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by Prof. C. S. Weeraratna

Sri Lanka continues to be one of the poor countries in the world. Our per capita GDP during the past few years has been fluctuating around US$ 900. It increased from US$ 879 in 1998 to US$ 899 in the year 2000. Since then it had declined.

A large number of crops cultivated in Sri Lanka have considerable potential in various agro-industries. Most of the produce of our plantations are exported without value-addition.

However, per capita GDP alone is not a good indicator of the economy as other factors such as value of the rupee and debts are also important. The value of the Sri Lanka rupee has decreased substantially during the past decade.

In 1995 a US Dollar was equivalent to Rs. 54.00 and at present it is around Rs. 98.00. The total outstanding government debts have continued to increase. The degree of indebtedness during 2001-2003 has increased as shown below.

2001 2002 2003

Foreign Debts 636 721 843

Domestic Debts 816 948 1020

Total 1452 1669 1863

(note: the values are in SL Rs. billions)

As indicated in the Table, the total debts during the two-year period Dec 2001- Dec. 2003 have increased from Rs. 1,452 billion to Rs. 1,863 billion. i.e. an increase by 28.3%. The "aid" the UNF government expected to obtain is mostly loans, which will add to these figures.

Since 1990, the economic growth in Sri Lanka has been fluctuating around 4.7 per cent. The living standards of the majority of our people have not increased during the past decade. According to Household Income and Expenditure survey carried out by the Dept. of Census and Statistics in 2002, around 24 per cent of the households in Sri Lanka are considered to be poor.

In some Districts this figure is higher. The percapita energy intake in these households is around 1760 Calories while 2500 is the recommended amount. According to Food and Agriculture Organization of the United Nations, about 26% of the people of Sri Lanka are undernourished.

The annual trade balance continues to be negative. For example the negative trade balance which was Rs 46 billion in 1992 increased to Rs 135 billion in 2002.

A large sum of money is spent annually to import food, most of which can be produced locally. In 2003, nearly Rs. 55 billion worth of food has been imported. By the end of the present decade, the population is expected to be around 20 million and the demand for food will be more resulting in an increase in food imports. Unemployment will tend to increase.

All this glooming statistics indicate the dire necessasity of formulating and implementing appropriate programmes aimed at improving the country's economy.

One of the contributory factors for the present parlous state of the economy of Sri Lanka is the inability of the previous governments to formulate and implement integrated viable action plans in the different sectors.

Even those "plans" which have been developed and implemented during the past few decades appear to have failed to make any substantial positive impact on the socio-economic situation of the country, and the various sectors such as agriculture, education, health, industries, transport etc. have continued to deteriorate during the last few decades.

This may be because the so called plans/strategies/programmes implemented by the past governments have not addressed the actual problems of the country, and had little or no pragmatic approach.

Usually, those who prepare these development plans have hardly experienced the problems the masses are facing.. For example, the main author of the economic development programme called "Regaining Sri Lanka", which the UNF government began to implement to take the country out of the present economic crisis, is a person without any local experience and who has not experienced the socio-economic problems the masses are facing.

This may be the reason why there are many inappropriate proposals, such as promotion of rural to urban migration as a means of reducing poverty in the "Regaining Sri Lanka" programme.

Importance of the agricultural sector:

Agriculture is one of the important sectors which has to be given priority in our endeavours to revitalize/improve the economy of the country, mainly because there is considerable potential for development of this sector.

The country has a wide variation in soils and climate. There are 24 agro ecological zones, each characterized by specific climate and soils. This makes it possible the cultivation of different types of crops. Out of the 4.5 million hectares of land in the dry zone, only about 2 million acres are in productive use.

Thus, there is a large extent of potentially cultivable land. A number of crops, which have a considerable potential in solving the socio-economic problems in the country, can be cultivated in these areas.

Although the agricultural sector has a tremendous potential in the socio-economic development of the country, it has deteriorated in the past few years. The production of rice , the main crop cultivated in the country, has been fluctuating around 2.5 million mt per year. The production of field crops such as chllies, green gram, ground nut, potato etc. and the extent under these crops have reduced considerably.

The average per hectare yields of these crops too have been static or decreasing. Nearly 50% of carbohydrate requirement of the country is imported indicating that our food security is at a low level. The expenditure on food imports continue to increase and Sri Lanka has the lowest index of agricultural production among the countries in the region. All these point out to deterioration in the agricultural sector.

During the past few years numerous programmes such as "AMA', " Waga Sangramaya" and "Govi Sevana " were implemented but these appear to have not made any positive impact on the agricultural sector of the country.

Hence, it is essential that a realistic agricultural development plan is developed and implemented effectively. Unlike garments and other such industries which are mostly unsustainable in the long-run, and where most of the inputs have to be imported, development of the agricultural sector promotes use of local inputs, provides food security and more employment opportunities and sustainable development.

Agro-based Industries:

A large number of crops cultivated in Sri Lanka have considerable potential in various agro-industries. Most of the produce of our plantation crops tea, rubber, coconut and spices are used only to a limited extent in agro-industries, and are exported without value-addition.

The industrial potential of many other crops such as cassava, horticultural and floricultural crops, medicinal herbs, cane, bamboo, sunflower, kitul, castor etc. remain unexploited for want of better and improved varieties, technological know-how, relevant market information etc.

Except for coconut fibre, fibre from other crops such as banana, pineapple, jute etc. are not used to any appreciable extent. By-products of many crops can be used as inputs in many agro-industries.

