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Sri Lanka: Tackling Agricultural Surpluses

The Sri Lankan Government is facing a new kind of challenge, tackling surplus production of rice. The Economic Development Minister of Sri Lanka Basil Rajapaksa has suggested to export the surplus of rice and vegetables in the country. There has also been suggestions that oil should be purchased bartered with rice.

But what is the reality on the ground? Are farmers happy with the surplus productions? There is very little information on the plight of the farmer in the Press. Rajaratarala, blogger and a farmer, terms the export of rice an insult to the paddy farmers of Sri Lanka. The blogger comments:

It was reported a short while ago today, April 18th 2012, that the Secretary to the Ministry of Agriculture, KA Sakalasooriya, has announced the creation of four zones for export. [..] It was further announced that in the next Yala season this paddy would be purchased at Rs40/kg.

Why is this announcement insulting? He has no clue about rice farming, about yields on different soil and growing conditions, and on different varieties of paddy.

I have planted 6 varieties of paddy, and I have personally sold door to door, 14 varieties of rice arising from this paddy. [..] Rs 40/kg is not enough to compensate for the lower yields. [..]

I really suspect that if farmers produce paddy at this price for the quality that is required for export, it is the Miller who will make the profit again, as he has the market sown up, and all the Government is doing by making this promise is doing the bidding of the Millers who have given the Govt. an undertaking to buy this paddy at this price.

Paddy fields in Sri Lanka. Image from Flickr by Nishan.sl. Used under a creative commons license BY-NC-ND

Paddy fields in Sri Lanka. Image from Flickr by Nishan.sl. Used under a creative commons license BY-NC-ND

The blogger sheds a light into the plights of the rice farmers in Sri Lanka, who are not obtaining a fair price for their produce, in another post:

There is no profit in growing paddy on an acreage that is less than 5 acres which comprise, 70% of the paddy land grown today. So REMEMBER the rice we eat is grown by people making a sacrifice!!! For no gain, not even enough to pay for a daily wage of Rs200. So what does the future hold?

Rajaratarala depicts in another post how the millers control the market and take the cream out of the business. The blogger suggests:

In order therefore for the excess paddy in Sri Lanka to be absorbed, the Govt. must purchase and store at least 6 months supply in large silos around the country and also have a plan to build a large mill for export quality rice, that requires special standards of quality control to compete with international standards, which this mill also has. This mill owner makes more money selling to the local market, the export market to him is actually more competitive!

Lastly the blogger explains how to tackle the economic surplus and says that he is not against export:

The govt. must have a policy on how each segment is treated, incentivized and compensated. [..] The transfer of the pricing determinant from the Miller, the wholesaler and intermediary to the grower, is what economists the whole world over are even now grappling with without answers, leaving agriculture to Market supply and demand dynamic that is only in the farmers’ favor when shortages are in the horizon.

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