Nishtha Chadha

Are Sri Lanka’s agricultural policies starving our farmers?

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In this weekly column on The Sunday Morning Business titled “The Coordination Problem”, the scholars and fellows associated with Advocata attempt to explore issues around economics, public policy, the institutions that govern them and their impact on our lives and society.

Originally appeared on The Morning


By Nishtha Chadha

Farmers have always been a critical voter base in Sri Lankan politics. The 2019 election seems no different. Presidential candidates have thrown around major election promises to improve the living standards of Sri Lanka’s agricultural producers, ranging from the redistribution of state lands to wiping off farmers’ debts. Yet, a stark contradiction exists between the alleged priorities of presidential hopefuls and Sri Lanka’s agriculture policies. 

Agriculture employs 25.5% of Sri Lanka’s population [1], but only contributes to 7% of the nation’s GDP [2]. While early post-independence agriculture policies focussed on food security and self-sufficiency through rice cultivation, these policies have failed to evolve with the rest of the country, resulting in low standards of living for farmers and high costs for consumers. In 1950, agriculture accounted for 46.3% of GDP and engaged around half the labour force [3]. Clearly the principles that guided agricultural policy then, are unsuited to governing the agricultural sector of today.

A more sustainable approach to improving agriculture

While quick fixes like fertiliser subsidies and debt relief are undoubtedly appealing for struggling farmers, there is an urgent need for more sustainable and holistic policies to support workers in this sector. Farmers need to be provided with real opportunities to earn suitable wages if they are to avoid falling straight back into debilitating debt. This begins with accelerating their production capacity through schemes for diversification and modernisation. 

The Ministry of Agriculture itself has identified the following issues in Sri Lanka’s present agricultural landscape [4].

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  • Low productivity of crop and animal products for which demand is rising.

  • Poor match between food commodities that are promoted under agriculture development programs and those important for food security.

  • Inadequate attention to agricultural diversification in favour of crops that have better income prospects.

  • Heavy post-harvest losses, especially in the perishable products.

  • Failure to respond to growing concerns of food safety with appropriate
    responses through the full value chain.

  • Low priority given to processed food products to cater to demand shaped by changing lifestyles.

  • Inadequate attention on producing/developing nutrition-rich food products.

These issues have serious consequences not only on the profitability of Sri Lanka’s agricultural industry, but also on national food security. Malnutrition is already a pervasive issue in Sri Lanka, with the 2016 Demographic and Health Survey revealing that 20.5% of Sri Lankan children are underweight [5]. An explicit misdirection of agriculture policy, in its concentrated focus on low-nutrition cereals rather than diversification, has certainly contributed to this manifestation [6]. Skewed government subsidies towards traditional crops such as paddy, mean that nutrition-rich foods are often imported, and thus fall victim to protectionist taxes that make them unaffordable for many lower-income households. Evidently, Sri Lanka’s current approach of self-sufficiency for food security is not working, and both farmers and consumers are paying the price.

Wasting our export potential

Sri Lanka is uniquely endowed with a high diversity of climatic zones which allows it to grow a range of crops all year-round. This suggests massive potential for the nation to grow and diversify its agricultural exports in fruits, vegetables and floricultural products. The floriculture industry itself has developed rapidly and now earns substantial foreign exchange, while generating direct and indirect employment [7]. In 2018, these exports were valued at US $8.5 million, with 60% travelling to Europe, while Japan, Middle East, USA and Korea make up the other key markets [8]. Sri Lanka is already known globally for its high quality of agricultural exports such as cinnamon and tea, and should capitalise on this to promote other competitive produce. 

However, this must also be supplemented with initiatives to boost productivity and access to export markets for Sri Lankan farmers. In 2018, agricultural exports accounted for 21.7% of total national exports, and were provisionally estimated to be worth USD 2,579 million [9]. But, agricultural productivity measures show very low labour productivity indicators for Sri Lanka when compared to its other South Asian counterparts [10]. Agricultural labour productivity, as measured by gross value added, is also the lowest of all 3 economic sectors - for example, one hour of work in agriculture amounts to Rs. 182.19 gross value added, whereas one hour worked in industry amounts to Rs. 528.27 and one hour worked in services amounts to Rs. 613.91 [11]. 

