Agriculture's pivotal role in economic and social life

A speech made by Prime Minister Ratnasiri Wickremanayake, former Minister of Agriculture, at an agriculture symposium held last month.

Agriculture plays an important role in the economic and social life of the country, as it serves as a direct and indirect source of livelihood for a considerable segment of the population. However, the performance of the domestic agricultural sector is not impressive as the growth is sluggish.

Though there is a drive for commercialization of agriculture, a majority of the farmers are still at subsistence level. Rural poverty is still very prevalent in the agricultural sector where 46 per cent of farmers earn less than US$ 2 per day which show that they are living below the poverty line. Also, there is a high percentage of unemployment in the rural sector as the youth are leaving agriculture for non-farm sector employment.

Absence of proper agro-processing industries has led to numerous problems and difficulties to the farmers as well as to the country. These problems are further exaggerated due to a lack of storage and marketing facilities. Under this situation, the surplus production is always sold at lower prices, since excess production will perish.

This situation is acute in the case of fruits, vegetables, and dairy products. These after the farmers' income and their reinvestment capacity. This has a direct impact on reduction of the food production and supply and threatens the food security of the country. As agro-processing industries would continuously generate demand for the farm products, farmers will get better prices and thus a better income.

This would encourage the farmers and the private sector to invest in agriculture and in turn increase the food production and supply. Also, the development of agro-processing industries would reduce the shortage of agro-products during the off season. Hence, the development of agro-processing industries would not only increase farmers income and their quality of life, but also create employment opportunities.

The agricultural sector is marred by many production and marketing related problems such as the high cost of inputs, lack of markets, high price fluctuation and low prices.

These problems result in low income for the farming community. A stable and reasonable price for the agricultural commodities is the main precondition for agricultural development. There is a need to improve the input supply, storage and marketing facilities.

The agro industries could serve the agricultural sector in many ways. There will be remedial measures to overcome the problems faced in agricultural production and marketing such as, improving storage facilities, agro processing, forward market arrangements, and others.

The promotion of agro industries could help to improve the demand for agricultural raw products, storage and stabilize the prices through forward marketing arrangements. In addition, there will be a good demand for agro-processed items in the local and international markets.

Hence, the promotion of agro processing industries could facilitate an increase in income, export earnings, generate new employment. Also, it may open up new export lines of commodities and markets.

Further, a large number of consumers, in Sri Lanka, especially in the urban and industrial areas have supplemented their traditional diet by fast-foods and other pre-cooked or semi-cooked instant foods.

Agro-processing products already possess a potential domestic market as well as an export market. However, the present state is not up to a satisfactory level. Hence the development of agro-processing industries, would have a favourable effect on food production and marketing in Sri Lanka.

There are tremendous opportunities for the successful establishment of a vibrant and potentially profitable agro-processing sector. This will however require stronger, more meaningful linkages between the farming community, the agro-processing sector, Government and financial institutions. Of course, private sector companies would also play a critical role in the marketing of products from the agro-processing sector.

The promotion of agro processing industries is important given the policy framework formulated by the National Development Council chaired by the President. Consequently, the recent agricultural policy direction and vision give due recognition for the development of processing industry.

There are many incentive schemes available for development of agro-processing industries under the Board of Investment, Second Perennial crop Project, Regional Economic Advancement Projects, Ministry of Rural Industries and the Central Bank. In order to develop the agro-processing sector and achieve rapid growth, the private sector investment has been encouraged to work in partnership with the state sector.

I note from your programme that you have discussed useful topics related to agro-processing industry to identify the potentials and constraints for the future development of the agro-processing industries in Sri Lanka.

Undoubtedly the symposium helped identify policies and other requirements to establish a conducive environment for the development of agro-processing industries in Sri Lanka. And I hope the findings of the symposium will be beneficial to the policy makers for future action.

Let me refer to the need for meaningful state intervention in agricultural marketing to stabilize the supply and prices.

This should be done through the least government intrusion, encouraging the private sector to invest in agricultural marketing, and improve the competitiveness in agricultural marketing. The state activities should not harm the improvement of the competitiveness and private sector participation.

Therefore, I strongly advocate the establishment two state authorities, one for food grain and the other for fruits and vegetables to facilitate supply management and price management through the regulation of infrastructure facilities for agricultural marketing, monitoring market information, promote forward marketing, buffer stock management to stabilise supply and prices as emergency situation.

In conclusion I remain firmly convinced that the potential for a viable, profitable and sustainable agro-processing sector in Sri Lanka is tremendous."