Dr. Anura Ekanayake

1. Issues on Food Security and Opportunities in Innovative Agriculture and Plantations: Sri Lanka Case Dr. Anura Ekanayake Chairman, The Ceylon Chamber of Commerce 6 July, 2010, The 24th CACCI Conference Sri Lanka Economic Summit 2010 Cinnamon Grand - Colombo

2. Contents • The Case for Food Security • Agriculture , Self Sufficiency, Poverty and Malnutrition in Sri Lanka • Transition from a low income to a middle income country: some realities • A “3P” Perspective • Way forward

3. The Case for Food Security • Conventional economic wisdom dictates that nations specialize based on resource endowments and engage in trade. Then food will move to the place where it is most needed from where it is most effectively produced. • Ensuring food security, however requires all nations to produce some minimum amount of food. • This requires diversion of resources to agriculture even if food can be imported cheaper than producing locally. • Such diversion of resources towards agriculture requires either protection or subsidies or both. • The problem is, which ever way, it makes locally produced food more expensive than imported food. • The policy dilemma is to strike a balance between cheap food and food security.

4. The Case for Food Security (contd.) Source: FAO

5. The Case for Food Security (contd.) • All of us can remember what happened in 2007 - 2008 to global food prices It was due to: • high oil prices and rising fertilizer and agro-chemical prices • diverting land and crops for increased bio fuel production • export restrictions to ensure domestic food supplies SOMEHOW THE MARKET MECHANISM DID NOT WORK! • This may happen again and again due to: • fluctuating petroleum prices along with peaks and troughs in the global economy • reducing farm credit during recessions • climate change and resulting increases in droughts and floods • reducing per capita availability of water (1/3rd drop from 2000 – 2050) Food security is no longer a choice

6. Agriculture, Self sufficiency, Poverty and Malnutrition in Sri Lanka • Agriculture adds 12% to GDP and yet provides 32% of employment • GDP per capita is US$ 2050 • Poverty has reduced sharply and is at 15% • Yet malnutrition amounts to 20% • Self sufficiency in rice is over 95% • Our consumption of wheat (imported) is about 40% of that of rice • Self sufficiency in sugar is about 30% • Self sufficiency in milk is about 10% • Self sufficiency in Fisheries is about 80%

7. Transition from Low Income to a Middle Income Country: Some Realities • Nominal incomes will double in the next five years • Real income will increase by half at least • Unemployment will be well below 5% • Connectivity will zoom up • People’s aspirations will rise • Aging population

8. A “3P” Perspective • The Triple bottom line approach (3P) of People, Planet and Profit is a convenient format to discuss Food and Agriculture issues • People – micro farms and resident work in plantations will not be preferred choices; wages will rise; labour shortages will be a reality; rising food consumption levels among the lower income population • Planet – mechanization, greater use of water, agrochemicals and in-organic fertilizer • Profit – margins will squeeze in micro holdings and plantations

9. Way forward • Encourage land consolidation and modernization of agriculture • Divert unused plantation lands to dairy, fruit and vegetable farming / market gardening • Promote better use of water • Shift towards organic farming • Engage in selective protection of priority crops • Encourage intensive homestead farming

10. Conclusion • Food security is a top priority - rice, milk and sugar are important • Selective protection and subsidization is required • Transition into mid middle income status will force changes in current ‘business’ models • Old sequence cannot work. Need to leap frog. • Modernization of agriculture towards sustainable agriculture will be essential