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An Overall Assessment of the Agricultural Marketing Systems in Northern Province of Sri Lanka

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An Overall Assessment of the Agricultural Marketing Systems in Northern Province of Sri Lanka An Overall Assessment of the Agricultural Marketing Systems in Northern Province of Sri Lanka T.A. Dharmaratne Research Report No: 169 June 2014 Hector Kobbekaduwa Agrarian Research and Training Institute 114, Wijerama Mawatha Colombo 7 Sri Lanka I First Published: June 2014 © 2014, Hector Kobbekaduwa Agrarian Research and Training Institute Coverpage Designed by: Udeni Karunaratne Final typesetting and lay-out by: Dilanthi Hewavitharana ISBN: 978-955-612-169-8 II FOREWORD One of the major challenges that need to be taken into consideration in terms of agricultural development in the Northern Province is “reconstruction of the suitable agricultural marketing systems. For restoration of the agricultural marketing systems, the policy makers do not have adequate proper information about the agricultural marketing systems as well as obstacles facing the market forces in the province. Therefore, they cannot identify the essential government complimentary role in promoting agricultural markets in the region. A survey on agricultural marketing systems helpful in identify the current agricultural marketing systems and weaknesses of the existing market structures of the province. In that senses, the overall objective of the survey is to undertake a market study aimed at generating information that would enable the authorities to gain understanding of the existing agricultural marketing systems, institutional arrangements and their management and operating procedures, covering the major players in respect of production and marketing of major agricultural commodities and to propose strategies to improve the efficiency of the marketing mechanisms in the north region of Sri Lanka. This study has made an effort to investigate agricultural marketing system in the Northern Province. The information available in this report will be very useful to policy makers, planners, policy implementers, development workers, researchers, scholars and others who are interested in development of the Northern Province. I take the opportunity to thanks the author, Dr. T. A. Dharmaratne Research Fellow and the Head of the Agricultural Policy and Project Evaluation Division of the institute for undertaking the study which provide details on the agricultural marketing systems in Northern Province in Sri Lanka. E.M. Abhayaratne Director i ACKNOWLEDGMENT The author is very much thankful to Mr. Lalith Kantha Jayasekara, former Director HARTI for his thoughts and invaluable supports provide to conduct and completed this study, and Mr. E.M. Abhayaratne, present Director HARTI for guiding and encouraged me to publish the report as early as possible. Professional supports were given by Dr. L.P. Rupasena and Mr. J.K.M.D. Chandrasiri, former and present Additional Director (Research) in respectively at HARTI. Mr. S. Sivakumar, Provincial Director of Agriculture and District Deputy Directors of Agriculture in Northern Province extended their full supports and made arrangements to obtain information from relevant officers in the five administrative districts of Jaffna, Mullaitivu, Kilinochchi, Vavuniya and Mannar in the Northern. They also gave that valuable production and marketing data and information which produce by the provincial and district agricultural authority. Mr. Aruna Upul Santha, Statistical Assistant, HARTI have been made some statistical tables and graphs and field data and information collection done by investigators in five Northern districts. Mr. M. Suganthern Kumar in Mullaitivu, N. Sivaruban in Mannar, S. Nimalan in Kilinochchi, Mr. P. Kiridharn and Miss P. Paramashwaran in Jaffna, Mr. Sugerdharn and Mr. N. Muran in Vavuniya district made valuable contribution to collection of production and marketing data and information at rural villages. The first draft repot typed by Mrs. K.A.S. Geethani, Office Secretary and Ms. H. Thilini Nisansala Steno Typist of the Marketing Food Policy and Agribusiness division. Mrs. S.D. Lalana Sriyani, Office Secretary of the Agricultural Policy and Project Evaluation Division and Mrs. Udeni Karunaratne, Type Setter made valuable contributions in preparing the final report. Prof. W.I. Suraweera, former Chairman of the University Grants Commission, had edited the first draft and Ms. Suharshi Perera, editor at HARTI had been made the final draft of the report. I also wish to thank Mrs. Dilanthi Hewavitharana, Secretary for final type-setting and page settings and Mrs. Udeni Karunaratne for cover page designing. The printing staff of HARTI did an excellent job in printing. To all of them I express my deep gratitude. Dr. T. A. Dharmaratne Co-ordinator ii EXECUTIVE SUMMARY Agricultural marketing