For example, the by-products of sugar industry can be used as animal feeds, to generate electricity and also to manufacture a number of industrial products such as alcohol, vinegar etc.

There is an urgent need to promote/develop agro-industries in Sri Lanka as it will have a tremendous positive impact on unemployment and reducing rural poverty. The writer at many occasions brought to the notice of the relevant authorities the importance of implementing an agro-industrial programme.

But, unfortunately no action has been taken in this regard. It is extremely important that at least now, the Ministries of Agriculture, Plantations, Industries, Finance and Science and Technology implement an effective coordinated programme to develop agro-industries in the country.

In any programme to revitalize the economy of the country, some agro-enterprises are extremely important. Among these are increase in the production of sugarcane, cashew and milk.

Sugar cane:

Sugar cane crop is one of the most feasible crop for cultivation in most areas of the dry zone. Although large extent of land is available in the dry zone, only about 15,000 hectares are presently under sugar cane production.

Around 2,000 hectares of irrigable land at Hingurana, hitherto cultivated with sugarcane, remain unproductive. As in most other crops, local sugar production has remained stagnant/decreased during the last few years. Per hectare yields of sugar cane has stagnated at around 70 mt/ha and a sugar conversion of 8 %., for want of better varieties, improved agronomic and processing practices.

The total amount of sugar consumed in the country is around 550,000 m. tons of which almost 90 % is imported, involving nearly rupees 12,000 million in foreign exchange. It is estimated that by the end of the decade the sugar requirement of the country will be in the region of 600,000 metric tons.

Hence, there is an urgent need to expand this industry to meet the local requirement of sugar.

Expansion of this industry will create ample opportunities for rural employment. The Sugar Research Institute has already developed a Sugar Sector Policy which will be useful in any endeavours to expand sugar production in the country.

Cashew:

The current total annual world demand for cashew kernel is around 600,000.mt but the supply is only around 300,000 t. India and Brazil are the main suppliers and Sri Lanka exports only about 1 percent of the total world demand.

Hence, there is considerable potential in Sri Lanka for increased exports of cashew and also to meet the local demand. In addition to cashew kernels, potential lies in the production of other cashew products for local use and export.

Cashew can be cultivated as the major crop in the uncultivated lands in Hambantota and Moneragala districts. Cashew can also be cultivated as a mixed crop in mature coconut lands in Galle and Matara districts.

Cashew crop is generally free of pests and diseases except occasional attacks by Helopeltis bug, stem borers and bark borers which can be easily controlled by the application of an insecticide. Extensive cultivation of this crop would increase opportunities for rural employment thereby increasing the incomes of the rural population.

Animal husbandry:

The total annual production of milk in Sri Lanka is around 90 million litres of milk which is insufficient to meet the national requirement. Hence, milk and milk powder is imported costing around Rs. 10 billion annually. As in the case of crops, livestock production in Sri Lanka has remained stagnant during the last two decades.

One of the more effective land use practice for the large extent of uncultivated lands in the dry zone and the degraded lands in the wet zone is dairy husbandry.

However, the previous governments did not implement a realistic effective programme to improve the dairy industry in the country. Such a programme will create immense employment opportunities specially in the up country and the dry zone.

The role of the BOI

In the implementation of agricultural development projects indicated above, substantial investments are necessary and hence, the involvement of the private sector is essential. Hence, the Board of Investment's (BOI) need to promote investment in sustainable agricultural enterprises, which will provide more employment opportunities and also promote growth.

Hence, BOI need to identify those enterprises and the potential investors need to be made aware of the relevant details of specific agricultural enterprises in which they could invest.

The role of the EDB

The Export Development Board (EDB) also has an extremely important role in promoting the development of agro-industries. EDB help the exporters but appear to have no effective programme to promote the production of exports, which has to be implemented in collaboration with the Department of Agriculture, the Dept. of Export Agriculture and the numerous research institutes.

The EDB regional offices, which have a very important role to play in the production of exports, have only a handful of staff. It is important that these offices are strengthened.

Science and Technology

Appropriate use of Science and Technology is vital in any programme to revitalize the economy of the country. A number of countries in the South and South East Asia have developed significantly during the last two decades resulting in a reduction in the percentage of population below poverty line by effective use of science and technology.

Appropriate scientific research and its use have always given adequate returns. For example, in Sri Lanka, development of better rice varieties, the results of a long-term research programme, brought about a considerable increase in the average rice yields per hectare from 2525 kg in 1980 to almost 4000 kg in 2002.

Research is an essential component in realizing the agricultural potential of the country as it provides data and information, which could be used in the development of improved, and more effective agricultural practices. A primary objective of agricultural research in Sri Lanka must be to utilize locally available resources.

However, Eppawela Apatite, an insoluble phosphorus-containing mineral, discovered nearly 30 years ago in Anuradhapura District, is continued to be used as ground rock phosphate, without utilizing it to make more soluble triple superphospahte (TSP), although we spend around Rs. 150 million annually to import it.

Manufacture of TSP locally is vital in any economic development programme of the country but, the previous governments did not bother to take any action in this regard.

In a developing country such as Sri Lanka, the research efforts need to be directed towards those aspects which have a more direct impact on increasing production, and reducing costs. It must be to solve those problems which limit production quantitatively and/or qualitatively.

Conducting research alone will not lead to increasing productivity unless the technologies developed by research are commercialized, for which appropriate investments have to made.

The Board of Investments need to coordinate with scientific research organizations to attract investments on commercialization of proven technologies.

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