Achieving growth without compromising food security

The Ministry of Agriculture in their Overarching Agricultural Policy 2019 (Draft) states that “Labour productivity is directly linked to farm incomes and therefore, increasing labour productivity will have positive impacts on standards of living.” [12] This can be achieved through mechanisation and by shifting to production of higher-value commodities. Small-scale farmers who produce most of the country’s agricultural output, though, tend to produce commodities with low economic value [13]. These farmers face a host of barriers in accessing modern technology and plugging into agricultural value chains, which hold massive potential to accelerate production processes. Government assistance programs should therefore be streamlined to encourage the adoption of modern technology at all levels of the production process - from seeding to harvesting, post-harvest processing, value addition, food technology, storage, packaging and marketing. Current strategies of market protection, as well as direct and indirect input subsidies, have meant that governments have distorted incentives towards the production of staple food crops, which have locked subsistence farmers into poor revenues and reinforced their dependence on the state [14]. This has contributed to both a high cost of living for the average Sri Lankan, and low standards of living for small-scale agricultural producers. 

Access to export markets must also be enhanced if farmer incomes are to increase, by removing barriers to trade and increasing intra-industry connectivity. A host of regulatory, procedural, and informational barriers currently plague Sri Lanka’s agricultural sector and obstruct small farmers' ability to access foreign markets [15]. Rigorous stakeholder consultation and long-term planning need to become staples of the regulatory landscape if Sri Lanka is to capitalise on its agricultural export potential [16]. The National Export Strategy of Sri Lanka 2018-2022 has already identified the distinct potential for value addition in the spice and processed food and beverage industries, as a means of increasing agriculture-based export incomes [17]. However, without the right reforms in place to support farmers’ transition into these markets, it is unlikely that this will come to fruition. 

Sri Lanka’s agriculture industry has consistently suffered from a patchwork of ad-hoc policies and fragmented priorities [18]. This has largely been driven by the age-old rationale that self-sufficiency is the answer to food security. However, if the 2019 presidential candidates want to promise meaningful change to their agricultural voter bases, there needs to be a complete overhaul of the current regulatory landscape. Sri Lanka needs to let go of its outdated perceptions of food security and capitalise on its comparative advantage. Singapore boasts the highest food security ranking in the world, yet imports more than 90% of its produce [19]. Global trade is a critical avenue for meeting increasing food demands, as well as changes in consumption and production patterns. Sri Lanka’s agricultural policy should thus focus on increasing cross-border flows and making it more competitive in global markets, not closing itself off from them. Political candidates are constantly touting their visions for Sri Lanka to become a ‘knowledge-based’ and ‘export-oriented economy’, so why doesn’t agriculture form part of this vision?


[1] Department of Census and Statistics, Quarterly Report of the Sri Lanka Labour Force Survey - First Quarter 2019, Ministry of Economic Reforms and Public Distribution (2019), http://www.statistics.gov.lk/EconomicStat/EconomicStatistics2018.pdf 

[2] Ministry of Agriculture, Rural Economic Affairs, Irrigation, and Fisheries, and Aquatic Resources Development and Ministry of National Policies, Economic Affairs, Resettlement and Rehabilitation, Northern Province Development and Youth Affairs, Sri Lanka Overarching Agricultural Policy Draft (August 2019), http://www.agrimin.gov.lk/web/images/Information_Act/Development/2019_08_19_Draft_OAP.pdf

[3] Ravi Ratnasabapathy, ‘Food Security doesn’t need self sufficiency’, Advocata Institute, n.d., https://www.research.advocata.org/food-security-doesnt-need-self-sufficiency/ 