will become sustainable solution for poor farmers who are great extent looking for a better life for generation in the Northern Province. The thirty years of extended war and crisis situation in the region and policy changes in the various government regimes had caused damaged to market systems and their infrastructures and its safety network. Close down of Paddy Marketing Board and free imports of food commodities are well examples. Rural-regional- national market network and farmers participation in the market development has been abandoned. Market value chain and supply chain was neglected or ruined. Farmers have their own marketing and production system for small quantities of commodities. No supply / value chain approach and integration. Traditionally the Province, particularly Jaffna peninsula was considering the agricultural paradise of country and agriculture becomes a main economic activity of the people. From the history, Paddy/rice, red onion, green chili, potatoes, pluses, tobacco, dairy products, Palmyra products and eggs are the major agricultural products. Recently, Banana, Grapes, mangoes and vegetables such as beetroot, carats, cabbages and brinjal develop into more popular and commercial crops. It is obvious to not that the crop diversity is the prominent charter in Jaffna peninsula, while the mono crop culture is leading factor in some other districts. Marketable surplus are smoothly growing for many crops. Except for red onion, banana, grapes, other agricultural products are deficits to the consumption requirement of the province. The total production of paddy was 82 percent of the provincial consumption requirement, while, dry chili were 66 percent, Pulses only 14 percent, and Vegetables 60 percent. The total production of red onion was 195 percent of province consumption requirement. Uneven development of the process of agricultural marketing systems is prime characteristics in the province. There are no proper marketing systems and operation activities in Kilinochchi, Mullaitive and Mannar districts, and most of the marketing activities are base on ad-hoc arrangements. However, the marketing systems those have in Jaffna and Vavuniya, mostly are neglected or ruined, due to the long term absences. Some improvements have been seen in recently, while there is no proper political and economic atmosphere for the development of agricultural marketing systems in the region. Land rights are the most essential policy issue for development of agricultural surplus production and markets. No social institutionalization for collective decision in coping with production and market challenges and dynamics. After decades of war and conflict, now Northern Province has entered a new path of economic growth and development owing to the huge investment done by the government and international donors. Large untapped, unmarketed potential in the key agricultural crops of the area (paddy, red onion, chili, groundnut, cowpea, banana, grapes, mango and tobacco) and livestock produce – creating better market linkages, better utilization of agricultural/farming capacity and skills, are need to be urgent measures. iii No social institutionalization for collective decision in coping with production and market challenges and dynamics. A complete re-governing of market system in the region in view of emerging trend of global market has to be planned for small farming sector that are not prepared for global changes and in ways that contribute to the resilience of rural economy in the region. To institutionalize the marketing systems, to develop the infrastructure facilities, to regularize resource mobilization, to promote market-led crop production, to promote public and private market participation and investments, to introduce and operate agri-business more efficiently, to develop self reliance in production and marketing, to facilitate formation of cooperative societies, to empower cooperative governance in production and marketing, and to ensure fair market access to all strata of the farming community are the leading issues of the package in the development programs and projects that would be need to grant by the government side. However, within the framework of present political and economic scenario, power devolution will meet only political aspiration of people interested with politics in the Northern region, but it will not bring tangible solution to economic struggles faced by hundreds and thousands of underprivileged poor farm producers in the province. iv LIST OF CONTENTS Page No. FOREWORD i ACKNOWLEDGEMENT ii EXECUTIVE SUMMARY iii LIST OF CONTENTS v LIST OF TABLES viii LIST O FIGURES xi CHAPTER ONE An Overall Assessment of the Agricultural Marketing Systems in the Northern Province of Sri Lanka 1 1.1 Introduction 1 1.2 Agriculture in the Northern Province 1 1.3 Problem Statement 5 1.4 Objectives of the Study 6 1.5 Methodology
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