Budget and paddy fertilizer subsidy

An Open Letter to the Minister of Finance:


I was dismayed reading the section of your 2016 budget speech on agriculture. You have stated therein that "studies also note that there is no direct positive correlation between the use of fertilizer and productivity of paddy". This is furthest from the truth as evident from the Fig. 1 and Table 1 below. The reasonably high yield without fertilizer in Table 1 is probably a result of residual fertilizer from previous applications, and had the trial continued for several more seasons, it is most likely that yields of the no fertilizer plot would have declined further. I am surprised that the economic pundits of the opposition who were very vociferous and critical of nearly everything in your budget proposals failed to make capital out of your statement! More importantly, it is unbelievable that your officials failed to brief you correctly on this subject. Surely, they should have consulted the Department of Agriculture (DOA) or the Ministry, if they were ignorant about it. Apparently it has not happened and you should reprimand them for negligence!

It is the high yielding and fertilizer responsive cereal varieties (the green revolution)that has made it possible to feed the world today. As Bill Gates once remarked " two out of every five people on earth today owe their lives to the higher crop outputs that fertilizer has made possible" So have no qualms on the vitality of fertilizer in rice productivity!

You have, on the other hand, rightly commented on the overuse of fertilizer . This is a serious issue which successive governments have hitherto failed to address adequately. It has been reported that some of the upcountry vegetable farmers apply as much as 5-10 times the DOA recommended levels of fertilizer that are not only excessive but can also lead to serious water pollution problems. According to DOA reports, in 70% of the upcountry vegetable farms studied the soil phosphorus (P) levels have exceeded the agronomic critical level (30 ppm) beyond which there is hardly any economic benefit to addition of P fertilizer but farmers continue to do so unabated. In 50% of the farms the P levels are reported to have even exceeded the environmental critical level(70 ppm). In some countries farming is prohibited if soil phosphorus levels are high in order to protect the water quality of their lakes and reservoirs . More details about these matters are highlighted in the book ‘Caring For Water’ authored by Dr. Sarath Amarasiri (Second Edition 2015) and published by the Greater Kandy Water Supply Project of the National Water Supply and Drainage Board, and distributed free of charge by them to all schools, universities, research institutes and libraries in the country.

Excess P applications can cause serious phosphorus pollution of water bodies in the dry zone, and you together with the Minister of Agriculture should endeavour to prevent such occurrence . This can be done through strengthening agricultural extension services, farmer education and public awareness. Furthermore, there should be regular monitoring of nutrient levels in the soils and making fertilizer recommendations based on soil/crop requirements. This will require establishment of adequate soil analytical facilities across the country. That should be the appropriate way by which you could save on the national expenditure on fertilizer . There is also evidence of little or no response to applications of potassium and phosphorus containing fertilizers in most paddy soils because of repeated application over the years . Fertilizer recommendation based on nutrient analytical data of paddy soils too could bring about substantial savings.

Your proposal to provide a cash grant of Rs 25, 000/ ha for both seasons of the year implies a payment of a meagre Rs 5000/ac/season as against the subsidy of about Rs 12,000 per acre per season for irrigated rice that was paid before. This amount is a little less for rainfed rice given that the quantities applied are less. Given below (Table 2) is the income from rice farming based on DOA published data.

The above data at a glance reveal that rice is a low income crop and the paddy farmer is a pauper. Under rainfed conditions, especially in the wet zone, there can often be even seasons where returns can be negative as in the case of Kalutara in the above table. This is why he has to be supported either by way of input subsidies or paddy price support schemes to enable him to produce the country’s staple and at the same time earn a tangible income. Even with irrigation and family labour his income, assuming a farm of 2 acres of paddy, is a meagre Rs 140,300 per annum or Rs 11,775 per month. Assuming that labour wage in the villages is Rs 800/day (now it is more often Rs1000) and the farmer works outside the farm as a labourer for 20 days a month, he can gain an income of Rs 16,000 per month. Fortunately paddy requires only a labour input of about 85-90 man days per acre per year, and farmer income studies reveal that farm families earn over 60% of the income from extra-farm sources. Much has been said about the need for increasing on-farm incomes through crop diversification, value addition and the like but little has happened.

You have also expressed concern about the decline in the relative contribution of agriculture to the GDP, but is this not a common phenomenon across the world? With economic development as the contributions from industry, goods and services increase , the relative contribution from agriculture (AGDP) decreases. This does not mean that agricultural development is declining but that the other sectors are developing faster. For example, in a country such as the US, despite a very large production of agricultural commodities, the AGDP is only 3% of the GDP as against some 11% in Sri Lanka. Again your officials have apparently failed to brief you correctly.

Dr Parakrama Waidyanatha

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