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SRI LANKA: Economy Going Nuts

Feizal Samath

COLOMBO, Jan 3 2011 (IPS) - At a marketplace near Colombo, consumers scramble for coconuts being sold from a state-owned truck. Sri Lanka is the world’s fourth largest coconut producer and a major exporter; but a crop shortfall and a drought have forced the country to import coconuts.

Sarath Fernando, farmers’ rights activist and convener of a farmers and peasants group, attributes the coconut crisis to lopsided government policies and short-term solutions.

“Now the government is banning the felling of coconut trees when it should have been done long time ago,” he said, adding: “This is like shutting the stable door after the horse has bolted.”

Fernando says the country’s poor food security policies have resulted in this need to import essential commodities.

Coconut prices have doubled due to the shortage.

“We have decided to import coconuts but the first stock is yet to come,” said Sunil Sirisena, Secretary at the Ministry of Internal Trade.


Responding to opposition claims that under plant protection laws coconut can be imported only for research purposes and not for trade, Sirisena said the law would be amended to meet the requirement.

Sri Lanka is also importing eggs and chicken meat. The government released two million eggs to the market Monday, along with large quantities of chicken – all imported from neighbouring India.

While this is not the first time eggs or chicken have been imported to meet a shortage, it is the first time coconuts are coming into a country that has exported coconut and nut products for decades.

Fernando says local food production needs to be strengthened, noting that a programme launched by President Mahinda Rajapaksa some years back titled ‘Build the country by growing more food’ was a good start but lost its momentum.

Four million home gardens were to have been created under this programme to create a food surplus in the country. “However there were no facilities and structures to back this campaign and now we are importing food,” Fernando explains.

Nimal Sanderatne, an agricultural economist, says rice productivity is high in Sri Lanka and the third highest in the world after Japan and Indonesia. “But we can improve current production to 5-6 metric tonnes per hectare from 4.5 metric tones now,” he said.

But, production costs in all key food sectors like rice, coconut and chicken remain very high mainly due to the high cost of imported fertilizer and chicken feed. Wage rates are also the highest in the region.

Local producers say coconut being imported from Kerala, India, could bring in foreign disease and fungus that may affect local plants. The coconuts in Kerala are much smaller than the Sri Lankan nut and any benefit in price is nullified by the size of the imported product, local farmers argue.

As it becomes harder for local landowners to earn a living farming the crop in Sri Lanka, many have been selling their lands for development and other purposes – mostly housing. Arable land has remained at 362,000 hectares in the past two years, from over 400,000 previously.

Some economists argue that despite this, new coconut land has come into the picture particularly in the former war-torn Northern and Eastern parts of the country.

Grated coconut is used widely in Sri Lankan curries while companies like the multinational Nestle spray-dry the milk to create coconut powder for cooking purposes.

Coconut oil is also used for cooking. There are other household and industrial users of coconut – for instance shells are used as firewood and ornamentation.

Coconut producers are demanding a subsidy from the government – currently subsidies are given to the rice, tea and rubber sectors.

But, Fernando says that even if subsidies are given, the cost of production won’t fall. “Labour costs are high and you also find the middleman who buys cheap from the farmer and sells it at a high price to the consumer,” he said.

He also blames institutions like the World Bank and the International Monetary Fund for encouraging a policy of food imports.

“We can produce our own food without costly fertilizer and through ecological farming. We can create home gardens but the policies should be right,” Fernando said.

In the past few years, there has been an ongoing debate over food production – whether Sri Lanka should import cheaper food rather than producing it locally at a higher cost. Rice – the country’s staple food – eggs, chicken and a range of vegetables and lentils are cheaper to import than produce locally.

Harsha de Silva, an economist and opposition parliamentarian, believes stable prices will help farmers and for that he suggests the creation of an agricultural exchange. “Farmers need to have information on prices and demand, three to six months ahead so that they can prepare,” de Silva says.

He says Sri Lanka should move away from what he calls a ‘command and control’ economy where commodities are grown at high cost. “China and India are moving away from this model,” he said.

Sri Lanka farmers are held back despite receiving government subsidies because other productions inputs are costly, de Silva says. Also agriculture markets are inefficient and land is not a marketable commodity – with the government controlling or managing over 80 percent of the land in Sri Lanka.

 
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