Modernisation Agriculture in Sri Lanka

The ultimate beneficiaries of agriculture modernization will be the island’s smallholder farmers. An estimated 1.65 million farmers operate on average less than 2 hectares and contribute 80 percent of the total annual food production in Sri Lanka.

by Idah Pswarayi-Riddihough- May 18, 2018

( May 18, 2018, Colombo, Sri Lanka Guardian) I would like to start by congratulating the Government of Sri Lanka for reaching this important milestone. The signing of these first Grant Agreements under the matching grants program of the Agriculture Sector Modernization Project is beyond symbolism. It is a moment that reflects hope for farmers, the private sector working with them and a country that has begun to look more outward; focusing on its potential as a global producer of internationally desired commodities and produce. Today marks an event that gives Sri Lanka’s agriculture sector a new image. Instead of its perception as a declining sector, we believe that agriculture has the potential to contribute significantly to Sri Lanka’s aim of becoming a competitive and inclusive upper-middle income country.

I take this opportunity to congratulate the matching grant winners. You are the game changers who will help change the image of Sri Lanka’s agriculture sector. You have risen to the challenge by going through the rigorous and competitive selection process. Those that made it have demonstrated innovation and strong support to working with smallholder producers. So, thank you for your commitment to engage with this project. What is particularly pleasing about these matching grants is that they are bringing closer the relationship between the producers – the farmers; and the market – the private sector who are demonstrating their willingness to make this partnership work by matching the first grants approved with more than $10 million additional investment into the sector.

Agriculture holds a very special place in Sri Lanka’s past and the present. Support to the agriculture sector is an important priority for the government and for the World Bank. The considerable potential in the sector to contribute to the economy of Sri Lanka and to enhance the livelihoods of rural households which are dependent on farming is tremendous. Agriculture has been an important driver of poverty reduction and it has accounted for about one third of the decline in poverty over the past decade. Sri Lanka’s consumers also benefit from a vibrant agriculture sector, with better access to more nutritious and a broader choice of foods.

However, agricultural productivity in Sri Lanka lags behind other South and East Asian countries and to close the gap requires modernization through diversification, commercialization and value addition. Countries such as Thailand and Vietnam have become major players in global agriculture markets, exporting the types of products that Sri Lanka also can produce competitively such as shrimp, fresh vegetables and fruit.

To compete on a global scale, Sri Lanka’s agriculture will need more than public investments. It will need to increase private investment in the sector; it will need to make reforms that will increase value addition to its produce – consumers have become discerning. Agriculture will also need to be cognizant of the challenges that are posed by climate change and disaster risk and adapt accordingly including risk reduction through better technologies and practices; to protecting the farmer through insurance when the risk simply can’t be mitigated against. Support to rural livelihoods through linking smallholder farmers to markets and providing farmers with technology to increase productivity must be an imperative.

A conducive policy framework is also essential. As stated in the Vision 2025 document, land, labour and capital markets need to become more dynamic to better serve the economy. Agriculture is held back by an outdated land administration system and the fragmentation of plots which prevents the optimal allocation and use of land. Farmers and agri-businesses struggle to access credit. Farmers need to have better access to new technologies – such as advanced irrigation systems, improved crop varieties and better water and crop management skills. Improving agriculture policy, legal and regulatory frameworks based on research and evidence in an open and transparent manner would not only stimulate accountability but also help the sector to create the space to attract Foreign Direct Investments that would help modernize the agriculture sector.

Special effort is required to target women and youth. Youngsters need to see that working in the agriculture sector is a viable alternative to moving to the city; that there are good quality jobs in rural areas. Women frequently have a vital role in agriculture production and processing, though their role is often neglected. Access to land, capital and public services needs to be facilitated for women to increase their productivity and support their families.

The ultimate beneficiaries of agriculture modernization will be the island’s smallholder farmers. An estimated 1.65 million farmers operate on average less than 2 hectares and contribute 80 percent of the total annual food production.

The Agriculture Sector Modernization Project is financed by a $125m Credit from the International Development Association of the World Bank, with additional grant of €25m to be provided by the European Union is a great start, but more is needed.

The success of this project will depend on its partners. This project brings together different ministries, with a front-end mandate to Ministry of Agriculture and the Ministry of Primary Industries. It brings together public and private sector bodies, farmer organizations and most importantly the community as well as consumers. If this project is to succeed, close coordination among these core institutions is crucial. These partners will need to determine how to improve the sector and attract the necessary investments, both local and foreign, to create more and better jobs in the agriculture sector.

I look forward to the quick and successful implementation of these selected projects that we are celebrating today. We look forward to more grants being awarded and to a sector that becomes more vibrant so that it not only delivers on farmer incomes and investment; but uses better technology and innovations. This is the future of food security and sustainable farming and more nutritious eating.

Dr. Idah Pswarayi-Riddihough, the World Bank Country Director for Sri Lanka and the Maldives