Increasing exports to US $ 50bn

14 August 2015 02:57 am Views - 3944

Dr. C.S. Weeraratna
At the Sri Lanka Economic Summit held recently, the Prime Minister has indicated that a systemic approach is necessary to achieve the target of US $ 50 billion exports annually. Dinesh Weerakkody responding to this (reference August 10, 2015, Mirror Business) has made several recommendations, mostly financial, to increase the annual foreign exchange earnings to US $ 50 billion, which now stands at US $ 11 billion. 

Around 30 percent of the foreign exchange earnings is from the agriculture sector (plantations and non-plantations). The contribution from the agriculture sector has increased during the last few years mainly because of the increase in the cost of the export items. For example, export earnings from the plantation crops - tea, rubber, coconut and spices - our major foreign exchange earners, have increased from around US $ 2000 million in 2010 to US $ 2800 million in 2014. However, the production of these crops has not increased. For example, tea production in 2010 was 331.4 million kilogrammes. In the following four years, the total annual tea production was 327.5, 328.4, 340.1 and 338.1 million kilogrammes, respectively. The production of rubber and coconut too has declined during the period 2010-2014.

Around 800,000 hectares are cultivated with plantation crops and if the productivity of this sector is raised, it would play an increasingly greater role in foreign exchange earnings. The average yield of tea, rubber and coconut has decreased during the last few years due to many factors. Land degradation is one of them. Hence, implementing appropriate soil conservation measures is important. In addition, productivity can be improved by increased the replanting rate as most of the holdings have old unproductive trees. In addition, effective management, including better fertilizer, weeds and pest management practices, diversification, improved manufacturing and value addition of the produce, would increase the productivity, contributing to an increase in foreign exchange earnings. 

A large number of crops other than tea, rubber and coconut cultivated in Sri Lanka have a high potential as export crops. Among these are the so-called minor export crops such as pepper, cinnamon, horticultural and floricultural crops. In 2013, spice crops earned around US $ 350 million. Sri Lanka has a wide variation in soil and climate. There are 24 agro ecological zones, each characterized by specific climate and soils. This makes it possible the cultivation of different types of crops. Out of the 6.5 million hectares of land, around 2.0 million hectares are in the wet zone. 

About 75 percent of it is cultivated and most of this land is of low-productivity due to soil degradation. 

In the dry zone, out of the 4.5 million hectares only about two million acres are in productive use. Thus, there is a large extent of potentially cultivable land in the dry zone. Most of the soils in the dry zone are relatively more fertile than those in the wet zone. Non-availability of adequate rainfall during the yala season is one of the limiting factors of crop production in the dry zone. However, better water management practices would reduce this limitation. Also, various major irrigation projects such as Mahaveli, Kirindioya, Muthukandiya and Inginimitiya provide irrigation to about 200,000 hectares in the dry zone. The numerous minor irrigation projects too would increase the irrigable area in the dry zone. Thus, there is a considerable potential to increase the level of crop production in Sri Lanka.

In any programme/plan to increase foreign exchange earnings from the agriculture sector, agro industries have to be given much emphasis. A large number of crops cultivated in Sri Lanka have considerable potential in various agro industries. However, only rubber, coconut and a few fruit crops are used in industries.

Crops such as cassava, horticultural and floricultural crops, medicinal herbs, cane, bamboo, sunflower, castor, Ayurvedic herbs, etc., have a considerable industrial potential but are not cultivated to any appreciable extent for want of better and improved varieties, technological know-how, relevant market information, etc. Development of agro industries will also increase the export income and will have a tremendous impact on the economy of the country and also provide employment opportunities among rural people. The private sector can be involved in such projects for which appropriate technical assistance needs to be given by the relevant public organisations. 

(Dr. C.S. Weeraratna can be contacted through csweera@sltnet.lk)