contribution that agriculture could make to the country’s economy that was discussed last week, and the incessant rhetoric supportive of agriculture, the reality is a lack of funding to improve the country’s agricultural productivity. This is not so only in Sri Lanka but the world over. Even international assistance for agriculture has been inadequate.
The World Development Report of 2008 revealed that agricultural and rural sectors in developing countries have suffered from underinvestment in agriculture over the past 20 years and only a mere 4 per cent of official development assistance was spent for agricultural development in developing countries. Even in countries heavily reliant on agriculture for overall growth, public spending for farming is only a small proportion of total government spending. Developing countries have underinvested in the development of rural areas and agriculture. The international food crisis is partly explained by this neglect.
It is very important to increase productivity in both plantation crops and food crops. Investment in research has a critical role in enhancing productivity. The extension system and services must be improved in order to communicate the best practices to farmers. Increased competition in marketing would improve farm gate prices as well as reduce consumer prices. There is a need to increase institutional credit and develop institutions to serve rural sector growth if agricultural productivity is to be improved, rural poverty reduced and household food security in the country improved.
Rhetoric and reality
There is no lack of rhetoric for the support of agriculture, rural development and improving the conditions of the peasantry. However the stark reality is that support for agriculture has been inadequate. A paradox the world over is that there is a wide gulf between rhetoric in support of agricultural development and the reality of inadequate investment in agriculture. The neglect of agriculture, despite the political rhetoric, is difficult to comprehend especially as agricultural development is of political salience in Sri Lanka as a third of the population is directly dependent on agriculture and more than one half of the population live in rural areas.
Further, the political perception of the importance of the rural population is even greater, as it is believed that about 70 per cent of the population is rural. Although parties and candidates woo the rural population with promises to improve agriculture and ameliorate livelihoods of farming families, agriculture remains a neglected sector. The restoration of a few tanks and the grant of a fertilizer subsidy, that all farmers are unable to access, are quite inadequate for sustained increases in productivity.
As we pointed out last week, the slow rate of agricultural growth in the last two decades has been responsible for retarding the rate of economic growth. Had agriculture performed better, export earnings would have been higher, import needs less and inflationary pressures could have been more contained through lower food prices. All these would have made a significant contribution to the country’s economic growth.
Policy changes in agriculture
The political rhetoric of improving agriculture must be transformed into higher investment in agriculture. Agricultural development policies must be well-thought out rational policies rather than emotional outbursts.
There must be effective implementation of a whole range of policies from agricultural research to marketing. A comprehensive and realistic agricultural policy framework is vital. Equally important is its effective implementation to benefit farmers and the rural community. Productivity of most crops is below their potential and lower than yields in other countries. Improvements in productivity are the keys to agricultural development in a land scarce country that Sri Lanka is. Besides this, improvements in agricultural productivity would improve rural incomes, reduce poverty and enhance food security.
One of the key pre-conditions for agricultural development is investment in research. Yet this is one of the areas where there has been under spending. There should be much more investment in research than the grossly inadequate amount expended on researh at present. Research expenditure on agriculture is a fraction of one per cent of the value of agricultural output and has been declining in recent years. This is partly due to a lack of appreciation of the importance of research in increasing productivity. Expenditure on research does not bring returns immediately. However, it is widely recognised the world over that agricultural research brings impressive returns over the long run.
Increases in yield can be achieved only if research develops high yielding varieties of food and other crops adapted to our soil and other climatic conditions and finds out the correct amounts of inputs and methods of preventing crop losses through diseases and pests. Methods of reducing crop damage and post harvest losses are also vital areas of research. Research institutions are under funded, research staff inadequate and laboratory facilities are insufficient. The neglect of research is an important reason for the lack of any significant breakthrough in developing new high yielding varieties recently.
Agricultural extension services
The agricultural extension services have also been severely neglected over time. The current extension services are in disarray hardly serving its purpose. The extension services so vital to communicating the correct methods of cultivation to farmers and providing them with seeds and planting material should be reformed and reconstituted. Without a good extension service the research expenditure is wasted. Agricultural extension is now for the most part the responsibility of provinces. Inadequate untrained staff that has no proper facilities can hardly provide the necessary services. A complete revamping of the agricultural extension service is vital to achieve significant increases in productivity. The current gap in yields between the potential and actual yields is to a good extent due to inadequate and ineffective extension services.
The development of rural infrastructure is another key area. This is a well recognised factor in the country’s development strategy though the achievements are insufficient. The repair and maintenance of rural roads, bridges and irrigation works are important determinants of productivity in agriculture. Poor infrastructure in rural areas is a severe constraint to farmers obtaining their inputs and more so for the marketing of their produce. Despite the recognition that rural infrastructure development is vital for agricultural development, there are inadequacies partly due to the shortages of financial resources, corruption in the construction of such facilities and the tendency to expend resources on high cost infrastructure rather that low cost priority needs of farmers and the rural community. Among the neglected areas of investment is the development of storage capacities for food crops.
One of the serious problems faced by farmers is that of marketing. The marketing of agricultural produce has been a perennial problem. At harvest time farmers are unable to sell their produce at remunerative prices that cover their costs of production. In a context where the costs of agricultural inputs are rising and wages are increasing owing to inflation, it is vital for farmers to obtain good prices for their produce. Even though prices of agricultural commodities are high at consumer levels, producer prices are low. The reduction of marketing margins could contribute much to both reducing consumer prices of agricultural commodities and farmers receiving better prices. These have to be resolved by developing storage and milling capacity, promoting competition and improving transport facilities. There should be more constructive private sector-public sector collaboration.
There are other areas of agricultural policies that require to be reformed. Land policies require to be reformed in the context of current situations to permit land use on the basis of economic returns. There is a need to determine the priorities of agricultural production on the basis of economic criteria rather than prejudices, unrealistic assumptions and without prioritisation of investment. The organisation structure of agriculture with its complex division into many ministries is another area for reform.
Rational agricultural policies should be formulated and adequate resources provided for agricultural research, extension and effective implementation of policies. Realistic goals must be established, research institutions must be funded and made efficient, extension services must be revamped and marketing and storage facilities improved. Without these improvements in vital areas serving agriculture, yields will remain low, agricultural incomes depressed and rural poverty would persist. The rhetoric of a priority for agricultural and rural development must be transformed into an institutional reality that enables the increasing of crop productivity. And that requires the range of policies discussed.