Why is the Subsidy on Fertilizers for Rice in Sri Lanka Continued? Dilini Vathsala Abeygunawardane BSc(Hons) Colombo, MEnvMgt UQ A thesis submitted for the degree of Doctor of Philosophy at The University of Queensland in 2014 School of Geography Planning and Environmental Management Abstract This dissertation attempted an answer to the question ‘why the subsidy on fertilizers for rice in Sri Lanka is continued amidst a number of sustainability concerns?’ There is ample evidence to point out why the long-running subsidy schemes should end; but they continue. This study locates the problem beyond its current definition that largely focuses on the gains and losses of subsidies, to incorporate the roles of stakeholders and their environment in deciding the important causes of subsidies. Using the current rice fertilizer subsidy scheme that started in late 2005 as the case, this study examined the roles of two key stakeholder groups - rice farmers and agricultural bureaucrats and researchers – set in the complex interplay of history, institutions, ideas, leadership, different actors, and external influences in constituting and mediating the rice fertilizer subsidy policy in Sri Lanka. Guided by the foundations of post-positivism, critical realism, and systems thinking, the study used a mixed method approach consisting of both quantitative and qualitative methods. Data was collected from 22 semi-structured interviews with agriculture bureaucrats and researchers, 189 survey responses from rice farmers, and three focus groups involving 24 agriculture bureaucrats and researchers. The data analysis was followed by a critique of the roles of stakeholders and their environment. The key findings of this study suggest that the persistence of the rice fertilizer subsidy in Sri Lanka is best explained by a model of shared food preference. The social, political, and economic conditions in Sri Lanka engendered and accommodated ideals that elaborated the role of rice unparalleled to its economic value. Nurtured by this environment, both farmers and agriculture bureaucrats and researchers have, for different reasons, constituted a support for subsidized fertilizers. At the operational scale, the rice fertilizer subsidy of Sri Lanka has been an experience very similar to those subsidy schemes in other developing countries generating benefits in fertilizer usage and rice production, but falling below its full potential due to limitations in its own operational mechanism and deficiencies in its enabling environment. Constrained by the diminishing soil conditions – perceived to be the most critical among all variables deciding rice yields – farmers found the perceived benefits of the subsidy to be beyond material measure, mediating a strong support for its continuation. The agriculture bureaucrats and researchers’ support for the fertilizer subsidy was largely driven by ideals of nationalism, development, and nutrition. To these ideals achieving self-sufficiency in rice was of the highest priority. Science’s contribution to policy was severely constrained by this cultural construct of rice and hence the policy choices. Therefore, the study concludes that the reason for continuing the rice fertilizer subsidy scheme in Sri Lanka is its people’s intimate preference for rice that is shared across the social spectrum. Being i a shared preference, rice evaded scrutiny and debate over any topic that questioned its suitability or potential, making it taboo. The rice fertilizer subsidy is only a symptom of this unconditional association Sri Lankans have with rice, limiting much of its potential for development. This not only explains why the subsidy persists but also why an exit is difficult. A key recommendation of this study is the need for the agriculture sector to understand its context. It has to adapt to the changing dynamics of the rural sector and the real risks that involve not only food markets but beyond, both at the local and international scales. For effective policy reforms, including a solution to the subsidy problem, three sensitive topics require an open dialogue. These topics include the role of rice in science, the role of science in Sri Lankan agriculture, and the role of agriculture in the Sri Lankan economy. These constitute an enormous challenge in the current context. ii Declaration by author This thesis is composed of my original work, and contains no material previously published or written by another person except where due reference has been made in the text. I have clearly stated the contribution by others to jointly-authored works that I have included in my thesis. I have clearly stated the contribution of others to my thesis as a whole, including statistical assistance, survey design, data analysis, significant technical procedures, professional editorial advice, and any other original research work used or reported in my thesis. The content of my thesis is the result of work I