The most important event that shaped the future of modern humanity in the beginning of its astounding progress, about 10,000 years ago, is easy to see. It is the application of agriculture and animal husbandry by human beings to ensure a regular supply of food for their subsistence. Anything useful to Man, other than food could be artificially made, but human food and animal feed have to originate from a biological source. This is a fact that reminds us the noble words of Lord Buddha who has said that all living beings have to subsist on food for survival. "Sabbhe sattha Aahara Tikitha" are his words in the Pali language. Once they had succeeded in producing crops and domestication of animals, there was no looking back and agriculture, together with later industrial development, enabled humans to be what they have become today. For all that, it is not very impressive to realise that an estimated 854 million people around the world do not have enough food to lead healthy lives. Despite such alarming statistics, investment in agriculture has remained low and foreign aid for agricultural and rural development has continued to decline.

The total population in Sri Lanka in 2003 was about 19.7 million and about 15 million people live in rural areas. Using a poverty line of LKR 1,338 per adult per month, the urban poor consisted of 334,400 people or 7.6% of all urban dwellers. In rural areas with a poverty incidence of 26.4%, an estimated 3.8 million people are poor. Therefore, 92% of the poor in this country live in rural areas. Most of the poor in rural Sri Lanka depend on agriculture for their livelihood. Out of the total population of Sri Lanka, about 34% depend directly and about another 35% indirectly on agriculture. Therefore, there is no gainsaying that the best way to reduce poverty in Sri Lanka is investing to a large extent in agriculture. In fact the theme of the World Food Day of 2006 was ‘Invest in Agriculture for food security.’ Investment in agriculture – together with education and health will alleviate poverty and hunger. Most of that investment has to come from the private sector with government support playing a key role, particularly with facilitating private investment and laying out the guide lines for such investment. However, Governments are also required to enact and apply rules and regulations to form a safe and fair environment for private investors as well as for farmers and producers.

Rural Farmers in Sri Lanka

The main food producers in Sri Lanka are the rural small farmers – living around functional small, tanks or ‘wewas’ or in command-areas under major irrigation schemes. However, the farmers living within major irrigation schemes are able to cultivate their land more intensely (More crops per year) than their fellows around small village tanks who often lack infrastructure such as roads, markets, electricity, hospitals and schools, making it difficult for them to develop business arrangements with buyers or to take their produce to the markets. However, farmers in major irrigation schemes are also not without their own problems, especially with marketing of their produce at harvest times.

The government at present buys about 4%, of the maha and 4% of the yala paddy harvest at the guaranteed price, but the farmers complain that they have to sell the remaining stocks at unreasonably low prices to private traders and mill owners. There are 663 privately owned paddy mills in 21 districts of Sri Lanka. The total combined storage capacity of the private store houses accompanying the mills is about 475,223 metric tons. The average storage is about 51% of the total capacity at any given time (source: G. M. R. D. Aponsu, Dept. of Development Finance). On an initial assumption that each mill will process paddy at the rate of 10 tons per day and work for 300 days a year, the 663 mills will require about 2,386,800 tons of paddy per year. If our yearly production of paddy is 3,300,000 metric tons, the total amount required by the private sector will be about 72% of the total yearly harvest of Sri Lanka, leaving an excess of about 28% of the total harvest at the end of the year. If we leave aside 8% due to losses due to various reasons, about 20% of the previous year’s harvest gets carried over to the following year’s maha harvest, which most probably is the factor that causes paddy prices to decline in the open market during the months of March and April. If the government can step in and buy 20% of the yearly harvest in two equal instalments, in March and August, the months in which the most amount of paddy comes to the market, the private traders will have to compete with each other to get their paddy requirement to get the mills going throughout year, and the paddy prices in all probability will rise. The government; however, has to have the necessary storage space and a sufficient number of mills to process the rice within a very short time in order to export or to keep it as a buffer stock that can be released when the retail price of rice escalates. The total storage space belonging to the government in various districts amounts- to, about 144,078 metric tons (source: Ministry of Commerce and Consumer Affairs). Twenty percent of the total paddy harvest when converted to rice amounts to 396,000 tons. If the paddy is bought in March and August in keeping with peak production in the two seasons, the storage space needed to store the rice in each season will be 198,000 tons, but as we have only 144,078 tons of storage space, we have to build or find another 53,922 tons of storage space. If this additional space also becomes available, then we can probably ensure that paddy will be bought by the private traders at a reasonable price. (It would be of interest to note that the Paddy Marketing Board (PMB) has had a total storage capacity of 335,000 tons in 1980 which had been enough to buy 42% of the national paddy production in 1979. The total amount procured had been about 26 million bushels or 546,000 tons of paddy, which is about 16% of the present national paddy production)*. Releasing the buffer stock of rice will also enable the bringing down of the price of rice when traders resort to hoarding and earn abnormal profits by selling rice at unreasonably high prices. Indonesia’s move to stabilise rice prices is a case in point we might well be aware of According to a report in the ‘Jakarta Post’, reproduced by the Asian News Network, the government of Indonesia had started to release its buffer stocks when the price of rice went, up by 5%. Indonesia’s rice consumption reached 32 million tons in 2006, but the production was only 30 million tons. The government then imported 210,000 tons to cover the shortfall and maintain the national buffer stock at a minimum of one million tons, which works out to only 3% of 30 million tons the country has produced. Such statistics show that the amount of rice purchased by the government and the amount of rice kept as buffer stocks can vary according to the prevalent market conditions. Even with the available storage space the government of Sri Lanka should be able to maintain a buffer stock of about 15% of the total rice amount produced in the country (7.5% in each season). This stock might well be enough to stabilise both paddy purchasing and rice retail prices in the local market.

In Sri Lanka as in many developing countries, rapid trade liberalisation led to sharp increases in imports, but exports failed to keep pace. Exports depend on whether there is market access, especially for developed countries. It is well known that there are many tariff and non tariff barriers in developed countries to act as stumbling blocks to potential exports from developing countries.

This is what has virtually happened to Sri Lanka. We have become a predominantly food importing country. In fact we are the number one in this respect in the SAARC countries. In 2005, we have spent 61 billion rupees on food and drinks as follows: rice 1.5 billion; flour, 3.2 billion; sugar 13 billion; milk products 13 billion; fish products 7 billion; and other foods 23 billion (Central Bank Report 2005) Therefore, it goes without saying that reducing our food imports and realising food security and self sufficiency in most types of food is a dire necessity.