[4] Ibid

[5] Indu Bandara, Sri Lanka Demographic and Health Survey 2016 Key Findings (Department of Census and Statistics, n.d.), http://www.statistics.gov.lk/social/DHS_2016a/DHS_presentations/Key%20Findings.pdf 

[6] Priyanka Jayawardena, ‘Malnutrition in Sri Lanka: A Persistent Problem’, IPS Talking Economics, April 9, 2018, http://www.ips.lk/talkingeconomics/2018/04/09/malnutrition-in-sri-lanka-a-persistent-problem/ 

[7] Sri Lanka Overarching Agricultural Policy Draft 

[8] Ibid

[9] Ibid

[10] Ibid

[11] Ibid

[12] Ibid

[13] Ibid

[14] Ibid

[15] Hasna Munas, Subhashini Abeysinghe and Dinoo Wickramage, ‘Sri Lanka's Domestic Barriers to Trade: Case Studies of Agricultural Exports’, Verité Research, February, 2017, https://www.veriteresearch.org/wp-content/uploads/2018/05/Sri-Lanka_s-Domestic-Barriers-to-Trade.pdf 

[16] Ibid

[17] Government of Sri Lanka, National Export Strategy 2018-2022 (n.d.), http://www.srilankabusiness.com/pdf/nes/sri-lanka-nes-4-3-web.pdf 

[18] Hasna Munas, Subhashini Abeysinghe and Dinoo Wickramage, ‘Sri Lanka's Domestic Barriers to Trade: Case Studies of Agricultural Exports’

[19] ‘Rankings and Trends’, Global Food Security Index, 2018, https://foodsecurityindex.eiu.com/Index ; Fabian Koh, ‘Singapore tops global index for food security’, The Straits Times, October 18, 2018, https://www.straitstimes.com/singapore/singapore-tops-global-index-for-food-security 

Why aren’t our millennials at work?

Originally published in Daily FT and Republic Next

By Nishtha Chadha

Today is International Youth Day; a day described as the United Nations as the “annual celebration of the role of young women and men as essential partners in change”. Everyday, we see young people across the globe emanating entrepreneurial drive and catalysing positive growth. ‘Millennials’ have become the symbol of a new world order, based on innovation and large-scale mutual exchange.

How do we create jobs that young people feel dignified doing? 

Yet, here in Sri Lanka, we see a very different story. Rather than catalysing growth, many of Sri Lanka’s talented youth languish in unemployment. Popular rhetoric often defines these young people as ‘lazy’ and ‘ungrateful’, unwilling to fill blue collar vacancies with low social repertoire and climb the ever-elusive career ‘ladder’. But with issues of unemployment pervading the youth demographic for over four decades now, despite having the highest literacy rate in the region, perhaps it is time for a new conversation. How do we create jobs that young people feel dignified doing?

Educated young people make up a third of Sri Lanka’s unemployed, while over 30% of the county’s total informal workers belong to the youth demographic. Often these numbers are attributed to the infamous ‘job-skill gap’, where tertiary-educated youth are left unequipped to acquire private sector vacancies, but over-educated to fill opportunities in labour-intensive industries. However, this hypothesis also ignores an entire socio-cultural dimension that underscores many young people’s unwillingness to settle for in-demand blue collar careers. 

According to the Department of Census and Statistics [DCS] (2017), the most difficult vacancies to fill in the job market were as follows:

  1. Sewing Machine Operators

  2. Security Guards

  3. Commercial and Sales Representatives

  4. Other Manufacturing Labourers

  5. Cleaners and Helpers in Offices, Hotels and Other Establishments

When one reviews this data it is hardly surprising that after spending 16 years in education, young people are unwilling to forego their intellectual capital and fill these vacancies. Instead, many wait in line for public sector opportunities, characterised by high social status, lifetime employment and funded by taxpayer money. The government often uses this as a vote-securing scheme, having offered 16,000 graduate roles just last month in preparation for the forthcoming election. But with an already inflated public sector, slowing growth rates and a growing toll of non-contributory pensions, this strategy has become both unsustainable and unreliable. 