have carried out since the commencement of my research higher degree candidature and does not include a substantial part of work that has been submitted to qualify for the award of any other degree or diploma in any university or other tertiary institution. I have clearly stated which parts of my thesis, if any, have been submitted to qualify for another award. I acknowledge that an electronic copy of my thesis must be lodged with the University Library and, subject to the General Award Rules of The University of Queensland, immediately made available for research and study in accordance with the Copyright Act 1968. I acknowledge that copyright of all material contained in my thesis resides with the copyright holder(s) of that material. Where appropriate I have obtained copyright permission from the copyright holder to reproduce material in this thesis. iii Publications during candidature No publications. Publications included in this thesis No publications included. iv Contributions by others to the thesis No contributions by others. Statement of parts of the thesis submitted to qualify for the award of another degree None. v Acknowledgements Two days from submission, I write this acknowledgement. For me it has been an emotional journey, through which I experienced, joy, excitement, pain, and the unexpected. So to be able to write this acknowledgement at the completion of this work is an achievement in itself. First I want to thank my supervisors - Bob Beeton my principal supervisor, Donald Cameron my current associate supervisor, and Iean Russel, my former associate supervisor. Thank you very much to all of you for your inputs and comments; academically and personally I have benefited greatly from your affiliations. I also want to thank my family - my mother, my father, and my brother. My talents, my arrogance, my drive, my temper, my believing in self, my passion, and my respect for people, in short all my good and bad is much in how we evolved as a family. Those discussions, arguments, fights, and reflections about life and people and the love we have for each other are what I’m today mostly. All three of you make a part of me and for that I thank you. I would extend a special thank you to Harsha for assuring me that I have a future ahead of me, and for constantly reminding me of that when I stray into the past. There are many joyous moments and pleasant memories I carry from my PhD years - thanks to my friends and colleagues. Chandima, Marie, Trishah, Am, Tho, Graham, Carol, Hao, Baldwin, Rudolfo, James, Mayuko, Bob, Song, Saffron, Jean-Mark, Johnvie, Ming, Paul, and Hee Soo - I would always treasure the laughter and joy I shared with you. I would like to extend a special thank you to all my gal pals who helped me through the difficult time. Tho, Carol, Am, Trishah, and Melanie, thanks a lot for checking on me to make sure I was OK - it mattered. I thank Bob Beeton, School of Geography, Planning, and Environmental Management (GPEM), and School of Agriculture and Food Science (SAFS) for funding my research. I am also grateful to the University of Queensland for its financial support through the University of Queensland Research Scholarship (UQRS). I was able to study in Australia, thanks to the two scholarships - Endeavour Postgraduate Award and the International Postgraduate Research Scholarship. For that I would like to thank the Australian Government and the awarding departments. I am grateful to the helpful staff of GPEM and SAFS. Judy Nankiville, Patrick Moss, Poonam Kalwar, Marie-Louise Moore, Meryl Carfrae, and Alan Victor, among many others have helped me out of many administrative and logistical troubles. I would also like to thank the staff of St John’s College for making my stay at St John’s for over 7 years, a pleasant and warm experience. Warden John Morgan, Dean Munro Howard, Maureen Crisp, Jennifer Nagle, John Nightingale, Louie [sorry vi I do not know your surname], and the friendly students - you all made St John’s a home away from home. I owe a special thank you to the many people who contributed to this study. All the research respondents and the government officials who helped me locate documents and directed me to other relevant contacts - your time and willingness to support have been invaluable for this study. I also have gratitude for the University of Queensland Library. The great collection of its resources and its never-ending effort to improve student experience is worthy of praise. I would also like to thank the University of Queensland for enabling a rewarding university experience - it has been a privilege to study at this institution. But above all I would like to extend a special thank you to three people, to whom I have already thanked - but not enough. If it had not been for your support, this dissertation would not have been possible. Bob, there was a time when I was not being the best or the easiest to work with, but you still had hope in me.