Increasing food production through promoting SME in Sri Lanka

The SME sector in Sri Lanka is considered as the backbone of the economy with their significant characteristics on employment generation, GDP growth, improving innovation capability and stimulating of other economic activities in Sri Lanka. In the country, more than 80% of businesses run by SME’s which are mainly in foods processing, manufacturing and construction field. In addition, they are supplying about 35 percent of employment and about 20 percent of total industrial value addition (Galagoda, 2008).

The economic environment is not conducive to sustainable livelihoods due to the need for large scale infrastructure rehabilitation, landownership issues, and lack of capital. Poor people are become very vulnerable condition by increasing the cash for accessing food at open market and Sri Lanka still imports food items from other countries because of the product are very poor even for the domestic consumption. But even India, Pakistan and Bangladesh have higher population and poor but they are still exporting surplus food productions to the Asian as well as USA, European and other countries in the world. Our country is mostly based on agriculture even though still we are import rice from countries like Pakistan and Bangladesh due to the shortage of our product.

There are large numbers in Sri Lanka without adequate food: persons who are hungry, malnourished or undernourished. There is growing evidence of increasing malnutrition in Sri Lanka. The rising prices of food are likely to aggravate this situation, especially in households that do not produce food. Although the country does not have serious food shortages malnutrition affects nearly one-third of children and one quarter of women. Almost one out of five children are born with low birth weight and about 29 per cent of children under five are reported to be underweight, rising as high as 37.4 per cent, in some deprived districts.

Imbalances in trade and large fiscal deficits undermine food security, especially of low-income households. Strong agricultural production through Small and Medium Entrepreneurial fundamentals, and effective safety nets are needed to improve the country’s food security. Increasing food production is essential in to minimize dependency at food import from other nation. Healthy macroeconomic conditions are a prerequisite to ensuring food security, in a food deficit country such as Sri Lanka. A strong economy is vital to ensure that the country could import the basic food needs of those commodities that cannot be produced in the country or are inadequately produced.

What is the sector must secure for food

Almost 75 percent of the population is still classified as rural, which for all intents and purposes means mainly engaged in agriculture, given the economic linkages generated by agriculture in the rural economy. Most of them are suffering from rural areas the only to strengthen their house hold income is developing and promoting SMEs.  So Agriculture sector must be considered which will strengthen domestic food production in rural areas.

 Impact of food insecurity

In Sri Lanka, agricultural growth has been only 1.2 per cent per year and lagged behind those of other sectors. Production of several crops declined over a period of time and even when there was growth these have been modest. The yield levels attained in almost all crops is much less than the potential. This applies as much to plantation crops as to small holder agriculture.

Agricultural growth could contribute to reduction of poverty, hunger and malnutrition. Poverty and food insecurity are largely problems in the rural and estate areas in Sri Lanka.

Governments need to focus on building up the agricultural sectors of rural areas  by training farmers and food manufacturers to better understand technical requirements and meet international standards. The first step in ensuring food security in developing countries is to educate farmers so that they can access and understand standards and regulations of export markets. The training can be provided through seminars, hands-on workshops and publications, which enable exporters to more easily, overcome technical barriers to trade.

The households in Sri Lanka most affected by food insecurity are spread across all rural areas identified. The reasons for such high food insecurity are associated with a number of factors namely; a) high level of indebtedness; b) constraints to livelihoods establishment such as some households still clearing land, households are still building up their productive and liquid assets; c) some households depending on unreliable income sources such as gifts and donations and casual wage labour, accompanied by under employment; d) some households still being hosted by other families after returning; and e) structural factors such as household limited access to land. Other household constraints contributing to food insecurity include loss of employment, high food prices, sickness, lack of veterinary services and fishing gear inhibiting the affected households to fully realize their income potential. Due to these constraints, the affected households use coping mechanisms such as borrowing money eating less preferred foods, pawning, selling jewellery to buy food. Furthermore, household use income on debt repayment, with less percentage of the household income spent on livelihood inputs, delaying the establishment of livelihoods.

Among the other reasons for this situation are the unequal distributions of people to land and water resources in the our country and the unequal distribution of incomes and poverty within our regions. Some recent proximate reasons that have aggravated the situation are climate change, droughts, floods and forest fires causing soaring food prices. The financial crisis and economic recession has not helped either.

Issues & Recommendations

The  population is gradually increasing in our country as there is no change in agriculture product. Some other countries in Asian region has surplus agriculture product even they have large number of population who are living under poor condition. So many agriculture products are seasonally yield higher than another off season. I observed the price of Banana in north part of Sri Lanka in April, May season was selling 10 to 40 rupees in the local markets. At the same time these imported and sold about 120 to 180 in Colombo. The middle man earn a lot, the real farmers are getting fed-up who do not like to continue by their next generation. Because of the cost of product is very high when they compare turnover  of their products. The farmers are not persuade  their children to continue this, they are sending to them all some other way which are rapidly reduce the agriculture product.

Sri Lanka has determined as a disaster prone country which is frequently impacts by flood, drought, and other disasters. Farmers are struggling without proper insurance mechanism to protect their farming and also as they have so many collateral issues to access the loan to invest to improve their SME. Still most of the rural SME sectors are depending in traditional method rather than adopting to new technics into their productive as well they do not have any change to develop their skills as young generation are not much interest and gradually away.

So these issues cause them to sell their product in a low price which motivate them all to leave from rural food productivity. Most of them are wasting their product without proper storage and value addition methods where the middle man are getting benefit than the farmers in the field.

·         The first requires a strong, forwardlooking policy favoring agricultural extension and communication for agricultural and non-agricultural rural development with a focus on food security.

·         The second proposes the establishment of a platform to promote dialogue and collaboration among all relevant sectors to favour extension/ communication activities for food security.

·         And the third proposes public sector institutional change to enhance the new and expanded policy and strategy.

·         Establish and strengthen rural technology-based incubation center promotion programs.

·         International organizations could take the lead.

·         Develop productivity enhancement and entrepreneurial management skills, including soft skills, in existing enterprises.

·         Encourage and develop PPPs for policy implementation at the central, provincial, and local levels.

·         Develop dedicated financial instruments as “challenge funds” for promoting rural entrepreneurship.

·         Identify sectors based on local needs and immediately establish a value chain analysis program.

·         Promote a rural entrepreneurial culture on a priority basis and change the mindset of local people/ communities as these are critical for promoting SME.

·         A comprehensive program (institutional and programmatic) for capacity building in rural entrepreneurship in terms of knowledge, skills, and attitude is needed.

·         SME requires that business development service (BDS) providers play a major role.

·         Develop a training manual and reference materials on RED.

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So these recommendation will sure protect the food security and promote the quality product which make the employment opportunity too to contribute to the country’ GDP.

S.Thanigaseelan, Assistant Director(Research)