Closing the gap

DCS data suggests that only 7.2% of private sector vacancies are in high-skill occupations.

While the private sector does account for the majority share of youth employment, DCS data suggests that only 7.2% of private sector vacancies are in high-skill occupations. Slow job creation has become a persistent characteristic of the Sri Lankan economy, with highly restrictive employment protection legislation and skewed bargaining power of trade unions significantly raising labour costs and impeding job creation.

Roughly 1.5 million Sri Lankans migrate internationally for work

As a result, roughly 1.5 million Sri Lankans migrate internationally for work (approximately one fifth of the domestic workforce). Over 40% of these migrants belong to the “skilled” labour category, suggesting a worrying trend of missed opportunity. Certainly, the fact that home-grown skilled labour has no place in a growing upper-middle economy is a cause for serious concern in itself.

As Sri Lanka faces up to the growing challenge of an ageing population, the country needs to create more and better jobs to sustain growth and make optimal use of its working-age population. This suggests an urgent need for structural reforms to increase competitiveness and openness to FDI, which will create more productive and higher-paying jobs as foreign firms bring in new technology and better management practices to the Sri Lankan market. Trade liberalisation can also play a critical role in producing large-scale opportunities for educated workers, particularly by plugging into regional and global supply chains. Indeed, with the right reforms in place, active engagement with foreign economies could present unparalleled opportunity to kickstart high-quality job creation in Sri Lanka and give many unemployed skilled graduates the opportunity to pursue fulfilling careers that positively contribute to the national economy. 

Moreover, as the global economy shifts increasingly towards services, personal consumption and trade in digital goods, there needs to be a concerted effort towards promoting innovation and entrepreneurship amongst the youth population and moving people away from traditional public sector careers. Sri Lankan investment in research and development (R&D) only amounts 0.07 percent of total Government expenditure (2017). As such, there is a pressing need to improve public and private funding of R&D, whilst simultaneously addressing the current fragmentation of R&D institutions, in order to create tangible outcomes within the innovation space. Improving the intellectual property rights regime and creating an ecosystem of early-stage finance and incubation facilities will be instrumental in mobilising young people and facilitating entrepreneurial growth. 

Entrepreneurship and opening up

Growing entrepreneurship can not only transition Sri Lanka into a more innovative and complex economy, but simultaneously create a broad range of high-quality jobs in a variety of competitive industries across domestic and international markets. Small nations such as Israel and Singapore have shown the scale of returns that investment into innovation can provide, attracting Silicon Valley’s largest players to set up incubators and accelerators in their countries. Indeed, at the heart of both nations’ technological success has been the cultivation of a targeted public-private ecosystem for innovation, as well as an absolute openness to diverse participation.

If Sri Lanka is to make the most of its youth potential, it needs to reform the very fabric of its workforce. Promotion of unconventional career paths and greater cooperation between the public and private sectors are a must. Current barriers to foreign participation must also be removed. Diversity of thought and exchange of ideas have been proven as key drivers of innovation, and these need to be promoted through people-friendly policies and the removal of burdensome mobility and investment regulations. Sri Lanka’s youth need to be given opportunities to access foreign capital and learn from global leaders in entrepreneurship if they are to form the basis of a new Sri Lankan economy. 

Moreover, by opening up migration policies and flows of labour, Sri Lanka will be able to fill its wealth of low-skill vacancies that currently plague the private sector, without foregoing its local talent. India has been enjoying the fruits of an open border policy with Nepal for over half a century, producing a mutually beneficial arrangement for both parties. Resisting globalisation is merely slowing productivity and resigning educated Sri Lankan youth to careers that they do not feel dignified doing. Youth potential should be harnessed to translate into economic growth and productivity, not heavier burdens on an already struggling economy. 

So, this International Youth Day, let’s have a new conversation about young people. Let’s remove the weight of heavy expectations, and replace it with rigorous strategies for empowerment. Young people are the future of the Sri Lankan economy – so what are we doing to help them shape it?