4/01/2010

Sri Lanka's fertilizer subsidy; Robbing Martin Ayiya to pay Bandayiya

(April 01, Colombo - Lanka PolitySri Lanka Minister of Agricultural Development Agrarian services Maithripala Sirisena said proudly addressing a pres briefing held in Mahaweli Center, Colombo that the government spends Rs. 65 billion annually for the fertilizer subsidy. This subsidy goes mainly to the rice industry.

The Minister said that the government bore a cost of Rs. 26,065 per an acre for fertilizer subsidy since 2005.

Eight paddy cultivation seasons have passed since the initiation of the fertilizer subsidy and the cost for the government for a farmer that owns two and half acres is Rs. 521,300, he said.

The cost for a farmer that owns three acres is Rs. 625,560 while the cost for a farmer that owns five acres in major farmer colonies is Rs. 1,042,600.

Sri Lanka provides a 50 kilo bag of fertilizer at a subsidized price of Rs. 350 for the farmers while the government purchases the same amount of fertilizer at a price well over twenty times the selling price.

Fertilizer subsidy fuels the vote machine of the ruling party in rural areas. However, most of these farmers are not real farmers. A good portion of the subsidy receivers of Sri Lanka are public servants who hire agricultural laborers to work in their cultivations while they manage them at the cost of the government via paid leave.

Sri Lanka's fertilizer subsidy is a specimen for bad concessions. The rice cultivation appears fully dependent on this subsidy and the subsidy needs to be sustained now for the survival of the paddy cultivation.

The whole country pays heavy taxes in the name of these farmers who have been over praised for their task. Criticizing the unproductive nature of subsidizing paddy cultivation in Sri Lanka has become a taboo subject.

However, most of the inputs of Sri Lanka’s rice industry are imports such as machinery, fuel, fertilizer, agro-chemicals and even the gunny sacks. There is no big difference between the garment industry and the paddy cultivation though most do not raise this issue.

Rice prices escalated sharply late last year and early this year. The government had to slash the import taxes for rice to stabilize the prices. Now the harvesting has commenced. Farmers lament about the low price of paddy purchasing prices in the market. They need the government to purchase their product at higher prices.

According to information revealed in Sri Lanka Parliament by the Minister Bandula Gunawardane in November 2008, the government imported 52,800,209 kilos of milk food accounting for 89.1 percent of local demand in 2005, but this amount had seen an increase up to 62,518,062 kilos last year. It was 90 percent of the local requirement.

The country had imported 57 percent of its potato requirement in 2008, and it had been a sharp rise against 33.9 percent imported in 2005. In 2006, the government had imported 37 percent of the country’s potato requirement and 52.6 percent in 2007.

Big onions had recorded an import growth of 71.9 percent in 2008 in terms of local requirement, against 60.4 percent in 2007, 61.9 percent in 2006 and 66.6 percent in 2006.

In contrast to attempts to boost local agriculture, Chillie imports had also registered an increase, as a percentage of the local requirement, from 72 percent in 2007 to 73 percent last year. In 2005, the country had imported only 67 percent of its Chillie requirement and 69 percent in 2006.



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