Sri Lanka - Nonplantation crop sector policy alternatives

This report is based on the output of two workshops in Sri Lanka, four background papers written by local consultants and the findings of a mission to Sri Lanka in November-December 1994. Growth from nonplantation agriculture remains stagnant and income low. The primary source of this growth has been Other Food Crops (OFCs - chilies, onions, potatoes, etc.). Assuming no data errors, OFC output is growing in intensity, as the total area under these crops has not grown. With 60 percent of Sri Lanka's population rurally based and mainly in the nonplantation sector, the sector's stagnation is of growing concern to government, particularly in terms of its implications for rural poverty. Despite its low returns per acre relative to OFCs and government support for more diversified crop-land use, low-valued paddy remains the dominant crop. Why this is so has been a dilemma. Examination of farm input and output markets and technology transfer shows no constraints. Price and trade policies, and rural credit markets are also not responsible. But land and labor markets are seen as major determinants of farmers' behavior. The study's policy recommendations are aimed at getting nonplantation agriculture moving again, assuming that sustainable growth with equity is the desired policy goal. Importantly, during the study it became abundantly clear that access to the off-farm market was far more important than size for creating equity in income-earning opportunities. Appreciation of the major role played by the off-farm labor market is key to understanding of farmers' behavior and provides the basis for the direction of the recommendations. This report first addresses the problem of the nonplantation crop sector poor performance. It then reviews the output and input markets. The third chapter of the report discusses the incentive policy. Chapter 4 reviews rural finance, chapter 5 land, chapter 6 farm family income and output adjustment, and chapter 7 technology generation and transfer.